Yesterday, Blackrock published a statement setting out its support for higher quality and consistent sustainability reporting. Somewhat hidden within this statement, Blackrock makes a critical commitment. It promises to reflect its concerns about management’s accounting assumptions in its votes on the financial statements, approval of the auditor or election of directors.
This represents a major step by the world’s largest asset manager, and one which dovetails calls Sarasin & Partners has led for the past two years. It is vitally important that all companies facing both transition risks and risks from the physical impacts of climate change consider how these risks impact their financial statements. Where climate risks are left out, the danger is that financial statements are misrepresenting the underlying economic health of the entity. The implications of this go beyond risks to shareholder and creditor capital; they threaten our planet.