The roundtable “Questions to Assist Non-Executive Director Oversight of Physical Risk Climate Management”, was held on 15 October 2020, hosted by the Directors’ Climate Forum Russian Chapter in cooperation with Deloitte CIS, Acclimatise and MinterEllison. Experts from Russia and the UK discussed with independent directors of the largest Russian and international companies how face new climate challenges, how to enhance risk management processes, as well as what procedures and practices need to be implemented today not to jeopardize the company’s activities in the near future.
Physical climate risks are currently one of major business concerns. Climate change affects productivity and asset values, increases the cost of capital, and changes the supply and demand curve of products and services. At the Russian Chapter roundtable, their views on this problem, as well as their experience in developing a sustainable business strategy were shared by:
- Olga Pascault, Founder and Chair of Management Board at Russian Chapter, Member of the International Advisory Board at APQ Global, Independent Director at NESsT UK;
- Elena Haykin (Sapozhnikova), Founder and Member of Management Board at Russian Chapter, partner of the Digital Horizon investment group, independent director of PJSC Inter RAO;
- Ian Colebourne, Chief Executive Officer, Deloitte CIS;
- Andrey Yakushin, Head of Corporate Affairs Development Division at the Central Bank of Russian Federation;
- Richard Bater, Climate Risk Analyst , Acclimatise (UK);
- John Firth, Chief Executive Officer and Co-Founder of Acclimatise (UK);
- Ellie Mulholland, Senior Associate, MinterEllison, Executive Director of the Commonwealth Climate and Law Initiative.
Opening the event, Olga Pascault and Elena Haykin (Sapozhnikova) emphasized that in terms of the probability of occurrence and possible scale of losses, climate risk is among the most significant.
On the one hand, companies’ actions aimed at reducing greenhouse gas emissions and other negative impact on the environment help to avoid physical consequences, but at the same time lead to significant transitional risks – market, technological or regulatory. On the other hand, the inability to reduce emissions can limit transitional risks, but will aggravate climate change, and it is very important for the company to find a reasonable balance.
Ian Colebourne told the participants about Deloitte’s international initiative WorldClimate, which drives responsible climate choices within and beyond the company by focusing on four principles: Net-zero by 2030, operating green, empowering individuals and engaging ecosystems.
Ian noted that Deloitte also contributed by supporting its clients on their paths to a low-carbon future with climate risk assessment and management, and climate change mitigation and adaptation strategies.
In his speech Andrey Yakushin emphasized how the Bank of Russia helped in financing sustainable development. In particular, special attention was paid to the Bank of Russia Regulation No. 706-P, “On Securities Issue Standards”, which provided a legal basis for issuance of labeled green and social bonds; Recommendations of the Bank of Russia on the implementation of principles of responsible investment, as well as creating in the Russian Federation a taxonomy of green activities and a verification system for green projects carried out jointly with the Ministry of Economic Development of Russia and VEB RF.
Dr. Richard Bater outlined the most likely physical climate risks facing the Russian Federation and noted that in our country the average temperature is rising at more than twice the global average rate and the number of climate-related extreme events also increasing. So, businesses ought to honestly answer themselves today if they have the right intelligence and knowhow to remain competitive and compliant in the face of a changing climate, when environmental adaptation has already become an important part of the political agenda at the federal level.
John Firth introduced the Guidance for Directors, prepared by Acclimatise, and set it within the context of wider global action by corporates, financial institutions and regulators to better manage and disclose physical climate risks. He also highlighted the role of the independent Board of Directors in shaping this agenda and tracking results.
Ellie Mulholland presented on the governance and liability issues that arise from a warming world, rising expectations of investors and regulators in global capital markets, responsibilities of independent directors in the context of climate change and how different warming scenarios in the future will impact resilience of assets and capitalization of the company.
In conclusion, the speakers answered the questions of the participants and invited them to the next Russian Chapter event – the webinar “Addressing Climate Change Issues: Impact on the Audit and Risk Committees’ Agenda”, which will be held on November 12, 2020.
The roundtable was supported by DLA Piper and international public relations agency PBN H+K Strategies. The recordings of the event can be found at the Russian Chapter’s site.
Russian Chapter serves as the Russian hub for the global platform on climate change for board members, that operates under the auspices of the World Economic Forum. By implementing the Climate Governance Initiative (CGI), the World Economic Forum supports the growing awareness and competencies of boards of directors for effective climate governance.