What is the issue?
It is now recognised that climate change is not simply an environmental issue, but that it poses material financial risks across the economy.
Through the global Paris Agreement, countries, regions, cities and businesses have agreed to keep temperature rise below 2 degrees, but to achieve this, the transition to a decarbonised economy needs to happen fast and in a smooth and orderly way. This will enhance the resilience of the EU’s (including the UK’s) financial system and provide greater financial stability through a more sustainable and just economic system.
Despite the existing body of research that identifies the material risks associated with climate change, and whilst major actors across the field are taking measures to address these, the consideration, management and disclosure of climate related financial risk has not yet become mainstream in the financial sector.
Using the investment granted by the Friends Provident Foundation (over 2017), ClientEarth carried out a series of intense research and engagement activities on three groups of professional advisors (actuaries, auditors and investment consultants) to raise awareness about their legal duties to manage climate risk. Leveraging the Friends Provident Foundation 2017 grant and building on the work completed during this year, in 2018, we aim to deploy a number of innovative and impactful legal strategies on professional advisors. These will be instrumental in contributing to a behavioural shift that fosters greater appreciation of the materiality of climate risk across financial markets, and the proactive integration of this into decision-making.
What will the project try to achieve?
This proposal seeks funding to support and continue the work of ClientEarth’s innovative Company & Financial Project with a specific focus on professional advisors. The project uses the power of the law to drive greater integration of climate-related financial risks (‘climate risks’) into the management decisions of influential actors in the financial sector. Our objective is to encourage a shift towards a cleaner, more sustainable and more resilient economic system that is well prepared for the risks of climate change, fully integrates environmental externalities and does not simply pass costs on to future generations.
Who might be interested in this project?
The project will target various groups of stakeholder that will be interested in the outcomes of the project: professional advisors, company directors, asset managers, investment consultants, pension fund managers, actuaries, shareholders, policy makers, and general public.