Audio Transcript Auto-generated
- 00:02 - 00:03
Thanks Doreen.
- 00:04 - 00:06
It's in every business is best interest to bake in
- 00:06 - 00:09
the risk of climate change to their business as usual.
- 00:09 - 00:12
Planning to provide more accurate information to investors,
- 00:12 - 00:15
stockholders and other shareholders.
- 00:15 - 00:17
This will also help sort of opportunities.
- 00:17 - 00:20
Early climate change is a long running negative for the economy,
- 00:20 - 00:23
but in the short run there are industry and regional specific
- 00:23 - 00:26
winners and losers created by the re pricing of certain assets.
- 00:26 - 00:31
That is why it's important for each institution to conduct its own analysis.
- 00:31 - 00:32
And climate disclosures
- 00:32 - 00:34
would help lead this.
- 00:34 - 00:35
Us institutions,
- 00:35 - 00:38
for example, are lagging well behind
- 00:39 - 00:42
this. Data comes from moody's analytics and shows
- 00:42 - 00:44
uh the U. S.
- 00:44 - 00:49
Uh number of US institutions that are incorporating climate change into uh
- 00:49 - 00:51
their corporate structures and analysis is
- 00:51 - 00:53
far behind international standards standards.
- 00:59 - 01:02
one benefit to companies is that it will increase investor sentiment
- 01:02 - 01:04
that each publicly traded companies.
- 01:04 - 01:09
Climate profile risks have been appropriately accurately assessed and managed.
- 01:09 - 01:13
This could strengthen their risk management proposals, protocols,
- 01:13 - 01:15
improve their strategic planning and help identify
- 01:15 - 01:18
areas of vulnerabilities throughout the business.
- 01:18 - 01:21
This could allow them to address any vulnerabilities that
- 01:21 - 01:23
could undermine the company's medium and long term performance.
- 01:23 - 01:27
Climate disclosures could also reduce the cost of capital or access
- 01:27 - 01:31
to new funding sources including corporate bond issuance tied to E.
- 01:31 - 01:31
S. G.
- 01:32 - 01:34
The market for sustainability sustainability linked bonds is
- 01:34 - 01:38
still relatively small compared to green bond market,
- 01:38 - 01:41
but it's growing sustainably sustainably linked bonds
- 01:41 - 01:43
can raise funds for any purposes but
- 01:43 - 01:47
costs for borrowers can increase if they fail to meet the goals laid out,
- 01:47 - 01:49
for example, cutting carbon emissions.
- 01:49 - 01:50
However,
- 01:50 - 01:53
climate disclosures by companies can highlight the progress they're making
- 01:53 - 01:54
and reduce the cost of capital.
- 01:59 - 02:00
There's also been research uh,
- 02:00 - 02:04
that climate disclosures have been translated into higher stock prices.
- 02:04 - 02:06
Uh, this could should not be surprising,
- 02:06 - 02:09
investors are a fickle bunch and don't like uncertainty.
- 02:09 - 02:12
A study done by boston University and Harvard show that in
- 02:12 - 02:15
the days following a shareholder induced disclosure of climate risks,
- 02:15 - 02:19
The disclosing firm stock price increased by 1.2
- 02:19 - 02:20
on average.
- 02:20 - 02:21
In other words,
- 02:21 - 02:23
companies that are already providing climate
- 02:23 - 02:25
disclosures are being rewarded by investors.
- 02:26 - 02:28
There are also benefits to society.
- 02:29 - 02:31
Universal climate disclosures would provide increased
- 02:31 - 02:33
transparency about the progress companies are
- 02:33 - 02:36
making towards addressing climate risk including
- 02:36 - 02:38
including reducing co two emissions.
- 02:38 - 02:38
Also,
- 02:38 - 02:42
these disclosures will create an incentive for companies to uh to
- 02:42 - 02:47
take definitive action if progress slows or isn't being implemented,
- 02:47 - 02:48
investors will respond.
- 02:49 - 02:51
Therefore the disclosures could accelerate progress towards
- 02:52 - 02:54
a stronger response to climate change, which benefits
- 02:55 - 02:55
everyone.
- 02:56 - 03:00
There will be costs of firms to incorporate climate disclosures disclosures,
- 03:00 - 03:04
but the benefits way outside the costs.
- 03:04 - 03:07
Climate disclosures could lead to changes in companiesboards.
- 03:07 - 03:09
There could be an increase in need for
- 03:09 - 03:11
to have a director with climate experience and could
- 03:11 - 03:14
be the creation of a new committee responsible
- 03:14 - 03:17
for collecting the company's climate data for its disclosures
- 03:17 - 03:19
and assessing progress they have made
- 03:19 - 03:21
towards achieving their climate related goals.
- 03:21 - 03:22
Also,
- 03:22 - 03:26
this committee could create be responsible for appointing an outside auditor.
- 03:27 - 03:30
Having Climate a climate committee on the board would also help address some
- 03:30 - 03:35
of the issues that were discovered after the Enron and Worldcom scandals.
- 03:35 - 03:35
For example,
- 03:35 - 03:38
climate disclosures will increase transparency
- 03:38 - 03:40
and accountability and appointing an independent
- 03:40 - 03:43
auditor would strengthen investors confidence in the accuracy of the data.
- 03:44 - 03:47
Climate disclosures is likely the first step towards a carbon tax.
- 03:47 - 03:52
Once uh, once the reporting is nailed down for climate disclosures,
- 03:52 - 03:56
it would be the logical next step to incorporate a carbon tax.
- 03:56 - 03:59
The most economically efficient policy approach to
- 03:59 - 04:02
address climate change is a carbon tax,
- 04:02 - 04:03
a tax on carbon emissions.
- 04:03 - 04:07
The economic logic of a carbon fee is straightforward,
- 04:07 - 04:11
since it would require carbon emitters to bear more of the cost of their emissions
- 04:11 - 04:13
and with that, I will turn it over to Mark.