Advanced Data Visualisation Reveals How Companies View Climate Risk
Much of the valuable information that companies communicate to their shareholders about their ESG performance and the social and environmental risks facing the business lie not in the tagged financials nor even in the structured tables and graphs embedded in annual reports, but rather in the paragraphs that flow around the numbers and figures.
For instance, corporate disclosure of climate-related risk, as defined by the US Securities and Exchange Commission’s (SEC) interpretive guidance issued in Feb 2010, can be included in one or more of a number of sections of the 10-K filing — an electronic document that can span more than 100 pages. Climate change poses direct risks to businesses (and their investors) from changes in weather patterns, precipitation and resource availability; extreme weather events; rising sea levels; and changes in disease patterns and ecosystems. Risks derive indirectly from laws, rules and agreements aimed at setting a price on GHG emissions or imposing fines and penalties for emission violations. Compliance with disclosure obligations imposes costs of monitoring and reporting. Potential legal and reputational sanctions may be imposed on companies identified as egregious contributors to climate-induced calamities via their role in the accumulation of GHGs in the atmosphere. New technologies that reduce emissions or provide alternatives to fossil fuel-powered products, for instance, may pose both challenges and opportunities to businesses.
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