If you needed any further reminder of the perilous position the world is in right now, take a look at the Doomsday Clock. Earlier this year, it was reset to 90 seconds before midnight, which is the closest that humanity has ever come to the point of annihilation. 

The clock, which indicates how close the world is to utter disaster, has been run for the past 75 years by the Bulletin of the Atomic Scientists, a nonprofit comprised of world leaders and Nobel laureates. During that period, the threat of nuclear war, the COVID-19 pandemic and climate change have all been major factors. Now, the added threat of nuclear conflict, this time in Ukraine, on top of the climate crisis has provoked the latest update. 

The alarm bell is ringing. No-one has all the answers, but our best hope of winding that clock back is for business leaders to be informed. Their best pathway is education, via our range of world-class ESG and Climate & Biodiversity programs. 

1. Take it from the top. Larry Fink, Chairman and CEO of BlackRock, published his much anticipated Annual Chairman’s Letter to Investors this week. Although his giant asset management firm still views climate change as a major financial risk, he argues in his letter that it is not BlackRock’s role to tell companies and society how they should deal with it. It has been a turbulent few months for BlackRock. The firm has found itself at the epicentre of the anti-ESG storm in the US, with Florida withdrawing US$2 billion in assets from its management, Texas placing the firm on a list of ESG-supporting asset managers subject to potential divestment and 19 state Attorneys General accusing it of boycotting fossil-fuel companies. To counter these issues, Fink wrote: “As I have said consistently over many years now, it is for governments to make policy and enact legislation, and not for companies, including asset managers, to be the environmental police.” Fink’s annual letters to CEOs and investors, usually published in January, have become a must-read for the financial sector. This year he combined both. 

2. New climate rules for Canadian banks and insurers. The Office of the Superintendent of Financial Institutions (OSFI), an independent Canadian government financial regulatory agency, has laid out new climate change rules for the country’s larger banks and insurance providers. By the end of 2024, they must run stress tests and formally disclose their plans to manage climate change risks. At the same time, they must also disclose the risks they face due to a transition to a lower carbon economy and complete “standardized climate scenario exercises”. According to the regulator, banks and insurers must disclose information consistently over time that must be:

  • Relevant 
  • Specific and comprehensive
  • Clear, balanced, and understandable 
  • Reliable and verifiable
  • Appropriate for its size, nature, and complexity

3. US boards going back to their old ways. The Board Monitor US 2023 report from Heidrick & Struggles reveals how board appointments played out at Fortune 500 companies last year. Overall, there were 414 appointments in 2022, a decrease on the 449 in 2021 and the lowest number since 2017. It was not a great year for increasing diversity: only 40% of board seats went to women, compared with 45% in 2021, and only a third (34%) went to racial or ethnic minorities, compared with 41% in 2021. The latter trend was largely driven by a 9% drop in board seats going to black and African-American candidates. Just under a third (32%) of seats went  to first-time public board directors, down from 43% in 2021. The average age of appointees was 59. 

4. Getting ready for climate compliance. With new climate disclosure regulations due in the next few weeks from the US Securities and Exchange Commission (SEC), many business leaders are already gearing up their companies. A recent survey by PwC US and Workiva Inc found that 70% will proceed with compliance, even before any laws are passed. The common proactive steps taken include investments in ESG reporting technology, people and accelerating or establishing climate ambitions or goal timelines. However, a large majority (85%) of those surveyed are worried due to their companies not having the necessary technology ready to support the new ESG reporting. On top of that, just under one-third (32%) of those surveyed said that their company was not currently using technology at all to help with ESG reporting. 

5. Looking to slow methane’s acceleration: New research by The Guardian has revealed the growing danger of human-caused major emission events to push for net zero. Last year, there were more than 1,000 methane “super emitter” events, mainly from oil and gas facilities that pumped the greenhouse gas into the planet’s atmosphere. The worst leak was the equivalent of the emissions from 67 million running cars. The report also identified 55 potential “methane bombs”, fossil-fuel extraction sites where any methane leaks could release methane into the atmosphere that would be the equivalent 30 years of greenhouse gas emissions in the US. Currently, methane emissions are the cause of 25% of global heating. However, since methane is a short-lived gas, a sharp 45% cut in current emissions would stop global temperatures rising by 0.3C.

Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.

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