Launch of the Climate Liabilities and Assets Forum
Good morning,
Welcome to the Climate Liabilities and Assets Forum. My name is Thomas Annicq and together with Mika Morse we created the Climate Liabilities and Assets Initiative, to work together with the ecosystem, all of you, to accelerate this transition to the balance sheet.
We are here today to address a structural flaw at the heart of our economic system — a flaw embedded in our balance sheets, our accounting standards, and our capital markets.
That flaw is this:
We treat climate-related externalities — emissions, ecosystem degradation, chronic physical risk — as if they are non-financial.
But these externalities will start to impact companies--whether from developments in law and policy that require it or the simple economic reality of climate disruptions. And in fact, they already are. We record their consequences, if at all, in ESG reports, pledges, or footnotes. But rarely, if ever, in the core financial statements.
And as a result, the single most systemic risk of our time remains materially unrecognized.
When we say we want to put climate on the balance sheet, we mean this:
We want to end the illusion that environmental externalities — emissions, land use change, biodiversity collapse, pollinator loss, water stress — are “non-financial.”
We want to recognize the obligations created when companies make climate commitments and take action to fulfill them.
And we want to recognize the assets created when companies invest in mitigation — in innovation, in decabonization, in carbon credits, in engineered or natural solutions that deliver future economic value.
Today, those actions are usually expensed.
The harm is free. The repair is penalized.
That accounting logic distorts investment. It hides risk. It sustains inaction.
But here’s the inflection point: this is changing.
And not because of idealism — but because of inevitability.
Companies are having to grapple with the real financial impacts of climate for several reasons.
First, policies are moving forward.
Across jurisdictions — from California to the EU — we’re seeing mandatory disclosures, transition planning requirements, and attention from financial regulators on material financial risks.
You’ll hear more on this in our session with Paul and Mika, who have had a front-row seat in watching regulatory developments start to drive the integration of climate reporting and financial reporting.
Second, the financial impacts of climate are landing on the CFO’s desk.
Climate-related events are becoming financial events.
Whether it's drought tightening supply chains, floods damaging assets, or insurance premiums tripling, the costs are real — and showing up in forecasts, stress tests, and capital planning.
Third, litigation risks are rising.
These externalities are becoming legal liabilities — not just through disclosure gaps or greenwashing, but through lawsuits for damages tied directly to the physical impacts of climate change.
We are seeing courts entertain claims that link emissions to extreme weather, public health costs, and loss of livelihoods.
Legal exposure will become accounting exposure — and auditors will begin to ask: do these risks represent constructive obligations, contingent liabilities, or provisions requiring disclosure and recognition?
And here's what’s often overlooked: recognizing assets alongside those liabilities isn't just allowed — it’s powerful.
It creates a forcing mechanism for climate investment. If liabilities grow while assets don’t, a company’s cost of capital rises, insurance becomes harder to secure, and investor confidence erodes. That imbalance pressures companies to invest in solutions.
Holding climate assets on the balance sheet is financially superior to expensing them. It transforms climate action from a sunk cost into a source of value.
It makes it easier to communicate the value of climate action to stakeholders — investors, auditors, and regulators alike can see what’s been built, not just what’s been spent.
In the case of carbon credits, the complexity around “net zero” and credit retirement fades. Holding credits actively — as assets — makes intent and action legible: if your trees grow faster, your assets appreciate; if they burn, you must impair and reinvest. This is not a loophole — it’s normal accounting.
We are at the beginning of a profound shift in accounting logic.
The IASB and FASB are taking early steps — recognizing that when a provision is booked under IAS 37, climate-related expenditures may qualify as assets under IAS 38.
FASB’s Topic 818 opens the door for carbon credits to be recognized on the books.
And slowly, the firewall between climate and core financials is beginning to erode.
This is not just about accounting rules.
This is about repricing the economy — reallocating capital based on a truer understanding of risk and value.
Over the few hours, we’ll dig into the implications:
What is possible already in today's accounting frameworks
How climate liabilities make their way to the balance sheet
How climate assets are already being held, traded, and valued
Let me leave you with this:
Climate risk is not an ESG issue. It’s an accounting issue.
The question is no longer if climate ends up on the balance sheet — but when, how, and who gets there first.
Thank you for joining us.
Let’s get started.
Mika Morse & Thomas Annicq
