The climate disclosure landscape in the finance sector

Paul Smith

The relative success of the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) in scaling awareness across the financial sector and non-financial corporates is perhaps not surprising given its focus on the material impacts of climate change on businesses, thus underlining climate change as a near-term material risk. Its importance in addressing the impact of climate change on the finance sector also builds on its origins in the Financial Stability Board (FSB), created in 2009, and itself an offshoot of the G20, with central banks, finance ministries and regulators from 25 jurisdictions on its board.

However, voluntary, high-level frameworks have their limitations. Despite the TCFD counting almost 1,400 supporters from the financial sector alone at the end of March 2022, relatively few of those institutions have published disclosures. Those disclosures that have been released are of varying quality and usefulness, and are certainly not standardised. The 2021 TCFD Status Report states that, while “disclosures increased more between 2019 and 2020 than in any previous year”, only 50% of companies are “disclosing at least three recommended disclosures”