Uptake of TCFD by companies.
Like ice cream melting on a hot day.
It’s only a matter of time.
The FCA is proposing and consulting on a rule that would require all premium listed companies1 to comply with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) … or explain why not. The implementation date is for accounting periods beginning on or after 1st January 2021. This means companies will have to become increasingly forward-looking as they face increased scrutiny from investors and regulators.
Meeting the TCFD recommendations requires engagement across business functions up to board level to answer questions such as
- How will our organisation fare in the transition to a 1.5 / 2°C, carbon-constrained world?
- What are the financial implications?
- How aligned is the business strategy in terms of resilience to climate related risks and readiness to capitalise on climate related opportunities?
The decarbonisation agenda is continually rising in importance and urgency. The FCA’s new rule will accelerate this net-zero transition.
How?
Increased transparency, consistency and data quality of climate-related risks and opportunities.
Improves analysis and pricing to enhance market integrity.
Compounded by greater competition for climate-related products allows capital to be allocated more effectively.
Ta-da!
Is this enough?
Perhaps not.
The rule is proposed only for premium listed companies and will not mandate disclosure. The FCA noted it does not want to be “overly prescriptive” as data capabilities and scenario analysis modelling are still evolving.
But the UK Government has already said it expects all listed companies and large asset managers to disclose in line with TCFD by 2022.
It’s clear.
Action is needed now.
This won’t be a choice for long.
Corporate Citizenship supports companies at different stages of their TCFD journey. Our TCFD work ranges from conducting readiness and gap analysis reviews, disclosure support, qualitative and quantitative scenario analysis, testing climate resilience and carbon abatement modelling.