E3G has heralded the new report from the Task Force on Climate-related Financial Disclosure (TCFD) as a major step forward in the effort to manage a changing climate, but added that its recommendations should become mandatory.
The report by TCFD, which was set up by the Financial Stability Board in the wake of COP21, called for businesses across the world to “come clean” about the material risks posed to their operations by climate change.
Climate and energy think tank E3G said this was clear recognition that climate change poses a systemic risk to the global financial system on which economies depend.
While the TCFD framework has gone out to public consultation, E3G has called for its recommendations, which are currently voluntary, to become mandatory. It has argued that companies could continue to hide the business impact of climate change from investors under a voluntary system.
Ingrid Holmes, director of E3G, said: “The recommendations of the Taskforce are a welcome move in the battle to give investors the information they need to properly identify, price and manage material climate risks. However, only mandatory reporting will provide the comprehensive coverage both investors and financial regulators need to prevent climate disasters becoming financial disasters.
“The obvious next step must be for governments and regulators to turn these voluntary reporting requirements into mandatory ones.”
The consultation will be open under 12 February and the TCFD is calling on the public to participate.