mended that climate-related financial disclosures be included in companies’ primary financial filings. “The Task
Force believes climate-related risks are material risks for
many organizations, and this framework should be useful
to organizations in complying more effectively with existing disclosure obligations,” it said. It released results of a
60-day public consultation about the recommendations on
Apr. 18, and intends to make final recommendations at July’s G20 Leaders Summit in Hamburg.
Ignores US standard
But Brian O’Shea, senior director at the US Chamber’s Center for Capital Markets Competitiveness, said the proposal
actually recommends moves to accelerate a global transition to a low-carbon economy instead of providing material information to investors. This does not recognize the US
standard for doing this, which has existed for 4 decades, he
noted during the May 6 discussion. “Without this, investors
could be inundated with excess information,” O’Shea said.
He said FSB’s recommendations also underestimate
voluntary climate reporting by 80% of US publicly traded companies, which publish such information separately
from their financial results. “Requiring this to be in their
filings with the Securities and Exchange Commission
could open the door to class action suits,” O’Shea warned.
A fourth speaker, J.W. Verret, an assistant professor at
George Mason University’s Antonin Scalia Law School, said
FSB proposed climate-related financial risk disclosure requirements that are based on future possibilities that cannot be grafted onto US securities laws that are based on
“US accountability principles are incompatible with
what the FSB is considering,” Verret said. “Litigation risk
would be a serious problem. Companies would be caught
between a rock and a hard place, trying to predict weather
5 decades into the future.” US companies now make safe-harbor statements acknowledging that climate change and
other nonfinancial factors can affect future financial results, but the potential impacts cannot be reasonably calculated now, Verret said.
“The energy industry makes up one third of this coun-
try’s total capital investments,” said Karen A. Harbert,
president of the US Chamber’s Institute for 21st Century
Energy, who moderated the discussion. “Any changes in US
disclosure requirements would have a real impact.”
The IHS Markit report found that the taskforce’s rec-
ommendation would undermine FSB’s goal of improving
capital allocation decisions and market functions. “The
linkages between climate-related indicators and financial
markets are complex and uncertain, and users could not
consistently deduce the scale, timing, or even direction
of climate-related financial risk from this information,” it
The IHS Markit report said the FSB taskforce’s proposal:
MMbtu), and the US is keen for a slice of the pie,” he said.
The deal paves way for a second wave of US LNG investment in the longer term, Di-Odoardo said. “Developers will
now be able to target Chinese buyers directly, potentially
supporting project financing. It could also support direct
Chinese investment into liquefaction and upstream developments on US soil,” he said.
The agreement also increases the pressure on competing suppliers, including LNG projects from Australia, East
Africa, and Canada, as well as pipe and LNG projects from
Russia, the analyst said. “It also undermines the niche that
portfolio players, such as Shell, BP and Total, have found
playing the middle man between US LNG exports and Chinese imports,” he said.
IHS report questions climate-related
financial risk disclosure idea
Encouraging countries to make publicly traded companies
disclose climate-related financial risks, as proposed by a Financial Stability Board (FSB) taskforce in December, could
distort markets and confuse investors instead, an IHS Markit
report warned. The consequences could be especially troublesome for oil and gas producers, speakers agreed during a
May 16 discussion of the issue at the US Chamber of Commerce.
“Some parts of this could help investors comprehend
risk related to climate change. Others would create confusion. The proposal’s materiality recommendations could
start to turn an important financial regulation aspect into
climate management,” said IHS Markit Vice-Chairman
Daniel Yergin, one of the report’s co-authors.
Capital and assets could be misallocated if countries
adopt FSB’s proposals, said a second co-author, IHS Markit
Vice-Pres. Andrea Bullard. “It’s up to managements and
boards to determine what information is material. The FSB
proposal assigns a special status to climate-related risk and
recommends making it a financial disclosure requirement,”
FSB was established in April 2009 by the G20 Countries, a group of 20 nations representing about two thirds
of the world’s population, 85% of the global gross domestic product, and more than 75% of total global trade. It
launched an industry-led Task Force on Climate-Related
Financial Disclosures in December 2015 to develop recommendations for consistent, comparable, reliable, clear,
and efficient climate-related disclosures by publicly traded
In its Dec. 14, 2016, proposal, the taskforce recom-