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Why We Need a Framework

Voluntary and mandatory reporting schemes on greenhouse gases and sustainability have multiplied alongside stock exchange rules, rating agencies, company law and reporting guidance. There is no single coherent standard about how companies should identify relevant information on climate change and how users of such information can interpret it. In the absence of such a standard, information is inconsistent, with too much or too little information.  Financial institutions are not taking account of climate change-related factors in their decision-making. 

An unclear disclosure landscape

Worldwide, the patchwork of schemes designed to mitigate climate change has resulted in an unclear disclosure landscape across different countries. This patchwork causes problems:

  • because it is at odds with the global and shared nature of climate change;
  • because it results in variations in the quality, quantity and relevance of information disclosures;
  • because it prevents effective use of information by markets and stakeholders;
  • because it discourages disclosure as preparers are uncertain about what they should report and how to best meet user needs; and
  • because there are challenges that the framework can address.

Making the connection between disclosure and value creation

Increasingly, there is a recognition that value creation is correlated with disclosure of climate risk, greenhouse gas emissions and mitigation and adaptation activities. However, this recognition is not reflected in disclosures. CDSB believes that if more reliable and relevant information can be provided, it will increasingly be used by investors, business, regulators and other stakeholders to take fast and effective action to address climate change.

Challenges

Download the Climate Change Reporting Framework here.