TCFD

TCFD Transfers Climate Monitoring Activities to IFRS Foundation

Posted on July 14, 2023

Following the publication of the ISSB Standards, the IFRS Foundation will take over monitoring of companies’ climate progress from 2024.

By Paul A. Davies, Michael D. Green, and James Bee

On 10 July 2023, the International Sustainability Standards Board (ISSB) and Financial Stability Board (FSB) announced that the IFRS Foundation (the organisation that founded the ISSB) would take over the monitoring of the progress on companies’ climate-related disclosures relating to the Task Force on Climate-related Financial Disclosures (TCFD). This announcement follows the ISSB’s publication of its inaugural sustainability standards IFRS S1 and IFRS S2.

The transfer in monitoring activities marks the latest development in the ISSB’s ambition to consolidate the sustainability reporting landscape internationally, with the TCFD joining other standards (such as the SASB Standards) in the list of frameworks that were previously independently managed but are now under the consolidated auspices of the ISSB.

TNFD Releases Third Beta Version of Disclosure Framework Ahead of Global Biodiversity Summit

Posted on November 28, 2022

Posted in Environmental, Social, and Governance, Green Finance

The third version introduces several new disclosure recommendations ahead of what is supposed to be a “Paris moment” for biodiversity in Montreal.

By Paul A. Davies, Michael D. Green, James Bee, and Austin Pierce

As environmental ambitions continue to grow, much attention has focused on climate. A key focal lens for that has been the annual Conference of the Parties to the UN Framework Convention on Climate Change, including the recently concluded negotiations in Sharm el-Sheikh (COP27). However, COP27 also included days focused on cross-cutting issues, such as water and biodiversity. This marks part of an important trend in 2022: the increasing prominence of natural capital in considerations of environmental sustainability.

The Taskforce on Nature-Related Financial Disclosures (TNFD) has released several beta version of its framework on nature-related risk and impact management and disclosure (the TNFD framework) this year. The most recent of these updates (version 0.3) was published in early November, days ahead of the COP27 on climate and approximately a month ahead of the COP15 on biodiversity in Montreal. As discussed in our summary of TNFD v0.2, the TNFD Framework aims to establish a standardized risk management and disclosure framework for organizations to address nature-related risks, playing the same role for nature as the Task Force on Climate-related Financial Disclosures (TCFD) has played for climate.

TNFD Releases Second Version of Its Disclosure Framework

Posted on July 18, 2022

Posted in Air Quality and Climate Change

The second version includes guidance on metrics and how companies can conduct dependency and impact evaluation.

By Paul A. Davies, Michael D. Green, Austin J. Pierce, and James Bee

On 28 June 2022, the Taskforce on Nature-related Financial Disclosures (TNFD) released version 0.2 of its framework for nature-related risk and opportunity management and disclosure (the Framework). The announcement builds on the release of the first iteration in March 2022, which was broadly received positively by market participants in a public feedback process hosted on the TNFD website.

The TNFD was established to develop a risk management and disclosure framework for organisations to report and act on evolving nature-related risks, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes. As the name may suggest, the TNFD has based much of its fundamental structure, including many aspects of the core disclosure recommendations, on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The TNFD hopes that the Framework will therefore have the market impact that the TCFD recommendations have had in the climate space, and provide a basis by which companies can represent their natural capital-linked risks and opportunities in a clear and comparable manner for investors.

China to Introduce Its First ESG Disclosure Standard

Posted on June 16, 2022

Posted in Environmental, Social, and Governance

The move follows a number of similar standards that regulators and governments across the globe have proposed.

By Paul A. Davies, Michael D. Green, and James Bee

With effect from 1 June 2022, the Guidance for Enterprise ESG Disclosure (the Guidance), published by Beijing-based think tank China Enterprise Reform and Development Society (CERDS), is seeking to become the first, and definitive, China-focused ESG disclosure standard.

UK Launches Taskforce to Take the Lead in Climate Transition Plans

Posted on April 27, 2022

Posted in Environmental, Social, and Governance

HM Treasury’s Transition Plan Taskforce aims to influence international standard setting and make the UK the world’s first net zero-aligned financial centre.

By Paul A. Davies, Michael D. Green, Nicola Higgs, Anne Mainwaring, James Bee, and Dianne Bell

On 25 April 2022, HM Treasury (HMT) announced the launch of the UK Transition Plan Taskforce (TPT) to help drive decarbonisation by ensuring that financial institutions and companies prepare plans to achieve net zero, as well as to support efforts to tackle greenwashing. This move is an important step connected with the UK’s development of the new Sustainability Disclosure Requirements (SDR) regime that Chancellor Rishi Sunak announced at his Mansion House speech in July 2021. HMT’s stated aim is to develop “a gold standard for climate transition plans” and for the UK to become the world’s first net zero-aligned financial centre.

An increasing number of companies are making public commitments to decarbonise their operations and reach net zero emissions, but transition plans announced so far are, according to the TPT, “varied in detail and quality”,[i] thereby limiting the ability of stakeholders to assess the credibility of such transition plans. Proposed rules announced by the Chancellor at COP26 would require large companies and certain financial sector firms to publish a transition plan from 2023. The TPT will, over the next two years, develop: (i) a sector-neutral framework for private sector transition plans; (ii) a sector-specific guidance for finance and other sectors; and (iii) recommendations regarding the preparation and use of transition plans. The TPT’s expectations are for such transition plans to be science-based and to help inform the UK’s SDR. (See Latham’s recent briefing for an outline of the SDR regime.)

ISSB Publishes Long-Awaited Exposure Drafts of Global Sustainability Standards

Posted on April 1, 2022

Posted in Environmental, Social, and Governance

The standards are part of a global initiative to consolidate sustainability disclosures to help investors assess the value of companies.

By Paul A. Davies, Sarah Fortt, Nicola Higgs, Betty M. Huber, Michael D. Green, and James Bee

On 31 March 2022, the International Sustainability Standards Board (ISSB) released exposure drafts of the first two IFRS Sustainability Disclosure Standards (ISSB Standards) for public consultation. The ISSB indicated that its aim is for the complete set of ISSB Standards, once finalized, to provide a comprehensive global baseline of sustainability disclosures for investors in global capital markets to use when assessing the value of companies.

ESG in 2022: 10 Things to Look Out For

Posted on January 5, 2022

Posted in Air Quality and Climate Change, China, Environmental Litigation, Environmental, Social, and Governance

Corporate reporting (including SEC developments), climate change, energy transition, supply chain management, and the mitigation of ESG-related litigation risk are expected to be the leading ESG themes of this year.

By Paul Davies, Nicola Higgs, Sophie Lamb QC, Ryan Maierson, Colleen Smith, Michael Green, Edward Kempson, James Bee, and Anne Mainwaring

As expected, 2021 saw continued emphasis on environmental, social, and governance (ESG) issues on a global scale, by governments, regulators, NGOs, the private sector, and other important stakeholders. Indeed, 2021 has been variously described as “a watershed moment for ESG” and “the year of ESG investing”[1]. We do not expect this interest to recede, and given the societal importance that now appears to be placed on ESG issues, we expect this growth trend to continue throughout 2022.

This third instalment of Latham’s annual 10 Things to Look Out For blog post highlights the ESG-related developments and trends that we expect to remain in the headlines in 2022.

TCFD Releases New Guidance on Climate-Related Metrics, Targets, and Transition Plans

Posted on October 22, 2021

Posted in Air Quality and Climate Change

The guidance offers clarification on key aspects of the TCFD’s recommendations on climate reporting.

By Paul A. Davies, Michael D. Green, and James Bee

On 14 October 2021, the Task Force on Climate-related Financial Disclosures (TCFD) released a new guidance document on climate-related metrics, targets, and transition plans (the Guidance). The Guidance seeks to support organisations that make TCFD-aligned disclosures in preparing decision-useful metrics, targets, and transition plan information and linking that information to estimates of financial impact. The Guidance builds on a consultation paper on the same topic that the TCFD released in June 2021.

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TNFD Releases Second Version of Its Disclosure Framework

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