Examples of tipping processes include the irreversible melting of the Greenland ice sheet, the collapse of the West Antarctic ice sheet, and the weakening of the Atlantic thermohaline circulation.” 17 See Richard Mahony and Diane Gargiulo, “The State of Climate Risk Disclosure: A Survey of US Companies,” White Paper (Chicago: Donnelley Financial Solutions, 2019), 14  -5that even well-informed investors may underestimate the likelihood of large shocks related to climate.
18 Combined with the uncertainty in the timing and magnitude of climate change itself, this mispricing could lead to financial volatility as conditions evolve and perceptions shift. Consistent, comparable, and actionable disclosures are critical to understanding firms’ exposures to climate risks and to accurately pricing that risk.