TCFD brings a welcome tide of change
Rebecca Gale, head of sustainability at Waterscan, discusses how the introduction of mandatory Task Force on Climate-related Financial Disclosures (TCFD) reporting shines a welcome light on the role of water in enabling corporates to improve approaches to environmental stewardship.
The introduction of mandatory Task Force on Climate-related Financial Disclosures (TCFD) reporting for UK companies this month is a significant and a welcome evolution in corporate responsibility. It sends a clear signal that safeguarding the physical environment on which we depend can no longer lounge on the periphery of commercial operations. Sustainability is now firmly at their core; the place where financial and strategic decisions are taken, and reputations are built or compromised.
This transition from ‘nice to do’ to ‘need to do’ has not taken any of us working in the sustainability arena by surprise. Indeed, for those used to disclosing environmental performance on platforms like CDP, the process and data requirements for TCFD will pose little challenge.
At least in the short term.
Looking further down the line however, we must anticipate – and embrace – a broadening of environmental risk mitigation. CDP’s five-year strategy encourages action on more issues including land, oceans, biodiversity, resilience, waste and food. Further, it is integrating water security into financial institution disclosures in what it says moves us towards a more holistic, integrated approach that tracks progress against not just climate, but all environmental metrics of relevance.
Water is a critical environmental metric of relevance, and it’s good to see water rising up the corporate agenda. Globally, CDP’s Water A-List grew from 106 to 118 in 2021 as more companies decided to take a leadership position on protecting this vital resource. Eight UK companies made it onto this A-List despite the criteria being strengthened. These include Waterscan customers Coca-Cola Europacific Partners and Sainsbury’s, while Whitbread boosted their score to an impressive B.
Surprisingly, it’s one that some companies are only just waking up to, but it’s time to set the alarm clock. Poor water management is recognised as a significant investment risk due to its potential to disrupt normal business operations, a fact long recognised by the World Economic Forum, whose Global Risk Report has ranked water crises among the top 5 risks in terms of impact for the last 10 consecutive years.
It’s highly appropriate then, that TCFD is mirroring these global trends by recommending that companies disclose on water. Currently, the primary requirement is to consider physical risks like water scarcity, water quality or extreme weather events like flooding. It doesn’t yet explicitly refer to regulatory or reputational water risks. Given that these can cause equally significant commercial impacts if overlooked, we can anticipate these risks being incorporated in due course.
The important thing to remember is that all risks can be balanced with opportunities. As Mike Bloomberg, TCFD Chair says, ‘Disclosure is one of the most powerful tools we have in the global climate fight,’ but it’s also a powerful tool in creating sustainable business. No business can operate without water. No business will succeed in the future without a good grip on their water data and a sound water stewardship strategy. Transparency and engagement are the first step and I for one, look forward to collaborating with those forward-thinking companies that support this tide of change.
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