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January/February  Volume 28, Number 1        

Climate-Change Disclosures Recommended

Publicly traded companies should disclose their climate-change risks and what they’re doing about them, says the Financial Stability Board. The Board, an international body that monitors and makes recommendations about the global financial system, includes members of the G20, government ministers and central bank governors of 20 leading economies.

In 2015, nearly 200 countries agreed to reduce greenhouse gas emissions and accelerate the transition to a lower-carbon economy in the so-called Paris Agreement. “Because this transition to a lower-carbon economy requires significant and, in some cases, disruptive changes across economic sectors and industries in the near term, financial policymakers are interested in the implications for the global financial system, especially in terms of avoiding severe financial shocks and sudden losses in asset values,” said the Financial Stability Board’s Task Force on Climate Change in a December 2016 report.

In its report, the Task Force urged publicly traded companies to disclose their climate-change risks. According to the report, “One of the most significant, and perhaps most misunderstood, risks that organizations face today relates to climate change. The potential impacts of climate change on organizations, however, are not only physical and do not manifest only in the long term.”

Climate-Related Financial Disclosures

The Task Force notes that, “In most G20 jurisdictions, companies with public debt or equity have a legal obligation to disclose material risks in their financial filings—including material climate-related risks. The Task Force believes climate-related risks are material risks for many organizations…” It recommends that these companies include climate-related financial disclosures in their public financial filings. These filings should include information on governance, strategy, risk management, and metrics and targets related to the effects of climate change on the organization.

Failure to disclose information that could affect investors can lead to lawsuits against directors and officers. We can help you mitigate your directors and officers liability risks—please contact us for more information.

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In this issue:

This Just In...

2017: The Year of the Cyber Attack

Don’t Get Shaken by Lack of Earthquake Coverage

Service Animals, Assistance Animals, Therapy Animals—What’s the Law?

Climate-Change Disclosures Recommended



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