FSB Task Force on Climate-related Financial Disclosures
During the Paris Agreements in December 2015, a global action plan was initiated with 195 countries agreeing to keep global warming well below 2⁰C. This new policy directive, along with the effects of climate change on the financial sector that are only now beginning to be fully understood, will have staunch implications for financial institutions and investors. The Paris climate deal will require changes in investment patterns, including a shift away from fossil fuels to low-carbon sources. But most importantly, climate change poses a threat to the insurability of assets and investments, agriculture and the food supply, as well as the water supply.
Faced with these existing and foreseeable challenges, the Financial Stability Board (FSB) approached leaders from the private and public sector to determine how financial reporting could incorporate climate-related issues. In December 2015, the FSB’s Task Force on Climate-related Financial Disclosures (TCFD) was launched. The overall mission is to develop voluntary climate-related financial risk disclosures so that companies will provide better (and comparable) information to investors, lenders, insurers, and other stakeholders. As part of this work, the Task Force will take on the challenge of defining “materiality” of risks associated with climate change (physical, liabiltiy and transition risks). Moving forward, the TCFD was charged with delivering two reports, organized into two phases.
PHASE I: The first phase of the TCFD’s workplan focuses on outlining the scope and objectives of the Task Force. After presenting its report to the FSB, the TCFD published its phase I report on Apirl 1 and launched a one month public consultation.
In the context of this consultation, New Rules for Global Finance convened diverse stakeholders on April 15 for a roundtable “Overexposed and Underreported: Climate Risks and the Financial Sector“. This was an opportunity for stakeholders and other interested parties to discuss these issues, exchange views and share recommendations for the Task Force. Drawing on the roundtable disussions, New Rules prepared and submitted a set of recommendations and comments for the TCFD’s phase I consultation. New Rules’ response can be found here
NOTE: The public consultation for Phase I has been extended to May 31, 2016. However, please keep in mind that the Task Force is progressing on its Phase II work, so the earlier they are received, the better they will be considered in the context of the ongoing work. The consultation survey can be found here (if desired, responses to these survey questions can be sumbitted seperately).
PHASE II: The TCFD’s phase II work will focus on developing the recommendations. Although the phase I consultation was extended (as noted above), the TCFD is continuing with its Phase II work. This work will be organized into four workstreams: governance, nonfinancial companies, the financial sector, and stakeholder outreach/communications. Other workstreams and subgroups are expected to be organized soon. New Rules will post any updates on the Phase II work on this webpage.
If you have any questions, please contact Philana Grant This e-mail address is being protected from spambots. You need JavaScript enabled to view it or Nathan Coplin This e-mail address is being protected from spambots. You need JavaScript enabled to view it .