TCFD: An update on corporate disclosure following the second status report
Climate change is now appearing in financial services disclosure more than ever before.
What is the role of the the TCFD recommendations in this change?
In June 2019, the TCFD released its second status report, indicating increased adoption of its recommendations.
To coincide with its release, we are updating our previous analysis into the extent to which this adoption has been reflected in supporters’ corporate disclosure.
- The number of finserv TCFD supporters mentioning climate change with a high emphasis has more than doubled from 14% in 2016, the year before the TCFD recommendations were published, to 33% in 2019.
- Climate change is predominantly discussed through a risk rather than an opportunity lense – with 54% of finserv TCFD supporters referring to the topic in relation to risk and 20% in relation to opportunity in 2018.
- Interestingly, climate change has been predominantly mentioned in the context of distant future risks, rather than in recognizing the upcoming implications to business.
- The number of climate-related regulations and voluntary initiatives has almost doubled since 2014.
To read the full report, please fill in the form on the right.
What can you expect to see in this report?
Financial services companies are talking about climate change more than ever before.
Datamaran shows that TCFD supporters have placed increased attention on climate change and greenhouse gases in their financial reports since the introduction of the recommendations.
High emphasis reporting has increased also among the largest financial services companies that don’t support the TCFD (market capitalization above $20bn) – from 12% in 2017 to 19% in 2019, the period since the introduction of the TCFD recommendations.
The financial impact of climate risks
“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.”
Donato Calace, VP of Accounts and Innovation, Datamaran
More about the TCFD
Click on each question to learn more.
The Task Force on Climate-Related Financial Disclosure (TCFD) is pushing companies to publicly disclose on their climate-related risks and opportunities.
Established in 2015 by the Governor of the Bank of England Mark Carney in response to a G20 request to understand the financial implications of climate change better, the TCFD is chaired by Michael Bloomberg.
The Task Force bridges the gap between the corporate and finance communities as it invites companies to disclose how climate-related issues can impact their business. This helps investors, lenders and insurers to better assess climate-related risks and opportunities in their decisions.
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. Coupled with the fact that financial services are one of the biggest sectors in terms of market capitalization, approximately $ trillion, their potential impact on climate change can be far reaching.
*as of July 2019
The study features 115 financial services companies as well as 194 non-financial services companies that are TCFD supporters. Additionally, the research covers 133 global financial services companies (market capitalization of over $20 billion) which are not TCFD supporters.
Using Datamaran’s proprietary artificial intelligence, our report compares the way finserv and non-finserv companies discuss the issues of climate change and greenhouse gases in their annual financial reports. This is in line with the TCFD recommendations’ focus on implementing climate-related disclosure in financial publications.
The main finding of last year’s research was that that financial services lag behind on disclosing climate-related risks compared to non-financial services signatories. Twice as many non-financial services signatories reported on climate change with a high emphasis compared to financial services. The gap between both groups of TCFD signatories has been stable throughout the years with no sign of widening or closing, as both showed an incremental growth for the past five years.
The full research is available here.
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