International Task Force Report Shows Further Progress Needed for Climate-Related Financial Disclosures06/05/2019The Task Force on Climate-Related Financial Disclosures has issued its 2019 status report outlining progress on adoption of the TCFD disclosure recommendations for improved climate-related financial disclosures by companies. The TCFD was established by the Financial Stability Board in 2015 with the aim of managing climate-related risk in markets. In 2017, it published a set of voluntary disclosure recommendations for companies to provide information on their climate-related financial risks. The recommendations are structured around four areas: (i) governance; (ii) strategy; (iii) risk management; and (iv) metrics and targets.
The TCFD's 2019 status report reviewed financial reports of over 1,100 companies from 142 countries over a three-year period to ascertain the extent to which the TCFD's recommendations had been implemented. The report finds that:
- Disclosure of climate-related financial information has increased since 2016, but is still insufficient, considering the speed at which companies need to make changes to tackle climate change;
- More clarity is needed on the potential financial impact of climate-related issues on companies;
- The majority of companies that use climate-related "scenario-analysis" to assess the resilience of their climate-related risk strategies do not disclose information on the resilience of those strategies; and
- A broader range of corporate functions, including risk management, finance and executive management, need to be involved in implementing climate-related strategies to ensure mainstreaming of climate-related issues.
The TCFD will continue to promote and monitor adoption of its recommendations and will prepare another status report in September 2020. It is also considering clarifying elements of the supplemental guidance to its recommendations, developing guidance around processes to introduce and conduct climate-related scenario analysis and identifying business-relevant and accessible climate-related scenarios.
View the status report.
View the TCFD's recommendations.
View details of the TCFD's 2018 status report.
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