The Climate Disclosure Standards Board (CDSB) was an international non-profit organisation providing frameworks to help businesses and investors identify, manage and communicate the climate-related information needed for informed decision making.
CDSB’s structures and tools contribute to the development of an integrated, global approach to climate-related information disclosure that reflects the physical and transitional nature of climate change risks and opportunities. Disclosures made in line with CDSB recommendations can help businesses to unlock new markets, manage risks, improve resilience and build a stronger case for investment.
CDSB worked with businesses, accounting firms, standard setters, regulators, policy makers, civil society and investor groups who recognise that disclosures can play an important role in moving the global economy towards a low carbon future. CDSB’s activities are aligned with, and contribute to international climate-related disclosure initiatives including those led by the UN Climate Change secretariat through its Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).
In 2015, CDSB became a supporting organisation of the International Integrated Reporting Council (IIRC). It has since been integrated into IFRS.
The Physical Risks of Climate Change
Climate change poses physical risks to people, property and natural systems around the world. These risks arise from increases in average global temperature and associated changes in weather patterns (such as more extreme heat waves or heavy rainfall), sea level rise, alteration of major ocean currents and more extreme weather events (such as hurricanes or floods). The scale and pace of climate change is such that many natural systems are already experiencing significant changes – often outside of their historic range – which is having an impact on people and economies. The physical risks from climate change are therefore significant and are set to increase over time as average temperatures continue to rise.
The Transitional Risks of Climate Change
In addition to physical risks, the speed at which governments, businesses and investors are moving to adopt low carbon technologies and business models is creating a number of transitional (“stranded asset”) risks for companies across all sectors. These relate to existing high carbon assets which may become uneconomic as a result of government policies or technological advancements (for example if a particular fossil fuel becomes stranded due to increasing regulation or competition from cheaper renewable energy sources). As such, companies need to consider how best to manage these risks – whether that be through adapting their business models, investing in technology or infrastructure improvements, or taking other actions. Given the potentially significant implications for company values, it is crucial that these risks are factored into strategic decision making.
The Opportunity Risks of Climate Change
Whilst there are significant risks associated with climate change, there are also opportunities for companies that are able to proactively manage them. This might include investing in low carbon technologies or developing new products and services which meet rising customer demand for sustainability. It could also involve improving efficiency and resource productivity across operations – something which can lead to both cost savings and improved competitiveness. Taking advantage of these opportunities can help companies not only mitigate against some of the risks they face but also position themselves well for growth in a low carbon economy.
To succeed in the transition to a low carbon economy, businesses need accurate information about both the physical risks they face from climate change as well as the opportunities that are available to them. The Climate Disclosure Standards Board (CDSB) provides frameworks to help businesses identify, manage and communicate this information so that they can make informed decisions about how best to respond to these challenges. Disclosures made in line with CDSB recommendations can help businesses unlock new markets, improve resilience and build a stronger case for investment – ultimately positioning them well for success in a low carbon future.
Looking to align your organisation with CDSB’s recommendations and framework? EmpoweredESG can assist with your alignment and help you manage your ESG risk.