As the trend towards the privatisation of high-carbon assets increases, investors with $2.3trn AUM and CDP launched the first standardised environmental disclosure platform for private markets. The pilot initiative for Private Markets aims to prevent ‘emissions leakage’ and improve transparency and performance on ESG issues.
“Encouraging more private companies to actively measure and disclose their carbon impacts – and also their water and possible deforestation impacts – is no longer a nice to have – it is essential to the low carbon transition,” Adam Black, Partner and Head of ESG & Sustainability at Coller Capital, is one of many calling for private firms to release their ESG data. The data is crucial for ESG-conscious investors who are looking to meet their own net-zero commitments by 2050.
When it comes to environmental reporting, there is a huge transparency gap between listed entities and private companies, so any move towards consistent and comparable disclosure should be welcomed and encouraged.
B Lab UK, part of the group that certifies B Corporations, launched the Boardroom 2030 initiative last week. The initiative calls on companies to hold senior leadership meetings as if it were 2030. The aim is to get companies thinking about what big decisions they would have made since 2021, how consumer and market expectations will have shifted, and who will be at the table. It encourages companies to think outside the box in terms of attendees, and suggests including community and youth representatives, activists, scientists, academics and more.
We hope that companies embrace this initiative. The Body Shop, Natura and Coutts have already signed up, and we look forward to seeing the innovative ideas that emerge. Tackling the climate crisis is going to take creativity as well as capital.
Over the last few years there have been warnings about the threat of climate change to the stability of the world’s financial system. Whilst recent stress tests have gauged it fairly unlikely, it all hangs in the balance of whether governments are able to set out a clear path for reducing emissions, and in a timely manner.
It will take companies a considerable amount of time to successfully adapt to any policy changes, and any sudden transition runs the risk of causing instability. The most likely situation in which climate change could pose a threat is one where “governments dawdle, and then have no choice but to take drastic action in the future.”
On our current trajectory, we worry that a combination of knock-on factors linked to climate change may well lead to crises in the future. For example, the emissions that are driving climate change could devalue energy companies, causing a sharp decline for investors.
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