The Task Force on Climate-related Financial Disclosures (TCFD) published its 2019 Status Report to provide an overview of disclosure practices aligned with the Task Force’s recommendations between 2016 and 2018.
The report also examines the decision-usefulness of existing climate-related financial disclosures to users of disclosure, and evaluates disclosures of strategy resilience and the challenges faced by preparers using scenario analysis.
Nearly 800 organizations have expressed their support for the TCFD’s recommendations, a more than 50% increase from the publication of the first status report in September 2018.
Reports from over 1,100 large companies were reviewed across multiple sectors in 142 countries found that the average number of recommended disclosures per company has increased by 29% from 2.8 in 2016 to 3.6 in 2018. At the same time, the percentage of companies that disclosed information aligned with at least one of the Task Force’s recommendations grew from 70% in 2016 to 78% in 2018.
“We remain encouraged by the continued growth in the number of companies adhering to the guidelines of the TCFD – it means businesses are better informed about the risks they face, and investors are more capable of making sound decisions,” said Michael R. Bloomberg, Chair of the Task Force and Founder of Bloomberg LP and Bloomberg Philanthropies. “However, we’re also clear-eyed about the serious threat that climate change poses. In order to keep people out of harm’s way, and build a more resilient global economy, we need more companies to follow their lead – and soon.”
While the commitment to implementation is encouraging, actual disclosure still faces challenges. Most notably the preparers surveyed find disclosing scenario analysis assumptions difficult and lack standardized metrics and targets.
“We see extensive and mounting evidence that the physical and transition effects of the climate crisis are real. In order to reach the goals of the Paris Agreement we need to take forceful action – this includes action from corporations and the private sector at large,” commented Mary Schapiro, Special Advisor to the TCFD Chair and Vice Chair for Global Public Policy at Bloomberg LP. “Climate-related disclosures and the TCFD recommendations help companies consider the impact of climate change and associated mitigation efforts on their strategies and operations. A company that communicates its climate resiliency to its investors will have a competitive advantage over those that don’t.”
Out of the 785 supporters of the TCFD included are 374 financial and 297 non-financial companies, with a combined market capitalization of nearly $9.3 trillion. The supporting financial firms are responsible for assets of nearly $118 trillion. Supporters also include 114 other organizations, such as trade associations, financial and insurance supervisors and regulators, governments and ministries. Supporters are headquartered across 49 countries.