Over the recent years, climate risk has become a substantial threat to long-term investment and market stability, and investors have been requesting climate data as a risk assessment tool.
In an interview
for the Electric Perspectives podcast, Dan Hahn
, partner at Guidehouse, discussed the investor focus on environmental, social, and governance (ESG) issues. While climate threats are widely recognized as key factors for investors to consider, other, less traditional issues are becoming important focus areas for investors.
"ESG has formalized how companies are measured from the investors and stakeholders perspectives, including communities, regulators, and even their own employees," clarified Hahn.
In the interview, Hahn also discussed how the evolution of the social and governance aspects affects these non-financial disclosures, as the ESG landscape continues to develop and the United States Securities and Exchange Commission (SEC) proposed rules
around disclosures of climate risk information take shape. Hahn noted that Guidehouse supports clients with a variety of ESG projects and has identifies six key steps organizations can take to prepare for the future.
Hahn explained: "First is literacy - it is very important that the leaders within these organizations become literate around what climate risk decisions they'll need to be making. The second is around governance and integration - do they have the right governance structure integrated into the risk management processes? Third is data - how do we actually get the right data? Fourth is creating an enterprise-wide structure for it. Fifth is around opportunities and upside - with the need to disclose this information, companies' customers are going to need help reporting their Scope 3 and Scope 2 emissions, creating an opportunity for the energy industry to provide new products and services. And sixth is preparedness and having a dedicated team focused on climate-risk disclosures."