Climate Risk Disclosures

Making Sense of Sustainability: A Policy Perspective

State Street’s regulatory and ESG experts explain key developments in global sustainability policy facing the financial services industry.

March 2022

The proposal from the Security and Exchange Commission (SEC) on new mandatory climate risk disclosures for public companies brings the United States more in line with other regions like the European Union and Asia.

While that should provide a boost for disclosure efforts worldwide, it also creates an imperative for companies and investors to understand evolving rules around sustainability that are complex and often differ by country.

In this paper, Ciara Horigan, Carlo M. Funk, and Darryl Cornelius make sense of sustainability regulations facing the global financial services sector and explore policy developments and implications.

They identify five priorities of global sustainability policy today:

  • Enhancing transparency of climate risks across the financial ecosystem
  • Establishing a common taxonomy or classification system for sustainable investments
  • Ensuring appropriate governance and management accountability for climate risk
  • Incorporating climate risk into capital rules
  • Encouraging market-based initiatives to scale up voluntary carbon markets.

In each of these areas, our experts provide an overview of developments, highlighting regional differences and conclude with key takeaways for financial market participants.

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