Main Content

The Bottom Line on Climate Change


Christopher Webb

Senior Climate Policy Advisor and UK Relationship Manager, The Nature Conservancy, Europe

July 2017

Why the Task Force on Climate-Related Financial Disclosures Matters

“You can’t manage what you don’t measure,” the old business adage goes. If so, companies should welcome a movement intended to help them measure the impacts of perhaps one of the greatest external threats to their strategic goals: climate change.

That’s the purpose of a new evidence-based approach put forth by the Task Force on Climate-related Financial Disclosures (TFCD). TCFD, a group of business and financial leaders organized by the Financial Stability Board, has developed “voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders.”

What sets this report apart from previous efforts is the elevation in awareness and engagement at the highest levels across the public and private sectors that have come from the chairmanship of Michael Bloomberg and the vocal support of Mark Carney, Governor of the Bank of England. In fact, over 100 global investors and corporates, with $11 trillion of assets, have already committed to support the TFCD’s voluntary recommendations.

The report is also set apart by the innovation it brings the climate reporting space, perhaps most prominently through recommending that companies consider how their businesses will fare under different climate scenarios, including the “well below 2oC” outcome sought by the Paris Agreement. It has also placed the analysis of water and land-use risks and opportunities associated with climate change firmly alongside the focus on energy—a long over-due shift from previous climate reporting frameworks, as water and land-use represent significant risks and solutions no matter almost where you are in the world.

Aerial view of corn fields along the edge of the forest in the ejido of San Agustin, Yucatan. Photo © Erich Schlegel
Aerial view of corn fields along the edge of the forest in the ejido of San Agustin, Yucatan. Photo © Erich Schlegel

For example, the land sector has the potential to cost-effectively deliver up to 30% of the carbon mitigation we need to stay below 2oC. At the same time, mangroves, marshes and reefs can help protect assets and communities from the impacts of a changing climate. Coastal wetlands, for example, prevented over $600 million in flood damages during Hurricane Sandy. Reefs, mangroves and other coastal ecosystems also provide a huge range of other economic benefits for example providing spawning grounds for fisheries and a source of tourist income. These ‘natural climate solutions’ offer in-demand negative emissions technologies, but they also cut greenhouse gas emissions in their own right, and they help people and nature adapt to climate change.

Considering all these aspects, “green” infrastructure can often be more cost effective than “grey” (such as concrete sea walls), and the TCFD’s recommendations should allow companies and investors to identify these opportunities much more easily than in the past.

The emphasis on water security is also notable, as climate change is projected to further accelerate the already unprecedented pressure we’re putting on some lakes, rivers and aquifers. But the path to water security doesn’t have to be lined exclusively in concrete, either. Improving the health of the lands around our water sources – for example by reforesting pastureland, protecting forests and the planting of cover crops - can improve water quality and reliability. In some cases, these green infrastructure solutions could pay for themselves through water treatment savings alone, according to a recent report from the Nature Conservancy. These practices also have the added benefit of capturing and avoiding the release of carbon into the atmosphere, helping to mitigate climate change.

The Mississippi River near Brainerd, Minnesota. Photo © Mark Godfrey for The Nature Conservancy
The Mississippi River near Brainerd, Minnesota. Photo © Mark Godfrey for The Nature Conservancy

The risks and opportunities that nature presents, of course, are very specific to each location and site. So, for example the TCFD recommendation to disclose water use is of much more value when the context of the health of the water sources being drawn on is considered. For most companies, operating across many natural systems brings a high degree of complexity, and the analysis of risks and opportunities will need to be done from the bottom-up rather than the top down.

Still, it’s clear that investments in nature present huge opportunities for companies and governments to both mitigate and adapt to climate change. As the Conservancy continues to build this scientific evidence base of the role nature can play as a cost-effective climate solution, we look forward to playing our part by supporting companies and investors to consider the TFCD Recommendations.