The US Financial Stability Board (FSB) will present its final report on the adoption of recommendations to provide a voluntary framework for disclosing climate-related information in financial filings at the G20 Summit next month in Hamburg, Germany.
The Task Force on Climate-related Financial Disclosures (TCFD) was created by the FSB in December 2015 and its final report was released this week. The recommendations aim to help organisations identify and disclose information to help investors, lenders and insurance underwriters assess and price climate-related risks and opportunities.
The recommendations revolve around the areas of governance, strategy, risk management, and metrics and targets. The Task Force has also developed guidance to help companies develop their disclosures and plans to focus on promoting and monitoring adoption of the recommendations until at least next September.
Financial Stability Board chair and Bank of England governor Mark Carney will present the final report at the G20 Summit.
“The Task Force’s recommendations have been developed by the market for the market,” Carney said in a statement. “They set out the disclosures that a wide range of users and preparers of financial filings have said are essential to understanding a company’s climate-related risks and opportunities. Widespread adoption will provide investors, banks and insurers with that information, helping minimise the risk that market adjustments to climate change will be incomplete, late and potentially destabilising.”
Michael Bloomberg, the former New York City mayor and Bloomberg LP founder who chairs the task force, says a framework around climate-related disclosures is important as climate change presents global markets with risks and opportunities that cannot be ignored. “The Task Force brings that framework to the table, helping investors evaluate the potential risks and rewards of a transition to a lower carbon economy.”
The International Integrated Reporting Council (IIRC) welcomed the release of the recommendations, which align with some of the main principles of integrated reporting: that companies should adopt an integrated approach to their risk management and that climate change is itself not simply an environmental issue, but a financial challenge for companies and for the stability of the global economy.
“The IIRC shares the task force’s vision that this isn’t just about businesses changing, but about reshaping the whole capital market system and, as convener of the global Corporate Reporting Dialogue, we are proud that the major financial and non-financial reporting frameworks have jointly committed to integrating the task force recommendations in our work to achieve a more aligned and coherent reporting system overall.”