Sustainable Investment Insights: TCFD - 1 Year On
What is the Task Force on Climate-Related Financial Disclosures (TCFD) and why is it important?
Set up by the Financial Stability Board (FSB), the TCFD seeks to develop recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers, and investors.
- Better access to data will enhance how climate-related risks are assessed, priced, and managed.
- Companies can more effectively measure and evaluate their own risks and those of their suppliers and competitors.
- Investors will make better informed decisions on where and how they want to allocate their capital.
- Lenders, insurers and underwriters will be better able to evaluate their risks and exposures over the short, medium, and long-term.
- The TCFD represents an opportunity to bring climate-related financial reporting to a mainstream audience.
Core Elements of Recommended Climate-Related Financial Disclosures
- Governance: The organisation’s governance around climate-related risks and opportunities.
- Strategy: The actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning.
- Risk Management: The processes used by the organisation to identify, assess and manage climate-related risks.
- Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities.
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