A guide to the TCFD

The casualties of the climate crisis could include financial stability, the global economy, and the value of investments. As governments catch up to the realities of climate change and the policy response continues to gather pace, global markets need transparency into the financial impacts of climate change on companies.

‌The Task Force on Climate-related Financial Disclosures (TCFD) released their recommendations in 2017 to improve and increase reporting of climate-related financial information. Today, 2,000+ organizations support TCFD, including 110+ regulators and government entities across 78 countries.

Why read this guide?

It outlines the benefits of climate reporting to firms such as yours, and explains how companies and regulators are implementing the TCFD recommendations.

Firms implementing the recommendations are able to:‌

• Efficiently identify climate-related opportunities and risks

• Proactively address investors' demands for climate-related information in a framework that investors are increasingly asking for

• More effectively meet current requirements to report material information in financial filings

• Enhance risk management and strategic planning, through better understanding of climate risk‌.

Bloomberg has created this guide to help you better understand the benefits of implementing the TCFD recommendations.

APRA releases guidance on managing the financial risks of climate change

The Australian Prudential Regulation Authority (APRA) has released for consultation its draft guidance to banks, insurers and superannuation trustees on managing the financial risks of climate change.

The draft Prudential Practice Guide CPG 229 Climate Change Financial Risks (CPG 229) is designed to assist APRA-regulated entities in managing climate-related risks and opportunities as part of their existing risk management and governance frameworks.

APRA has developed CPG 229 in response to requests from industry for greater clarity of regulatory expectations and examples of better industry practice. The guidance covers APRA’s view of sound practice in areas such as governance, risk management, scenario analysis and disclosure. The PPG does not, however, create new requirements or obligations, and is designed to be flexible in allowing each institution to adopt an approach that is appropriate for its size, customer base and business strategy.

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IGCC Media release: Net Zero Asset Managers initiative triples in assets under management

Net Zero Asset Managers initiative triples in assets under management as 43 new asset managers commit to net zero emissions goal

• 43 new investor signatories to Net Zero Asset Managers initiative will work in collaboration with clients to achieve 2030 emissions reduction targets and reach net zero by 2050 or sooner.

• The Net Zero Asset Managers initiative now has a total 73 signatories representing $US32 trillion in assets under management (AUM), 36 per cent of the global total.

• Net Zero Asset Managers initiative is now accredited by the UNFCCC Race to Zero campaign.

Asset managers representing over $US22.8 trillion of assets under management (AUM) today announced that they are new signatories to the Net Zero Asset Managers initiative. Following the launch of the initiative in December 2020, 43 additional asset managers are making new, enhanced commitments to support the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5°C.

The Net Zero Asset Managers initiative now has a total 73 global asset manager signatories, representing $US32 trillion in assets under management, representing more than a third (36 per cent) of the total assets under management across the globe. The breadth of signatories signals the determination of investors to play their part in achieving a net zero and resilient future and the global significance of the Net Zero Asset Managers initiative.

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Legal & General ties bosses annual pay to climate targets | This is money

The FTSE 100 pensions and insurance group said its executive pay 'scorecard' – which measures how far the business has gone to achieving its annual targets and decides how much of the maximum bonus its bosses should get – would from this year include specific climate-related goals.

Policy Forum on Climate Related Disclosures | Kings Business School

Climate-related corporate disclosures are the next big thing in fostering the transition to a net-zero carbon economy. The Qatar Centre of Global Banking & Finance convened a policy forum of experts to debate the issues involved in designing a set of coherent standards.

Catch up on the Virtual Seminar Series

The next virtual seminar series will begin on Monday 15 February 2021 with the full details being announced soon. These seminars aim to provide a forum for researchers at central banks and academics working on central banking issues to present their research. Seminars take place fortnightly every Monday each term and last one hour, including time for questions from the attendees.

Watch our previous seminars on our YouTube channel here.

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Annual Conference 2021: Challenges facing central banks in the 2020s

The conference to be held on 17th & 18th of May 2021 will focus on new directions in central bank research and policymaking. Areas of interest include but are not confined to:

• Central bank mandates, policy frameworks and governance arrangements,

• Understanding the interaction of fiscal, monetary and macroprudential policies,

• Understanding new and emerging threats to economic stability, including COVID, climate change and new financial technologies,

• Conducting monetary and macroprudential policies in times of uncertainty, and

• Data analytics for central banking.

Second Annual Global Survey of Climate Risk Management at Financial Firms | GARP

Climate change 'could trigger a financial crisis' and central banks may have to bail out fossil fuel operators | ABC News

London, New York mayors urge cities to divest from fossil fuels | Trust.org

None of the C40 cities that have divested their pension funds has seen worse performance and some have done better by removing fossil fuels, C40 said. We don't expect it to have a negative effect at all on the income of pension funds," Hanisch said. "If anything we expect it to have a positive impact.

Finance counts the cost of the bushfire catastrophe | AFR

Where the law requires the disclosure of climate risk, needless to say it should be done in a way that's useful and relevant to the market", he said. "Where climate risk is material, we're actively encouraging directors and advisers to provide voluntary disclosure to the market.

Insurers will ramp up efforts as regulation and disclosure goes global | Clyde & Co

In 2020, as insurers and banks ramp up their efforts to identify and manage climate risk more strategically in line with the PRA's supervisory statement SS3/19, many are expected to adopt TCFD recommended disclosures (Task Force on Climate-Related Financial Disclosures)

The Muni Bond Market's Biggest Credit Risk: Climate Change | Think Advisor

Most at risk are localities that are already economically challenged, located in low-tax states and threatened with extreme weather-related events.

Tackling climate crisis is what we should be doing, says new IMF boss | The Guardian

The climate crisis and financial stability are linked, she says, because if left unattended, global heating will threaten financial stability. “When people say we should be sticking to our mandate, I fully agree,” she says. “That’s exactly what we are doing.”

Mark Carney addresses Melbourne Climate Alliance Conference via video

He addresses Reporting, Risk Management and Returns in the face of climate change risks. Visit here to book.

Mark Carney: banks should stress test clients for climate risk | Financial News

Just one in four of the companies surveyed in the task force’s 2019 status report provided the “fuller set” of information it recommended, the BoE governor highlighted, adding that progress across different sectors was “uneven”.

Redburn says Big Oil no longer a ‘buy’ as peak demand looms | Financial Times

Redburn, the equity research house, has removed all “buy” ratings from the biggest integrated oil companies, arguing that the industry faces an “existential risk” as long-term forecasts for oil demand are up to 30 per cent too high.

Climate risk and sustainability: ASIC guidance developments | MinterEllison

The Australian Securities & Investments Commission (ASIC) has released revised guidance on climate change-related financial disclosures.

ASIC has released revised guidance on climate change-related financial disclosures made in both offer documents and Annual Report Operating & Financial Reviews:

• Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors; and

• Regulatory Guide 247 Effective disclosure in an operating and financial review.

ASIC has updated its guidance to, amongst other things:

• incorporate the types of climate change risk developed by the G20 Financial Stability Board’s Taskforce on Climate Related Financial Disclosures (TCFD) into the list of examples of common risks that may need to be disclosed in a prospectus appearing in Table 7 of RG 228; and

• in RG 247.66, highlight climate change as a systemic risk that could impact an entity’s financial prospects for future years and that may need to be disclosed in an operating and financial review.

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Climate Change: Evolution and Impact on Financial Risk Management | GARP

The presidential nominee of the European Commission recently endorsed the idea of creating a European bank focused on climate change, and the European Union is trying to figure out how to eliminate greenhouse gas emissions by 2050. What's more, as part of a green finance push, the U.K. is considering rules that force companies to disclose their climate-related risks.

All of this follows on the heels of comprehensive climate risk regulatory guidance issued by both the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) and the Prudential Regulation Authority. Clearly, the transition to a low-carbon economy is coming, but how are financial institutions responding to these significant developments?

In a recent interview with Mike Barber (see full video, below), a partner in Deloitte's U.K. sustainability services group, GRI co-president Jo Paisley said the survey clearly showed that firms have different levels of maturity. “Some firms were doing an awful lot and had really thought about [climate risk] and had embedded it in their day-to-day operations,” she said. “Others, frankly, had not started and were really looking for help.” This video interview was first published on Deloitte U.K.'s dedicated climate change website.

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Companies that fail to adapt to climate change risk will go bust, Carney warns | Isle of Wite County Press

Companies that don’t adapt, including companies in the financial system, will go bankrupt without question

Why Climate related financial disclosures matter | Insights - The London Institute of Banking & Finance

Dr Paul Fisher: “It will take some time, but the disclosure of climate-related risks is going to become mainstream.”

Listed UK companies and pensions face mandatory climate reporting | FT

The government’s new green finance strategy, to be published on Tuesday, will “set expectations” for listed companies and large asset owners to report climate risks by 2022, said the Treasury, adding that work with regulators “will explore the most effective way of doing this, including whether mandatory disclosures are necessary”