We identified that this company was particularly exposed to climate-related risks, yet there were limited disclosures available to provide insight into whether these risks were being managed or not.
For example, the company has not undertaken any scenario analysis, and position statements suggest that the assessment of environmental risk is limited to a focus on pollution prevention and waste minimisation. Further, climate change is not specifically mentioned as a risk factor within 10k reporting.
We requested the company provide greater detail on physical climate impacts on its business, including robust analysis being undertaken. Further, we encouraged the company to pursue opportunities relating to sustainable product development.
In 2019, the Board’s Nominations and Corporate Governance Committee adopted sustainability on its agenda and has been tasked with ensuring the Board remains informed on ESG topics, while a Sustainability Committee was also established to bring together cross functional business leads to report to the CEO.
We view these developments positively and have encouraged these committees to drive improved, investor-relevant ESG reporting. Early discussions indicate that the company is looking to adopt the SASB disclosure framework. Either way, the company has committed to enhanced disclosures in 2020, including additional sustainability metrics and targets.