TCFD: Sustainable investments through enhanced transparency of information

06/09/18



When the Paris Agreement came into effect in 2016, it was the first-ever universal, legally binding and global climate deal. Adopted by 195 countries, the Paris Agreement sets out a global action plan, with the goal of avoiding dangerous climate change by limiting global warming to well below 2°C.

While this was a significant turning point for the signatory nations on the road to a low-carbon economy, there remained the key question of how the Paris Agreement would translate into practical, actionable steps for businesses and investors.


Introducing the TCFD

Enter the Task Force on Climate Related Financial Disclosures (TCFD), an industry-led initiative launched by the Financial Stability Board (FSB) to develop recommendations on climate-related financial disclosures that are applicable and actionable by organisations.

In 2017 the TCFD launched their recommendations, which encourage companies identify and disclose the potential financial impacts of their climate-related risks and opportunities and ultimately act on these disclosures.

Better access to consistent and transparent information on climate-related risks is set to transform how lenders, insurers and investors are able to assess and price those risks and opportunities – helping to ensure sustainable investments and build a more resilient economy.

Companies are urged to disclose information around four key thematic areas: 

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: How the organisation identifies, assesses and manages climate-related risks

Metrics and targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities 


Growing support

Now, as we reach the first anniversary of the guidelines being published, the number of businesses pledging their support continues to rise.

According to Bloomberg, by April 2018 more than 275 companies with a combined market capitalisation of over $6.6 trillion had publicly expressed support for the TCFD recommendations. Jumping forward to August 2018, this figure had risen to at least 315.

The TCFD’s recommendations continue the growing trend of bringing together financial and non-financial considerations into organisations’ public reporting. The standardisation of these disclosures and valuation of risks helps investors to make informed decisions and ultimately drive their capital towards low-carbon investments. In an increasingly data-driven world, investors are incorporating environmental, social and governance factors into their decisions to better manage risk and generate sustainable, long-term returns – a trend which is projected to only continue with the rising prominence of the TCFD.


Support from sustainability experts

Bureau Veritas’ experienced and specialist Sustainability team offers a range of services that help clients to demonstrate their commitment to sustainability and transparently report on their climate impacts.

This includes Carbon Disclosure Project (CDP) verification, Sustainability Report Assurance and Climate Bonds verification.

For more information or to see how we can support your organisation on your sustainability journey, contact our expert team at sustainability@uk.bureauveritas.com or call 0845 600 1828. 


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