G7 nations commit to mandatory corporate climate reporting
Published June 14, 2021
The G7 finance ministers have agreed to make climate reporting mandatory for public companies.
Chairing a meeting of the ministers in London in the run-up to the Cornwall conference, Chancellor Rishi Sunak said: “This is a truly historic agreement and I’m proud the G7 has shown collective leadership at this crucial time in our global economic recovery.”
The ministers gave their commitment to make it mandatory for corporates to report the climate impact of their investment decisions.
In November 2020, the UK became the first country in the world to commit to make corporate climate disclosures mandatory. Now G7 countries are to follow suit and make climate disclosures mandatory across their respective economies. The commitment will embed climate change considerations into corporate economic and financial decision-making on a near-global scale.
The commitment also means investors will be able to better understand how the companies they invest in are managing climate risks and base decisions based on this. It is hoped this will enable the global financial system to play a more effective role in the transition to net zero.
To make sure information is consistent across the G7, reporting climate change impacts must adopt a standard approach to reporting. The Finance Ministers also backed work by the International Financial Reporting Standards Foundation to develop a baseline global standard for high-quality sustainability reporting. The standard will be based on the TCFD framework and work of sustainability standard-setters.
The G20 are due to meet in Rome in October 2021. It is hoped ministers of the wider group will make the same commitment in time for the COP26 negotiations.
“If the G20 also adopt this, it’s not that we’ll suddenly have world system, but it’s a step in that direction,” said Jeremy Nicholson, corporate affairs officer at Alfa Energy. “Finance is international and investors are putting pressure on funds to follow this practice, so it’s likely this is going to spread quickly.”