Climate-related financial disclosures ‘still insufficient for investors’, says TCFD

The new report notes that almost 800 organisations have expressed support for the recommendations

The TCFD published its 2019 Status Report to the Financial Stability Board (FSB) on Wednesday (5 June), providing an overview of disclosure practices aligned with the TCFD’s recommendations.

Launched in December 2015 by Bank of England governor Mark Carney, the TCFD has since welcomed former New York Mayor Michael Bloomberg as chair of the group to lay-out the recommendations to help businesses identify and disclose information wanted by investors and other external shareholders to assess the climate-related risks and opportunities of individual companies. Notably, the recommendations call on companies to include impacts of different scenarios – including the 2C pathway of the Paris Agreement – and what this would mean for businesses.

The new report notes that almost 800 organisations have expressed support for the recommendations, an increase of 50% on the Status Report published in September 2018. Supporters include the world’s largest banks, asset managers and pension funds, responsible for assets of $118trn.

Despite the increase in support for the recommendations, the report expresses concerns that “not enough companies are disclosing decision-useful climate-related financial information”. A survey accompanying the report found that 91% of respondents plan to “fully or partially implement” the TCFD recommendations, and that 76% are already using them as part of decision-making processes. Two-thirds of respondents claimed they will have integrated climate-related financial disclosures by 2022.

Michael R. Bloomberg, Chair of the TCFD said: “We remain encouraged by the continued growth in the number of companies adhering to the guidelines of the TCFD – it means businesses are better informed about the risks they face, and investors are more capable of making sound decisions. However, we’re also clear-eyed about the serious threat that climate change poses. In order to keep people out of harm’s way, and build a more resilient global economy, we need more companies to follow their lead – and soon.”

The report notes an increase in the availability and quality of data being supplied. However, with climate change moving at speed – so much so, that nations are declaring ‘climate emergencies’ – more companies across more sectors are being implored to disclose material findings.

The report highlights that of companies using scenarios, “the majority do not disclose information on the resilience of their strategies”.

The Task Force reviewed reports from more than 1,100 companies from 142 countries in eight industries over a three-year period. The FSB has asked the TCFD to deliver another status report to the FSB in September 2020.

“The TCFD sets an important minimum bar for climate-related disclosures by the companies in our portfolios. Our true ambition goes further,” BNP Paribas’ global head of sustainability and TCFD member Jane Ambachtsheer said.

Commenting on the 2019 Status Report, Jon Williams, sustainability & climate change partner at PwC and TCFD member said: “It’s really positive to see the increase in companies supporting the TCFD and beginning to disclose against its recommendations. We expect the momentum to continue, driven by the financial institutions responsible for assets of nearly $118trn who have signed up as TCFD supporters and regulators that supervise them.

“We know companies are finding it a challenge, particularly in respect of scenarios analysis, a lack of data availability and the need for standardised metrics and targets. We also know that users of disclosures want to see more on the financial implications of climate-related impacts on companies.”

Matt Mace