Short-termism and low awareness or skepticism about the risks it poses for business are among barriers to corporate disclosure on climate change, according to a global taskforce.
The Taskforce on Climate-related Financial Disclosures (TCFD) was asked by the G20 group of nations to develop recommendations to improve the clarity and consistency of corporate climate reporting to make the information more useful to lenders, insurers and investors. The former mayor of New York City, Michael Bloomberg, chairs the taskforce.
Findings from a consultation held earlier this year reveal several barriers to disclosure, including technical issues, such as a lack of clarity over what should be reported and the absence of a universal price on carbon risk.
Other barriers were concerned more with policy, such as a lack of coordination between regulatory actions on climate and financial investment decision criteria, and inconsistency across G20 standards. The taskforce also received reports of short-term thinking by corporations and a low awareness or skepticism about climate change and the risks and opportunities it poses to business.
The UK counted for the largest proportion of consultation responses, at 24%, while 20% were from respondents based in the US. Other countries representing a high proportion of responses included France (10%), Canada (7%), Switzerland and Australia (5% each).
More than half (59%) of respondents came from the financial sector and around 20% were from environmental organisations. Some 19% of respondents described themselves as being an academic or industry expert. Other respondents mostly held roles in finance and strategic disciplines in firms, including investment (15%); corporate strategy (12.9%); investment manager (9.8%); chief executives (9.2%) and risk (8%).
More than 90% of respondents said recommendations by the taskforce should cover banks, insurance firms and pension funds. After financial institutions, companies in the energy, utilities, materials and industrial sectors were identified as those that should disclose climate information, with more than 50% believing these should be more transparent.
Respondents' view on target audience, industries and asset classes
Views were split on how disclosure should be provided: 31% want disclosure to be sector-specific, while 31% want it to be both sector-specific and aggregated across sectors. Other respondents (16%) said priority should be given to aggregated disclosures.
The taskforce is holding webinars over the next few coming weeks to gauge feedback on its initial findings. Click here for more information. Its final recommendations are due in December.
