Task force urges companies to disclose climate-related financial risks

A task force set up by the G20’s Financial Stability Board has published its recommendations on climate-related financial disclosures. One recommendation is to integrate climate risk information into mainstream financial filings.

The Task Force on Climate-related Financial Disclosures (TFCD) was established by the G20’s Financial Stability Board (FSB) in 2015 to develop a set of voluntary disclosure recommendations for use by companies in providing investors, lenders and other stakeholders information on their climate-related financial risks.

Chaired by former New York City mayor Michael Bloomberg, the 32-member task force received more than 300 responses from responses in 30 countries to come up with the recommendations, which were published yesterday.

CDP, which in 2016 assisted nearly 6,000 companies disclose their environmental data and climate risks, called the report’s publication “a landmark day in the drive for better management of climate risk through capital markets”.

According to the Task Force, the recommendations are structured around four thematic areas: governance, strategy, risk management, and metrics and targets. These areas correspond to the type of information investors indicated that they need to make better, more informed decisions.

One recommendation receiving particular support is that which calls for integrating climate-related information into mainstream financial reports. CDP praised it, saying it will “bring climate change further into the boardroom” and prove to stakeholders that companies doing so “are disclosing climate risk information with the same rigour as financial information”.

Speaking about the final recommendations, Task Force chair Bloomberg said in a statement: “Climate change presents global markets with risks and opportunities that cannot be ignored, which is why a framework around climate-related disclosures is so important. The Task Force brings that framework to the table, helping investors evaluate the potential risks and rewards of a transition to a lower carbon economy.”

The work of the Task Force has received widespread support: over 100 business leaders and their companies with a combined market cap of some USD 3.5 trillion as well as financial institutions responsible for assets of around USD 25 trillion have publicly committed to support the TCFD’s recommendations.

 

Image credit: Florence N, flickr/Creative Commons

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