Transparency in climate-related financial risks is gaining ground within companies and investor communities. The TFCD, the task force piloted by the G20 Financial Stability Board to push companies to provide synchronized information on the subject, listed 513 organizations in "support" of its recommendations, including 287 financial institutions representing $100 trillion in assets under management. Most of them are located in Europe (249) and North America (119).
In its first status report (1) published during the One Planet Summit and the Global Business Forum, it sampled the 2017 annual reports of nearly 1800 companies across 8 sectors of activity: four concern the financial sector (banks, insurance companies, asset managers, asset owners), and the others include energy, transportation, real estate and agriculture sectors.
The majority of companies already publish information online, along with the recommendations that were originally published in 2017. "However, further work is needed for disclosures to contain more decision-useful climate-related information", says the TFCD. To date, "relatively few" companies are publishing the financial impacts of climate change on their business model or information concerning company resilience to different climate scenarios.
More transparency, better decision-making
Moreover, this information, when reported, is often included in CSR (corporate social responsibility) reports and not in financial reports, as recommended by the TCFD. This is a good starting point that needs to be followed up with more comprehensive and relevant information in future reports, said the TCFD in a statement. That task force relies on the diffusion of their recommendations by the many international organisations that support it, such as the Principles for Responsible Investment (PRI), the World Business Council for Sustainable Development (WBCSD) and the Institute of International Finance (IFF). The CDP, a coalition of investors that has been pushing companies to publish climate and other environmental data (water and forests) since 2002, ensures that the 6,800 companies that provide this data to the CDP will be aligned with the TCFD recommendations this year.
"The more companies know about the risks that weigh on them, the faster and more effectively they can respond. And the more they provide this information, the more investors will be equipped to make the right decisions. This will make the global economy more resilient and steer more capital towards projects that help reduce emissions and protect the inhabitants are warming," said Michael Bloomberg, who chairs the task force.
However, a study recently published by HSBC shows that less than 10% of companies and investors around the world are aware of the TCFD recommendations.
Béatrice Héraud @beatriceheraud