To help investors better understand, measure, and manage their exposure to climate-related risk, the Sustainability Accounting Standards Board (SASB) today published a Technical Bulletin on Climate Risk.

SASB develops disclosure standards to provide companies with a framework for effectively disclosing sustainability-related material risks. The new technical bulletin examines exposure to climate risk across 79 industries and provides industry-specific climate risk disclosure guidance. In the bulletin, Risky Business Project Co-chair and former Treasury Secretary Hank Paulson and Risk Committee Member and former Treasury Secretary Robert Rubin discuss the importance of tackling climate change risk:

“If investors are to effectively evaluate climate risk, they need a far better understanding of granular, industry-specific climate impacts, with industry-specific standards by which to evaluate corporate performance on these issues. By adopting a set of industry-based market standards for disclosure, especially in SEC filings, investors will be able to accurately compare and contrast companies,” they write. “This latest SASB bulletin is a good next step toward this goal, and offers for the first time a comprehensive guide to understand and measure the unique climate impacts across all industries of the economy.”

The research finds that climate change affects 72 out of 79 industries, which is 93 percent or $33.8 trillion of capital markets. Climate risk manifests differently from one industry to the next, so SASB advises different actions for different sectors. For example, agricultural concerns must manage water as an increasingly stressed resource, oil and gas companies need to properly value reserves in a carbon-constrained world, and commercial banks have to effectively manage the carbon embedded in their loan portfolios.

Due to the ubiquity of climate risk, investors can’t simply diversify away from it; instead they must focus on managing it—and on encouraging portfolio companies to manage it—in all its forms.

Paulson and Rubin emphasize the need for better disclosure. Their comments build on a comment letter they wrote with fellow former Treasury Secretary George Shultz, in response to the Securities and Exchange Commission, which is currently reviewing Regulation S-K. More on the SEC letter can be found here.