John Kerry, Joe Biden’s climate envoy, said the US would probably “join with Europe” to begin requiring companies to disclose information on climate risk, in a move that would have significant ramifications.
Kerry’s remarks came in the run-up to Biden’s inaugural two-day climate summit scheduled to begin on Thursday, where the US is expected to update its pledge to cut greenhouse emissions.
“We all need to take actions from 2020 to 2030,” Kerry said on a webinar hosted by Ceres, a sustainable investor network. He added that even if the world were on pace to meet the commitments established in Paris in 2015, it would still fall far short of what is needed to avert a climate catastrophe.
“We all need to build out our capacity way beyond what it is and begin to shift out of coal dramatically,” he said, echoing secretary of state Antony Blinken in signalling a US push against financing of new coal projects.
Kerry did not provide further details on when the US reporting mandate might take effect or how the US might collaborate with Europe on disclosures.
The European Commission is conducting a review of its rules on non-financial disclosure, which covers climate risk reporting. Last year, the UK said it would begin requiring certain companies to include emissions and climate risk information in annual reports by 2025, in accordance with the Taskforce on Climate-Related Financial Disclosures (TCFD) framework established at the time of the 2015 Paris climate accord.
In March, Allison Herren Lee, the acting head of the Securities and Exchange Commission, said the US securities regulator was “enhancing its focus on climate-related disclosures” and planned to update its guidance on the issue for the first time since 2010.
Mandatory climate reporting has also recently been endorsed by BlackRock chief executive Larry Fink, who said in a letter to shareholders last month that it was critically important for global regulators to work together in setting standards.
Sustainable finance initiatives are expected to play a big role in the Biden plans to decarbonise the economy, and investment managers and banks have jumped onboard with a slate of announcements this week.
State Street Global Advisors, the world’s third-largest investment manager, on Tuesday became the latest to promise to reach net zero carbon emissions across its investment portfolios
A group of 43 banks with $28.5tn in assets on Wednesday also announced plans to cut emissions from their balance sheets. The so-called “Net-Zero Banking Alliance”, spearheaded by Kerry, former Bank of England governor Mark Carney and US Treasury secretary Janet Yellen, includes lenders such as Citigroup, Bank of America and Barclays, among those which have made previous commitments.
Notably absent from the list is JPMorgan Chase, which also promised emissions reductions in 2020, but remains the world’s largest provider of finance to fossil fuel companies.
Members of the alliance must commit to the UN’s “Race to Zero” framework, which Carney says is a step up from some of the voluntary climate commitments being made. Companies signing on are required to set an interim goal for cutting a portion of emissions by 2030, and their plans are subject to peer review.
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Carney is also leading the creation of a new project called the Glasgow Financial Alliance for Net Zero, which will bring together the various industry net zero groups, including those covering asset managers and bankers, under a common framework.
However, environmental activists warn that the finance sector should not be allowed to set its own rules.
“More voluntary alliances filled with repeat greenwashing offenders is not enough,” said David Barmes, economist with pressure group Positive Money. “We need urgent action from regulators such as central banks to ensure that the entire financial system is aligned with the legally binding environmental targets governments have committed to.”
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