According to a progress report from Climate Action 100+, 120 companies now have a board committee with express responsibility for oversight of climate risks and 59 companies now formally support the disclosure framework from the Task Force on Climate-related Financial Disclosures. The TCFD is a voluntary set of climate-related financial risk disclosures that is intended to help price climate risks — the task force is chaired by Mike Bloomberg.
As a Paul Weiss memo explains, although the TCFD’s recommendations were first published only three years ago, it’s one of the frameworks that’s become more popular. Late last week, TCFD issued its third annual status report to document progress. Here are a few of the key findings:
– Almost 60% of the 100 largest global public companies support the TCFD, report in line with the TCFD recommendations, or both
– The largest increase in disclosure was related to how companies identify, assess, and manage climate-related risk – but disclosure of the potential financial impact of climate change on businesses remains low
– Less than 1% of companies disclosed information on the resilience of their business strategy, taking into consideration different climate-related scenarios
– The most useful piece of info according to “expert users” is the impact of climate change on a company’s business & strategy – check out Appendix 5 beginning on pg 93 to see how these users ranked the usefulness of other information, which could help you prioritize your disclosure efforts
The TCFD also published two guidance documents:
– Guidance on Scenario Analysis for Non-Financial Companies: provides ways to use scenario analysis and ideas for disclosing resilience of strategies to different climate-related scenarios
– Guidance on Risk Management Integration & Disclosure: aimed at companies interested in integrating climate-related risks into their existing risk management processes and disclosing information on their risk management processes in alignment with the Task Force’s recommendations
-Liz Dunshee, TheCorporateCounsel.net November 4, 2020
