The Taskforce on Inequality-related Financial Disclosures (TIFD) and the organisations preparing a Taskforce on Social-related Financial Disclosures (TSFD) have consolidated their efforts into a single initiative.
Wednesday’s update follows the announcement in April of their intention to consolidate their work. The merged entity will be dedicated to co-creating the provisionally named Taskforce on Inequality and Social-related Financial Disclosures (TISFD).
Plans for TIFD were first announced in 2020. The aim of the project was to provide guidance, thresholds, targets and metrics for companies and investors to measure and manage their impacts on inequality, as well as the impact of inequality on company and investor performance.
TIFD has been led by an interim secretariat that included the Argentine Network for International Cooperation (RACI), Predistribution Initiative (PDI), Rights CoLab, Southern Centre for Inequality Studies (SCIS), and United Nations Development Programme (UNDP).
The proposal to create the TSFD, on the other hand, was initiated by the Business for Inclusive Growth (B4IG) coalition together with its strategic partner, the OECD. Initial discussions took place in November 2021 during B4IG’s board meeting.
This week, the two groups published a statement outlining the provisional purpose, scope, approach and governance of the TISFD.
According to the document, the initiative will aim to meet the distinct needs of providers of capital, companies, regulators, and civil society and labour organisations to assess material financial risk to enterprises as it relates to inequality and social issues.
It will also look to strengthen the stability of financial systems, evaluate and tackle the system-level risks posed by inequality and improve outcomes for people, in particular those who are marginalised or disadvantaged.
To achieve its goal, the TISFD will develop a global framework for inequality and social-related disclosures so that companies and investors can communicate their inequality and social-related impacts, dependencies risks, and opportunities, including as they relate to governance, strategy and management processes.
The initiative will also create guidance and recommendations on which information on inequality and social-related impacts, dependencies, risks and opportunities may be material from both financial and impact perspectives, including as a result of entities’ contributions and exposure to system-level risks and opportunities.
Finally, it will provide guidance and recommendations regarding the design of inequality and social-related metrics and targets, as well as identification of thresholds, tipping points and triggers, and why they are important for companies and investors.
Unsurprisingly, TISFD will build upon existing frameworks, standards, benchmarks and ratings to clarify the disclosure landscape on inequality and social-related issues and address gaps and weaknesses.
This will be done through research that will – among other things – support interoperability with the Task Force on Climate-related Financial Disclosures (TCFD) and the Taskforce on Nature-related Financial Disclosures (TNFD), as well as with existing sustainability disclosure standards.
Governance structure
When it comes to the provisional governance structure, the merger partners have stated that the taskforce be “governed by a diverse and balanced range of stakeholders across the Global North and Global South”.
In addition, it will operate through an “iterative and transparent co-creation process and an open dialogue” between public and private sectors.
These will include providers of capital, companies, governments and regulators, international organisations, trade unions, civil society and people impacted by inequality and social harm, or representatives of their interests.
Looking ahead, the organisations that have been involved to date are now working to convene a working group with a mandate to design and steward a global consultation and co-creation process that will inform the governance structure and future work of the initiative.
The consultation and co-creation process will start in the fourth quarter of 2023, with the aim of launching the initiative in the first half of 2024. Once launched, the taskforce will begin developing the disclosure framework.
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