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Reporting on climate risk increasing but still needs more financial impact analysis

  • IFRS - FSB (Financial Stability Board) Image

Jun 05, 2019

On June 5, 2019, The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders has published a second status report providing an overview of the extent to which companies in their 2018 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD surveyed disclosures of over 1,100 firms from diverse sectors with broad geographical representation (142 countries).

It found that: (i) disclosure of climate-related financial information has increased since 2016, but is still insufficient for investors; (ii) more clarity is needed on the potential financial impact of climate-related issues on companies; (iii) of companies using scenarios, the majority do not disclose information on the resilience of their strategies; and (iv) mainstreaming climate-related issues requires the involvement of multiple functions.

The FSB has asked the TCFD to deliver another status report to the FSB in September 2020. The TCFD will undertake further work during the course of the next year to promote and monitor adoption of the TCFD recommended disclosures. It is also considering additional work to: (a) clarify elements of the TCFD’s supplemental guidance, (b) develop process guidance around how to introduce and conduct climate-related scenario analysis, and (c) identify business-relevant and accessible climate-related scenarios.

Please click for the press release and the status report on the FSB website.

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