Following the latest U.N. Climate Change Summit (COP22) in Marrakesh, the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures (TCFD) released its much-anticipated climate-related financial risk recommendations. These recommendations aim to provide specific climate-related guidance for organisations in the financial and non-financial sectors, including: asset managers, asset owners, banks, insurance companies, energy, transportation, and agriculture, among others.
The recommendations intend to tackle a lack of coherent financial reporting frameworks, the difficulties faced by investors, creditors, and the obstacles faced by regulators in using existing financial disclosures to determine whether financial systems are vulnerable to climate-related risks.
In a new report, S&P Global Ratings expresses that the adoption of the recommendations by market players will be strong. It regards application of the recommendations as likely to increase the quality of climate risk disclosure and opportunities for companies and investors worldwide. This is because previous voluntary recommendations from the Enhanced Disclosure Task Force were widely carried out, with implementation rates reaching as high as 92 percent in countries like the U.K.