Companies selling fossil fuels are facing their Netflix moment, as cheap solar panels and electric vehicles are poised to do to coal-fired power stations and gas stations what online streaming did to Blockbuster.

This warning comes not from Greenpeace, but from the international Task Force on Climate-related Financial Disclosure established by Mark Carney, former Governor of the Bank of Canada and present Governor of the Bank of England. The Task Force was set up as part of an initiative by the G20 finance ministers and central bankers to avoid another financial meltdown like the 2008 subprime mortgage crisis. They chose to focus on climate-related risks after Carney warned in 2015 that climate change could become a “defining issue for financial stability.”

Greenpeace Canada is, however, calling on the Ontario government to protect Canadian pensions and investments by following through on that Task Force’s recommendations. To that end, we filed a formal request under Ontario’s Environmental Bill of Rights asking the Ontario government to review the need for mandatory disclosure of climate-related risks in corporations’ financial filings. The government has indicated it will reply to our request by the end of the year.

Carney identified three kinds of climate risk. There are the risks from the physical impacts of global warming such as sea level rise or the more extreme hurricanes and wildfires that have struck North America this year.

Lawsuits arising from the failure of companies to reduce their emissions of heat-trapping gases or insufficiently disclose material financial risks are another kind of risk. Companies like Exxon are already being investigated for misleading the public and investors on climate risks, and sued for contributing to climate damage costing cities billions.

And there are transition risks, as it becomes apparent that a significant portion of the coal, oil and gas reserves that companies have on their books now will stay in the ground (and hence lose their value) as we make the inevitable transition from fossil fuels to renewable energy.

Mandatory disclosure of these risks in a consistent, comparable format – just like the way companies have to follow accounting rules to explain their balance sheet – would enable investors to make better decisions.

It would also make corporate boards take climate-related risk seriously: misrepresenting or omitting risks in your financial filings opens a company up to an investigation for fraud or lawsuits from shareholders.

Adopting the Task Force’s recommendations would also require corporate CEOs and board of directors to publicly answer a key question: Does our business strategy still work in a world that is reducing fossil fuel consumption at a rate consistent with achieving the Paris climate agreement? If not, then they are at risk of going bankrupt if the world does succeed in making a transition to renewable energy. If that’s the plan then management should be prepared to defend it to their shareholders and customers.

This isn’t a problem for the distant future. Earlier this year, Greenpeace Canada challenged Kinder Morgan’s sale of shares to finance the Trans Mountain Expansion pipeline on the grounds of inadequate disclosure of climate risk. The legal document underlying the share offering was subsequently amended to admit that if the world does make progress towards the Paris climate agreement’s decarbonization goal, then the oil companies who have 20 year contracts to ship oil on their pipeline might not be able to honour those commitments.

Nor is it just a concern just for environmentalists. More than 100 firms, with market capitalizations of over $3.3 trillion and financial firms responsible for assets of more than $24 trillion supported the Task Force’s recommendations when they were presented to the G20 in July. Canadian supporters included our major pension funds: the Canada Pension Plan Investment Board, the Ontario Teachers’ Pension Plan, OPTrust, the Caisse de dépôt et placement du Québec and the British Columbia Investment Management Corporation.

The Canadian Securities Association, which brings together provincial securities regulators, is currently reviewing the Task Force’s recommendations. Greenpeace Canada met with Ontario Securities Commission staff to discuss our recommendations, where we argued that making this kind of fundamental change requires more than voluntary guidelines.

That is why we are asking the Ontario government to update securities regulation as part of the province’s climate adaptation plan.

Ontario, along with most other Canadian jurisdictions, has taken an important step in putting a price on carbon. Now time to take the next step in preparing our economy for the 21st century by implementing mandatory climate risk disclosure.

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