ClientEarth, CDP and ShareAction write to European watchdog on climate risk disclosure

Letter to ESMA calls for alignment with new Bloomberg-led taskforce

ClientEarth, the environmental law NGO that has backing from rock group Coldplay, is spearheading a campaign with CDP, ShareAction and others that is calling on the European securities market watchdog to promote climate risk disclosure by fossil fuel companies.

The group has written to the Legal, Convergence and Enforcement Department at the European Securities and Markets Authority (ESMA) to ensure climate risk disclosures are included in management reports from the firms.

It also wants Paris-based ESMA to align with the work of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) – the new high-level group announced by Bank of England Governor Mark Carney and headed up by former New York Mayor Michael Bloomberg.

The momentum behind the new task force was displayed last week with the announcement of its composition, featuring a host of responsible investment figures such as Matt Arnold, Global Head of Social and Sustainable Finance at JPMorgan Chase, David Blood of Generation Investment Management, Principles for Responsible Investment Chair Martin Skancke and Steve Waygood, Chief Responsible Investment Officer at Aviva Investors.

“To support ESMA’s mission, we encourage ESMA to align with the work of the Task Force on Climate-related Financial Disclosures, and act to assist competentauthorities ensure climate risk disclosures (particularly those related to stranded asset risk) are included in management reports from fossil fuel companies,” the new letter states.

The signatories also encourage ESMA to act to ensure a “consistent regulatory approach” by competent authorities for climate risk disclosures by fossil fuel companies. The letter to ESMA is also signed by the Climate Disclosure Standards Board (CDSB), a consortium of business and environmental NGOs.

The letter focuses on what fossil fuel companies say about their principal risks and uncertainties. It highlights that, with the Paris agreement meaning up to 80% of current fossil fuel reserves must remain in the ground, fossil fuel companies are now bound to treat climate change as a principal risk and report on it accordingly.

ClientEarth, which also counts famed David Bowie collaborator Brian Eno amongst its high-profile supporters, has been raising its profile in the institutional investment area of late.

It is involved in the latest ‘Aiming for A’ shareholder resolution
process at mining companies. And in November, it emerged as a partner in a new project – Commonwealth Climate & Law Initiative (CCLI) – to identify the legal liability risk of pension funds that fail to consider the risk of climate change along with the Accounting for Sustainability (A4S) initiative of the UK’s Prince Charles.