Uniform Climate Risk Disclosure: The Catalyst to Private Sector Climate Action

William attended the UNFCCC forum. He is a Juris Doctor student at RMIT University in Melbourne. William works and volunteers at a non-government organisation that aims to ensure finance and investment is used to help solve major environmental problems like climate change. 

Abstract

Meeting the climate goals set out in the Paris Agreement will require a reallocation of capital, away from emissions-intensive activities, and towards clean, efficient alternatives. In order to optimise this reallocation, investors must understand which companies are best placed to take advantage of the opportunities posed by climate change, and which are most exposed to climate change risks.

The G20 Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) has recommended that organisations disclose information regarding the risks and opportunities they face as a result of climate change, along with their plans to manage those risks and opportunities. The recommendations were adopted by the G20 at its July 2017 summit in Hamburg, giving a clear indication as to the direction of future domestic policy in Australia.

Given climate change poses material business risks to some organisations, it is clear that some level of disclosure is already required under the Australian corporate regulatory regime. However, climate risk disclosure to this point has been far from uniform or comprehensive. Further guidance, supervision and enforcement is required to ensure climate risk disclosure is sufficient to give an accurate representation of a company’s prospects. This would enable markets to make informed investment decisions, thus driving the push towards a cleaner, more sustainable economy.

This paper identifies the immediate and longer term regulatory measures that should be implemented to ensure mandatory uniform climate risk disclosure amongst Australian companies.

Read More

Bonds. Green Bonds: Financing a Sustainable Future with the Green Climate Fund

An analysis by Claire Smith

Claire attended the 2015 United Nations Climate Change Conference (COP21) in Paris.

Abstract

The 21st Conference of Parties (COP 21) to the United Nations (UN) Framework Convention on Climate Change (UNFCCC) is expected to deliver a binding agreement that could be the most important step towards a global climate change solution since the Kyoto Protocol. A key issue for negotiators will be mobilising climate finance for mitigation and adaptation projects in developing countries, which have contributed least to climate change but will be most affected by its devastating impacts. The UN set a goal to mobilise US$100 billion (bn) in climate finance contributions from developed countries by 2020. To date only US$10.2bn has been raised for the Green Climate Fund (GCF), a UN financial mechanism expected to become the premier body for delivering climate finance to developing countries. The World Bank, UN, G20 and climate experts have identified the need to mobilise private finance to fill this funding gap. The emerging green bond market offers an appealing solution because, with the right support, economists estimate up to US$1 trillion in climate-focussed bonds could be issued per year by 2020. The GCF has a unique opportunity to become the world’s leading proponent of green bonds, but it must address challenges related to bond structures, risk levels, debt capacity, and financing models before it is in a position to start issuing bonds and facilitating investment in projects on a large scale. Short-term efforts should focus on mobilising sufficient capital from the public sector, building robust networks, and facilitating market readiness to lay the groundwork for future activities.

Read More