Corporate reporting bodies the Sustainability Accounting Standards Board (SASB) and the Climate Disclosure Standards Board (CDSB) are seeking to address the “implementation gap” for the Taskforce on Climate-related Financial Disclosures, with the publication today of practical guidance for corporates on how the widely-supported disclosure framework can be incorporated into mainstream reporting.
“We wanted to look at the 11 recommendations and demonstrate what current good reporting practice might look like” – CDSB’s Nadine Robinson
The TCFD was set up by the Financial Stability Board in 2015, under the leadership of Bank of England Governor Mark Carney, to develop a standardised approach to corporate disclosure of the climate-related information needed by financial markets.
Since they were published in June 2017, the Taskforce’s recommendations have been publically backed by more than 600 organisations, including investors, banks and other financial organisations responsible for more than $100trn in assets.
Commitments to implement the recommendations, however, have “not always translated quickly into actual or comprehensive disclosures”, according to the new guidance, which stresses the urgency and need for market forces to drive climate action.
A 2018 review conducted by CDSB found that just 34% of the disclosures of 80 of Europe’s largest companies mentioned the TCFD at all, and “far fewer made authentic TCFD disclosures in the first year of reporting”.
The new guide seeks to address this by offering practical direction for companies on making effective climate-related disclosures. It uses “mock” disclosures and commentaries to demonstrates how the CDSB Framework and SASB’s standards can be used in conjunction by companies to meet the TCFD’s recommendations.“While there is lots of information about the TCFD in the market place there isn’t anything that goes into the level of granularity of the disclosures”, Nadine Robinson, Technical Director at CDSB, told RI. “We wanted to look at the 11 recommendations and demonstrate what current good reporting practice might look like and [also] show that there are existing solutions for TCFD implementation”.
The guide is the first in a series of “practical, TCFD-focused resources” that SASB and CDSB will collaborate on in the coming months and years – including webinars and workshops – to drive the implementation of the TCFD.
It follows the launch of the Corporate Reporting Dialogue in March, which was set up to explore how the some of the biggest corporate reporting initiatives and frameworks could better align. A report is expected in September.
“Companies are showing strong interest in managing their exposure to climate-related risk by committing to the TCFD recommendations”, said Madelyn Antoncic, CEO of The SASB Foundation. “However, few have a clear understanding of how to implement those recommendations…SASB and CDSB felt it was imperative to help companies achieve their goals with this comprehensive guide.”
“The guide takes the recommendations from principles to practice, increasing the adoption of the TCFD recommendations and enhancing the robustness, consistency and comparability of such information,” added Mardi McBrien, Managing Director, CDSB. “This will not only benefit companies through better risk management, but investors who can use the disclosures to allocate capital at the scale and pace required to accelerate the transition to a low carbon and climate resilient economy”.