Global banks worth $7trn pledge support to TCFD climate disclosure guidelines

Eleven of the world's top banks, including Barclays and Santander, have jointly committed to adopt key elements of a new international framework which seeks to improve climate transparency in the financial industry.

The financial institutions, representing more than $7trn, have pledged to develop analytical tools and indicators to strengthen their assessment and disclosure of climate-related risks and opportunities.

The group, which also includes ANZ, Standard Chartered and UBS, has given its backing to the final recommendations listed last month by the Task Force on Climate-related Financial Disclosures (TCFD), which encourages firms to disclose climate information as part of mainstream financial statements.

“The message from financial heavyweights is clear – climate change poses a real and serious threat to our economy,” said head of UN Environment Erik Solheim. “At the same time, there are enormous business opportunities in taking climate action. Transparency on how financial institutions mitigate the risks and seize the opportunities of a two degrees pathway is crucial to move international markets towards actively supporting a low-carbon and climate-resilient future.” 

Sustainable finance

TCFD suggests that the value at risk, as a result of climate change, to global manageable assets ranges from $4.2trn to $43trn between now and the end of the century. Investors already fear that the next financial crisis will be climate-related. 

The Financial Stability Board (FSB), led by Bank of England Governor Mark Carney, launched the Task Force in 2015 in an attempt to aid financial markets in understanding sectoral exposures to climate-change risks. More than 100 businesses including Unilever, Barclays and HSBC, have already publicly committed to support the final recommendations listed by TCFD.

The Task Force calls on companies to promote senior management into the conversations surrounding disclosure and adopt scenario analysis. TCFD hopes the new voluntary framework will strengthen the stability of the financial system and help boost climate-friendly investments.

“Sustainable finance is about two imperatives: improving the contribution of finance to sustainable, low-carbon and inclusive growth, and ensuring financial stability in light of environmental risks such as climate change,” said Christian Thimann, group head of strategy, sustainability and public affairs at the AXA Group and TCFD vice chair.

“The TCFD framework emphasizes how achieving these two goals requires that financial and non-financial corporations provide more transparency on how they plan to address the risks and opportunities related to climate change.”

Green portfolios

Around 60% of the world’s biggest investors are taking steps to protect their portfolios. HSBC has launched a $1bn green bond portfolio aimed at the renewable energy sector, while Goldman Sachs announced it will leverage $150bn into clean energy financing and investments by 2025.

Companies are already reporting climate-related information under other frameworks – such as those provided by CDP. In response to the release of the TCFD’s final report, CDP wrote an exclusive blog for edie which claimed that while climate change poses some of the most significant monetary risks to the corporate sector, it too often remains the reserve of specialised sustainability professionals.

George Ogleby

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