Once again, we are indebted to Joel Kenrick’s ‘The Chronicle’ for a handy round-up of reactions to Final Report of the Task Force on Climate-related Financial Disclosures (TCFD), including commentary and media stories from around the world, as well as stakeholder responses.
1. Taskforce on Climate-related Financial Disclosures final recommendations published
2. Mark Carney, Paul Fisher, and TCFD members on climate risk & opportunities
3. Media round up of TCFD recommendations
4. Stakeholder responses to TCFD
1. TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES FINAL RECOMMENDATIONS PUBLISHED
- Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures (pdf, 74 pages),
- TCFD: Overview of Recommendations, June 2017 (pdf, 16 pages),
- Summary of Key Changes and Clarifications to the TCFD Report and Annex (June 2017) pdf.
- TCFD Final Report FAQs (pdf, 5 pages),
- Annex: Implementing the Recommendations of the Task Force on Climate-Related Financial Disclosures (full pdf here, 85 pages)
- Technical Supplement: The Use of Scenario Analysis in Disclosure of Climate-related Risks and Opportunities (June 2017) (full pdf here, 42 pages)
2. MARK CARNEY, PAUL FISHER, INVESTORS & BUSINESSES ON CLIMATE RISKS AND OPPORTUNITIES
On CNBC, Scott Stringer, the Comptroller of New York City writes “With the release of the recommendations and the G20 meeting approaching, there’s a chance for scenario analysis and climate change disclosure to take a leap toward becoming a market standard. That means more corporate and investor voices are needed. … This isn’t disclosure for disclosure’s sake. It’s about protecting our investments — and our planet — for generations to come.” (The market-based approach to climate risk, 28 June, CNBC)
Graeme Pitkethly, Unilever CFO, writes on CNN: “Climate change is affecting companies through the direct impact of steadily rising global temperatures and the policies that governments around the world adopt in response. If markets are to operate efficiently, we must be transparent about that to help investors evaluate companies and make better decisions for the long term.”(Companies must come clean on climate risks, 29 June, CNN Money)
- Moody’s: Report can enable climate integration into credit analysis, Moody’s say in a statement that widespread adoption of the recommendations will ‘enhance the ability to integrate the impact of climate-related issues into credit analysis’. “Over time, greater standardization of reporting and disclosure practices would allow for a more consistent and material assessment of the credit impact of climate-related risks and opportunities across sectors and issuers,” says Richard Cantor, Moody’s Chief Risk Officer and member of the FSB Task Force.
- PwC blog from Jon Williams says “Perhaps the most innovative aspect is the proposal that companies consider how their businesses will fare under different climate scenarios, including the 2oC outcome that the Paris Agreement seeks to meet.”
- PRI Perspectives, Sagarika
Chatterjee writes that investors must drive implementation of the FSB Task Force final report.
- Climate Disclosure Standards Board (CDSB) special newsletter “
rounds up key information on the TCFD recommendations and how companies can begin implementation.”
- 2 degrees investing initiative in partnership with The CO-Firm are launching a Transition Risk Scenario Tool and associated report that directly responds to the TCFD recommendations. The tool allows users to ‘select’ their scenario covering 8 of the most energy-intensive sectors and over 30 risk-related parameters, at global level and across a set of key countries” for a ~2C and ~3-4C outcome.
3. MEDIA ROUND UP OF TCFD RECOMMENDATIONS
- Canada: “The Canadian government is “supportive” of the task force’s work, said Chloe Luciani-Girouard, spokeswoman for Finance Minister Bill Morneau. She noted that Canadian securities regulators are reviewing climate-change disclosure, including the Bloomberg report’s recommendations. “We look forward to the outcome of this process,” she said. (Globe & Mail)
- Europe: few companies disclosing, Commission expert group at work: ‘In Europe, few companies have taken the step to disclose their exposure to climate risk, however. A survey by the WWF of the 80 largest asset owners in Europe showed that only 30 agreed to disclose their data. … Similar efforts are underway at European level. In December, the European Commission set up a High Level Expert Group on sustainable finance (HLEG SF) to work on climate-related financial disclosure and other sustainability reporting recommendations. The group is expected to conclude its work in December.’ (Euractiv) IPE report “Philippe Zaouati, CEO of Mirova, saying [the European Commission’s HLEG SF will recommend integrating the TCFD’s disclosure recommendations in EU regulation when it presents its interim report in just over a week.”
- Italy: Busines daily ilSole24 notes even if Trump is not interested in climate risks “the world of economics and finance has no intention of closing their eyes. … [companies backing the TCFD findings include] two oil companies, Royal Dutch Shell and the Italian Eni, several mining giants (including Barrick Gold, Bhp Billiton and Vale, but not Rio Tinto) and utilities, including Enel. Under the Italian flag there is also Borsa Italiana, … part of the London Stock Exchange.”
- Australia: ‘Australia’s largest listed companies, including Woodside, Rio Tinto and Santos, are likely to face sweeping changes to the way in which they model, plan for and disclose risk from climate change to investors. How they respond will affect their ability to attract funding from lenders, insurers and superannuation funds who are under pressure to stress-test investments for a carbon-constrained future’ report The Guardian (3 July).
- Japan: NHK national broadcaster reported that the Ministry of Environment will encourage domestic companies to actively disclose information (NHK, in Japanese)
- ‘the International Organisation of Securities Commissions to change its listing rules to promote climate-related disclosure’;
- ‘the Organisation for Economic Cooperation and Development update its Principles of Corporate Governance to make clear it is the responsibility of company boards to govern long-term risks, including climate change.’
- “credit-ratings agencies [to] include climate-related measures in their assessments’ if the TCFD recommendations are to gain sufficient traction. (3 July, Responsible Investor ($)).
4. Round up of stakeholder responses to TCFD
“Risks are emerging around climate change that are hard to manage and pose major threats to the financial system. The recommendations of the FSB’s Task Force on Climate-related Financial Disclosures represent a landmark step in enabling financial firms to understand and manage these risks and adopt a consistent approach across their exposures.”
Edward Mason, Head of Responsible Investment, Church Commissioners for England:
“As the transition to a low carbon economy continues to progress at pace, we need high quality disclosure on how companies are managing climate change-related risks and opportunities. As asset owners, we support the TCFD recommendations. This is essential and financially material information.”
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Natasha Landell-Mills, CFA, Head of Stewardship, Sarasin & Partners LLP:
“It is to be welcomed that the TCFD explicitly highlights the importance of existing legal requirements throughout the G20 for the disclosure of material risks and uncertainties. Most capital maintenance regimes also demand that companies disclose foreseeable liabilities or losses within their financial statements. These disclosures are not only prudent, but vital to reassure shareholders that their capital is protected. Yet, currently even the most exposed companies to climate change do not appear to be providing full, balanced and understandable disclosures, and international financial reporting standards (IFRS) offer little explicit guidance for how climate related liabilities or losses might be treated in financial statements. Few auditors appear to have sounded the alarm. The Task Force’s recommendation, therefore, offer a useful framework for companies to meet their existing obligations. What is now needed is for shareholders to scrutinise these disclosures, and where they fall short to back this up by holding directors and auditors to account at annual general meetings.”
Peter Damgaard Jensen, CEO of Danish pension fund manager PKA and Chair of the Institutional Investors Group on Climate Change:
“Investors are pleased to see this industry-led forum publish a robust framework applicable across all sectors and jurisdictions. Greater climate related financial disclosure in line with the TCFD’s four widely adoptable recommendations is crucial to secure more complete, meaningful, reliable and consistent data across all companies and sectors. Given their importance at the top of the investment supply chain, large asset owners and asset managers also recognise they have an important role to play in driving the swift and widespread adoption of this framework.“
Philippe Desfossés, CEO of French pension fund ERAFP and Vice Chair of the Institutional Investors Group on Climate Change:
“The more companies report effectively on climate related risks and opportunities, the easier it becomes for investors to allocate the substantial amounts of capital required to implement the Paris Agreement and to work on their own climate risk disclosure. There should be no resistance to the widespread adoption on the TCFD’s recommendations given how – in most G20 countries – companies already have legal obligations to disclose material risks in their routine financial filings, including those that related to climate change. Moreover, with its remit now extended to 2018, the TCFD is well placed to monitor implementation and take-up its framework closely.”
Sam Gill, CEO, ET Index Research
“The Task Force’s report signals that it is time for the consolidation and standardisation of corporate reporting on climate-related risk across different sectors. ET Index Research was created to facilitate precisely this process, by linking index-tracking capital allocation to our public carbon rankings. The Task Force’s latest report highlights the need for more systematic approaches to emissions reporting and reduction in order to mitigate systemic climate risk. We are committed to working with investors on this issue.”
Sophia Cheng, Chief Investment Officer of Cathay Financial Holdings:
“The TCFD recommendations provide a comprehensive framework to help corporates identify climate change related risks and opportunities and disclose information needed by investors. Cathay Financial Holdings responds to the risks of climate change and discloses our climate-related work by following the international initiatives such as CDP. We believe the TCFD recommendations can help us to further deepen our strategy and disclosure to climate change.”
Julie Raynaud,Senior Analyst Sustainability Research & Samuel Mary, Senior Sustainability Research Analyst, Kepler Cheuvreux:
“We welcome the publication of the TCFD recommendations that put financial materiality at the center of climate disclosures. Its emphasis on disclosing the financial impact of climate change risks and opportunities as well as scenario analysis makes it particularly relevant to analysts that seek to further integrate these topics in equity valuation. Recent research by our equity analysts in the Oil & Gas, Auto, Steel and Utilities sectors amongst others suggest that these topics are increasingly taken into account when building an investment case. For example, our Auto team calculated the opportunity cost of e-mobility roll-out for OEMs to be 8% of their share price on average and the value-at-risk for suppliers to be 14% on average.”
Nick Molho, Executive Director, Aldersgate Group:
“These recommendations on standardised voluntary disclosure will act as an influential guide for investors and businesses across the economy. However, in light of the urgency of tackling climate change, mandatory regulations remain essential to ensure that climate-related disclosure is widely adopted in the near future and is consistent and comparable between companies of a same sector.
“Given the UK’s aim to become a hub for green finance, the government should take note of the ambition of these recommendations and strengthen the breadth and scope of its own mandatory carbon reporting regulations in line with the industry standard.”
Mark Zinkula, CEO, Legal & General Investment Management
“We are delighted to see the launch of the TCFD final report. Having appropriate and meaningful disclosure on climate risks and opportunities by companies and investors is vital to building a low carbon economy. At LGIM, we are committed to engaging with companies to continuously improve their transparency in regards to climate change. We are also working with our clients to provide long term investment solutions that protect their assets and their future.”
Emily Chew, Head of ESG Research and Integration, Manulife Asset Management (Chair of the Asia Investor Group on Climate Change (AIGCC)):
“The TCFD recommendations provide invaluable guidance for investors and corporations to increase their disclosure as they look to mitigate investment risks from climate change, as well as capitalize on emerging low carbon and green finance investment opportunities. AIGCC will continue to support investors and corporations in the Asian region in theirefforts to adapt and align their investments to a two-degree future”.
Ben Caldecott, Director Sustainable Finance Programme at the University of Oxford Smith School of Enterprise and the Environment:
“The Task Force recommendations set an important baseline for how exactly companies and investors should disclose their exposure to physical climate impacts and societal responses to climate change. It will help many organisations begin their journey towards effectively measuring and managing climate risk. Ultimately, it should also support the management of climate risk facing individual financial institutions and the financial system as a whole.”
Richard Samans, Chairman, Climate Disclosure Standards Board:
“We believe there is a clear value to businesses implementing the TCFD recommendations. 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.
“With 10 years of experience in the field of climate change reporting in mainstream reports, CDSB has the technical expertise to support implementation. Our Climate Change Reporting Framework helps companies understand how to report climate-related financial information in their mainstream report, driving the alignment of financial and non-financial information.”
Robert Schuwerk, US senior counsel, CarbonTracker:
“The TCFD recommendations provide a template for applying requirements to report on material risks in the context of climate change. They also provide recommendations for new metrics and scenario analysis that extend the regulator’s toolkit for ensuring fair and transparent markets. Ultimately, this is a question of which company projects would or would not be competitive in a carbon constrained world. Carbon Tracker’s latest report offers a market test of the largest oil and gas companies’ potential portfolios and concludes that $2.3 trillion of oil and gas company spending on potential projects is surplus to what is needed to meet demand in a 2°C scenario. Our work demonstrates the potential for better-resourced companies to evaluate their portfolios and disclose the results.”
Mark Campanale, founder & Executive Director, CarbonTracker:
The TCFD’s intervention in disclosure comes at a key moment. Today, many fossil fuel companies already acknowledge that action on climate change presents a material risk, but few offer disclosures that adequately assess the financial impact. The recommendations make a great leap forward in standardising climate-related financial disclosure and enable investors to compare impacts across companies and sectors. Moreover, the recommended use of scenario analysis, including against a 2°C target, is a step forward in helping companies assess their resilience over the longer term. Carbon Tracker’s recent report, Two Degrees of Separation, provides one template for how such analysis could be conducted.”
Heather Coleman, Oxfam America’s Climate and Energy Director, Oxfam:
“The TCFD recommendations on climate risk disclosure are an important step in meeting the commitments of the Paris Agreement. While it’s encouraging to see many mainstream investors backing these recommendations, it’s vital that the G20 adopt these recommendations and translate them into national reporting requirements. As millions of people around the world become increasingly vulnerable to the impacts of climate change, governments have a responsibility in making financial flows consistent with low emission, climate resilient development pathways.”
Andrea Marandino, Sustainable Finance and Corporate Risk Manager at WWF:
“The TCFD’s recommendations have the potential to be a catalyst for the world’s transition to a low-carbon future. Businesses are at risk from climate change both from the direct impact of extreme weather and from the changing economic landscape as we transition to a low-carbon world in line with the Paris Agreement. What we must see now is companies adopting these recommendations as a routine part of financial disclosure and asset owners putting pressure on asset managers and the businesses they invest in to provide better, forward looking, climate-related financial disclosures.
The more the market recognises how much climate change threatens the long-term stability of the global financial system, the greater will be its ability to respond and correct our course away from catastrophic temperature rises.”
Matthias Kopp, Head Sustainable Finance at WWF Germany:
“TCFD elevates the issues of climate risk related disclosure from sustainability forae to board level, in the corporate world as much as with the political arena. The TCFD’s recommendations address the highest level in G20 politics, financial market regulators and supervisors, on the topic of creating robust information and degree of impact to corporate value and financial portfolios from the transition to a <2 degrees future. As such it delivers important improvements to current standard procedures, for instance through the focus on forward looking scenario analysis.
Today’s practice in mainstream reporting across the corporate world has to systematically misrepresent such risks in many cases as the data and methodology had not been in place. TCFD improves on quality, quantity , degree of detail and financial relevance once widely applied. The TCFD’s recommendations substantially improve the starting point for all further activity to analyse corporate strategies in the light of impacts to company value and asset pool from the transition to a low carbon future. The G20 needs to further provide the momentum by welcoming and endorsing the recommendations, by requesting structured uptake and assessing the existing regulatory landscape.”
Ingrid Holmes, Director, E3G:
“This is an encouraging step forward. Policymakers in the EU have responded to the work of the Task Force and are committed to improve climate disclosures by European companies. More legislators should follow their lead to ensure investors have the comprehensive information needed to protect savers from the risks of climate change.”
Mindy Lubber, President and CEO, Ceres:
“The TCFD recommendations, which were crafted by a geographically diverse group of business leaders from financial and non-financial sectors, help companies in all industries understand the significant financial opportunities and risks associated with climate change, and provide investors with the information they need to make better investment decisions. That’s why more than 360 global investors with $19 trillion dollars in assets under management announced their support for these recommendations, and over 100 global company and investor CEOs today are elevating their voices in support of the TCFD’s work. It is clear that the implementation of these recommendations is an important step towards delivering the commitments of the Paris Agreement and keeping global warming to below 2-degrees Celsius. We look forward to working with investors, companies and the TCFD on widespread adoption and implementation of their recommendations across every sector of the global economy.
Paul Simpson, CEO, CDP:
“This is a landmark day in the drive for better management of climate risk through capital markets. The TCFD recommendations are a springboard to delivering the commitments of the Paris Agreement. Embedding climate information in all corporate financial filings will engage boards around the world. This will enable better understanding of climate exposures and better planning and preparedness for a well-below 2°C world. Last year nearly 6000 companies disclosed through CDP on climate change and we look forward to helping them implement the TCFD recommendations. The TCFD’s leadership will act as a further ‘enabler’ for companies and investors in the push for a sustainable economy. As a next step, we would encourage the G20 to look at mandating regulatory disclosure.”
“Climate risk is no longer a theoretical abstraction, but an imminent and concrete challenge facing businesses, investors, and financial authorities. The recommendations are a response to growing demand from some of the world’s largest asset owners and managers, as well as companies and financial regulators, for better ways to understand and manage climate risk.
“While measuring and disclosing climate risk is still in its early days, the TCFD recommendations provide a critical step in this direction, empowering data users and preparers to develop new methodologies. Over time, climate-related financial disclosures will enable smarter decision-making and risk management across economies. All companies should embrace and apply these recommendations, and G20 governments should endorse them at the upcoming meeting in Hamburg.”