Mandate companies and financial institutions to report their climate risks and impact, and integrate them into decision-making

Climate change poses ever-growing risks to banks, investors and insurers, as well as companies. Yet few policymakers have taken effective actions to require financial institutions and corporations to mitigate their exposure to these risks. The first stage should be for governments to enforce generic environmental disclosures and then to mandate that companies and financial institutions report their climate risks and impact, and integrate these impacts into decision-making. The ultimate goal is for financial institutions to price the impact of climate change into their investment or lending activities, to mitigate risk while progressively shifting financial portfolios away from activities not aligned with a low-carbon economy.