Companies' disclosure of risks to their business from climate change could become mandatory in a few years as investor pressure gathers pace, climate finance experts said on May 23.
Investors have urged companies, particularly those operating in the oil, gas and coal sectors, to disclose the financial impact of long-term climate change and increase transparency as the world shifts away from fossil fuels.
"I think we are moving towards the disclosure of climate change risks and stress testing of investments by companies. That is something which is gaining traction," John Roome, senior director of climate change at the World Bank, told an FT climate finance summit in London.
"We are now in the voluntary stage but I suspect that in a few years we may very well see standardized requirements from various regulatory authorities on disclosure of climate risk," he added.
Last year, a global task force set up by the G20's Financial Stability Board proposed that companies disclose in their public financial findings how they identify and manage risks to their business from climate change.
Although the measures are voluntary, there are calls for them to become mandatory.
This could happen in a few years and further ahead prudential requirements could be placed on potentially stranded assets, Roome said, using a term for assets that no longer provide an economic return because of changes in the market or regulatory environment.
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