When former New York City mayor Michael Bloomberg announced
in March that he would not be running for U.S. president, at
least one person may have been quietly cheering: Bank of
England governor Mark Carney. In his role as chair of the
Stability Board, Carney had tapped the billionaire
businessman in December to head up the FSBs
newly created Task Force on Climate-Related Financial
Disclosures a position Bloomberg would likely have
had to relinquish given the rigors of a presidential
Bloomberg was a logical choice to chair the task force,
which was first proposed by Carney during a speech at a Lloyds of London event
last September. During his 12 years as mayor of New York, he
spearheaded environmental initiatives like the NYC Clean Heat
program that dramatically improved the citys air quality.
As Special Envoy for Cities and Climate Change to United
Nations Secretary General Ban Ki-moon, Bloomberg in 2014 helped
launch the Compact of Mayors, a global coalition of
officials committed to reducing carbon emissions and making
cities more resilient to
climate change that has grown to more than 500 members. And
Philanthropies a nonprofit that distributed $510
million in 2015 has been actively engaged with groups in
China and India to tackle climate issues.
Climate change is the biggest problem facing the
world, Bloomberg, 74, tells Institutional
Investor. If things spiral out of control and the
planet starts getting hotter and hotter and theres no
stopping it, you literally will eradicate every single living
thing. The planet would look like Mars.
Carney announced Bloombergs appointment during the United
Nations Climate Change Conference in Paris (COP21), citing
the ex-mayors unparalleled track record in a broad
range of fields and his lifelong commitment to open and
transparent financial markets. For his part Bloomberg
spent five days at COP21, speaking at several events, including
a meeting on December 4 he co-hosted with Paris Mayor Anne
Hidalgo that attracted more than 440 mayors to City Hall for
the Climate Summit for Local Leaders. The
cities have signed up to provide environmental data on their
cities annually on a comparable basis, Bloomberg says.
And why do the mayors want to do that? Because they think
its a competitive advantage for their cities.
The FSB, of course, has been charged by the Group of 20
nations with protecting the stability of the financial system,
not saving the planet. But as Bloomberg explains,
everything has a financial component to it, and the
effects of climate change extreme weather, coastal
flooding, global warming are having a real economic
impact on companies, banks, insurers and investors. The
fascinating thing is that there are no businesspeople who stand
up and say climate change doesnt exist, Bloomberg
adds. Why? Because you would get fired.
In January the FSB revealed the membership of the 31-person
task force, which includes vice chairs Denise Pavarina of
Brazils Banco Bradesco, Graeme Pitkethly of Anglo-Dutch
consumer products maker Unilever, Christian Thimann of French
insurer AXA Group and Yeo Lian Sim of the Singapore Exchange.
Its mission is to develop voluntary guidelines for companies
across industries on what to disclose in financial reporting
about the physical, liability and transition risks
associated with climate change. The task force presented
the first phase of its work a 64-page report laying out the
projects goals and scope, as well as seven principles for
effective disclosures to the FSB on March 31. It will
deliver the final, more detailed report with specific
recommendations and disclosure guidelines before years
Members of the task force admit that the time frame is
challenging. Its a crazy deadline, says
former Securities and Exchange Commission chair Mary Schapiro.
Its very tight.
Mike [Bloomberg] and Carney would be disappointed if
we werent somewhat ambitious, adds Curtis Ravenel,
global head of sustainable business and finance at Bloomberg
LP. We want to be ambitious but practical.
Schapiro, now vice chair of the advisory board of consulting
firm Promontory Financial Group in Washington,
was brought in by Bloomberg as part of a secretariat that
includes Ravenel and Promontory managing director Didem
Nisanci, Schapiros chief of staff at the SEC. Schapiro
has worked closely with Bloomberg and Ravenel on the board of
SASB, a San
Franciscobased nonprofit that is creating sustainability
accounting standards for U.S. companies. Climate-related risks
are among the material disclosures recommended by SASB.
One of the things were going to try to do is build
off the many regimes that are already out there, including
SASB, Schapiro says.
One problem in tackling climate risk is that there are so
many different voluntary guidelines and mandatory requirements
for disclosing it Carney identified nearly 400
initiatives to provide such information in his September
2015 speech at Lloyds of London. In its Phase 1 report,
the global task force provides details on an alphabet soup of
frameworks, including the CDP, CDSB, GRI, IIGCC, IIRC and SASB.
A critical goal of the task force is to come up with consistent
disclosure rules, says member Jane Ambachtsheer, chair of responsible investment at consulting firm
Mercer. There are lots of different market- or
sector-specific reporting guidance and frameworks around
climate risk, she explains. A key objective of the
task force is to take a step back from that and try to focus on
financially relevant climate disclosures, looking at all kinds
of risk, both historical and forward-looking.
The hope is that once companies start uniformly reporting
about their climate-related financial risk, they will do
something to reduce it, including decreasing carbon emissions.
If you get the information out there, Bloomberg
says, in their own self-interest, the parties that are
potentially impacted [by climate change] will take appropriate
steps to try to solve it.