TCFD support skyrockets as climate risks and opportunities reporting creeps up
More than 1,000 additional organisations have voiced support for the Task Force on Climate-Related Financial Disclosures (TCFD), bringing the combined market capitalisation of all supporters to $25.1trn (£18.3trn).
The milestone was announced late last week as the TCFD published its latest annual Status Report.
According to the report, the number of organisations voicing support for the Task Force’s recommendations increased by more than one-third year-on-year – the biggest annual increase to date. Now, more than 2,600 organisations have voiced support. Represented in this cohort are businesses and other organisations spanning 89 countries and every major economic sector. 83 of the world’s largest companies have made TCFD-related commitments, up from 60 this time last year.
As has always been the case, voicing support does not mean full alignment with the TCFD’s recommendations, which are designed to help organisations measure and minimise their climate risks and opportunities by assigning them a monetary value, and tracking them across a variety of future global heating scenarios.
Last year’s report revealed an increase in the quality of reporting of just 6% between 2017 and 2020. This year, a 9% year-on-year increase was recorded. More than half of the companies to have voiced support for the TCFD are now producing reports.
The TCFD has cited several drivers for this trend, including increased investor expectations and new requirements from governments and regulators in several key markets. In the UK, for example, disclosure will become mandatory for some organisations from either April 2022 or 2023, subject to consultation, then expanded in 2025. The six other G7 nations have committed to introducing similar mandates this decade.
A further driver has been the TCFD’s own publication of additional resources to support disclosure. Building on this, the Task Force has launched a new guidebook on metrics, targets and transition plans.
“The Task Force has had an exceptional year in rallying global support for climate risk reporting – but we still have a long way to go,” summarised Task Force founder Michael R. Bloomberg.
“As governments and businesses around the world work to accelerate the transition to a clean energy economy, they should continue to draw on the TCFD recommendations as a critical tool in their efforts.”
edie this year launched an updated Explains guide answering important questions for businesses looking to align their reporting with the TCFD’s recommendations. Click here to download your free copy of that guide, kindly sponsored by Inspired Energy.
In related news, climate intelligence provider Cervest has today (19 October) published the results of a survey of 800 executives in the US and UK, garnering their approach to climate risk.
Of the survey respondents, 87% said they believe their organisation has an understanding of the financial risks that the climate crisis is already posing – and will pose – to operations and the value chain.
However, only half (53%) state that their organisation has properly embedded climate considerations into their financial risk management processes.
Cervest also found that businesses are more likely to focus on decarbonisation than adaptation when developing plans to reduce climate risks. Eight in ten survey respondents said their organisation is heavily focused on net-zero, but less than four in ten said their organisation has conducted scenario analysis and is modifying assets and processes in light of the findings.
The biggest barrier to improved risk assessment and to increased action on adaptation was found to be a lack of resources. More than one-third (36%) of respondents believe their company does not have or has not allocated enough budget or people to be able to deliver proper climate risk management.
“Decarbonisation is critical, but it’s not enough to protect organisations and investors against the risks of climate change,” said Cervest’s founder and chief executive Iggy Bassi.
“Decades of greenhouse gas emissions have locked us into decades of accelerating climate volatility which translates into trillions of dollars of assets at risk. Even if we were to reach net-zero tomorrow, it would not reverse the persistence and intensification of today’s extreme weather events. Organisations need to understand how to adapt to climate change and build resilience into their strategy.”
To Bassi’s point, the Intergovernmental Panel on Climate Change’s (IPCC) most recent major report revealed that global surface temperature increases would take time to reverse even in a net-zero world, while other climate-induced changes would be baked in for decades to millennia, potentially worsening over time.
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