Overall, the TCFD’s recommendations enable businesses to be proactive about climate change and its future risks when doing business on any level. The ability to mitigate climate-related risks (i.e. rising high energy cost, environmental disasters, etc.) is becoming more difficult as insurance companies are not willing to take on the risk, and investors and lenders are looking for sustainable financial reporting to create transparency when looking at an investment portfolio. Is your company prepared for these changes?
Last week, the Accelerator Center hosted a Lunch and Learn on the topic of environmental, social, and governance (ESG) integration for small-medium sized businesses. Jane Brid (Manager of Climate Change and Sustainability Services) and Jessica Knutson (Manager) from EY led the discussion on how market leaders have used frameworks to support a low carbon economy.
Brid and Knutson both spoke to how the Paris Agreement drove Mark Caney, the Governor of the Bank of England, to establish the Financial Stability Board’s “Taskforce on Climate-related Financial Disclosures” (TCFD). This task force was developed to allocate adequate funds for a low carbon economy. Michael Bloomberg, co-founder of the TCFD, assisted in the generation of a recommendation for how companies should disclose climate related financial risk to stakeholders. With this voluntary reporting framework, organizations are able to reflect upon and analyze their own climate risks and put that data into usable metrics. These recommendations are also used by lenders, bankers, and investors when evaluating financial portfolios. Knutson noted that organizations adopt this reporting framework quickly and integrate climate risk into their financial reporting.
The TCFD recommendation also led the Canadian government to establish their Expert Panel on Sustainable Finance. Brid explained that the Panel developed a three-pillar plan to help secure financial sustainability instruments. These pillars focus on maintaining the existing business climate and support our heavily resource-based economy, while mobilizing finance for sustainable growth.
The image below provides a break down of three pillars and 15 recommendations they have suggested as of 2018.
Overall, the TCFD’s recommendations enable businesses to be proactive about climate change and its future risks when doing business on any level. The ability to mitigate climate-related risks (i.e. rising high energy cost, environmental disasters, etc.) is becoming more difficult as insurance companies are not willing to take on the risk, and investors and lenders are looking for sustainable financial reporting to create transparency when looking at an investment portfolio. Is your company prepared for these changes?
Overall, the TCFD’s recommendations enable businesses to be proactive about climate change and its future risks when doing business on any level. The ability to mitigate climate-related risks (i.e. rising high energy cost, environmental disasters, etc.) is becoming more difficult as insurance companies are not willing to take on the risk, and investors and lenders are looking for sustainable financial reporting to create transparency when looking at an investment portfolio. Is your company prepared for these changes?