On September 26, 2018, the Task Force on Climate-related Financial Disclosures issued a status report outlining progress on adoption of the TCFD disclosure recommendations issued in June 2017. The TCFD was established by the Financial Stability Board in 2015 and its 2017 recommendations provide a voluntary framework for companies to develop more effective climate-related financial disclosures through their existing reporting processes. The recommendations are structured around four areas: (i) governance; (ii) strategy; (iii) risk management; and (iv) metrics and targets.
The TCFD surveyed the disclosures made in the 2017 annual reports of over 1,700 firms from diverse sectors and geographical locations. Despite the limited time since publication of its recommendations, the TCFD found that the majority of firms' disclosures were already aligned with one or more of the TCFD's recommendations. While TCFD's supporters numbered 100 companies on the launch of the recommendations in June 2017, over 500 companies are now supporters of the TCFD, including the world's largest banks, asset managers and pension funds, responsible for assets of nearly $100 trillion. Commenting on the publication of the status report, FSB Chairman Mark Carney stated that "climate-disclosure is becoming mainstream."
A key finding of the report is that, while many companies report on environmental issues, the majority have yet to specifically provide consistent information on the financial implications of climate change for their businesses. A further progress report will be published in 2019 and will analyze firms' 2018 disclosures.
The status report is available at: http://www.fsb.org/2018/09/task-force-on-climate-related-financial-disclosures-status-report/ and TCFD recommendations are available at: https://www.fsb-tcfd.org/publications/final-recommendations-report/.
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