Groups worth $25tn support climate disclosure

Companies and financial institutions worth around $25 trillion (£19.3tn) have committed to supporting a set of climate change disclosure recommendations. The Task Force on Climate-related Financial Disclosures (TCFD) framework aims […]

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By Jonny Bairstow

Companies and financial institutions worth around $25 trillion (£19.3tn) have committed to supporting a set of climate change disclosure recommendations.

The Task Force on Climate-related Financial Disclosures (TCFD) framework aims to enable market forces to drive more efficient allocation of capital and help support a smooth transition to a low carbon economy.

As businesses increasingly take action to address the effects of climate change on their day-to-day operations and long term strategies, a growing number of investors are demanding better information on those actions.

The TCFD’s voluntary framework for companies to disclose climate-related information in their financial filings received more than 300 responses from across 30 countries when its draft version was published last year.

More than 100 business leaders and their companies, such as insurance groups AXA and Aviva, oil giant Royal Dutch Shell, mining group BHP Billiton and Virgin Group, have pledged their commitments.

The guidelines for disclosure are centred around four main areas – governance, strategy, risk management and statistics.

Recommendations include disclosures on how company management are mitigating risks to the business presented by climate change, describing the resilience of various business models in the face of a changing world and explaining how and why various metrics can be used to track green progress.

These areas reflect the type of information investors expressed that they need to make better, more informed decisions.

Michael Bloomberg, Chair of the Task Force said: “Climate change presents global markets with risks and opportunities that cannot be ignored, which is why a framework around climate-related disclosures is so important.

“The Task Force brings that framework to the table, helping investors evaluate the potential risks and rewards of a transition to a lower carbon economy.”