This article, as originally published by the ABA Section of International Law in the December 2017 edition of the International Environmental Law Committee Newsletter was co-authored by Withers' Jeanne R. Solomon. The publication provides guidance on the impact of climate-change-related voluntary sustainability reporting. Other authors include Robert Blanchard, Kristie Blase, Karen Bridges, Naicheng Deng, Virginia Harper Ho, Linda Lowson and Paul Wehrmann.


The Financial Stability Board (FSB), established in 2009 by the Group of Twenty (G20) as the successor to the Financial Stability Forum, is a global financial macro-prudential oversight authority charged with promoting financial stability and supervising global financial system systemic risk. It develops and recommends regulatory and supervisory financial sector policies relating to systemic risk, and monitors consistent implementation of the standards and policies to which its members have agreed. FSB members include G20 Finance Ministers and Central Banks, International Financial Institutions, and International Standard-Setting Bodies.

In September 2015, the FSB received a remit from G20 Finance Ministers to develop voluntary guidance on climate-related financial reporting. The direct impetus for this remit was climate risk research conducted in 2014 by the Bank of England (BOE), led by BOE Governor Mark Carney (who is also Chairman of the FSB). The BOE research found that climate risks, and their financial impacts, represent a clear, growing, material global financial system systemic risk.

The FSB, led by Governor Mark Carney, decided that two principal corporate disclosure weaknesses needed to be addressed to mitigate this rising climate-related systemic risk:

  • A plethora of disparate, inconsistent disclosure frameworks and requirements addressing these risks (as well as the broad range of environmental, social, and governance, or sustainability risks) have produced a lack of disclosure standardization, making it difficult for investors to evaluate and compare corporate disclosures; and
  • Existing disclosure frameworks largely have failed to provide meaningful insight into climate-related financial impacts.

These corporate disclosure weaknesses meant that corporate climate-related risks likely were being understated, undervalued, or otherwise improperly disclosed in corporate financial statements, as well as being under-managed or mismanaged by corporate management and boards, thereby creating increased investor risk and the potential for another international financial crisis.

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