The Climate Risk Disclosure Lab seeks to support those in government, the private sector, and civil society who are working to address climate change and the risks it poses to the global financial system, through effective implementation of climate risk disclosure rules. The Lab is an education and policy development initiative led by Duke Law’s Global Financial Markets Center.
The Climate Risk Disclosure Lab acts as a hub for sharing information and ideas on climate-related disclosure standards. Our in-house law and policy experts assemble research and contribute research papers and policy-relevant reports to highlight current climate risk disclosure standards and proposals to improve them. Many of these products are developed collaboratively with academics, NGO policy experts, and industry leaders. In addition, the Lab provides a forum for outside experts to submit their writings on proposed approaches to climate risk disclosure.
The Climate Risk Disclosure Lab also provides information and ideas that legislators and regulatory agencies can use in establishing and strengthening whistleblower programs and it educates whistleblowers about available mechanisms for confidentially and anonymously reporting violations of climate risk disclosure laws. We highlight the financial awards given to whistleblowers when they contribute to successful enforcement of securities, commodity trading and other relevant laws.
While our initial focus is on U.S. laws and public companies subject to U.S. laws, in a subsequent phase of the project we will address disclosure laws in other countries as well as disclosures by privately-held companies.
Companies face enormous risks from climate change. The physical consequences of climate change could have both immediate destructive effects on physical assets, infrastructure, and supply chains, and long-term disruptive effects on financial markets around the world. And the transition away from fossil fuels could render products and business models obsolete and could cause hundreds of billions of dollars in assets to be stranded.
Companies need to be aware of these risks, so that they can value their long-term investments, project market trends, implement adaptation measures, and identify emerging opportunities. Investors also need to understand the relative risk across firms, engage in effective risk-management, and ultimately allocate capital more confidently and efficiently. Yet, to-date, there is neither a standardized framework for climate-related disclosure in the U.S. nor an effective enforcement mechanism to hold companies accountable for failing to disclose material climate risks. Absent robust climate-related corporate disclosure regulations, companies are left to use their own metrics, choose their own scope, and employ their own calculation methods when disclosing climate risks – where they disclose at all. In such an environment, it is easier for companies to engage in “greenwashing” or other forms of deception to persuade investors and the public that environmentally and financially responsible action on climate change when in fact they are not. Development of an enforcement, regulatory, and policy agenda around climate risk disclosure is needed to address this gap.
We believe that one of the greatest opportunities for progress on climate change is harnessing the power of businesses and those who finance and insure them to allocate capital in a way that meets the dual challenges of mitigating and adapting to climate change.
In our view, if investors, asset managers and insurers were to obtain accurate disclosures of climate risks faced by key companies, they would likely redeploy capital in a manner that accelerates the transition of the global energy system from fossil fuels to renewables and other low-carbon energy sources. However, we recognize these key players have been hampered from obtaining such critical information due to current weaknesses in the legal system governing climate risk disclosures.
The Climate Risk Disclosure Lab provides a home for sharing information and ideas on climate risk disclosure from individuals representing multiple disciplines and perspectives. Our vision is that this sharing of information and ideas will lead to more robust risk disclosure regimes and in turn, better-informed choices about managing climate risks by industry leaders, including industry whistleblowers, as well as policy makers, law enforcement officials, regulators, NGOS, academics, and other influential actors.