The Task Force on Climate-related Financial Disclosures (TCFD) provides market-driven recommendations for voluntary and consistent climate-related financial risk disclosures in mainstream filings.
The Sustainability Accounting Standards Board (SASB) provides industry specific standards help investors and other market participants assess their portfolios’ exposure to sustainability risks and opportunities.
Climate risk is often material, and as such, disclosure belongs in mainstream financial filings.
SASB and the TCFD share the belief that climate change is one of the biggest economic risks the world faces today. For example, certain assets may be adversely impacted through increased legislation, adding liabilities to corporate balance sheets. Physical assets might be prone to climate change risks such as sea-level rise or desertification.
Investors are looking for leaders in the transition to a low-carbon economy and identifying the laggards as investment risks.
Whether your company is actively engaged with SASB, TCFD, the more focused CDSB (Climate Disclosure Standards Board) or CDP’s new temperature rating, there are opportunities to take a leadership role. CDP’s temperature rating makes it easier to identify the leaders by noting the degree to which companies’ emissions are on track to support the Paris Agreement on climate change.
Executives and Sustainability Managers must know how to use the various standards, disclosures and reporting which are interrelated in complex ways.
Research from Southpole, a consultancy focused on decarbonization pathways, found that
- Almost two thirds of responding corporations recognize the first mover advantage of early implementation, but less than one in ten have a disclosure strategy.
- There is wide recognition of advantages of disclosure, in particular satisfying investors, building and maintaining their reputation and better managing risks and opportunities.
- Four out of ten respondents believe TCFD will enable companies to better understand the physical and transition risks associated with climate change, but only a quarter of businesses have created scenarios to explore how these risks will affect them
BlackRock’s Chairman and CEO Larry Fink in his annual letter to CEOs called for standardized and accelerated sustainability disclosures. He endorsed SASB’s industry-specific standards and TCFD’s climate-specific framework as the benchmark frameworks for finance.
Despite Fink’s endorsement, knowing how to use disclosures and standards can be daunting. CSE is proud to be a leading global provider of ESG Reporting Services. CSE services support organizations to maximize their climate change and carbon disclosure performance. CSE helps companies align with all the latest non-financial –ESG reporting guidelines most relevant to the organization and sought by investors.