Vanguard: Tell Companies to have climate plan

Vanguard should ask companies to publish assessments of the long-term portfolio impacts of scenarios consistent with the internationally recognized goal of limiting the global increase in temperature to 2 degrees Celsius.

Investors are increasingly focused on the need for robust climate disclosure, including scenario analysis. In June 2017, the Financial Stability Board’s Task Force on Climate-related Financial Disclosures finalized its guidelines for reporting on climate risk, recommending that companies in the energy sector evaluate the potential impact of different scenarios, including a 2-degree scenario, on the organization’s businesses, strategy, and financial planning. Investors representing over $25 trillion in assets publicly endorsed the Task Force recommendations.

A 2-degree scenario analysis of future plans will give Vanguard and other investors a more complete picture of present and future risks and opportunities. Many companies only provide business-as-usual planning and risk analysis, which is not sufficient to prepare for a set of risks as large and complex as climate change. The reports will test if companies are poised to manage and take advantage of future regulatory, technological, and market changes.