Businesses will soon be required to address the risks of climate change. The new rules are coming quickly – more quickly than most might think. 

In less than a year, Canadian regulated financial institutions will have to disclose climate related risks and emissions. To meet the new requirements, banks, trust and insurance companies will in turn be asking their clients to disclose carbon emissions and risks. 

Starting January 2024, any business seeking a loan, mortgage, investment capital or financial services should be prepared, and able, to report their carbon emissions and other climate-related exposures.

Canada is not alone on this. Canada’s disclosure requirements are very similar to those coming from the Securities Exchange Commission in the United States, the U.K. government and the European Union. 

What’s the best way for a company to prepare for the new rules?

Most importantly, is what they not do. They must not assign the task of climate-related disclosures to a single individual. Disclosure is only the first step. Disclosing carbon emissions and managing carbon emissions are two inter-related, but different, tasks.

The activities that contribute to global warming will soon have to be managed as well as disclosed. Companies need to properly prepare now to do both. No single individual can actually reduce an entire company’s carbon emissions. That work requires an organization-wide effort. 

The best way to reduce emissions is to engage a diverse cross-section of people in the organization. People are more likely to feel empowered in making changes if they are part of the force making decisions about those changes. Include managers from the C-suite to mid-management and workers on the floor. Company climate goals are best realized by tapping into the diverse ideas and knowledge held by various disciplines throughout the organization. 

A carbon management team is needed to successfully manage climate risks. Greater inclusion generates more ideas. Additional perspectives generate more productive innovation. A carbon management team will drive improvement and savings for a company on an ongoing, sustained basis. 

It’s important to maintain a team as new business requirements, opportunities and ideas will always arise. Fresh perspectives add value. Team members will also change over time. Having a carbon management team in place when a person leaves, is a benefit. Activities can continue without pause, through the transition. 

Creating a group charter or mandate will direct the team’s ongoing efforts regardless of personnel changes. Designing targets, recording results, updating plans, reporting progress. All these actions set up the team’s goals and track success over time.

Be prepared when 2024 arrives. 

A mandated team can make easy work of the carbon and environmental disclosures needed to access financing. More importantly, however, a carbon management team will give the companies they work for a competitive edge in the low carbon economy that is coming.