Misplaced expectations from climate disclosure initiatives

Summary 

Expectations about the impact of climate transparency are running high, fuelled by regulators pinning their hopes on disclosures. Mark Carney’s COP26 plan for private finance puts climate transparency at its heart. Meanwhile, US regulators are rumoured to be preparing a raft of new transparency requirements for companies. The idea is simple: more transparency on climate risks and the fear of stranded assets should push investors away from dirty assets and increase appetite for green investment. But in practice, transparency isn’t a silver bullet solution. Disclosure initiatives may eventually help to preserve financial stability from climate risks, but they don’t help us stabilise the climate. It also risks exempting the finance sector from the need for more radical action that leads to long-term systemic changes.

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