Financial services catching up on climate change disclosure
Datamaran – the leading platform that analyzes ESG disclosure using qualitative and quantitative data – releases an update on the TCFD signatories’ disclosure on climate change
15 August 2019
Contact: Adriana Farenga
LONDON – Financial services companies are talking about climate change more than ever before, according to a new study released by Datamaran, the only software as a service (SaaS) solution for non-financial risk management.
Primarily dominated by financial services, the Task Force on Climate-Related Financial Disclosure (TCFD) is supported by over 824 organizations across all sectors, which account for over $9.3 trillion in market capitalization.
In the data brief, released today, Datamaran analyzes how financial services TCFD supporters have been disclosing on climate change-related issues in their annual financial reports. The study revealed that the number of financial services companies mentioning climate change with a high emphasis* in their annual financial report has more than doubled in the last three years – from 14% in 2016, the year before the recommendations were published, to 33% in 2019.
Speaking about the increase in support for the TCFD’s recommendations, Donato Calace, Director of Accounts and Innovation at Datamaran, said: “The TCFD recommendations give companies the tools to improve their governance and risk management practices, and to build resilience into their strategies. The TCFD truly speaks to organizations in a language they understand, not by warning them about the impact they have on the environment, but instead getting them to understand the financial impact the environment can have on them. It all goes to show the value of voluntary initiatives as an accelerator to help companies do the right thing.”
Further findings include that global financial services companies who are not TCFD supporters** have also become more proactive in climate change reporting. The percentage talking about climate change with a high emphasis remained relatively static in the years before the TCFD recommendations – at 10% in 2014 and 2016. However, this figure has risen from 12% in 2017 to 19% in 2019, indicating an upward curve in climate change disclosure that coincides with the introduction of the TCFD recommendations.
While reporting on climate-related issues is increasing, the study also found that climate change has been predominantly mentioned in the context of distant future risks, rather than in recognizing the upcoming implications to business.
Background on the TCFD.
Established in 2015 by the Governor of the Bank of England, Mark Carney, in response to the request by G20 to better understand the financial implications of climate change, the Task Force on Climate-Related Financial Disclosure (TCFD) has been pushing companies to publicly disclose on their climate-related risks and opportunities. TCFD supporters include 374 financial companies, 297 non-financial companies and 114 other organizations.
* High emphasis: ‘High,’ ‘medium,’ ‘low’ and ‘no mention’ are the emphasis scores that are used to assess the level of emphasis each company puts on a specific topic in their corporate reports. The emphasis takes into account a number of variables, including but not limited to the number of times the topic is mentioned, its location (e.g. CEO letter) and more. For example, high emphasis topics are found a large number of times in a source and/or in key sections. Whereas low emphasis topics appear only rarely in a source.
** The study features 133 global financial services companies, with a market capitalization of over $20 billion, which are not TCFD supporters.
Datamaran is the only software as a service (SaaS) solution for non-financial risk management.
Entirely unique in its field, the platform provides a data-driven perspective into regulatory, strategic and reputational risks and opportunities. Datamaran enables a business process for continuous issues monitoring fully owned by internal teams. It harnesses technology to support decision-makers with an improved materiality analysis process – one that seamlessly integrates into Enterprise Risk Management and corporate strategy.
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