S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
Who We Serve
Corporate Sustainability Assessment (CSA)
Research & Insights
Who We Serve
Corporate Sustainability Assessment (CSA)
Research & Insights
S&P Global Offerings
Featured Topics
Featured Products
Events
Language
The S&P Global Sustainable Finance Scientific Council fosters an exchange of ideas between diverse stakeholders to help the global capital markets transition toward sustainability.
Climate Change Litigation
The Appetite (And Success) For Climate Litigation Cases Is Arguably
As the effects of climate change are realized and the global push toward decarbonization accelerates, various stakeholders--including nongovernmental organizations, investors, and communities--are increasingly turning to litigation according to some scholars on the topic. Indeed, the number of climate change-related court cases filed globally nearly doubled between 2017 and 2020, with more than 1,800 cases filed in 40 countries as of May 2021, three-quarters of which were lodged in the U.S., primarily related to corporate entities and governments (Setzer & Higham 2021).
The Appetite For Better Climate Risk Analytics Is Growing
Trucost (part of S&P Global) has found that two-thirds of global companies have at least one asset that is highly exposed to the physical impacts of climate change under the most severe 2050 climate change scenario (which assumes a global average temperature rise of 3.6 degrees Celsius). Without understanding the potential physical impacts of climate change on entities, market participants (governments, financial supervisors and corporate regulators, and financial services companies, among others) will find accurately pricing in climate-related risks and opportunities an increasing challenge. Indeed, this may also prove challenging for financial institutions, as owners or capital providers, as well as savers who depend on improved returns and interest. The availability of climate risk analytics has increased exponentially, and may help entities understand their exposures. However, the lack of standardization and the complexities of climate science (as well as the precise crystallization and severity of impacts) is compounding the uncertainties.
In our view, enhanced climate risk analytics combines outputs from climate models and other dedicated models (IAMs for example), scenario planning, and other entity-derived and asset-level data, with analytical judgement based on interactions with entities, to develop better informed views about entities' potential exposure to the physical impacts of climate change.
Natural Capital and Biodiversity: Reinforcing Nature as an Asset
Biodiversity loss is a global phenomenon. The recent Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services estimates that of the eight million plant and animal species on earth (75% of which are insects), around one million are threatened with extinction. In the U.S. and Canada, bird numbers have declined by a third since 1970, with even the most abundant species, like starlings, seeing a 49% decline over the same period. The Yangtze River dolphin, last seen in the early 2000s, is thought to be the first dolphin species to be driven to extinction by humans. And Australia's regent honeyeater is also now facing extinction because declining numbers are inhibiting the males' ability to learn their courting song.
Nature is evidently suffering, but what can governments and corporations do to reverse these alarming trends?
Stakeholder Capitalism: Aligning Value Creation With Protection Of Values
Although broadly defined, the core premise of stakeholder capitalism is to find a balance and compromise in meeting the needs and serving the interests of all stakeholders: customers, employees, suppliers, communities, society, and the environment, as well as shareholders. It implies a company's purpose is to create sustainable long-term and shared value for all. Value creation is not just about profit maximization for shareholders but instead encapsulates a more holistic purpose, aligning the broader values of a corporation with those of society, while taking into account externalities, as Mark Carney, former governor of the Bank of England, described it in his recent BBC Reith Lecture in December 2020.
Traditionally, market focus on quarterly financial performance has kept pressure on management to meet shareholders' expectations. Companies have considered it paramount to maximize financial value, echoing Milton Friedman's belief that "the only social responsibility of business is to increase its profits". But what about a firm's value for society as a whole?