Episode
12

Climate Change & Its Impact on Organizational Financial Planning

September 8, 2021
|
Duration:
2068409
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In This Episode:

Join energy coaches David Arkell and John Pooley on an episode about the severity of climate change and how it will impact your corporations access to funding. This episode features how your climate change plans impact funds and bank loans, what your organizational board structure should prepare for, and more.

Highlights

  • Climate Impact on Financial Evaluation: Financial institutions, such as banks and hedge funds, are increasingly assessing companies’ climate strategies when considering loans and investments, shifting focus from profitability alone to include environmental sustainability.
  • Role of Pension Funds and ESG: Pension funds are prioritizing ESG factors, encouraging companies to adopt sustainable practices. European funds, in particular, are influencing major companies like Toyota to improve their carbon footprint.
  • Challenges for Banks and Credit Ratings: North American banks are starting to incorporate ESG criteria, but implementation is inconsistent. Companies with strong climate plans may gain advantages such as lower loan interest rates and improved credit ratings.
  • Pressure from Insurance Companies: Climate-related risks are driving insurers to raise premiums or require additional protective measures from businesses, shaping corporate climate risk management strategies.
  • Importance of Board Engagement: Organizations must involve their boards in climate strategy to meet regulatory and market demands. Board members need climate literacy to effectively align financial decisions with climate goals.
  • Key Insights

  • Climate Impact on Financial Evaluation: Financial institutions, including banks and hedge funds, are increasingly factoring companies’ climate strategies into loan and investment decisions, reflecting a shift toward evaluating both profitability and environmental sustainability.
  • Role of Pension Funds and ESG: Pension funds are prioritizing ESG factors, driving companies to adopt sustainable practices. European pension funds are particularly active, influencing large corporations like Toyota to improve their carbon footprints.
  • Challenges for Banks and Credit Ratings: North American banks are gradually adopting ESG criteria, but inconsistent implementation remains a challenge. Companies with strong climate plans may benefit from lower interest rates and enhanced credit ratings.
  • Pressure from Insurance Companies: Insurers are responding to climate risks by raising premiums or requiring additional protective measures from businesses, shaping how companies manage and mitigate climate risks.
  • Importance of Board Engagement: Boards must engage with climate strategy to address regulatory and market pressures. Climate literacy among board members is essential to integrating climate goals into organizational financial decision-making.
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