As global leaders coalesced at COP28 on the urgency of rapidly approaching climate goals, I couldn’t help but think of my granddaughter, Macy. Born this year, Macy could be looking at colleges in 2040, the same year that the Intergovernmental Panel on Climate Change (IPCC) predicts global food shortages and intensified floods and droughts, among other catastrophes, if we continue at our current emissions rate.

I work at the nonprofit Ceres. Our team engages with regulators, banks, insurers, and investors to drive the system change needed to achieve a net zero emissions economy. We recognize that climate-related financial risks pose a threat to the safety and soundness of our financial system. And we are not alone in that recognition.

The activities of COP28 are a testament to the global consensus that the financial risks of climate change loom large and are growing. The first step to addressing these risks? Disclosure. The market needs better information. Disclosure does not eliminate climate risks, nor is that its intent. But investors and companies can’t manage what they don’t measure. Disclosure ensures transparency throughout the market.

Ceres has been beating the drum of disclosure for twenty years since we first met with the U.S. Securities and Exchange Commission (SEC) as a small group of investors in 2003. But we’ve seen more momentum than ever toward disclosure in just the last eighteen months.

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In March 2022, the SEC proposed a rule to require all publicly traded companies to disclose how their businesses are managing climate-related risks, including emissions. While we’re eagerly awaiting a final rule, other jurisdictions are forging ahead.

The EU finalized its Corporate Sustainability Reporting Directive, which mandates the disclosure of all company activities that have a material impact on people and the environment. The International Sustainability Standards Board issued its inaugural sustainability disclosure standards, which are being adopted by the UK, Canada, Brazil, and many other countries.

The momentum is already here in the U.S. California passed legislation requiring companies doing business in the state to report on climate-related risks. Insurance regulators implemented an annual Climate Risk Disclosure Survey, which applies to 80% of the U.S. insurance market.

As we enter 2024, I am inspired by progress made and optimistic that the pace of disclosure will further accelerate.

This article is contributed by Steven Rothstein, Managing Director, Accelerator at Ceres. Every week ESG News delivers smart commentary from ESG practitioners and experts to unpack issues of the day. Submit an article: [email protected]