The Use of Technology in Corporate Management and Reporting of Climate-Related Risks

Abstract

AbstractSustainable finance and climate change have emerged as areas of renewed interest in the wake of the global financial crisis, when the assessment of companies’ risk management was shown to be the key to the prevention of systemic disruption. While many aspects of corporate disclosures were radically and quickly revised following the crisis, even several years later commentators have pointed to a continuing pressure for improvement to regulatory requirements in relation to financial statements. Much of the debate focuses on the need for expedited operational execution of reporting information. Over the past decade significant advances have taken place in digital technologies, especially with respect to the security and processing of granular data. This article examines how these new technologies can be deployed in a manner that will address the need to eliminate the vulnerabilities of the climate risk management process, which requires standardisation of data in order to improve managerial decision-making and the desired outcomes. It further explores the use of technology to enhance the evaluation of climate change impact on company exposures, and to advance transparency in regulatory reporting for financial institutions. Technology applications such as automated language systems offer opportunities to align corporate disclosure with climate change policy objectives, which in turn can increase sustainability in the performance of companies’ activities.