Net Zero Commitment – Is Malaysia in the lead?

 Photo courtesy of Pexels, for illustration purposes only

Introduction

A few years ago, Malaysia was under the radar due to human rights issues. However, things are starting to change – with strong adherence to global standards as part of the country’s approach to address the ‘Social’ aspect particularly in dealing with labour standards. It is anticipated that Malaysia is setting its path on the right track under the ‘Social’ aspect particularly with the aim in reducing reliance towards foreign labour from enhanced digitalization and automation, moving forward. 

Now that we have some assurance that the ‘Social’ aspect is heading twards the right direction, the next question is – how about the ‘Environmental’ aspect?

Climate Ambitions

‘Environmental’ aspect is broad but for the purpose of this article, let us narrow it down to the current focus under the Environmental aspect i.e. Climate Change.

There are a lot of discussion around the topic, but one clear response to it for companies across industries is the establishment of Net Zero pathway; a complex and challenging subject for all, globally.

Amongst ASEAN countries, to date, Malaysia has seen to be having the clearest and comprehensive approach towards Net Zero. Neighboring countries such as Thailand and Indonesia have committed to achieve carbon neutrality by 2050 and 2060 respectively, while other ASEAN nations that mostly establish aspirations to the overall Sustainable Development agenda and reduction of greenhouse gas emissions – not specifically on Net Zero.

There is however, a similar trend across ASEAN in regards to the view on Net Zero as a response to combat climate change and emissions. As an example, Malaysia had made a stance to abstain from constructing new coal power plants and at the same time accelerating the retirement of existing coal capacity. Similar approach is being taken with countries such as Thailand, Vietnam and Indonesia that aim to diminish reliance on coal and increase investment in greener and sustainable energy alternatives. 

Based on the report on ASEAN countries Energy Transition Index (ETI), which benchmarks countries performance on their energy infrastructure and systems, and their readiness towards transition to greener and sustainable energy, there is a clear distinction with the ASEAN countries rankings.

Even as a developing country, Malaysia is ranked higher than the southern neighbor, Singapore, which is one of the developed nations and more economically advanced.

One of the observations made was that countries are challenged with the issues of investments in renewable energy (RE) being economically limited and moving at a slow rate. Eventually, and as based on historical data, there is projected reduction in Renewable Energy costs and the return on investments (ROI) surge from Renewable Energy, this would address the current challenges and would eventually scale up such investments. However, we need to note that there is also current contractual obligations from traditional power producers that is unavoidable, but critical to shift towards transition.

Governments would need to step up to facilitate the transition and industry is expecting governments to chart pathways and roll out policies and frameworks to enable the same. For Malaysia, the government had recently issued roadmap on energy transition called the National Energy Transition Roadmap.

National Energy Transition Roadmap

Research shows that nations that have sound ESG and climate agenda tend to create positive impact on foreign investment (FDI) through enhancing its attractiveness via mitigation of medium and long-term risks linked with ESG risks across all aspects. With investors have started to demand ESG criteria integrated into their investments mandates, nations that are aligned on adhered to global signatories or standards such those under the United Nations, would be deemed more attractive  to investors that set ESG compliance within their investment practices. This trend have grown rapidly in recent years and is forecasted to continue.

On 27 July 2023, Malaysia’s Minister of Economy launched the Part 1 of the country’s National Energy Transition Roadmap (NETR 1). Subsequently, on 29 August 2023, Malaysia’s Prime Minister launched the expanded and complete National Energy Transition Roadmap (NETR), which expands on NETR 1. The NETR sets Malaysia’s aspiration of accelerating the nation’s energy transition and sustainable growth agenda. It establishes a pathway to transition the national energy mix, reduce GHG emissions, generate significant investment and employment opportunities, and promote a just and responsible transition.  The NETR identifies 6 energy transition levers to facilitate Malaysia’s transition to clean energy, and outlines the Malaysian Government’s 10 flagship catalyst projects across these levers. The 6 levers are: (i) Energy efficiency, (ii) Renewable energy, (iii) Hydrogen, (iv) Bioenergy), (v) Green mobility, and (vi) Carbon capture, utilization and storage. The expanded NETR outlines 50 key initiatives and five cross-cutting enablers, in addition to the 10 flagship catalyst projects unveiled in Part 1.

Early in 3Q2023, the Malaysia government expedited the implementation of the NETR, to progressively and structurally transition Malaysia from dependency on fossil fuels towards greener alternatives. The implementation will be done across 10 pilot projects with an estimated cost of over RM620 billion. 

The high cost invested is due to NETR that stretches over long-term, but there is potential foreign investment will be made to scale up the NETR substantial implementation deliverables. NETR will place Malaysia at the forefront in green manufacturing within ASEAN Foreign participation and will note only enable Malaysia to reach its climate goals, but also become the green manufacturing hub within the ASEAN region.

As Malaysia strive towards Net Zero, in line with the structured execution of the NETR, there is potential for the country to tackle simultaneous issues it faces a weak currency and declining foreign ownership particularly in the equity market. This is direct impact from NETR that would enable the restructuring the economy and also ensuring strong and sustainable GDP growth in years ahead.

Conclusion

Malaysia is currently seen as a leader in the ESG and this includes on the climate agenda. NETR shall further elevate the country’s position to be amongst global peers and this too will set the expectation for local companies to pursue its own climate agenda and ambition.

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation  

Read more →

What is the Role of Internal Audit in ESG?

 

 Photo courtesy of Freepik, for illustration purposes only

 

Introduction

Environmental, Social and Governance (ESG) has now become integral in business strategies and operations. It is no longer a nice-to-have agenda for companies. ESG contributes towards value creation, in both financial and non-financial aspects.

Acknowledging this, is important, but we need to also take account that ESG also recognizes a new risk type i.e. Sustainability Risks. Companies are still strengthening internal processes towards managing Sustainability Risks and this includes enhancing its governance structure, strategies, business goals, initiatives and also on disclosures.

Sustainability Risks (and opportunities) are relevant for both businesses and operations, and sit across companies’ functions. That is why, having a robust structure with clear roles and responsibilities across the three lines of defense is imperative, to ensure ESG is managed holistically and aligned with overall business model.

One of the questions that has been discussed lately is – what is the role of Internal Audit in ESG?

But before that, there is a need to reiterate the importance of ESG for stakeholders.

 

Stakeholder pressure – regulators and investors as main drivers

 A robust and holistic ESG strategy and roadmap has now become essential to address regulatory requirements and stakeholders expectations. ESG strategy and roadmap also serves as competitive advantage, and catalyst for overall value creation. Companies are constantly under the scrutiny of regulators on the ESG resilience in addressing the evolving changes and requirements over short, medium and long term. On top of that, stakeholders are expecting clearer and more meaningful alignment of ESG strategy and roadmap with companies long term corporate strategy. Internally, stakeholders namely employees, are setting higher standards on the Sustainability agenda at organisations they are working with, that would impact talent recruitment and employee satisfaction.  One thing to note here is that, the primary source for stakeholders to understand on a company’s ESG strategy and roadmap, is through reports and disclosures.

  

Internal Audit’s Role in ESG

Internal audit is now becoming more and more critical in ensuring quality of ESG disclosures as a whole, as they can provide objective assurance and advisory pertaining to the credibility of ESG data and information. As with financial reporting, the independent and objective assurance that internal audit can provide should be an integral part of a company’s ESG disclosures.

 

Sustainability Assurance

·         Sound and robust ESG disclosures require maturity in ESG systems and controls and internal audit should be one of the very first parties to have oversight prior it goes to external third party auditor

·         Internal audit should always aim for ESG disclosures to be based on metrics that are relevant, accurate and consistent that would benefit the stakeholders and organization

·         Internal audit should embed ESG into regular periodical audit plans and should be business-as-usual

 

Sustainability Advisory

·         Assess scope and areas that are less well-defined and build an ESG control environment towards meeting regulatory expectations and industry best practices

·         Propose ESG reporting metrics (internal and external reporting) and data management processes, to ensure the coverage of meaningful and accurate ESG data for the organization and its stakeholders

·         Advise for better ESG governance to ensure organization has relevant synergy across departments and functions

 

Conclusion

Internal audit should by now looks beyond identifying risks and controls in place. There is a need towards integrating ESG within the scope and methodology, and there must be linkages towards organization strategy, risk management and governance structure to facilitate internal initiatives, programmes, KPIs, controls as well as infrastructure are effective towards supporting organisations’ ESG agenda.

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

 

Read more →

Green Talent – key towards net zero

 Photo courtesy of, freepik for illustration purposes only

In the previous article, we talked about why a company culture is important in the overall ESG agenda. Now, let’s talk a little bit more specific. What is the role of the workforce on the current ESG buzzword i.e. climate and net zero.

Companies need to understand that Human Resources (HR) play a key function to ensure a successful business transition towards net zero.

The race towards net zero and the greening of the economy has started and will continue to have significant impact on the on employment and the required skillsets. Just like other capitals, investments in human capital in building a talent pool of green skills is important towards enabling a company to transition towards low-carbon, resource efficient and green operations.

Green skills do not sit within a specific sector. It covers a broader spectrum where it applies to a wider set of current functions and management levels. Currently, the industry is witnessing a ‘green enrichment’ job descriptions where skillsets and knowledge related to ‘green’, net zero, low-carbon, green products, renewables and many more, are becoming a common requirement.

On top of that, the industry is also seeing new emerging jobs catered for green skillsets especially in the area of renewable energy and energy efficiency and green technology.  

Green skills should also be supplemented with generic skillsets such as stakeholder engagement, adaptability, risk management and problem solving as these skillsets required by a green talent.

The demand for green talent is on the rise and the competition is stiff. According to multiple studies, the scarcity of green talent is across all industries and sectors. For instance, a recent survey from Funds Europe highlighted that more 70% of financial services firms viewed that they are facing ESG skills shortage, and only a small minority of firms (13.5%) are providing training on the risks resulting from climate change, which exacerbates the challenge.

Without a doubt, HR must up their game towards building the required skillsets and capabilities of green talents as this will ensure sustainable succession planning to meet companies’ green transition.

Some of the practical steps to be taken as guidance are as follows:

 

Green Talent Competency Assessment

HR needs to have a clear definition of the requirement criteria for green skills and knowledge in order to conduct a strategic and purposeful green skills competency assessment. There are a few frameworks out there such as the one developed by Bursa, that could guide HR to develop the sets of criteria specifically for green (and overall Sustainability) talents, but HR needs to further refine based on the company’s business model and its green ambitions and goals.

 

Green Talent Roadmap

HR should craft a structured resourcing plan including talent up-skilling pathways for identified employees critical for moving the green agenda of the company. This resourcing plan should be approached from within the company (internal) and from outside of the company (external) e.g. identify key employee groups, retain and attract green talent with green skillsets.

 

Green Talent Capability Building

Employee development should be an on-going process by leveraging on vocational education, training modules, learning programmes, green certifications, as well as on-the-job training to develop and strong talent pool with green talents and succession planning. This should be across different levels i.e. awareness, fundamentals, intermediate and advanced.

 

Monitor and Respond

The initiatives to up-skill the green talents need to be monitored in terms of its effectiveness. Are they meeting the requirements for a specific function? How is the participants’ feedback? Is it enough? Is it too basic? Are there any other new programmes that need to be rolled out? Does the overall plan need to be revamped? These are some of the questions HR needs to monitor and to eventually respond in order to address any gaps and improvement plans to ensure successful execution of develop green skillsets.

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

Read more →

Why company culture is critical for ESG

 

Photo courtesy of Freepik, for illustration purposes only

 Company culture; is something that is not easy to change and manage. But it is common understanding that it determines the enabling success of a company towards achieving its goals and aspirations, including for Environmental, Social and Governance (ESG) agenda.

Human Resources (HR) has a huge role to play in ESG; not merely by providing data for annual Sustainability Reporting, or driving Sustainability-related programmes for the workforce. Even though that ultimately the ESG agenda would most likely come from the Chief Executive Officer or the Chief Sustainability Officer, HR has the potential to ‘make or break’ the whole ESG agenda of a company through culture change of the company to embrace ESG and its objectives.

The fact that we need to understand – building any culture within the organisation is not easy, especially ESG culture. To begin, culture building must begin with the organisation’s authentic identity. What it means by ‘authentic’ is that it must not be based on borrowed or aspired clichés. Therefore, each organisation’s approach on ESG should be unique and integrated in its own context of ambition, and its key internal and external stakeholders’ expectations.

Employees should also have the say in deciding how aspirational they want ESG outcomes to be and how strategy needs to be developed and executed to achieve them. Do they want to be ESG leaders, or followers? Do they want to go beyond regulatory requirements? Each employee functions would have various views and all should be taken as important as the direction being set at the top level. Hence, it is important for organisations to factor in material views and align with the overall short, medium and short term ambitions.

But organisations also need to be abreast of immaterial views that may mislead towards achieving the intended outcomes. Communications is key where effective communications on the oragnisation ambitions should be made accessible and sufficient, where the tone at the top should be set and committed. Various ways can be adopted and with multiple channels to cater to the needs of the stakeholders for engagement whether informally or formally.

To embed an ESG-centric culture, it is important that key behaviours are ingrained across the organisation. This revolves around the materialisation of adopting characteristics and mindsets of long-term focus, collaborative approach, accountability and resilience. This is due to the fact that ESG is constantly evolving and requires prompt adaptation for organisations. With these characteristics, organisations can ensure the transition to an ESG-centric culture is achievable and sustainable.

 

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

 

Read more →

Role of Treasury in ESG

 

Role of Treasury in ESG

 

Photo courtesy of Freepik, for illustration purposes only

 

Introduction

Sustainable Finance is widely known as the consideration of environmental, social and governance (ESG) factors into financing (including investing) and decision making processes. For the financial sector, ESG factors, which are broad in scope, have not been traditionally part of standard financial analysis. However, now, more than ever, ESG integration into financial analysis has not only become relevant, but critical.

 

The difficult first step

Regardless of sector or region of operations, ESG integration into business model has always been a challenge. Unfortunately, for treasure, this is even harder. This is because treasury is partly tied to the organisation’s policies which means ESG integration into the treasury functions are not 100% control by treasury directly.

However, there are a few key initial steps that worth to be taken; and it can start with an acknowledged framework that maps the potential contributions of treasury to ESG factors and guides its integration, and this can be based on a few established frameworks that can meet the above objective.

But, there hurdle here is; what framework to adopt as the regulations and standards are still unaligned globally. One of the ways to approach this is to adopt the common and most widely accepted framework such as the United Nations Sustainable Development Goals (SDGs). This shall enable clear linkages to the goals that contribute to each and/or combined elements of ESG. Another option is the green, social, and sustainable bond principle frameworks of the Climate Bond Initiative (CBI).

By adopting these frameworks, it provides guidance and directions to evaluate ESG eligible project financing.

Contributions of treasury to ESG

Green financing is not the only way corporate treasury can contribute towards supporting sustainability. In terms of its operations, sustainability can be achieved through digitalisation in its processes, record management and bank statement management. Innovative technologies like robotic process automation, blockchain, and artificial intelligence should also be implemented to increase efficiency in an ESG friendly ways. These initiatives will cover the environment impact of sustainability. In terms of social, corporate treasury should encourage diversity, equity and inclusion by providing equal opportunities for everyone and creating an inclusive working environment.

On top of that, the role of treasury can be further more extensive. Firstly, treasury can set ESG-related requirements to be met by new business partners. Secondly, for existing business partners, treasury can create advocacy and awareness for them towards complying with these requirements. Treasury can also build credible relationship with credit rating agencies focusing on the areas of ESG.

A structured model should be established and implemented to ensure an effective integration of ESG in treasury. This model should include a clear overview of potential treasury contributions to ESG factors, once they have been selected, and the building blocks needed to achieve those contributions.

 

Monitor and Measure

It is important that the progress of ESG integration in treasury is monitored and tracked in a structured manner and also using credible metrics and benchmarks. However, we need to acknowledge that development of metrics and benchmarks for ESG integration tracking is still in the nascent stage and it comes with some complexities, in terms of identification of types of indicators, as well as standardization. Nonetheless, it still can be done effectively with consideration of a few key approaches.

First and foremost, it must be made clear on the mapping of each treasury contribution, and this should be done separately. From here, metrics and benchmarks need to be developed separately for each contribution based on materiality to the company and stakeholders. Apart from that, the metrics and benchmarks should always be updated as the ESG integration matures so there will be efforts towards improvements.

Examples of product offerings and operational metrics and corresponding benchmarks are:

·         Assessing external review of Sustainable Financing framework to measure the perceived the ESG elements of financing

·         Tracking digital workflows, through a digitalised form processing and records ratio

·         Measuring  the increase in output of a processes in place to monitor the effectiveness of technological innovation

 

Conclusion

ESG as a whole is constantly evolving, and so is the role of treasury in ESG. It is important for the treasury team to keep up to date with the latest development of ESG, particularly on Sustainable Finance as well as how operations c

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

 

 

 

Read more →

Sustainable Finance – It is here to stay. Here’s why.

 Photo courtesy of Freepik, for illustration purposes only

Introduction

Back then, it is known that investors focus mainly on financial returns, regardless the impact their investments have on society and the environment. Now, it is a different story. Environmental and social issues continue to be the main highlights of today’s news globally and there is a significant rise of interests made from stakeholders including the investors. 

Apart from that, in many case studies, sustainable funds are observed to be outperforming conventional funds, such as during the covid-19 pandemic period. So, this creates a win-win opportunities situation for investors to reap financial return and at the same time do good for the society and environment.

 

What is Sustainable Finance?

The short definition of sustainable finance is investment or financing that considers environmental, social and governance (ESG) factors into account on top of financial returns. Terms such as green financing and also social impact financing also constitute the sustainable finance spectrum; the former is related to finance activities that stimulate economic growth while simultaneously reduce environmental risks and impacts, and the latter is related to the positive impact created in regards to specifics group of the society.

 

Why is it a big deal?

The struggle to combat climate change impacts varies from ecosystem and biodiversity restoration as well as how we manage natural resources. But this is not enough. Sustainable finance can be the answer to get the win over climate change impacts. Globally, the economy requires up to USD800 billion each year to mitigate the climate crisis by 2030. This is a huge amount. Thus, private entities and public entities around the world have to collaborate on the sustainable finance agenda.

Financial institutions are the key players when it comes to sustainable finance through capital allocations towards sustainable projects and programmes. Financial institutions can provide critical financial support for companies towards sustainable investments and operations.

The role of financial institutions in sustainable finance has been on the rise. On top of that, there is a growing trend for companies to come up with business strategies and commitments that are linked to sustainability i.e.to create positive impact on the environment and society. This results in rising demand for investment through sustainable finance.

Though financial institutions have a vital role to play, sustainable finance initiatives also depend on the involvement of non-profit organisations (NGOs), regulators, investors and governments. Innovation for sustainable finance product offerings depend highly on the alliance of all these entities.

 

Companies are getting serious with sustainable finance

Sustainability in general, brings significant values for companies. Furthermore, there has been greater expectations from employees, to investors, clients, and regulators towards the integration of ESG factors into business model.

Employees demand for a more sustainable business working environment and operations, especially the younger workforce where sustainable values on top of attractive packages are core for them to stay with a company. On top of that, employees also want to affiliate working with companies that invest in projects and programmes through the funding from sustainable finance.

Investors and clients also want to move towards ‘greener’ portfolios where financial returns would also come with positive environmental impact. They want that ‘added’ value so they know they are making a difference in this world.

Regulators all around the world are becoming more and more aggressive in setting their expectations across all sectors to adopt sustainable business.

All of this means that, there is both opportunities and risks elements of sustainability integration for companies which indicates that sustainable finance is important for key and external stakeholders for a company.

That is why, sustainable finance is here to stay.

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation  

Read more →

The Main Challenges in Climate Reporting and How to Tackle Them

 Photo courtesy of Pexels, for illustration purposes only

Companies have been disclosing on how their operations impact the climate and this information is easily accessible in companies’ websites and public reports. But, what about the information regarding the impact of climate risks to companies? Recently, this topic is being discussed at a greater length and the demand for companies to disclose it has risen. This is due to the fact that the direct physical impacts of climate change risks are exposing companies’ operations to complex operational risks. On top of that, this demand is also driven by the indirect and transition climate change impacts, including introduction of new policies and regulatory requirements to shift towards a low carbon economy, as well as changes in customers demand on product and services that are more ‘climate friendly.

Reporting on the impact of climate risks to operations represents how the company is both managing the risks as well as creating business opportunities for the sustainability of the business.

In response, stakeholders are demanding for greater transparency on the climate impacts on companies’ financial performance, including future performance.

Adoption of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) recommendations is also increasing, and we are seeing this across the world. The recommendations of TCFD have been driving companies to enhance the holisticness of climate disclosures. The TCFD sets out a framework that enables companies to disclose their climate risk profile and integrate it into mainstream filings. This information provides regulators and investors with a meaningful climate-related risk information to better assess how companies manage climate change impact and how they respond over short, medium and long term.

 

TCFD – Current Progress

The TCFD recommendations are widely accepted by organisations from various sectors, including investors, associations, as well as policymakers. All have expressed full support towards the adoption of the TCFD recommendations.

However, the implantation of the TCFD is deemed as the main challenge, from getting started to improvements the adoption. CDP and Marsh & McLennan Companies’ Global Risk Center in its research has reported that the implementation challenges faced by organisations include the following three key areas:

·         Securing leadership buy in for a wider approach to climate risks

·         Overcoming siloed risk-management processes

·         Limited experience with climate change scenario analyses.

 

Securing leadership buy in

The Board and Management need to properly define and evaluate the impact of climate risks to the balance sheet of the company. In order to do so, Board and Management should expand their horizons of their considerations towards climate related issues and trends. It is reported that more than 80% of companies’ Board provide oversight on climate issues. However, it also reported that only 10% of companies actually incentivise Boards to prioritise climate risks, and even lower percentage of Boards consider climate risks as a top 5 risks affecting the company within the next 5 years. This clearly contradicts with the -Global Risk Report by the World Economic Forum which ranks climate- and environment-related threats as the most likely and most damaging over the next decade. 

 

Risk management are working in silos

Conventional risks can be easily isolated and addressed with standard risk-management process, and this will not pose much issues to a lot of businesses. However, it is a totally different ball game when it comes to more complex risks embedded in interconnected systems, such as nature-related risks and climate risks including on risks pertaining the transition to a low-carbon economy.

Climate risks for example, are now considered one of the biggest risk topics being discussed. According to CDP, only 34% and 28% out of more than 1,500 companies, respectively, are linking physical risks and regulatory and transition risks associated with climate change beyond six years.

For investors, organisations and other stakeholders that are assessing the mid- or long-term view, limited and short-term climate change impact analyses will not be adequate in providing them with robust information on potential direct physical and transitional risks from climate change.

This is certainly a complex issue. On top of that, another research has found that the complexity also rises from the lack of stadardisation and clarity on risk definitions, as well as which function within the organisation that is accountable to manage them. Climate risk management should not fall under under the sole responsibility of one individual or a function which in many cases – the sustainability team. Responding to climate risks will require broad ownership, understanding and collaboration across the organisation on climate risks and opportunities and how they relate to financial impacts in the long run.

 

There’s not much experience and cases on climate change scenario analysis

Based on TCFD’s recommendation, companies should describe the potential impact of different climate scenarios, including a 2-degree Celsius scenario, on businesses, strategy and financial planning.

The fact is, companies encounter a lot of challenges and potential barriers in translating climate scenarios to integrated financial analysis. Various types of climate scenarios and widely varied outcomes result uncertainty to determine which climate scenarios are appropriate to use and to translate into meaningful financial impact analysis. Currently, the developed climate scenario models were established mainly for academic and economic use cases, but not financials. Existing scenarios require input and judgment from experts across the organisation but the other challenge is that for many cases, the process involves a lot of very educated guesswork and not everyone guesses in the same wavelength as others.

Companies are required to find ways to integrate the analysis into current strategy and scenario planning and risk assessment. Subsequently, companies are required to provide linkages of the scenario impacts to future business strategy and performance. Data is one of the main obstacles as there is lack in historical and factual data to link climate impacts to financial performance.

TCFD’s recommendations will likely to be via phased approach and require time especially for companies that are new in their overall Environmental, Social and governance (ESG) journey. There is also indeed, the need for a clear and practical reporting framework.

The long-term horizons of climate risks and opportunities typically extend beyond the scope of business planning and one thing that needs to be highlighted is that normally, business works on a short-term cycle, hence, quarterly financial reporting is the common practice. For financial stability, the horizon is extended, but typically only to the outer boundaries of the credit cycle — about a decade. This brings to another concern – by the time climate change becomes the defining issue for financial stability, probably it will be too late for a response, unless, drastic actions are taken right now to evaluate and disclose climate-related factors.

 

Conclusion

Without a doubt, assessing and reporting on climate impacts – risks, resilience, opportunities is challenging. However, by undertaking it, it provides the edge for companies to get the upper hand to face the adversity arising from climate change. This, is key for a truly, sustainable future.

 

All views and opinions expressed on this site are by the author and do not represent any particular entity or organisation 

Read more →