By Peter Paul van de Wijs, Chief Policy Officer
Corporate accountability is now a pressing global focus, underscored by recent international discussions on environmental action. Companies’ roles in tackling sustainability challenges were central to last month’s Biodiversity COP16 in Colombia, September’s Climate Week NYC, and remain a high priority for the upcoming Climate Change COP29 in Azerbaijan.
In his recent opinion piece, published on Medium, Peter Paul van de Wijs, Chief Policy Officer, highlights the crucial role of understanding and disclosing corporate impacts in financial risk assessment.
Embracing Impact Materiality for Financial Resilience
Van de Wijs argues that incorporating impact materiality—evaluating how a company’s actions affect society and the environment—is increasingly vital for gauging true financial resilience. Traditional financial reporting is proving insufficient as businesses face risks that are intricately tied to environmental and social factors. Over time, the majority of a company’s impacts are likely to become financially material, affecting its bottom line directly or indirectly.
“Financial decision-making now requires transparent disclosure of corporate sustainability impacts,” he writes. Investors adhering to conventional risk models may be reluctant to change, but climate risks will likely compel a shift, potentially leaving those who resist with stranded assets, reputational damage, and declining returns. This emerging perspective recognizes that focusing solely on immediate financial risks is an inadequate approach in today’s interconnected economy.
As van de Wijs explains, a growing number of market participants understand that a more holistic, impact-aware approach is essential for navigating today’s financial and environmental complexities. This shift in corporate accountability marks a transformative moment in aligning financial practices with global sustainability priorities.
| Find out more here. |
