Tag: climate risk disclosure

McKinsey looks at socioeconomic impact of climate risk

If you need a good scare, take a look at this study on climate risk from consultant McKinsey.  The study was the result of a year’s effort to measure the potential socioeconomic impact of climate change. As the risk of acute and chronic hazards intensifies, McKinsey assessed physical risk, looking at nine examples to illustrate the potential impact. Could this study focusing on socioeconomic impact have been one of factors driving BlackRock CEO Laurence Fink to put sustainability at the center of BlackRock’s investment strategy? (See this PubCo post.) According to the WSJ, “[c]limate crises in the next 30 years may resemble financial crises in recent decades: potentially quite destructive, largely unpredictable and, given the powerful underlying causes, inevitable. Climate has muscled to the top of business worries….Yet worrying about it isn’t the same as doing something about it.”  McKinsey suggests that climate change will “need to feature as a major factor in decisions. For companies, this will mean taking climate considerations into account when looking at capital allocation, development of products or services, and supply chain management, among others.” As the study asks, “could climate become the weak link in your supply chain?” The study makes plain that companies will need to think carefully about climate risk and its “knock-on effects” in considering, planning for and describing for investors the risks of their businesses. McKinsey also provides some questions for companies to consider in that regard.

Two SEC commissioners: Is the Reg S-K modernization proposal too principles-based? And why no climate change disclosure?

Yesterday, Commissioners Robert Jackson and Allison Lee published a joint statement to encourage public comment about two aspects of the proposal to modernize Reg S-K (see this PubCo post), released on August 8, about which they had some, uh, reservations. They both indicated their support for release of the proposal, particularly its focus on adding “human capital” as a disclosure topic, but—and it’s a significant “but”— they took issue with the proposal’s “shift toward a principles-based approach to disclosure and the absence of the topic of climate risk.”