{"id":15898,"date":"2020-12-09T11:58:16","date_gmt":"2020-12-09T00:58:16","guid":{"rendered":"https:\/\/edgeenvironment.com\/?p=15898"},"modified":"2021-01-19T10:25:46","modified_gmt":"2021-01-18T23:25:46","slug":"tcfd-a-year-in-reflection","status":"publish","type":"post","link":"https:\/\/edgeenvironment.com\/us\/2020\/12\/09\/tcfd-a-year-in-reflection\/","title":{"rendered":"TCFD: A Year in Reflection"},"content":{"rendered":"\n
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Photo by NOAA<\/a> on Unsplash<\/a><\/figcaption><\/figure><\/div>\n\n\n\n

In a year that has been dominated by the impacts and responses to COVID-19, another global risk has never been far from the headlines: climate change.<\/p>\n\n\n\n

While it\u2019s an issue that has received attention from climate emergency declarations across the community. Despite the sometimes slow pace of change in government regulation, it\u2019s at the board table that significant change continues to happen.<\/p>\n\n\n\n

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Photo by AbsolutVision<\/a> on Unsplash<\/a><\/figcaption><\/figure><\/div>\n\n\n\n

The consistent international corporate driver of action on climate change is the Taskforce on Climate-Related Financial Disclosures (TCFD). The number of companies joining the TCFD continues to rise, with 1,596 registered supporters as of December 2020. In total, nearly 60% of the world\u2019s 100 largest public companies support the TCFD<\/a> and report in line with the its recommendations.<\/p>\n\n\n\n

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Looking back over 2020 there are five developments that suggest we\u2019ll see an acceleration of action in the next few years here in Australia:<\/p>\n\n\n\n

1. Summer of Australian bushfires<\/h4>\n\n\n\n

If it wasn\u2019t for COVID-19, the Australian community and businesses would have spent more time focused on the bushfire response and what mitigation looks like. While it\u2019s received some attention, a Senate Inquiry into the \u201cLessons to be learned in relation to the Australian bushfire season 2019-20\u201d leaves no room for doubt that communities and businesses alike need to prepare better for bushfires, which are projected to become more frequent and severe with climate change.<\/p>\n\n\n\n

2. Mandatory TCFD reporting<\/h4>\n\n\n\n

After suggestions that at some point TCFD would become mandatory for public companies, and some even calling it \u201cvolandatory\u201d, the New Zealand Government announced in September of this year that reporting in line with the TCFD will become mandatory<\/a> in 2023. This will affect around 200 entities in New Zealand. The UK has since followed suit with its own policy announcement to mandate climate disclosures by 2025<\/a>.<\/p>\n\n\n\n

3. Boris Johnson, UK Prime Minister, says no to new petrol and diesel cars after 2030 <\/h4>\n\n\n\n
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Photo by Colin D<\/a> on Unsplash<\/a><\/figcaption><\/figure><\/div>\n\n\n\n

The TCFD framework asks businesses to consider technological and market changes that could result from a move to a low carbon economy, some of which could happen rapidly. These are known as transition risks (and opportunities). The UK delivered a prime example this year in announcing that it will stop selling new diesel and petrol (gasoline) cars and vans from 2030<\/a>. This is part of a 10-point plan aimed at generating 250,000 jobs and combatting climate change. While some organisations are only just starting to ponder how they\u2019ll manage their fleet when electric vehicles become more common, at least in the UK, the countdown is now on.<\/p>\n\n\n\n

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4. US Federal Reserve finds its voice <\/h4>\n\n\n\n

While regulators in countries like the UK and New Zealand have been on the front foot on climate risk, the same can\u2019t be said for the US. But that all looks set to change. After the recent US Federal election that the US Federal Reserve joined the chorus with various statements including that<\/a>: “Acute hazards, such as storms, floods, or wildfires, may cause investors to update their perceptions of the value of real or financial assets suddenly”.<\/p>\n\n\n\n

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5. A more standardised approach to TCFD <\/h4>\n\n\n\n

A challenge for many companies wanting to align with the TCFD is that the methods can be wide and varied. For example, which climate change projections should be used for scenario analysis? The Climate Measurement Standards Initiative<\/a> (CMSI) provides a consistent and comparable approach to financial disclosure and launched its guideline for responding to the TCFD in 2020. The CMSI guideline will support a wider disclosure of climate change scenarios by the banking, insurance and asset owner sectors in Australia.<\/p>\n\n\n\n

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While there have been some larger global changes of note, what does the year ahead look like for the application of the TCFD framework at a company scale? The TCFD Status Review 2020 provides some signposts of where to focus, especially for addressing implementation issues. These include that companies should:<\/p>\n\n\n\n