The Task Force on Climate-Related Financial Disclosures is still a relatively new initiative in corporate sustainability and therefore still there are many who are not familiar with it. However in the recent years since its establishment it became a well-known phenomenon and it is likely to influence both corporate practices and financial disclosures.
TCFD is in fact a reporting guideline focusing on climate change. It was prepared after in 2015 the Group of 20 (G20) Finance Ministers and Central Bank Governors had asked the Financial Stability Board to convene public- and private-sector participants to review how the financial sector can take account of climate-related issues.
Disclosure according to TCFD has 4 pillars:
- Governance: The organization’s governance around climate-related risks and opportunities
- Strategy: The actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
- Risk management: The processes used by the organization to identify, assess,and manage climate-related risks
- Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities
The central idea behind TCFD is that they do not focus on the risk companies have on climate but on the contrary they ask the companies to disclose the risk the changing climate has on their business model.
Climate change is central to ESG evaluations anyway and with such disclosures investors can better factor climate risk in their models and make more informed decisions. On the long term this should lead to increased support and financing to companies whose business models are more resilient to climate change.
The task force is asking companies not just to include climate risks into their reports but also to express their support and they reported in February 2020 that the number of supporters exceeded 1000 companies. From Central Europe there are still very few supporters despite the fact that supporting TCFD does not require much more than a committment. TCFD does not require financial support nor do companies have to commit themselves to mandatory targets. Becoming a TCFD supporter is more about making a public statement that the signatory company agrees with the goals of TCFD and supports the initiative.
The companies who support the initiative from the Central European region can be found on this site and are the following in December 2020:
- From Poland 1: European Financial Congress (Academia/Research)
- From Romania 1: OMV Petrom ( Energy)
- From Austria 6: Borealis Group (Chemicals), denkstatt (Professional Services), OMV (Energy), Rosenbauer International AG (Industrials), SMN Investments Services GmbH (Asset Management), Verbund AG (Utilities)
We will follow TCFD in the future as well to see if the number of supporters from the region will increase.