The annual report shows a considerable uptake in the adoption of climate-centred financial disclosures.
By Paul A. Davies and Michael D. Green
The Task Force on Climate-related Financial Disclosures (TCFD) published its Annual Report on TCFD-aligned disclosures by firms (Annual Report), on 29 October 2020. The TCFD was established by the Financial Stability Board (FSB) in 2015 as a mechanism to develop an approach for companies to disclose climate change matters. The TCFD offers companies guidelines and disclosure recommendations for providing information to investors, so that companies can provide more consistent, comparable data. The TCFD also promotes climate-related scenario analysis and the integration of climate-related risks into risk-management processes.
On 6 March 2020, the UK’s Financial Conduct Authority (FCA) launched a consultation primarily focused on enhancing requirements on certain listed companies to make climate-related disclosures (the Consultation). In particular, it is proposed under the Consultation that such listed companies will be required to state that they have reported in line with the recommendations made by the Taskforce on Climate-related Financial Disclosures (TCFD) or explain why they have not complied with such step. This demonstrates further momentum behind the increasingly widespread adoption of the TCFD recommendations in the public markets (as well as the private markets).