The Task Force on Climate-related Financial Disclosures (TCFD) released its 2020 Status Report. Among the noteworthy takeaways:
- Nearly 60% of the 100 largest public companies support the TCFD, report in line with its recommendations, or both. Of the more than 1,500 supporters, 1,344 are companies and 168 are industry associations, governments, regulators or other organizations. Not all supporters implement the recommendations; rather, they may encourage, facilitate or require others' implementation.
- Disclosure across the 11 recommended disclosures increased 6% between 2017 and 2019, with energy companies and materials and buildings companies leading on disclosure - averaging 40% and 30%, respectively, across the recommended disclosures.
- Not surprisingly, smaller companies lag larger companies, with 42% of companies with >$10 billion market cap aligned with the TCFD recommendations vs. 15% of companies with <$2.8 billion market cap.
- Respondents to a survey conducted by the Task Force for this year's report identified these top challenges in implementing the disclosures across the four pillars:
- Recommended disclosures were 4x more likely to be included in sustainability reports than in financial filings or annual reports.
The Task Force concurrently issued guidance on two topics - conducting climate-related scenario analysis and integrating climate-related risks into existing risk management processes and disclosing those processes, as well as a consultation document on forward-looking metrics for the financial sector. The consultation is subject to a 90-day comment period that ends January 27, 2021.
See the TCFD's release, Davis Polk's briefing, and these articles from IR Magazine and Pensions & Investments. This post first appeared in the weekly Society Alert!