On 31st January 2022, the Climate Disclosure Standards Board (CDSB) was consolidated into the IFRS Foundation to support the work of the newly established International Sustainability Standards Board (ISSB). While this site and its resources remain relevant for preparers looking to improve sustainability disclosure until such time as the ISSB issues its IFRS Sustainability Disclosure Standards on such topics, no further work or guidance will be produced or published by CDSB. For further information please visit the IFRS website.

2020: The disruption and the lasting change

Last week the world’s largest asset manager, BlackRock, announced that it voted against 53 companies worldwide due to lack of progress on climate concerns. CDSB’s Senior Technical Officer, David Astley, warns that the “freshness” of climate reporting phenomenon should not be mistaken for fleetingness.

While the Covid-19 virus is affecting each household, community, country and region in profoundly different ways, there is a degree of commonality between each of our experiences. The virus has reconstituted our ways of being, altering how we socialise and communicate, work and relax. More fundamentally, Covid-19 and the public health response has altered how each of us experiences space and time. We are, in this way, all living in a Covid-19 world, through the Covid-19 moment.

In these locked down and socially distant days, it can sometimes be difficult to see how or when this moment will end. The virus dominates the horizon of the imagination. In the future, though, some markers will be adopted to neatly encapsulate the period we are presently living through. It might be that we bracket this Covid-19 moment by some peak and flat-lining of infection and mortality, by the dates of the appearance of the virus and the vaccine, or by some trough of global GDP. Now, one can only wish that the length of time bracketed does not stretch far into the 2020s.

Others hope, however, that this moment will not be solely understood as one of horrific disruption, but also as a point of departure, the start of a new trajectory. Voices around the world are advocating that we “build back better” from the economic crisis brought by the virus, centring ambitions for decarbonisation in recovery and stimulus packages. The European Commission, for example, has pledged that €150 billion of its Covid-19 recovery plan will be focused on green transport, industry and homes, with the plan also more than quadrupling the bloc’s just transition fund.

There is rightly a sense that this opportunity cannot be missed – if we do not reorient our economies now towards decarbonisation, then there is little or no chance of keeping warming below 1.5°C. To have a chance of meeting that ambition, after all, global emissions need to fall by at least 7.6% every year this decade. 

The scale of the challenge has been underscored by the crisis brought by Covid-19. Despite so much of the world’s economy being shut down, it is still estimated that annual emissions will only be around 8% lower this year than 2019.

 Simply, there can be no return to business-as-usual.

It is easy in these discussions of solutions, of fixing and solving, which are justifiably focussed on the immediate and short-term, to lose perspective on the realities of climate change. It should be remembered, however, that even if we were to miraculously stop emitting greenhouse gasses tomorrow, the over 1°C of warming we already feel will persist for hundreds to thousands of years. In our best-case scenario, the climate system will be locked-in to 1.5°C of global heating for well over a millennium.

But we should not confuse lock-in with stasis. The perturbation of global warming in the climate system will result in changes that are different and greatly dynamic across space and time. Indeed, these complex dynamics may mean we miss our targets, no matter the ambition. Even if we are able to meet the monumental ambitions of reducing emissions by 7.6% per year across the 2020s and reaching net-zero by 2050, interconnections and feedbacks may mean that warming could well exceed 1.5°C. The astonishing and worrying temperature anomalies of Siberia these past months illustrate this dynamism – the temperatures, between 10 and 20°C higher than average, could melt the area’s permafrost and release the stored methane and carbon dioxide, adding to the greenhouse gas load of the atmosphere and providing a positive feedback for warming.

In these senses, there will never be a neat and easily bracketed climate change moment for us to discuss definitively in the future. No solution will simply solve the crisis. Instead, climate change, to a lesser or greater degree, in all its mutability, will be a permanent feature of our world for timespans that far outreach common imaginations.

This is not a conclusion of the futility – no, the actions to tackle and limit global warming to 1.5°C are an absolute necessity. Instead, it is to emphasise the unavoidability of climate change.

From reading annual and sustainability reports and observing corporate developments, it seems that this conclusion is especially important for companies to take on board. While climate change and its potential business impacts have certainly risen up the corporate agenda, one gets the sense that many companies regard it as a tick box reporting exercise and others are simply ignoring the issue. There is an impression from corporate reporting, which I think is shared by large swathes of the public, that in a few years’ time climate change will be “sorted out” and not something for companies to take too seriously.

The reality could not be further from the case. There will be no ignoring of climate change as its physical and transition risks and opportunities increasingly manifest themselves socially and economically in the coming years and decades. These risks and opportunities will alter and develop over these years as climate systems shift around the world, regulators enact policies, and technologies emerge. The strategies and reporting of companies will need to keep apace of these developments as well as the advances in science to properly ensure resilience. This is as true for a world of 1.5°C warming as for one of 3°C or 5°C of warming.

The mainstreaming of material climate reporting is a new phenomenon. But its freshness should not be mistaken for fleetingness. The mainstream reporting of climate issues will be the new normal for companies. The sooner, the better.

If you have questions about this blog, feel free to get in touch with David Astley:    

If you are interested in enhancing climate reporting, you might also be interested in the launch of the CDSB Framework application guidance for climate-related disclosures. Learn more.