Investors set climate disclosure standards for power sector
London, 14 February: Investor bodies in Europe, the US, Australia and New Zealand have teamed up to publish voluntary climate change disclosure standards for electricity firms.

Europe’s Institutional Investors Group on Climate Change (IIGCC), Ceres of the US, and Australia and New Zealand’s Investor Group on Climate Change (IGCC) jointly prepared the set of standards for power companies, covering things such as exposure to regulatory constraints on emissions, climate change strategies and planned new builds.

“We tried to come up with a framework for investors to compare [different companies],” said Stephanie Pfeifer, IIGCC programme director. “It’s not mandatory, but it will help.”

The groups are asking for information on: the likely implications of climate policies; emissions reduction targets and strategies; the impact of emissions on power prices; and the effect of changing weather conditions on both output and demand. Power firms are also asked about their use of carbon credits, such as those from Kyoto Protocol-based projects.

“As climate-related risks and opportunities become increasingly recognised as relevant to electric power companies and their investors, it is imperative that disclosure standards continue to improve so that financial markets can respond effectively,” said Ceres president Mindy Lubber.

The standards were drawn up in consultation with the power sector, said Pfeifer. The groups also talked with the Carbon Disclosure Project (CDP), which will use some of the forms drawn up by the bodies, she added.

The CDP is a collaboration between more than 300 institutional investors, which surveys the world’s top companies annually on their greenhouse gas emissions and mitigation strategies.

Eric Borremans, Paris-based head of sustainable investment at BNP Paribas and vice-chairman of the IIGCC, said that while this is not the first initiative in this area, it “goes deeper and asks more probing questions” than the CDP and the Global Reporting Initiative.

“We felt, as professional investors, that there was an urgent need for developing a pragmatic and coherent set of guidelines [focused on the power sector],” he added.

The IIGCC represents 44 European investors with assets totalling some €4 trillion ($5.9 trillion), while the IGCC members have combined assets of A$375 billion ($339 billion). Ceres was involved through the Investor Network on Climate Risk, which represents 60 institutional investors with assets worth $4 trillion.