Photo: Chrisjtse, Flickr.

Climate change is a boardroom issue. That has been clear for many monitoring environmental science and debate over recent years.

But it became abundantly clear at the beginning of this year when the G20’s Financial Stability Board set up a task force to develop guidelines for climate change financial disclosures.

The task force will develop a voluntary set of guidelines, but the emphasis is clear: G20 leaders believe companies should be reporting the risk presented by climate change for the benefit of shareholders and stakeholders.

This week, pressure on companies to report their climate-related risk was ramped up when environmental campaigning group, ClientEarth, made formal complaints to the Financial Reporting Council against SOCO International and Cairn Energy, claiming they had failed to adequately disclose their climate-related risk in recent annual reports.

ClientEarth’s working assumption must therefore be: forget about the task force, there’s enough in the Companies Act compelling corporates to report on climate issues.

SOCO and Cairn deny they have failed in their reporting obligations.

SOCO’s argument is an interesting one. It says climate issues are covered by the disclosure of other, related risks.

Have they done enough?

The question, then, is: have companies that take SOCO’s view done enough to fully confront the challenges of climate risk and report on them?

That’s a hard one to unpack. There will be those who argue it doesn’t work, and those who claim it does.

Whatever position you take it’s not hard to imagine that we are far from a time when investors and stakeholders will demand explicit mention of climate issues and the associated risk in annual reports.

As climate develops as a topic of debate so too will the demands on companies to be clear about their stance and the effect climate change may have on their business models. Shareholders will not be happy being left to figure out whether climate has been factored in to other principle risks.

As yet we don’t really know what the task force will come up with. Nor do we know what national governments and regulators will do with those guidelines when they emerge. Some will argue they need to be integrated into existing reporting demands; others will argue for the guidelines to be left as a voluntary option.

However, the importance of climate risk in some business models will not go away. Nor will shareholder and stakeholder interest. ClientEarth has got ahead of the task force to turn climate change into a formal boardroom issue. And it is unlikely to go away.