Climate change place both risks and opportunities for business. Investors, lenders and insurers don’t have a clear view of which companies will withstand or prosper as the environment changes, new technologies arise and customer behavior shifts which companies are likely having issues with.
Financial markets cannot rate climate-related risks and opportunities correctly, without this information, and we face a shaky change to a low-carbon economy, with sudden value shifts and destabilizing costs if industries must rapidly adjust to the new landscape.
Financial Stability Board Chair and Bank of England Governor Mark Carney established the FSB Task Force on Climate-related Financial Disclosures (TCFD) to help the financial markets better understand climate-related financial risks.
The Task Force spent 18 months developing recommendations to guide companies in revealing climate-related financial information that is decision-useful, comparable and consistent. The group released its final recommendations in June 2017.
The recommendations suggest that companies reveal how climate change factors into their governance, approach and risk management processes and share the targets they use to assess and manage climate-related risks and opportunities.