Featured Product

    FSB Report Finds Steady Increase in Climate-Related Disclosures

    October 29, 2020

    FSB published the annual report that examines to-date progress toward implementation of climate-related disclosure recommendations of the industry-led Task Force on Climate-related Financial Disclosures (TCFD). The report finds that disclosure of climate-related financial information aligned with the TCFD recommendations has increased steadily since these recommendations were published by TCFD in June 2017. However, the report highlights the continuing need for progress in improving the levels of TCFD-aligned disclosures, given the urgent demand for consistency and comparability in reporting. The next status report is expected to be published in September 21, 2020.

    The report provides an overview of the current disclosure practices in terms of their alignment with the Task Force’s recommendations. The TCFD recommendations provide a framework for companies and other organizations to develop more effective climate related financial disclosures through their existing reporting processes. The report also highlights specific climate-related information a group of expert users identified as the most useful for making financial decisions, addresses the top implementation issues identified by nearly 200 preparers, and includes case studies by financial sector preparers on implementing the recommendations. The following are a few key takeaways of this report:

    • Disclosure of climate-related financial information has increased since 2017, but continuing progress is needed. Disclosure of TCFD-aligned information increased by six percentage points, on average, between 2017 and 2019. On average across the TCFD recommendations, 42% of companies with a market capitalization greater than USD 10 billion disclosed at least some information in line with each individual TCFD recommendation in 2019. However, companies’ disclosure of the potential financial impact of climate change on their businesses and strategies remains low. TCFD recognizes the challenges associated with making such disclosures but encourages continued efforts and faster progress.
    • Nearly 60% of the world’s 100 largest public companies support TCFD, report in line with the TCFD recommendations, or both. In addition, nearly 700 organizations have become TCFD supporters since the Task Force issued its 2019 status report, an increase of over 85%.
    • Energy companies are leading on disclosure, with an average level of TCFD-aligned disclosures of 40% for energy companies. In comparison, the average percentages of disclosures among insurance companies and banks are 27% and 23%, respectively. A higher average percentage of disclosure indicates that an industry generally disclosed at a higher rate across the 11 recommended disclosures.
    • Expert users of disclosure identified the impact of climate change on a company’s business and strategy as the “most useful” information for financial decision-making. Notably, this information has the lowest level of disclosure across the recommendations, with just one in 15 companies making this disclosure.
    • Insights of expert users on the most useful information for decision-making may provide a roadmap for preparers. Companies already disclosing their governance and risk management processes for climate-related issues and working toward full TCFD implementation might consider expert users’ relative ranking of specific types of climate related information—from most useful to least useful—as one factor to consider in prioritizing their efforts.
    • Asset manager and asset owner reporting to their clients and beneficiaries is likely insufficient. While TCFD-aligned reporting by a sample of asset managers and asset owners increased over the past three years, the Task Force believes reporting by these organizations to their clients and beneficiaries may not be sufficient and that more progress may be needed to ensure clients and beneficiaries have the right information to make financial decisions.
    • Progress in the public sector is also accelerating. Among others, Canada, Chile, the European Union, Hong Kong, Japan, New Zealand, the UK, Singapore, and South Africa have announced new policies, partnerships, or other formal support for climate-related financial disclosure in line with the TCFD recommendations.

    The report also provides a "roadmap" for preparers through highlighting insights from expert users on which information is most useful for decision making. Going forward, it will be important to bring more standardization to reporting requirements across different countries and jurisdictions, to minimize the burden for reporting companies and maximize the value of disclosure for investors. FSB has asked TCFD to undertake further analysis on the extent to which companies describe the financial impact of climate-related risks and opportunities on their businesses and strategies. TCFD also plans to gain better insight into reporting practices of asset managers and asset owners to their clients and beneficiaries.


    Related Links

    Keywords: International, Banking, Insurance, Securities, TCFD, Disclosures, Climate Change Risk, ESG, FSB

    Featured Experts
    Related Articles
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    SNB Updates NSFR Forms and FINMA Consults on Operational Risk Circular

    The Swiss National Bank (SNB) published Version 1.2 of the reporting forms (NSFR_G and NSFR_P) on the net stable funding ratio (NSFR) of banks, along with the associated documentation.

    May 10, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8191