The industry-led Task Force on Climate-related Financial Disclosures (TCFD) has published its Final Report and Recommendations for the effective disclosure of climate-related financial risks.

The Task Force was set up by the Financial Stability Board (FSB) in December 2015 to develop a set of voluntary, consistent disclosure recommendations for use by companies in providing information to investors, lenders and insurance underwriters about their climate-related financial risks.

Chaired by Mark Carney, Governor of the Bank of England, the FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies.

The 32 industry members of the Task Force, who are drawn from a wide range of industries and countries from around the globe, finalised the recommendations after extensive public engagement and consultation, including public consultation on a draft of the recommendations in December 2016.

The TCFD has developed four recommendations on climate-related financial disclosures that are applicable to organisations across sectors and jurisdictions. The recommendations are structured around four thematic areas:

• Governance: The organisation’s governance around climate-related risks and opportunities.
• Strategy: The actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning.
• Risk Management: The processes used by the organisation to identify, assess and manage climate-related risks.
• Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities.

Speaking about the work of the Task Force, FSB Chair Mark Carney said:

 “The Task Force’s recommendations have been developed by the market for the market. They set out the disclosures that a wide range of users and preparers of financial filings have said are essential to understanding a company’s climate-related risks and opportunities. Widespread adoption will provide investors, banks and insurers with that information, helping minimise the risk that market adjustments to climate change will be incomplete, late and potentially destabilising.”

More than 100 firms, with market capitalisations of over $3.3 trillion and financial firms responsible for assets of more than $24 trillion, have provided statements of support to welcome the recommended disclosures and encourage take-up of the TCFD recommendations.

In developing the recommendations, the Task Force received over 500 public consultation responses and held 18 outreach events with over 1,250 participants, as it sought feedback.

Speaking about the final recommendations, Task Force chair Michael R. Bloomberg said:

 “Climate change presents global markets with risks and opportunities that cannot be ignored, which is why a framework around climate-related disclosures is so important. The Task Force brings that framework to the table, helping investors evaluate the potential risks and rewards of a transition to a lower carbon economy. We’re pleased to see so many businesses and investors around the world support the recommendations of the TCFD and hope others will be encouraged to join our initiative.”

Click here to download Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017)