On the go: The rate of climate-related financial disclosures has increased more in the past year than in any previous year, the Task Force on Climate-related Financial Disclosures has reported, but warned that “significant work” remains.
The report, published by the Financial Stability Board on Thursday, stated that work needs to be done to “mainstream” the consideration of climate-related issues in financial decision-making, despite growing global support.
The latest status report found that TCFD-aligned disclosures have grown by 9 per cent in 2020 — more than double the increase in 2019.
The report also stated that 83 of the world’s largest 100 companies now support or report by the disclosures framework.
An additional 1,000 organisations have vowed support for the TCFD recommendations in the past year, totalling more than 2,600 supporters globally, representing a 70 per cent increase on the previous year.
TCFD signatories now span 89 countries and jurisdictions, representing a combined market capitalisation of $25tn (£18.2tn) — an increase of 99 per cent on the previous year.
But the TCFD said that “significant progress” is still required, as an average of only one in three companies reviewed in the reported disclosed climate-related information aligned with the TCFD recommendations.
Europe remains the leading region for disclosures, with the average level of reporting across the 11 recommended disclosures from the 2020 fiscal year, now at half of the European companies assessed.
European companies have increased their average disclosure by 15 per cent since 2019 and now disclose 16 per cent more than the next closest region.
The report further noted that governments have increasingly begun to codify aspects of the TCFD recommendations into policy and regulation, on the back of implementation within private markets.
In addition to the support of dozens of regulators and supervisors, Brazil, the EU, Hong Kong, Japan, New Zealand, Singapore, Switzerland, and the UK have announced requirements for domestic organisations to report in alignment with the TCFD recommendations.
TCFD chair Michael Bloomberg said: “The TCFD has had an exceptional year rallying global support for consistent and transparent climate risk reporting. Since our last report in September 2020, public and private sector support for the TCFD recommendations has accelerated rapidly.
“The momentum we have built is helping to ensure that organisations throughout the global economy understand and appreciate the role of climate change as a financial risk around the world.”
Bloomberg noted that despite the recent review of more than 1,600 companies finding “the greatest-ever growth in disclosures aligned with the TCFD recommendations”, companies “continue to struggle to quantify the impacts of climate change, and to source the data they need to fully assess the threats of a changing climate”.
“Our efforts to increase and improve these disclosures are only growing more important,” he added.
“Markets are increasingly looking to channel funds to sustainable and resilient investments, and it is critical that climate reporting requirements are standardised across jurisdictions to help investors and consumers make decisions.”
From October 1 2021, pension schemes with an asset value of £5bn have had to report the risks and opportunities that climate change poses to their investments in line with the TCFD framework.
Almost half of businesses with a defined contribution scheme said that disclosures will be a useful way to engage employees with their future savings, according to the latest CBI/Mercer Pensions Survey.
