Investors need more data on company greenhouse gas emissions for them to successfully align their portfolios with future climate projections, a leading expert has warned.
Andreas Hoepner, a founding partner of the 100% Club and member of the EU’s Technical Expert Group on Sustainable Finance, made the warning in announcing a new joint initiative between the investment industry and academics.
Hoepner explained that many people will be surprised how few companies independently report 100% of their Scope 1 greenhouse gas emissions. Scope 1 emissions are direct emissions from company-owned or company-controlled sources.
He said: “To provide asset owners any chance of aligning their portfolios with climate goals scenarios and responding thoroughly to TCFD, it is paramount that the vast majority of corporations listed on equity or bond markets take complete and public accountability of their Scope 1 greenhouse gas emissions.”
The warning comes as an initiative between the investment industry and academics prepares to launch in Ireland next week. The 100% Club is aiming to improve the way companies report their greenhouse gas emissions.
It is being established to support the UN-backed Financial Centres for Sustainability, which aims to bring together the resources of the world’s finance centres to help implement the Paris Climate Agreement.
Imperial College’s London Business School and the University College Dublin’s Michael Smurfit Graduate Business School are among the academic institutions involved in the programme.
“Companies are under increased pressure from stakeholders to disclose their approach to climate risk,” said Charles Donovan, director of the Centre for Climate Finance and Investment at Imperial College Business School.
“But if the underlying data isn’t up to scratch, then even the most sophisticated and robust risk management framework is rendered useless. Disclosures, of the quality expected by the 100% Club, are a crucial part of climate-risk management. Companies need to rise to the challenge.”
German banking group Deutsche Bank and insurance giant Tokio Marine are among 20 firms worldwide who disclose 100% of their Scope 1 greenhouse gas emissions in line with the criteria set out by the 100% Club.
The announcement comes on the same day as the UK’s Meteorological Office announced that new statistics show that the United Kingdom had been experiencing greater extremes in weather over the past decade.