IEMA and IFoA publish guide to climate-related financial disclosures

22nd February 2024


IEMA and the Institute and Faculty of Actuaries (IFoA) have today published up-to-date guidance to help companies and individuals understand climate-related financial information.

A User Guide to Climate-Related Financial Disclosures draws on expertise from both finance and sustainability practitioners, and is aimed at a wide range of stakeholders, from investors, lenders, and insurers, through to interested members of the public.

It builds on previous guidance published by IEMA and the IFoA in 2020, providing new insights into reading, understanding, and using financial data to identify company risks and opportunities.

Sections one, two and three outline the background and current landscape on climate-related disclosures, while section four provides in-depth guidance on reading the information and following up with reporting organisations.

IEMA CEO, Sarah Mukherjee MBE, said: “When making any financial assessment of companies around the world, climate change stands out as both a potential risk and an opportunity.

“The more that companies disclose climate-related information, the more likely we are to drive business and industry towards net zero and encourage more sustainable practices within supply chains.

“This guidance combines the sustainability skills and knowledge of IEMA experts with complimentary expertise from actuaries in dedicated climate risk roles.

“The aim is to offer a valuable guide to help anyone better understand climate-related financial disclosures, as well as providing a helpful set of prompts to those working in this area.”

The Task Force on Climate-related Financial Disclosures (TCFD) – established by the Financial Stability Board (FSB) – published a set of recommendations to help organisations assess and communicate key climate-related information in 2017.

Progress has been monitored annually by the FSB since 2019, and its latest status report shows that 58% of reporting companies disclose in line with at least five of the 11 TCFD recommendations – up from 18% in 2020.

The UK government has mandated TCFD-aligned disclosures for large entities in the private sector, and more jurisdictions across the world are mandating their adoption.

However, barriers remain to successful climate-related financial reporting, with a survey in 2022 indicating that the top challenge is insufficient information from investee companies.

Wendy Walford, IFoA Sustainability Board member, said: “Economic and investment decisions need to increasingly incorporate sustainability information, to understand the non-financial risks that enterprises are exposed to and how they are managing their position.

“This paper combines the sustainability skills and knowledge of IEMA experts with IFoA members specialising in financial risk management to provide a user-focused guide on how to make the best use of these disclosures, and respond to the evolution in reporting with a critical mindset.

“We hope this guide supports users of disclosures to feel confident in understanding and in applying the insights obtained, to support not only increased disclosures, but also their use in assessing how firms are adapting to our changing world, grappling with new opportunities and managing material risks.”

Download A User Guide to Climate-Related Financial Disclosures here: IEMA - IEMA and the Institute and Faculty of Actuaries User Guide to Climate-Related Financial Disclosures : 2nd edition

Learn about IEMA’s sustainable finance steering group here: IEMA - New IEMA sustainable finance steering group – express your interest in joining

Image credit: Shutterstock

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