Since the launch of the TCFD, Carbon Credentials has been helping its clients to prepare for alignment with the TCFD recommendations.
In the wake of the 2008 financial crisis, the G20 set up the Financial Stability Board (FSB) to identify and manage risks to the stability of global financial markets. The FSB recognises that climate change represents a new and emerging vulnerability in the financial system. To address this risk, the FSB established the Task Force on Climate-Related Financial Disclosures (TCFD) which is chaired by Michael Bloomberg and consists of 32 members including Unilever, Blackrock, Barclays, Aviva Investors, Mitsubishi, Tata Steel, PwC, EY, Deloitte, and KPMG.
In June 2017, the Task Force published recommendations for voluntary and consistent climate-related financial risk disclosures for use by companies, investors and other financial stakeholders to provide high-quality information in their mainstream filings.
The purpose of the TCFD recommendations are to improve financial disclosure so that investors can make better-informed decisions on where to deploy their capital.
Companies and investors need to be aware of the risks from climate change. We believe they will become increasingly important factors in investment decisions, potentially devaluing an organisation or rendering it obsolete, if ignored.
How will the TCFD recommendations impact your business?
Investor pressure
- Investors are increasingly requiring their investee companies to adopt the recommendations, for example, Aviva Investors, which represents $436 bn of assets, has warned that it will vote against the annual reports and accounts of companies that fail to embrace the TCFD recommendations.
Legislation
- Many groups are pushing for the TCFD recommendations to become mandatory, including 130 investors, representing over $13 trillion of assets, which have written to the G20 leaders to encourage the integration of the recommendations into their national disclosure rules.
- France and Sweden have already committed to implementing the TCFD recommendations into national law, and in the UK, the Government has officially endorsed the TCFD recommendations and subsequently established the Green Finance Taskforce to develop recommendations for the UK Government on green finance.
