Disclosure means little if there isn’t real transformation

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– Disclosure is nice. But even setting aside greenwashing concerns, mere disclosure isn’t enough to tackle climate change. There needs to be real transformation.

Zsolt Lengyel posted this comment on this note about the formation of the Sustainability Standards Board (SSB):

IFRS Foundation seeking inspiration from TCFD? Be careful. Nearly 60% of the world’s 100 largest public companies support the TCFD, report in line with the TCFD recommendations, or both according to the TCFD’s latest 2020 Status Report. What about the quality of disclosure?

A new study from ETH Zürich has a tell-tale title: “Cheap Talk and Cherry Picking: TCFD supporting firms exhibit weak climate risk disclosures” ( https://bit.ly/3rkyGOn) We should not forget that disclosure is a necessary but grossly insufficient mechanism for triggering transformation.

Last August, Jérôme Tagger, Bill Baue and I argued that: data, disclosure and scenarios don’t produce intention, action, or adequate regulation. And with so much uncertainty on what and when regulation might emerge, investor and corporate action is an immediate must.” Solution: contextual sustainability with Thresholds and Allocations. Intrigued? Follow the r3.0/UNRISD Pilot and you may also obtain inspirations from Ralph Thurm’s “The Big Sustainability Illusion – goodbye ‘ESG LaLaLand’ and hello to the ‘New World’ of a regenerative & distributive economy!”

And this GreenFin piece by Emily Chasan makes a lot of good points. The primary point is that climate risk was always meant to be just the beginning – and that fighting climate change cannot just be a risk management exercise for markets. The key excerpt is:

The traditional advice that you manage what you measure should have turned all of this financial risk measurement into climate action, but lacking political certainty, markets are still just scratching the surface of climate solutions and resilience. When you price climate risk, you essentially put the brakes on investing in risky things — but there’s not a linear path to investing in ways to reduce the risk.