Climate Change Governance and Reporting
Key Contact: Begonia Filgueira
The way we do business with regard to Climate Change Governance and Reporting is changing. As of 1 October 2021, Occupational Pension Schemes will be legally obliged to publicly share how they, as trustees of funds, identify, assess and manage the climate change risks of their investments. It is important to note this doesn’t just affect pensions and all businesses will have to prove their resilience to climate change and their value to investors.
Private equity houses that invest pension money will have to carefully scrutinise the Climate Change Governance of the businesses they invest in and are obliged to report back to the pension funds regarding this. When it comes to buying or exiting a business, due diligence will focus on the organisation’s Climate Change Governance and ESG to understand its true future value.
The risk for medium and smaller businesses is that they see Climate Change Governance as something that happens to PLCs, but this assumption is incorrect. The obligation to meet Net Zero CO2 emissions by 2050 is enshrined in UK law and will affect every business across the UK. It’s my belief that if small and medium size enterprises get on with enacting this change as a matter of urgency, they will have a commercial advantage due to being nimbler and more adaptable than some larger competitors.
The fact that the UK will be hosting COP26, the most important climate change conference we have ever had, is a further driver of this change. The reason this conference is so important is because, it will set out in practice, how we meet the targets of both the Paris Agreement and our own UK Net Zero CO2 emissions target, by 2050.
COP26 will focus on how we finance the transition to a low carbon economy, an essential part of which will be the transition to understanding how business, and their supply chains, affect the climate and how climate affects a business’ bottom line. You can only understand this through public disclosure and reporting on the risk climate change poses to business and the economy.
If you would like to discuss what Climate Change Governance or ESG means for your business, and/or receive updates on COP26 please contact Acuity Partner, Begonia Filgueira – [email protected].