December 31, 2020
by Hank Boerner – Chair & Chief Strategist – G&A Institute
This is my last post of 2020 – indeed, a chaotic, challenging and tumultuous year for corporate managers and investment professionals. And the rest of us!
At this time last year we were looking forward to continued peace and economic growth. That new virus spreading infection inside China was a blip on the horizon for many people.
Most of us did not foresee the rapid spread of this dangerous virus to all corners of the globe, and the resulting tragedy of the immensity of deaths, as many families lost loved ones, We were not adequately prepared for the resulting economic upheaval posing serious challenges to leaders in the private sector, public sector and capital markets. At year end we are still working our way through the mess.
And so we come the start of a new calendar year — 2021! — with all of humanity wishing for better days!
Many eyes are on the United States of America, the world’s largest economy, which will soon have new leadership in the White House and the important arms of the federal government, the cabinets. Those are State, Treasury, Defense, Interior, Energy, Labor, Commerce, and other departments as well as in key agencies such as the Securities & Exchange Commission, and the Environmental Protection Agency (US EPA).
The better days could start on January 20th when a new President and Vice President are sworn in and a new Congress will already be in office (the 117th Congress will convene on January 5th with 100 Senators and 435 Members of the House of Representatives).
And there is much work for all of those leaders to do! There are especially high expectations of soon-to-be President Joe Biden and Vice President Kamala Harris…and the men and women they will appoint or nominate (for U.S. Senate confirmation) to help in leading the USA forward, working in cabinet offices or federal agencies. .
President Biden has said that his will be the “climate change administration” and that meeting the challenges posed by climate change is a top priority.
What should / can be done as these leaders settle into the office?
Mayor Michael Bloomberg, head of the Bloomberg LP organization — he with the loudest megaphone to reach and influence capital markets players, government leaders, NGOs, climate activists, multilateral organizations leaders, and many more leaders and influentials — has some specific suggestions for the Biden-Harris team as they assume office.
Here are some of the highlights of Mayor Mike’s suggestions:
- “Biden Needs to Lead on Climate Reporting” (the headline of the editorial with the suggestions – there’s a link below).
- Biden’s pledge to rejoin the Paris Agreement should be carried out and this will send a strong signal to the world. But that will take us back four years (when Secretary of State John Kerry led the US delegation in joining the agreement).
- To move forward President Biden on his first day in the Oval Office should begin the effort to bring together the leaders of the G-20 nations (the world’s leading economies*) to endorse a mandatory standard for global businesses to measure and then report on risks all nations face from climate change.
There are mechanisms and players in place to help make rapid progress.
Remember that Michael Bloomberg heads the TCFD – the Task Force on Climate-related Financial Disclosures — which was formed by the Financial Stability Board (FSB) — the board a creation of the G20 nations after the disaster of the 2008 financial crisis.
The concept of the FSB is to serve as a sounding board and think tank for the leading economies of the world to address among critical issues risks to the financial system.
This is the organization’s official description: “The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system. The FSB promotes international financial stability; it does so by coordinating national financial authorities and international standard-setting bodies as they work toward developing strong regulatory, supervisory and other financial sector policies. FSB fosters a level playing field by encouraging coherent implementation of these policies across sectors and jurisdictions.”
This means that the FSB, working through its member organizations, seeks to strengthen financial systems and increase the stability of international financial markets. The policies developed in the pursuit of this agenda are then implemented by jurisdictions and national authorities.
Members include the US Department of the Treasury, the Federal Reserve System, and the Securities & Exchange Commission.
The TCFD is a creation of these and other members.
The TCFD issued recommendations for companies to measure, manage and report on risks and opportunities related to climate change — which Mayor Bloomberg sees as key driver in directing capital to companies with smarter, more responsible leadership that protect and company and seize opportunities related to climate change.
The TCFD guidelines have been adopted or endorsed by 1,000-plus companies and organizations in 80 countries on six continents, Michael Bloomberg pointed out in his editorial. Sovereign members of the G20 are among the endorsers — Japan, Canada, France, New Zealand, the United Kingdom.
And so the United States of America — the world’s largest economy — could serve as the catalyst, the unifier, the key player in the drive for adoption of global standards under Biden-Harris leadership.
This would serve to bring a coordinated effort to deal with the challenges posed by climate change on a global basis, help to develop the right regulations for the world’s family of nations to develop uniform, comparable regulations for climate change disclosure and reporting, and remove uncertainty for corporate leaders and their providers of capital.
Michael Bloomberg, whose own company’s widely-used platform (“the Bloomberg”) carries volumes of ESG data, tapping his own knowledge of ESG data, advises us that such data must be useful, comparable, and not be confusing (as is frequently now the case).
Even with the increasing flow of ESG data, the world’s financial markets, Michael Bloomberg points out, operate in the dark today in terms of climate change – which he sees as the biggest risk to the global economy.
Michael Bloomberg is urging the Biden-Harris team to take action “…to help to develop a single global disclosure framework for climate risks that helps drive a faster and more effective response to climate change”.
Or else we will continue “with competing frameworks that make it harder for investors and businesses to identify risks, leading to more economic harm and lower progress”.
Mayor Bloomberg’s summing up his views: “Climate disclosure is not flashy but it’s one of the important tools we have to speed progress on prevent climate change and economic hardship…which could dwarf the effects of the financial crisis. The faster we make [disclosure] standard practice globally, the safer and stronger the economy will be. The US can help lead the way.”
There’s the complete editorial and more perspectives shared at bloomberg.com/opinion.
And so we end 2020 (farewell!) and begin a new year, filled for many people with great hope and promise for better days. Stay Tuned! And best wishes to you for the new year.
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P.S. Michael Bloomberg was also the Chair of the Sustainable Accounting Standards Board (SASB) Foundation, 2014-2018 and remains supportive of the organization.
You can follow Michael Bloomberg on his web site: https://www.mikebloomberg.com/
* The G20 nations are the USA, UK, Germany, France Italy, Japan, Canada (these are the G7); Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey. Plus “guests” – Spain; two African countries; the International Monetary Fund; World Bank; United Nations; the World Trade Organization; the Financial Stability Board (all attend G20 summits).
To understand the influence of the Financial Stability Board, here are the members: https://www.fsb.org/about/organisation-and-governance/members-of-the-financial-stability-board/
The members of the Task Force (TCFD) and other information: https://www.fsb-tcfd.org/about/