Many in the community Eli slums in twit and blog about Exxon, about climate risk and recent attempts to force fossil fuel companies to confront the risk to their business of climate change. At the Exxon stockholders meeting just last month a motion to that effect failed with 37% of the voting shares being in favor. That is an outstanding shot across the bows of Exxon management, 37% means that many significant economic players have come over to the side of yeah, climate change is not only a risk to people, but also our money, but there is more.
Now some, not Eli to be sure, who might not be paying attention, indeed Eli was not, but the Bunny was at a recent seminar on the economic issues of climate change with some of the high and mighty holding forth, and they kept coming back, one might, only might say smugly, to three letters of the alphabet, FSB and the Bloomberg Committee.
Eli sat up bolt upright because he thought that there were four letters FASB, the US Financial Accounting Standards Board, basically the guys who killed defined benefit retirement by making the costs appear out to infinity on any employer who offered one. They also trashed the Bunnies retirement health insurance plan for the same reason. Were they taking an interest in meeting the accounting challenges of climate change? Big news if so (and this will require looking into)
But no, this is the Financial Stability Board, a construct of the G20, more exactly the Finance and Treasury ministers of same the G20 being the 20 most economically important countries in this Galaxy (Eli thinks that astrobiology is a crock). The FSB was formed after the recent 2008 economic meltdown
The FSB promotes global financial stability by coordinating the development of regulatory, supervisory and other financial sector policies and conducts outreach to non-member countries. It achieves cooperation and consistency through a three-stage process, including monitoring implementation of agreed policies.and as a creature of governments and especially the finance ministries of governments it is not to be sneezed at. The FSB IS concerned with how the threat of climate change to economic stability
Policymakers have an interest in ensuring that the financial system is resilient to all forms of risk. In April 2015 the G20 asked the FSB to consider risks related to climate change and in November the FSB proposed the creation of an industry-led Task Force to develop recommendations on climate-related financial disclosures. Appropriate disclosures are a prerequisite for financial firms not only to manage and price climate risks accordingly but also, if they wish, to take lending, investment or insurance underwriting decisions based on their view of transition scenarios.Just what the activist shareholders are trying to drag the fossil fuel companies to, and they are resisting. The task force was put together in December 2015, and Michael Bloomberg is the chair.
That should cause some bunnies to sit up in their seats.
A first report on the lay of the land has already been published (more later) and
During the second phase, the Task Force’s work will focus on delivering specific recommendations for voluntary disclosure principles and leading practices, if appropriate, with a view to issuing a report for public consultation by end-2016. As part of its work the Task Force will conduct public outreach to engage a wide and varied range of stakeholders as it develops its recommendations.The intent of the FSB can be read in the next paragraph
The work of the TCFD builds on the successful work of the Enhanced Disclosure Task Force (EDTF), which was created to provide recommendations on developing more effective bank risk disclosuresand that is what the TCFD is about
The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders. The Task Force will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries. The work and recommendations of the Task Force will help firms understand what financial markets want from disclosure in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors’ needs.Stress tests for Exxon bunnies and voluntary is likely to become not optional real quick as governments implement the rules.