Two-thirds of G20 member states are engaged with the Financial Stability Board’s climate risk disclosure recommendations

31 May 2018 – Approximately two-thirds of G20 member states have actively engaged with the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD), set up by Bank of England Governor Mark Carney to help the financial sector take account of climate-related issues.

The University of Cambridge Institute for Sustainability Leadership (CISL), through its Centre for Sustainable Finance, conducted a comparative analysis on the various approaches G20 members are taking towards TCFD implementation in their national contexts during 2017 and 2018.

The analysis, published today in the report Sailing from Different Harbours: G20 approaches to implementing the recommendations of the Task Force on Climate-related Financial Disclosures, considers actions taken by national (and EU) regulatory authorities, central banks and governments to support the implementation of the TCFD recommendations by companies and the financial sector.

The author of the report, Dr Nina Seega, Research Director for Sustainable Finance at CISL said:

“This overview of G20 regulatory approaches to implementing the TCFD recommendations points to important implications for public and private stakeholders. Multinational firms need to manage the risk that regulatory or investor expectations leap ahead of their practices. Regulatory authorities could share knowledge as well as synchronise approaches to decrease the compliance burden for multinational firms. Finally, investing in mechanisms to keep track of both evolving practice and policy approaches at a suitably granular level may be of wider benefit to all stakeholders – public and private alike.”

Key findings of the report include:

• Two-thirds of G20 countries have engaged with the TCFD.
• Australia, Canada, the EU, Italy, Japan, South Africa, Turkey and the United Kingdom have conducted (or are in the process of conducting) consultations with the private sector on sustainable finance generally and on disclosure requirements as an important building block of sustainable finance more specifically.
• Based on these consultations, Japan has issued voluntary disclosure guidelines and the EU has put together a firm action plan on how to incorporate the recommendations into existing disclosure frameworks.
• France’s Article 173, while predating the TCFD, is broadly aligned with the TCFD requirements and provides a mandatory disclosure framework. 

Task Force on Climate-related Financial Disclosures (TCFD)

The establishment of the industry-led Task Force on Climate-related Financial Disclosures (TCFD) was prompted by the G20’s Financial Stability Board in 2015. It was set up by the Bank of England Governor and the Financial Stability Board Chair Mark Carney and chaired by Michael Bloomberg. It was established so based on the recognition that climate risks are financial risks and that financial markets lack information about their exposure to such risks of sufficient quality and quantity to ensure appropriate allocation of capital. The Task Force was convened in order to develop voluntary recommendations to guide consistent and useful climate-related disclosures. The Task Force released its final recommendations on 29 June 2017. The TCFD suggested that organisations disclose climate-relevant financial information in their mainstream annual filings according to national disclosure requirements. It structured its recommendations around four areas: governance, strategy, risk management and metrics and targets. Further, it recommended that the disclosures include forward-looking climate-related scenario analyses. 

University of Cambridge Institute for Sustainability Leadership (CLSL)

CISL is a globally influential institute within in the University of Cambridge, working with leaders to build a sustainable economy. Through focused collaboration between business, government and finance institutions, we believe the economy can be ‘rewired’ to deliver positive outcomes for people and the environment – in short to deliver the UN Sustainable Development Goals. For more information, please visit www.cisl.cam.ac.uk and follow us on Twitter @cisl_cambridge. 

CISL’s work in sustainable finance: Since the global financial crisis of 2007–08, CISL, through its Centre for Sustainable Finance has been a recognised leader in sustainable finance. The Institute has long-term relationships with over 50 financial institutions from across five continents that are members of its business platforms and has delivered capacity-building programmes for financial institutions around the world.

About the report: Sailing from Different Harbours: G20 approaches to implementing the recommendations of the Task Force on Climate-related Financial Disclosures

CISL, through its Centre for Sustainable Finance, has conducted this comparative analysis on the various approaches that the G20 members are taking towards TCFD implementation. CISL’s sustainable finance expertise has been recognised through its appointment to various government advisory positions at both international, e.g. G20 (CISL, 2016; G20 GFSG, 2017) and European Commission (European Commission, 2016), and national, e.g. UK (Green Finance Taskforce, 2017), China, Mexico, South Africa, levels. This kind of comparative analysis of market practices is a key part of CISL’s role in developing customised capacity building and advisory support for sustainability leadership. The audience for this research is twofold: (i) multinational firms (financial and non-financial) operating in different jurisdictions and needing to understand the evolving regulatory contexts in which they operate; and (ii) national regulatory authorities who may benefit from understanding what their counterparts are doing to inform their journey towards TCFD implementation. 

Read more about CISL's work on sustainable finance