FAQs: Statement on fiduciary duty and climate change disclosure

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1. What is the Statement?

The statement is a collective commitment by a leading group of companies and institutional investors to strengthen and align climate-related corporate reporting to the investment community through a common framework. It is also a call to action by them to other companies and investors to follow their example and scale the use of a leading-practice framework: the Climate Change Reporting Framework, or other comparable framework. More fundamentally, it is a recognition that, because climate change is beginning to affect economic activity in various ways, it has become a relevant matter for consideration by fiduciaries irrespective of how they view its moral or societal implications.

The Statement was launched on September 23 2014 at the UN Secretary-General's Climate Change Summit in New York. The full list of signatories can be found here.

2. What is the purpose of the Statement?

The purpose of this statement is to articulate:

1. A shared concern that financial markets do not take sufficient account of climate-related risks and opportunities relevant to future shareholder value due, in significant part, to insufficiently comprehensive and comparable climate change-related information in mainstream corporate reports;

2. A shared commitment by an influential initial coalition of companies and institutional investors to begin to produce and use such information in mainstream reporting through the Climate Change Reporting Framework or other comparable frameworks, whether or not required by current regulation. The expectation is that once this opinion-shaping coalition of first-mover firms and investors begins to report on a common and comparable basis to their investors, this will create a demonstration effect within the wider corporate and financial communities, and lead eventually to the scaled incorporation of climate-related corporate performance and risk considerations into routine capital allocation decision making within the financial system.

3. How can my organisation sign up?

If you would like to become a signatory, click here. You can visit the fiduciary page or e-mail for more information. You can also call the CDSB Secretariat on +44 (0)20 381 83939.

    4. What outcomes does the Statement seek?

    The desired outcome from this statement is the availability of more comprehensive and comparable information in mainstream corporate reports, which is used in decision making to allocate capital to optimize long term shareholder value and the environmental stability on which it depends.

    5. Why now?

    A number of key policy opportunities along with rising awareness on the issue has created a new urgency and renewed momentum for climate action including: 

    • International Agreement: The United Nations Framework Convention on Climate Change reached an ambitious new agreement on an international climate treaty in 2015, the Paris Agreement. This is an opportunity for companies, investors and stock exchanges to show demonstrable leadership on this issue outside of the formal inter-governmental processes.
    • Significant Legislative Momentum: The last five years has seen a significant increase in actual and prospective legislative measures across the world to require corporate disclosure of climate change-related information;
    • Financial Risks: To reduce their exposure to serious financial risks, investors need clear, comparable information from publicly traded corporations on the material risks and opportunities they face due to climate change. 81% of Asset Owners and 68% of Asset Managers recently stated they view climate change as a material risk or opportunity across their entire investment portfolio1. In 2013, 41% of the S&P 500 failed to address climate change in their 10-K filings despite the Securities and Exchange Commission (SEC) 2010 Interpretive Guidance on climate change disclosure2;
    • Efficiencies and innovation - Deutsche Bank Climate Advisors reported in 2012 that 89% of companies with high ESG performance ratings exhibit market based outperformance compared to industry peers3 and in 2016 Merrill Lynch highlighted that companies within the highest quartile of ESG tend to have lower future volatility and lesser price declines4;
    • Increasingly Extreme Weather: The impacts and economic losses of extreme weather have led policy makers and others to openly link increasing extreme weather to a changing climate. Between 2004-2014, there was an average of 335 major weather-related disasters per year around the world, costing an estimated $250 billion to the global economy annually5;
    • Strong Public Support: Public awareness and support as opinion polls highlight the importance of climate change and a growing concern. 90% of Europeans consider climate change to be a very serious problem and 83% of American respondents to the Yale Project on Climate Change Communication believe corporations and industry should be doing more to address global warming and encourage a clean energy economy.

    6. Who can sign the Statement?  

    Businesses, investors and investor groups are welcome to sign this statement. All signatories will have their name/ logos included on all communications related to the statement. Regulators and stock exchanges can also sign the statement as Statement Associates.

    7. What is the difference between the types of signatories?

    Companies: These are public companies listed on a stock market that are committing to produce climate change-related information in their mainstream reports on a common basis through the Climate Change Reporting Framework, or other comparable framework, whether or not required by current regulation.

    Investors: These are investment firms, asset managers, asset owners and similar who invest in companies through stock markets that are committing to make use of climate change-related information in companies' mainstream reports, whether or not required by current regulation.

    Investor group signatories: These are investor membership bodies that have signed up to support the statement to signal that the statement is in line with the membership body’s objectives as a whole.

    Statement associates: These are organisations that do not fit into either category above but want to publicly endorse the statement. This group includes government agencies, accounting membership bodies, service providers, NGOs and others.

    8. What is required in order to sign?

    The only requirement for signing the Statement is agreement to work towards the production and use of climate change-related information in mainstream corporate report as a matter of fiduciary duty. You can use the CDSB Framework (see “What is CDSB?” below for more information) or equivalent frameworks for this purpose.

    There is no cost associated with signing. No company is required to speak to the press. It does not mean that your organization supports any specific piece of legislation. 

    There are opportunities for signatories to take action beyond adding their name or logo. The CDSB Secretariat will contact signatories with opportunities for further engagement.

    9. Where will the logo appear and what format does it need to be supplied in?

    The logo will appear on the CDSB website, both in printed copies and on the web (as well as future iterations of the statement as more companies join in the future). It may also appear in other strictly statement related materials, both in print, virtual, and online, for informational or promotional purposes. However, the logo will never be featured outside of the statement’s context or for any other purposes. Additionally, the logo will also never be featured on its own. It will always be presented alongside the logos of other major signatories.

    The best format to have a logo in support of this statement is in high-resolution .eps or .jpg format.

    10. What are the opportunities for further engagement?

    There are opportunities for signatories to take action beyond adding their name and logo. None of these opportunities are mandatory. The CDSB Secretariat will contact you with opportunities for further engagement, including:

    • Spreading the message through social media and other online communications  
    • Issuing press announcements in support of the statement
    • Telling your own climate reporting story through blogs or op-eds   
    • Recruiting other companies, investors, stock exchanges in your networks to commit to the statement.

    11. Where will the Statement appear?

    The statement appears online at cdsb.net/fiduciary, as well as press releases, CDSB’s partner and board member websites where relevant. CDSB will continue to seek opportunities to highlight the Statement in as many venues as possible beyond the UN Secretary-General’s Summit and Climate week in September 2014.

    These announcements in New York mark just the start of a sustained program of activity running in parallel to the official climate change negotiations up to COP 21 in Paris 2015. It is our intention to publish the statement in the mainstream financial press ‎at an opportune time, allowing CDSB to showcase this remarkable multi-stakeholder commitment on climate change disclosure in mainstream corporate filings and a necessary instrument to accelerate changes in economic and financial market activity.

    Signatory logos will only be used in the context of the statement unless the CDSB Secretariat has received explicit permission for other uses.

    12. What is CDSB?

    CDSB is a consortium of business and environmental organizations formed at the World Economic Forum’s annual meeting in 2007. Its purpose is to jointly develop and advocate an international reporting framework for the integration of climate change-related information into mainstream corporate reports. Following the traditions of accounting and financial stability standards setters, CDSB’s work is designed to deliver the transparency and accountability needed for decisions to be made and capital to be deployed in support of a low carbon economy.

    Information deficit lies at the heart of market failure to take account of risk factors that threaten economic and social stability. These factors have been implicated in the financial crisis and are being remedied through the work of the Financial Stability Board, which aims to co-ordinate international standard setting in the interests of more effective financial sector policy. Similarly, CDSB’s mission is focused on developing climate change and environmental reporting standards.

    13. What is the CDSB Climate Change Reporting Framework?

    The Climate Change Reporting Framework sets out an approach to incorporating climate change related information into mainstream corporate reports. It adopts relevant principles from the existing mainstream corporate reporting model, including corporate governance and financial reporting principles. The CDSB Reporting Framework can be found here.

    The Climate Change Reporting Framework is designed to convey climate change-related information of value to investors in mainstream financial reports. Created inline with the objectives of financial reporting and rules on non-financial reporting, the CDSB Framework seeks to filter out what is required to understand how climate change affects a company’s financial performance. Building on the work of its Board members, CDSB seeks to standardize environmental disclosures through collaboration and by identifying and coalescing around the most widely shared and tested reporting approaches that are emerging around the world. CDSB therefore adopts relevant principles from existing standards and practices with which business is already familiar. Through a process of continuous improvement and collaboration, CDSB has developed its Framework and associated guidance material for use by companies when making disclosures in, or linked to, their mainstream financial reports about the risks and opportunities that climate change presents to their strategy, financial performance and condition.

    14. Who Benefits from CDSB’s work?

    Investors will be able to make informed and robust decisions based on clarity, confidence and trust in climate change-related opportunities and risks disclosed by a company.

    Analysts will be better equipped to utilize climate change-related information in determining impacts on future cash flow and ultimately company valuations. 

    Companies can use CDSB’s Framework to incorporate climate change-related information in mainstream financial reports, assisting companies in achieving a holistic view of how climate change can affect their performance and the necessary actions they could take to address the risks and opportunities.

    Governments can benefit from a standards ready Framework that can be adopted, adapted or referenced as a method of compliance with regulatory requirements on climate change reporting. Examples include guidance on carbon reporting requirements in the UK Companies Act and active consideration of the CDSB Framework as an internationally recognized scheme for non-financial reporting in EU Accountancy Directive revision. 

    Stock exchanges can adopt or incorporate features from their Framework in their voluntary and mandatory listing requirements.

    Accounting firms may use the Framework in support of assurance activities on climate change-related reporting.

    15. What is CDSB’s Governance?

    CDSB’s Board provides the strategic direction for CDSB’s work, encompassing the following organizations:

    • CDP (Secretariat)
    • Ceres
    • World Business Council for Sustainable Development
    • The Climate Registry
    • International Emissions Trading Association
    • Climate Group
    • World Economic Forum
    • World Resources Institute

    CDP (formerly the Carbon Disclosure Project) provides the Secretariat to CDSB and is responsible for coordinating the day-to-day work program on behalf of the global consortium. 

    A group of leading industrial and financial services companies together with governmental and non-governments representatives act in an advisory capacity. CDSB is currently seeking new advisory members. Contact us for more information. 

    A Technical Working Group formed of representatives of the major accounting firms and their professional bodies coordinates CDSB’s work programme with expert input from academics and specialist collaborators.