Extractive companies should disclose the estimated carbon footprint of any unexploited reserves, as well as the asset price used to justify future projects, the Principles for Responsible Investment (PRI) has told a task force on climate-related disclosures (TCFD).
In a submission to the task-force, convened by the Financial Stability Board, the PRI suggested any climate-related disclosure framework drawn up should consider the international goal of keeping temperature increases below 2° C above pre-industrial averages.
The PRI also noted the new information large oil companies would disclose following the ‘Aiming for A’ campaign led by institutional investors.
It said that, in addition to some of the disclosures proposed as part of the shareholder resolutions – such as the value of oil reserves under a number of low-carbon scenarios – companies should disclose their break-even price, as well as the prices used during the planning of future projects.
However, when drawing up the voluntary disclosure framework, the PRI also urged the task force to acknowledge the need to tailor all frameworks to specific sectors and allow any such frameworks to be flexible.
“Preparers need to articulate clearly the links between transition, company strategy and climate-related risks and opportunities,” the PRI added, calling for the use of historical and forward-looking metrics within any such reports.
It also called for any proposed standard to apply across all G20 nations and beyond, arguing that a widespread uptake would reflect the “global nature” of investments.
For data to be of “high enough quality” for asset owners, third parties should audit disclosures, the PRI said.
The TCFD, chaired by Michael Bloomberg, said in a preliminary report last month that it would look at climate-related disclosures for a range of unlisted assets, including real estate and infrastructure.
The report said it would examine the role played by institutions, including pension funds, to ensure every area of the credit and investment chain were covered by its recommendations.
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