Will 2019 be the year of climate-risk reporting?

Léon Wijnands insists that the success of the climate disclosure movement could rely to an extent on the ability of the finance sector to develop a standard to attribute data to financial products.

Finance experts cited 2018 as the year that climate disclosure entered the “mainstream”, as more than 500 companies expressed support for the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations. A growing number of corporates, meanwhile, moved to drop standalone sustainability reports last year in favour of integrated reporting methods, in the belief that sustainability can act as a holistic driver for growth and value across a business.

Looking ahead, ING’s global head of sustainability Léon Wijnands insists that this trend will continue and grow in importance in 2019 as companies seek to capitalise on the vast financial and reputational opportunities of taking strong climate action.

“We will see more disclosure in 2019,” Wijnands told edie. “It started last year with the first TCFD reports and the integrated reports. Disclosure will be a bigger part of the integrated annual reports of companies, but also in GRI and other frameworks.

“It will become more important – companies will report on what is material and also on climate-related topics. We will also see more thematic reporting, so that next to annual reports, companies will also start to publish different reports based on the issues raised by the TCFD.”

Research shows that many businesses are still failing to translate climate impacts into business risk. Notably, very few companies in TCFD’s 2018 status report were found to disclose the financial impacts that climate change has on a business, but Wijnands is nonetheless encouraged by the progress made in this area so far.

“Of course, it will not be done in one year – the transition will take several years,” he said. “For several reasons we see a lot of companies that do not disclose data yet. Other companies are hiding data from their suppliers and consumers. We still see a few issues around the availability of data. But it is great that both financial and non-financial companies have endorsed TCFD, because it all starts with data.”

Two Degrees investment

Wijnands insists that the success of the climate disclosure movement could rely to an extent on the ability of the finance sector to develop a standard to attribute data to financial products.

That is why ING has partnered with the Two Degrees Investing Initiative to create a methodology that it believes should be the standard for how “international banks measure the climate impact of their lending portfolios”.

Called the Terra approach, the standard uses detailed data on the assets companies use for their production today, as well as future investment plans. Using these metrics, the Dutch banking giant will steer its portfolio towards a 2C trajectory, making it the first investor to adopt a science-based approach.

Away from data and disclosure, Wijnands believes that the other major trend within the sustainable finance agenda in 2019 will be innovation. “We will see more innovation in the sustainability area over the next year,” he said.

“What we did last year in ING was provide the ‘sustainability improvement loan, where we linked interest rates with sustainability performance. That was a real innovator in the market – first we linked it to sustainability scores, but in the first quarter of this year you will see this linked to other metrics which could be climate-related.”

Léon Wijnands at edie’s Sustainability Leaders Forum

ING Bank’s global head of sustainability Léon Wijnands will appear at Day Two of edie’s Sustainability Leaders Forum, to provide his thoughts on the new era of climate-related financial disclosure. 

He will be speaking alongside representatives from the Coca-Cola Company, Marks & Spencer (M&S) and CtrlPrint, who will debate what the future of sustainability, finance and risk management looks like. 

The two-day event, taking place 5 & 6 February 2019 at the Building Design Centre, London, will also include debates on how to solve the plastics crisis and the state of corporate action on sustainable packaging. 

For more information and to register for the Forum, click here.

George Ogleby