A coalition of global investment organizations representing more than $103 trillion in assets is calling on companies and auditors to have their publicly released financial results reflect the effects of climate change.
An open letter issued by this coalition contends that firms need to consider material climate change effects when calculating profits and assets. Specifically, the group is asking that organizations comply with new guidance from the International Accounting Standards Board on the need to reflect climate-related risks in financial reports.
The letter is also asking that the assumptions that companies apply regarding climate change should be in line with the goals of the Paris Agreement.
In a news release announcing the letter, the coalition cites the recent $16.8 billion loss declared by BP after recognizing "that the values it had placed on its assets were inconsistent with climate and other considerations" as a prime example of how and why companies cannot afford to disregard the effects that climate change have on performance.
"The world cannot afford business as usual, but that is what too many companies are currently pricing in with regards to climate change risks," said Fiona Reynolds, CEO Principles for Responsible Investment and one of the signees of the letter, in the release. "In order for us to invest properly for the long-term, a sustainable future needs to be factored in when calculating any company's profits and assets. That is what the IASB statement demands — and so do investors."
In addition to PRI, the coalition also includes the U.N. Environment Program Finance Initiative, U.N.-convened Net-Zero Asset Owner Alliance initiative, Institutional Investors Group on Climate Change, Investor Group on Climate Change, Asia Investor Group on Climate Change, and Pensions and Lifetime Savings Association.