Carbon Intensive Companies Face Unprecedented Complaints In 2016
Scrutiny of carbon intensive companies’ reporting could mean an unprecedented number of complaints to financial regulators from environmental lawyers ClientEarth in 2016.
ClientEarth has said they will be poring over annual reports of carbon intensive UK and EU companies and reporting them to the Financial Reporting Council if they are failing to disclose to investors how the post COP21 business outlook could affect their operations.
The agreement aims to limit the global temperature rise to 2 degrees Celsius, with an ambition for 1.5 degrees. It will have a huge effect on companies in carbon intensive sectors such as energy, mining and utilities.
Alice Garton, Company and Financial lawyer for ClientEarth, said: “The Paris agreement represents a huge change for the world. We are now in a transition to a low carbon economy. Business as usual is no longer an option for carbon intensive companies.
“We will be looking at how those carbon intensive companies disclose the risks that they face and where they’re not disclosing them effectively and appropriately we will submit complaints to the regulator to take action.”
The move comes amid growing consensus in the business community that climate change is changing the landscape beyond recognition. Mark Carney, the Governor of the Bank of England, made a major intervention in September, when he identified climate change as one of the biggest risks to economic stability.
In Paris, during the COP21 negotiations, the Financial Stability Board announced a task force to look into the disclosure of climate risks in company reports across the G20.
Financial regulators must thoroughly exercise their regulatory powers and stop leaving it to directors to pick and choose how they report on risks to their business, particularly when there is an obvious conflict in reporting on a risk that has serious implications for the very core of the company’s business model.
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