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.