Investors expect COP21 will stimulate ESG reporting

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Following the December 2015 Paris Climate Conference — also known as COP21, for the 21st meeting of the Conference of Parties — representatives of 195 nations have agreed to the first-ever universal, legally binding global climate deal that will limit global warming to below 2 degrees Celsius from pre-industrial levels.

It will require the parties to achieve zero net carbon emissions globally by mid-century. The COP21 agreement will likely cause a significant shift in global economic policies, even beyond what was put forward by nations in Paris. It will reshape financial and economic markets toward zero emissions technologies, renewable energy sources and away from emissions-intensive products and services.

Even if the challenging targets set out in Paris are met, companies will still likely be impacted by the physical impacts of a changing climate, and investors are increasingly asking them to set out how they’re adapting to the expected changes.

According to our poll of investors, 27% of all survey respondents expect COP21’s “below 2-degree” goals to lead to dramatically increased disclosures of company climate practices and related risk management strategies, with the majority (58%) expecting COP21 to moderately increase such disclosures. Just 15% of global investors expect little or no change in disclosures.

Investors expect COP21 will stimulate ESG reporting - Figure