Eleven of the world’s biggest banks representing over $7 trillion in assets have pledged to work towards adopting last month’s recommendations by the Taskforce on Climate-related Financial Disclosure (TCFD) by allying with the UN Environment Finance Initiative (UNEP FI) to develop analytical tools and indicators that will enable them to do so. The banks – ANZ, Barclays, Bradesco, Citi, Itaú, National Australia Bank, Royal Bank of Canada, Santander, Standard Chartered, TD Bank Group and UBS – say the data tools will help them disclose their own climate-related risks and opportunities and assess those of other companies in meeting the voluntary TCFD requirements. The banks are the first in the sector to work towards adopting key elements of the new climate-reporting Guidelines following initial pledges of support at the launch. The hope is that if enough companies sign up to the TCFD framework then critical mass and peer pressure will start to build momentum.
UNEP FI said this “first mover project” to implement the TCFD recommendations put the eleven UNEP FI bank members in the “vanguard”, and said the results would be made public to encourage other banks worldwide to adopt the scenarios, models and approaches developed.
Christian Thimann, Group Head of Strategy, Sustainability and Public Affairs at the AXA Group, and Co-Chair of UNEP FI and TCFD Vice-Chair, said: “After the G20, the issue now is about implementation: how can the finance industry put the framework into practice and deliver disclosure that is meaningful? Through this and other industry-led working groups UNEP FI is helping the finance sector to do just that: move from awareness to action.”
The UNEP initiative has backing at the CEO level of the banks involved. Shayne Elliott, CEO of ANZ Bank, said: “Companies must improve reporting on their management of carbon risks and opportunities for their shareholders and banks to make more informed decisions. We are doing our part by being an earlier adopter of the FSB Taskforce recommendations, joining this initiative and thus signalling we will be seeking greater disclosure from our customers about their climate related risks and opportunities.”
And Jes Staley, CEO, Barclays, said: “As a contributing member to the work of the FSB Task Force over the past 18 months, Barclays is pleased to be able to continue our involvement by joining this UNEP FI Working Group. Putting the theory into practice – or exploring how best the Recommendations can be implemented – and creating greater transparency for all participants, is an endeavour we look forward to working on with our fellow Working Group participants.”However, supporters of the TCFD had also hoped they might get a boost at last week’s G20 summit in Hamburg with a statement of support from governments, which failed to materialize.
Instead, the leaders of the other G20 members acknowledged the forthcoming departure of the US from the Paris Agreement, while also stating that its implementation was irreversible and backing a G20 Hamburg Climate and Energy Action Plan for Growth, set out in the Annex of the G20 Communiqué.
Steve Waygood, Chief Responsible Investment Officer at Aviva Investors and member of the TCFD Taskforce, but speaking on behalf of Aviva, said: “US President Donald Trump and the leaders of the G20 dropped the ball by failing to endorse the climate change guidelines proposed by the Financial Stability Board’s TCFD. These guidelines were carefully crafted over eighteen months and deserved the support of the G20 as an intrinsic part of the response to climate change, potentially a big systemic risk to financial markets. But the support they have from a wide range of other influential organisations means that they could still be made to work. Three actions stand out. Investors should embed the principles in their voting practices at annual general meetings and stock exchange listing authorities should embed them in national guidance. Thirdly – and most important of all – we need civil society to produce public league tables measuring corporate performance so that transparency can lead to the kind of accountability that drives better performance in this important area. This will get us a long way down the TFCD road.”
However, Waygood said Aviva still believed the Guidelines require regulatory backing in order to travel the full distance, and suggested that institutions such as the Bank of International Settlements (BIS), the International Organisations for Securities Commissioners (IOSCO) and the International Accounting Standards Board (IASB) have an important role to play in setting related climate reporting standards.
Read RI’s TCFD reports:
TCFD Analysis: The focus now turns to re-thinking materiality
The FSB Task Force recommendations mark a crucial step in the battle against climate change
Five ways the G20 can mainstream green finance now