Capital deployment and governance not yet aligned with stated risks
According to ERM’s review, many companies that have identified material climate exposures have not yet aligned capital allocation or governance settings with those risks. In most cases, the consultancy found little or no capital specifically set aside for adaptation, physical risk management, or transition investments, and few examples where climate indicators are integrated into executive remuneration, internal pricing, or capital planning frameworks. “Investors in particular need decision-useful information, and the onus is on reporters to quantify the risks they are declaring as material, including financial impacts, and explain how they intend to mitigate them,” Stewart said.