At present, there is little evidence that companies are taking decarbonisation or the physical impacts of climate change into account as they draw up their financial statements. In order to shift capital flows towards activities aligned with the Paris Agreement, material climate impacts must be fully reflected in company accounts.
IIGCC’s report ‘Investor Expectations for Paris-aligned Accounts’, sets out in detail the steps investors require companies to take on the issue. On 16 November 2020, the investor expectations were sent to 36 of Europe’s largest companies along with a letter signed by 38 investors who collectively represent $9.3 trillion in assets under management or advice. See here for more detail on this engagement.
The Investor Expectations set out five clear steps companies should take in preparing ‘Paris-aligned’ company accounts. It also outlines expectations for auditors to call out where accounts are ignoring material climate risks and making it clear they should say when accounts are not ‘Paris-aligned’.
