Between progress and the need for greater disclosure on the climate: the third TCFD 2020 report

A steady growth in disclosure of climate-related financial information in line with TCFD recommendations by the private sector, however, despite significant momentum, the 2020 Status Report, published by the Task Force on Climate-related Financial Disclosures, highlights the continuous need for progress in improving reporting levels aligned with the TCFD given the urgent demand for consistency and comparability in reporting.

Looking at reports from 1,700 companies using AI technology, the Task Force found that disclosure of climate-related financial information in line with TCFD recommendations has steadily increased since the recommendations were published in 2017. The increases major ones relate to companies disclosing how they identify, assess and manage climate-related risks. Industries considered most exposed to material climate risk have achieved the highest levels of TCFD disclosure.

 

To date, more than 1,500 organizations have expressed their support for the TCFD's recommendations, representing an increase of more than 85% from the 2019 status report. , user opinions and other research include:

42% of companies with a market capitalization greater than $ 10 billion disclosed information in line with each TCFD recommendation in 2019. In addition, disclosure levels for these companies exceeded 50% for certain information;
nearly 60% of the world's 100 largest public corporations support TCFD, report in line with recommendations or both;
Energy companies and materials and construction companies lead the disclosure, with an average disclosure level of 40% for energy companies and 30% for materials and buildings companies;
expert users have identified the impact of climate change on a company's business and strategy as the "most useful" information for financial decision making;
the report also provides an illustrative 'roadmap' highlighting expert user insights into which information is most useful for decision making.
"The work that governments and businesses are doing to address the devastation caused by the coronavirus pandemic is also an opportunity to build a stronger, more resilient and more sustainable economy - and transparency and disclosure play an important role. perform, "said Michael R. Bloomberg, president of the TCFD and founder of Bloomberg LP and Bloomberg Philanthropies. "The more companies know about their risks and opportunities related to climate change and the more information investors have, the better we will be able to allocate resources and make progress, so it is encouraging to see public and private sector leaders implement the Task Recommendations. Force, as outlined in this report ".

To support companies' implementation efforts, the Task Force will publish two guidance documents:

guide to conducting analysis of climate-related scenarios; is
guide on integrating climate-related risks into existing risk management processes and disclosing those processes.
"Investors are increasingly demanding climate-related information from the companies they invest in, and this question is driving the global momentum around TCFD recommendations in the financial and non-financial sectors," commented Mary Schapiro, TCFD Head of Secretariat and Vice President of Global Public Policy at Bloomberg LP. "We have provided a foundation that is improving the quality and consistency of this type of disclosure and can help encourage a standardized approach across all regulatory sectors and jurisdictions. We seek companies and investors to use the tools we have provided to accelerate the pace of progress ".

The Task Force is also asking for feedback on its consultation on decision-making and forward-looking parameters for the financial sector. The publication of the consultation document started on 29 October 2020 will end on 27 January 2021.

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Photo by Héctor J. Rivas on Unsplash
Between progress and the need for greater disclosure on the climate: the third TCFD 2020 report