The atmosphere for climate-change disclosure

Introduction

In January 2020, the CEO of the world’s largest asset manager stated, "...we will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them."

Adding to BlackRock’s ask of companies, State Street Global Advisors has stated that “Beginning this proxy season, we will take appropriate voting action against board members at companies in the S&P 500... that are laggards based on their R-Factor scores and that cannot articulate how they plan to improve their score."

Also, in January, at the World Economic Forum annual meeting in Davos-Klosters, world leaders focused on the theme of a cohesive and sustainable world. The World Economic Forum Global Risks Perception Survey 2019–2020 set the stage reporting that "Severe threats to our climate account for all of the Global Risks Report’s top long-term risks."

These and other developments have shone a spotlight on ESG performance and disclosures specific to climate-change. It is important for boards and audit committees to be aware of the increased focus being placed on climate-change disclosures and determine how best to exercise their oversight role to respond to this focus.