YNTR: How to Measure the Impact of Business Decisions on Climate Change

You Need to Read Financial Times’ How to Measure the Impact of Business Decisions on Climate Change by Natasha Landell-Mills

Fundamentals of financial reporting must change to accurately account for climate risk, and five types of market participants (accounting standards boards, auditors, shareholders, asset managers, and credit rating agencies) can act to bring accounting in line with reality. 

What gets measured gets managed. The climate impact of business and consumer decisions is not being fully measured and thus not being properly managed. Decisions on where to invest and what goods and services to buy are ignoring the consequences for our planet. This market failure could prove to be our undoing, unless it is urgently fixed.

A global carbon tax would be by far the neatest policy solution: put simply it would force everyone to internalise the climate externality. The IMF estimates that to deliver the 2015 Paris climate agreement’s goal of keeping the global temperature rise well below 2C, we need a tax worth about $75 a tonne of carbon. But a charge of that magnitude is politically toxic for many and, despite considerable efforts to clinch a global deal, there is little sign of a governmental breakthrough.

While we wait, there are other levers we should pull to help transform behaviour. To put us on track toward net zero carbon emissions by 2050, we need five groups of market participants to step up and align their work with the Paris agreement goals. They have the power to reshape financial incentives in this area.

Bring your loved ones together this holiday season to give #GiftsToTheFuture. Each day on the way to welcoming the new year, we'll share a little something you can do to help make it (and many years that follow) better for those you love. enough.co/gifts-to-the-future

How you earn, spend, save, and invest can grow climate solutions faster. Let's work on it together?