Climate-Related Disclosure and Financial Risk Management

Climate change impacts have become more evident, triggering concern and calls to action among individuals, governments, and the private sector alike. This has impacted the investor-company relationship. Shareholders increasingly view information about the risk climate change poses to individual companies as critical to their investment decisionmaking, influencing corporate disclosure practices and legal requirements. Financial institutions are also coming to terms with their potential exposure to climate-related risks, resulting in additional pressure for substantive, climate-related disclosure.

These discussions have moved well beyond the purview of values investors seeking to influence climate policy through stakeholder activism. Companies, shareholders, and financial institutions are working to improve disclosure of climate-related risks and opportunities in both voluntary and mandatory forums. New regulatory obligations on financial institutions—whether in the form of stress testing or disclosure—have so far developed primarily outside of the US. However, these efforts have implications for US-based institutions and US financial regulators have expressed interest in following suit.

This work is part of EELP’s Private Sector Governance and Innovation Project that analyzes trends in private sector responses to the clean energy transition and physical risks of climate change.

Our Financial Disclosure and Risk Management Work

Our work assesses how climate change-related disclosure intersects with US securities and financial regulatory laws. We analyze the legal implications of disclosure for individual companies and proposals to revise disclosure and risk management requirements. We also follow related litigation and analyze how courts may treat these developments.