Inspiring trust for a more resilient world.

BlackRock makes climate change central to its strategy


What has changed?

Everything and nothing. The climate crisis has been looming, and now seems upon us, as evidenced by the increasing scale and frequency of climate-induced natural disasters. That, surprisingly, is not the most sudden and unexpected change. The most rapid change in our opinion is in the seriousness and urgency placed upon the issue by the finance community, as evidenced by BlackRock’s letter and other recent initiatives. The finance community, including investors and insurers, have come to the conclusion that “climate risk is investment risk.” Capital markets will move more quickly than climate change, based upon the perceived risk of their investments. Unfortunately, the vast majority of companies are unaware of the impact of climate-related risks to the valuation of their own organization.

What does this mean for you?

You may already be accounting for your Greenhouse Gas (GHG) emissions and taking steps to reduce and report your emissions under standards like CDP, the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB). Or some of you may just be starting on that journey. The big change for you is not in the attention being placed on current emissions from your business, but on future impacts of a changing climate to your business. What was once perceived by some as a feel-good effort to make a positive impact, is now being recast as a business imperative by your investors who struggle to forecast the future value of your business in increasingly uncertain and volatile environments. That volatility is expressed through the physical environment, but also through changing regulatory requirements and customer expectations.

These changing investor expectations expand climate action beyond accounting for current emissions, to include preparation for potential future climate impacts. This also expands the range of potential material impacts that the organization will be asked to include in financial reporting. These potential impacts can range from damage to physical infrastructure, to increased costs of supply chain disruptions, to costs and losses due to changes to regulatory requirements or customer and employee attitudes. 

What can you do?

BSI’s Sustainability Practice recommends a few initial steps you can take to align with BlackRock’s call to action:

  1. Review your current greenhouse gas accounting and reporting against the SASB standard specific to your sector. These standards vary by sector to reflect the most relevant impacts. In addition, the Task Force on Climate-related Financial Disclosures (TCFD) also provides valuable guidance on reporting material risks related to climate change. BSI can support your efforts and help you navigate how your current efforts and disclosures can align with these requirements. 
  2. Update materiality assessments to include climate-related risks and opportunities that can affect your organization’s infrastructure, strategy, reputation and financial bottom line.
  3. Establish a consistent practice of scenario planning to model how potential futures impact your business. Since the range of impacts is so broad, this will require a cross-disciplinary set of perspectives. And since the impacts are so long-term, this requires a uniform set of practices that necessitates cultural and behavioral changes that support, and are supported by, a robust management system.
  4. Finally, include this forecasting into your organization’s planning, upskilling, and investment strategies.

How BSI can help you

BSI has combined our unique capabilities and resources to support our clients’ climate risk adaptation programs, including:

All of those resources and capabilities are bound together and supported by the standard BSI helped shape on climate risk adaptation (ISO 14090).  We are committed to enabling our clients advance their sustainability goals, so please don’t hesitate to contact us if we can support yours.