A group of more than 100 business leaders and companies are backing the recommendations of a task force on providing a voluntary framework for disclosing climate-related information in financial filings.
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures nearly two years ago. It released its final report and supporting materials on Thursday. The recommendations aim to help organizations identify and disclose information to help investors, lenders and insurance underwriters assess and price climate-related risks and opportunities.
The recommendations revolve around the areas of governance, strategy, risk management, and metrics and targets. The Task Force has also developed guidance to help companies develop their disclosures.
“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,” said Michael Bloomberg, the former New York City mayor and Bloomberg LP founder who chairs the task force. “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. We’re pleased to see so many businesses and investors around the world support the recommendations of the TCFD and hope others will be encouraged to join our initiative.”
Now that the final report is out, the task force plans to focus on promoting and monitoring adoption of the recommendations until at least next September. Financial Stability Board chair and Bank of England governor Mark Carney will present the final report at the G20 Summit next month in Hamburg, Germany.
“The Task Force’s recommendations have been developed by the market for the market,” Carney said in a statement. “They set out the disclosures that a wide range of users and preparers of financial filings have said are essential to understanding a company’s climate-related risks and opportunities. Widespread adoption will provide investors, banks and insurers with that information, helping minimize the risk that market adjustments to climate change will be incomplete, late and potentially destabilizing.”
The International Integrated Reporting Council welcomed the release of the recommendations, which align with some of the main principles of integrated reporting: that companies should adopt an integrated approach to their risk management and that climate change is itself not simply an environmental issue, but a financial challenge for companies and for the stability of the global economy.
“The fact that prominent companies already adopting integrated reporting, including Unilever, HSBC, ING Group, BNP Paribas, Aegon, ENGIE Group, and Tata Steel are amongst those today committing to implement the task force recommendations, sends a very powerful signal to companies across the world,” said IIRC CEO Richard Howitt in a statement. "The IIRC shares the task force’s vision that this isn’t just about businesses changing, but about reshaping the whole capital market system and, as convener of the global Corporate Reporting Dialogue, we are proud that the major financial and non-financial reporting frameworks have jointly committed to integrating the task force recommendations in our work to achieve a more aligned and coherent reporting system overall.”
Another group involved in a similar effort, the Climate Disclosure Standards Board, also praised the recommendations of the task force. “We believe there is a clear value to businesses implementing the TCFD recommendations,” said CDSB chairman Richard Samans in a statement. “Companies can become more resilient to the systemic risks that climate change creates and improve their relationships with investors and other stakeholders by collecting, assessing and reporting information about climate-related financial risks and opportunities.”
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