The Financial Stability Board (FSB) welcomed the publication today of the 2021 status report
by the industry-led Task Force on Climate-related Financial Disclosures
(TCFD), which reports on the further progress in TCFD-aligned
disclosures by firms.
The latest status report finds that disclosure of climate-related
financial information aligned with the TCFD recommendations has
accelerated over the past year, growing by nine percentage points in
2020 compared to four percentage points in 2019 and finds that over 50%
of firms disclosed their climate-related risks and opportunities. More
than 2,600 organisations have expressed their support for the TCFD
recommendations, an increase of over a third since the 2020 status
report. But the report highlights that significant further progress is
still needed.
The TCFD has also published today two additional documents to support decision-useful disclosure. Guidance on Metrics, Targets, and Transition Plans
to support preparers in disclosing decision-useful information and
linking those disclosures with estimates of financial impacts; and updates to the implementation guidance on its Recommendations initially published in 2017.
Next steps for TCFD
The TCFD Recommendations have become a widely supported basis for
climate-related reporting. This is not only through voluntary
private-sector adoption but also more recently through jurisdictional
initiatives to make such disclosures mandatory or promote voluntary
implementation, as well as through the IFRS Foundation’s work to develop
a baseline global sustainability reporting standard, built from the
TCFD framework and the work of an alliance of sustainability standard
setters. The FSB asks the TCFD to be ready to respond to requests for
technical advice relating to the TCFD recommendations that may arise
when designing such initiatives.
The FSB welcomes the continued progress the IFRS Foundation is making
on its initiative to develop a global sustainability reporting
standard, beginning with climate. As the IFRS Foundation advances its
work, there is an important continuing role for the TCFD in monitoring
and reporting on take-up of its recommendations in the period until a
global baseline standard is agreed and the implementation of that
standard across jurisdictions begins to be monitored. The FSB therefore
asks the TCFD to continue its work to promote and monitor progress in
firms’ take-up of its recommendations, and publish a further status
report in September 2022, reviewing disclosures by companies in their
public reporting for 2021. Such monitoring will complement the FSB’s
monitoring of jurisdictions’ initiatives to make TCFD-based disclosures
mandatory or to promote their voluntary implementation, and will promote
disclosures that, by being TCFD-aligned, will be using a common basis
with the planned global baseline standard.
FSB Chair Randal K. Quarles said: “Consistent and comparable
disclosures are foundational for enabling accurate risk assessment. The
TCFD recommendations have become widely supported by the private and
official sectors as the basis for climate-related disclosures, and this
year’s report shows further momentum but also where disclosure gaps
remain. As the IFRS Foundation continue to develop a global
sustainability reporting standard, working with an alliance of
standard-setters, I am pleased that they will be able to draw from the
strong work of the TCFD.”
Michael R. Bloomberg, Chair of the Task Force and Founder of
Bloomberg LP and Bloomberg Philanthropies said: “When companies disclose
clear, consistent, and accurate information on the risks they face from
climate change, investors and business leaders can make more informed
and sustainable financial decisions. That strengthens our global
economy, improves health, and helps address the climate crisis. The Task
Force has had an exceptional year in rallying global support for
climate risk reporting - but we still have a long way to go. As
governments and businesses around the world work to accelerate the
transition to a clean energy economy, they should continue to draw on
the TCFD recommendations as a critical tool in their efforts.”
Notes to editors
The TCFD was established by the FSB in 2015 to develop a set of
voluntary, consistent disclosure recommendations for use by companies in
providing information to investors, lenders and insurance underwriters
about their climate-related financial risks. The industry members of the
TCFD, who are drawn from a wide range of industries and countries from
around the globe, finalised the recommendations in 2017 after extensive
public engagement and consultation. They set out the disclosures that a
wide range of users and preparers of financial filings have said are
essential to understanding a company’s climate-related risks and
opportunities.
The FSB coordinates at the international level the work of national
financial authorities and international standard-setting bodies and
develops and promotes the implementation of effective regulatory,
supervisory, and other financial sector policies in the interest of
financial stability. It brings together national authorities responsible
for financial stability in 24 countries and jurisdictions,
international financial institutions, sector-specific international
groupings of regulators and supervisors, and committees of central bank
experts. The FSB also conducts outreach with approximately 70 other
jurisdictions through its six Regional Consultative Groups.
The FSB is chaired by Randal K. Quarles, Vice Chairman, US Federal
Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche
Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted
by the Bank for International Settlements.