A new task force is to be established by the Financial Stability Board (FSB) to develop voluntary disclosures advising companies of the financial risks posed by climate change.
The new G20 Task Force on Climate-related Financial Disclosures (TCFD) has been unveiled by FSB chair Mark Carney and will be used by firms to provide information to lenders, insurers, investors and other stakeholders.
Speaking at the COP21 climate change negotiations in Paris, Carney said: “The FSB is asking the Task Force on Climate-related Financial Disclosures to make recommendations for consistent company disclosures that will help financial market participants understand their climate-related risks. Access to high quality financial information will allow market participants and policymakers to understand and better manage those risks, which are likely to grow with time.”
The formation of the group follows a request at the FSB summit in Turkey last month, which asked the board to look at how the financial sector can take account of climate-related issues. It will be chaired by Michael R. Bloomberg, former mayor of New York and the United Nations secretary-general’s special envoy for cities and climate change, and will consider the physical, liability and transition risks associated with climate change.
Bloomberg said: “It’s critical that industries and investors understand the risks posed by climate change. While the business and finance communities are already playing a leading role on climate change, through investments in technological innovation and clean energy, this Task Force will accelerate that activity by increasing transparency. And in doing so, it will help make markets more efficient, and economies more stable and resilient.”
The TCFD will initially consist of ten people who will determine the scope and high-level objectives for its work. This first stage is expected to be completed by end-March 2016 when the Task Force will grow to include up to 30 individuals. It will then focus on delivering specific recommendations for voluntary disclosure principles and leading practices, if appropriate, with a view to completing its work by end-2016.
