With a single tweet, the chief executive officer of Unilever (NYSE: UL) provided a major boost to the climate change movement. Unilever chief Paul Polman said recently that “climate change reporting should be mandatory for businesses,” and by doing so, delivered a shot in the arm for shareholders of publicly-held companies that face climate change risk. Climate risk is the potential vulnerability of businesses due to the negative effects of climate change or the efforts to reduce it.

Polman has been a long-time advocate for greater awareness of the danger posed by climate change. In 2014, he spoke at the Global Landscapes Forum and mentioned the damage being done by deforestation. Last year, Polman was a major supporter of the landmark Paris climate change accord, and in an interview posted on Unilever’s website, augmented that support with a World Bank forecast that climate change threatens to send 100 million people back into poverty by 2030.

The most recent comments regarding climate change risk and the lack of related disclosure is a huge issue for investors.

A major risk, hiding in plain sight

Unilever’s CEO makes an important point. More broadly, there is an argument to be made that shareholders of a publicly-held company have the right to know what the level of climate risk the company faces going forward. Publicly-held corporations are required to list key risk factors facing the business in quarterly 10-Q and annual 10-K filings with the Securities and Exchange Commission. While some choose not to acknowledge it, climate change is a real and significant risk to the business prospects of many large companies.

And yet, disclosure of climate change-related risks is woefully falling short among U.S. companies. According to the Sustainability Accounting Standards Board (SASB), while 93 percent of public companies face some level of climate risk, only 12 percent disclose it. The amount of wealth at risk is staggering; 93 percent of U.S. equity market capitalization would equate to $33.8 trillion of wealth at stake. Not all of this is outright refusal on the part of corporate executives—many leaders simply do not know how to quantify such risk. But this still leaves a pressing need to elevate climate-risk expertise to a higher level.

The comments from Unilever’s chief executive are notable for several reasons. Most importantly, it represents the leader of a major conglomerate breaking ranks with his peers and making a strong call for an environmental cause. While these comments come from outside the oil and gas industry, it is nevertheless important for a high-profile individual to shine a light on a very important issue. And, the comments could put pressure on other CEOs to do the same, even those within the energy sector, which to this point has adopted a seemingly unanimous policy of silence on the subject of climate risk.

Going forward, it is clear that more can be done by large U.S. companies, whose shareholders have put their money at risk. If the expertise is not currently available internally, companies may want to bring in outside consultants to help assess climate risk. Otherwise, shareholders will be surprised if and when companies begin to actually realize the damage done by climate change. From an accounting perspective, this could come in the form of declining revenue, stranded assets, or impairments of assets.

Importantly, Polman has practiced what he preaches. He has spearheaded many initiatives at Unilever that have meaningfully reduced the company’s carbon footprint. Sustainability is a core tenet of the Unilever corporate culture, and the results speak for themselves. Since 1995, Unilever has reduced its carbon emissions per ton of production by 65 percent. Moreover, the company has shared its compressed deodorant technology that it uses in its own products with its competitors.

These efforts are not just due to a moral obligation—the changes Unilever has implemented have had great financial results as well. Unilever’s sustainable brands are growing twice as fast as its other brands, and the company forecasts 70 percent of total grocery growth in the U.S. and Europe will be comprised of responsible consumption products. These actions also result in significant cost savings. Unilever states that its eco-efficiency measures have resulted in more than $440 million in cost reductions since 2008.

Indeed, Unilever has benefited greatly by embracing environmentally-friendly policies. Unilever grew organic revenue, which excludes foreign exchange fluctuations, by 4.7 percent last quarter, which is an excellent growth rate in a slow-growth global economy. Going back further, Unilever grew total revenue and earnings per share by 10 percent and 14 percent last year, which was significant outperformance of its peers in the consumer staples sector. Clearly, making good environmental decisions does not necessary have to conflict with making good business decisions.

With so much money at stake, taking preemptive action to disclose possible risk related to climate change is likely the better course to than reacting after the damage has been done.

Companies to watch

Among the U.S. companies that would most be affected by climate change risk, most prominently stranded asset risk, are Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), and ConocoPhillips (NYSE: COP). These are three of the biggest U.S. firms; by market capitalization, these three companies collectively have a market capitalization of approximately $640 billion. And, they are also among the biggest holders of oil and gas reserves. For example, Exxon Mobil is the largest publicly-traded energy company in the world and has a resource base of 91 billion barrels of oil equivalents. These oil majors need to disclose stranded asset risk, which is the risk that a significant portion of their oil and gas reserves may never be developed because of the adoption of new sources of energy.

Bob Ciura is an independent equity analyst. Since 2012, his work has focused on fundamental investment analysis of publicly-traded companies in the energy, technology, and consumer goods industries. Bob has a Bachelor's degree in Finance and an MBA in Finance.