- Investor Watch -

UK-listed companies and global finance under pressure to account for climate change

Published March 31, 2020

UK-listed companies and global finance under pressure to account for climate change.

Pressure continues to grow for both FTSE index companies and the global finance sector to take into account climate change and wider sustainability issues in their reporting and decision-making. 

The UK’s investment industry trade body, the Investment Association, has given companies three years to explain in their annual reports how they plan to measure and manage the threat of climate change. The IA recently revealed that only 30 companies on the FTSE 100 had implemented the TCFD recommendations.

Meanwhile, research by ShareAction found half of the world’s largest asset managers are failing to adequately incorporate environmental and social considerations in their investments. The research found that 38 of the 75 finance companies were neglecting to consider such issues.

The IA has instructed all listed companies in the UK to comply with standards set by the Task Force on Climate-related Financial Disclosures (TCFD) by 2022. The TCFD is a risk-assessment framework launched by the Financial Stability Board in 2015 to develop recommendations on climate-related disclosures.

The IA’s director for stewardship and corporate governance, Andrew Ninian, said:

“Climate change could result in a significant loss of value in companies if risks are not effectively measured and managed, ultimately hitting savers’ pockets. Companies need to be looking at the impact of climate change on their business, products, and strategy and set out to investors how they are responding to these risks.”

Six of the world’s largest asset managers, including BlackRock and State Street, were among the worst performers. US firms scored far worse than their European peers. All the companies studied are members of the UN-backed Principles for Responsible Investment, and 75% have joined the Climate Action 100+ initiative.

“While many in the industry are eager to promote their ESG credentials, our analysis clearly indicates that few of the world’s largest asset managers can lay claim to having a truly sustainable approach across all their investments,” said ShareAction senior analyst Felix Nagrawala.

Tags Andrew Ninian BlackRock Climate Change Felix Nagrawala FTSE FTSE Index Global Finance ShareAction TCGD