Task Force issues recommendations on climate-related financial disclosure

A global task force set up by the G20’s Financial Stability Board (FSB) has released its guidelines for companies to disclose the financial impact of climate-related risks and opportunities.

The Task Force on Climate-Related Financial Disclosures (TCFD) was established by the G20's FSB to provide a framework to improve the ability to assess and price climate-related risk and opportunities.

The framework has drawn support from more than 100 companies with $11 trillion of assets.

Among the supporters are banks - Bank of America, Barclays, HSBC, ING, Australia and New Zealand Banking Group (ANZ) - and insurers - Aviva plc and AXA Group.

The Recommendations of the Task Force on Climate-related Financial Disclosures was published on Thursday 29 June, 18 months after it was first set up by the FSB.

To develop the voluntary framework for companies to disclose climate-related information, the TCFD received over 300 responses from 30 countries and liaised with a range of stakeholders.

Michael Bloomberg, Chair of the TCFD, said: "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.

“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," he added.

The voluntary framework recommends that organisations make disclosures around four key themes: the organisation's governance pertaining to climate risks and opportunities; actual and potential impact of climate risks on business, strategy and financial planning; how climate-related risk is managed; and the metrics and targets used.

The TCFD emphasised that the recommendations were not intended to supersede national disclosure requirements, but rather to complement or enhance them wherever possible.

Mark Carney, Governor of Bank of England and Chair of the FSB, said: "The Task Force's recommendations have been developed by the market for the market."

He went on to say: "Widespread adoption will provide investors, banks and insurers with that information, helping minimise the risk that market adjustments to climate change will be incomplete, late and potentially destabilising." 

Join Climate Action this 19 September for the second annual Sustainable Investment Forum taking place during Climate Week NYC. Topics will include financial disclosure and transparency. Find out more about the agenda and register your place at: sustainableinvestmentforum.org.