FSB welcomed the 2019 status report on climate-related financial disclosures. The report was released by the industry-led Task Force on Climate-related Financial Disclosures (TCFD). The status report provides an overview of the extent to which companies included, in their 2018 reports, information aligned with the core TCFD recommendations, which were published in June 2017.
The TCFD recommendations provide a framework for companies and other organizations to develop more effective climate-related financial disclosures through their existing reporting processes. As part of its efforts to promote adoption of the recommendations, TCFD prepared this status report to provide an overview of current disclosure practices as they relate to the recommendations, highlight key challenges associated with implementing the recommendations, and outline some of the efforts TCFD will consider undertaking in coming months to help address some of the implementation challenges.
To better understand the climate-related financial disclosure practices and how they have evolved, TCFD reviewed reports for over 1,100 companies from 142 countries in eight industries over a three-year period. In addition, TCFD conducted a survey on companies’ efforts to implement its recommendations as well as on user views on the usefulness of climate-related financial disclosures for decision-making. While the Task Force found some results of its disclosure review and survey encouraging, it has concerns that not enough companies are disclosing decision-useful climate-related financial information. This could be problematic for financial markets if market participants do not have sufficient information about the potential financial impact of climate-related issues on companies. The key findings from the disclosure review and survey results include the following:
- Disclosure of climate-related financial information has increased since 2016, but is still insufficient for investors.
- More clarity is needed on the potential financial impact of climate-related issues on companies.
- Of companies using scenarios, the majority do not disclose information on the resilience of their strategies.
- Mainstreaming climate-related issues requires the involvement of multiple functions.
FSB has asked the TCFD to deliver another status report to FSB in September 2020. TCFD will undertake further work during the course of the next year to promote and monitor adoption of the its recommendations. TCFD is considering additional work to clarify elements of its supplemental guidance, develop process guidance around how to introduce and conduct climate-related scenario analysis, and identify business-relevant and accessible climate-related scenarios.
Keywords: International, Banking, Insurance, Securities, Climate Related Risks, TCFD, Disclosures, Status Report, FSB
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