June 22, 2021
Suzanne P. Clark
President and CEO, U.S. Chamber of Commerce
One of the most pressing issues environmental, social and governance (ESG) policies can help solve is climate change. Both the private and public sectors need to take responsibility in addressing this ongoing worldwide concern.
Here are four ESG implications for climate change and how businesses and governments can work together to solve these challenges.
Growing Business and Addressing Climate Change Are Not Mutually-Exclusive Ideals
Many people falsely believe if their organization makes policies to address climate change, it comes at the cost of scaling their business. However, the two notions are not mutually exclusive, and there is no better example of the economy and environment helping each other than in Miami.
“The environment is the economy, and in Florida, and in Miami in particular, that reality is extremely stark,” said Miami Mayor Francis Suarez. “We know that we need clean drinking water to survive. We know that our bay, which is a multi-billion dollar industry, has to be clean so that people can enjoy water and recreational sports. For us, the economy and the ecology are tied very much together.”
“Unfortunately, it's an issue that has become polarizing and has become partisan,” Suarez continued. “We have to push beyond and look at this as an issue where there is not an antagonism, where [we have] promulgating policies that help the environment [and that] are good for our economy.”.
Public Companies Are Not Ignoring Climate Disclosure
There is another myth that public companies are ignoring climate change disclosure and not releasing ESG data. Representative French Hill of Arkansas dispelled this, explaining the issue isn't the information being public — it's making it readily available.
“The vast majority of large publicly-traded companies are dealing with climate by reporting material risks on their financial statements, and they have extensive sustainability disclosure, metrics disclosed and any initiatives described … almost uniformly in an environmental section on their website,” said Rep. Hill.
“They are getting the information that investors are requesting,” he continued. “The challenge is how do you do that [in] a comparable way? How do you do it in a financially measurable way that can be incorporated in the financial statements under GAAP that are material disclosures?”
There Is No One-Size-Fits-All Policy for ESG
While most businesses want to do their part to address climate challenges, this can't come in the form of a singular policy. Businesses come in all different shapes and sizes and have different environmental impacts. For everyone to do their part, there need to be specific policies for each industry and business.
“The SEC is not a climate regulator,” said Rep. Hill. “It facilitates information being prepared in a common, relevant, comparable way on a material basis for investors to use in order to make investment decisions.”
“At the heart of it is the fact that our boards of directors and our executive management make determinations within those financial rules, within the disclosure framework, about what's material and what should be disclosed and how to provide that communication to their investors,” he continued.
Cities Should Be Addressing Climate Change Like Miami
Miami is currently experiencing an economic boom, with companies moving to the city and the economy thriving. However, some business leaders are hesitant to follow suit because of the city’s climate issues.
To address this hesitancy, Mayor Suarez launched a program called Miami Forever, a $200 million resilience program with the goal of preparing Miami for these challenges. Miami Forever addresses issues impacted by climate change such as hurricanes, dry day flooding, and intense rainfall.
“The program is meant to make Miami the most water-resilient city on the planet,” said Mayor Suarez. “We’re already post-Hurricane Andrew, the most wind resilient city on the planet.”
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