Maria Mora, Technical Manager at CDP maria.mora@cdp.net
Wit With the he 2015 2015 Pa Paris ris agreem greement ent, climat limate cha change ge is at the forefront of issues where human activities have exceeded the ability of Earth’s natural systems to compensate. Business sinesses es are both significant contrib ribut utors ors to, and potential solut utio ion providers for, environmental problems. To To put ut solut solution, on, they need to collect relevant, timely, reliable, material and complete information upon which to base their business strategy. Providers of capital, insurers and regulators also need eed this his info informa rmation on from fr bus usiness inesses in a transparent, comparable, clear and verifiable structure so that they can make the best informed investment decisions and ensure compliance. 2 XBRL WEEK IN FRANKFURT 2016
Polici cies es, global l agreem eement ents and report rting ing initia iativ ives es (like CDP) appear as a potential solution to reduce the environmental degradation, including climate change. Most G20 jurisd isdictions ictions place a legal obligation on companies to disclose material risks in financial reports, which includes risks from climate change. However, er, regul gulators rs, inves estors rs, credit itors ors and underw erwrit riters ers have e difficulties ficulties to access to that information to inform their decisions. As a result, the relationships between financial and environmental impacts are not understood, generating an equation where finan ancial ial imbal alan ances and environmental degradation are part of the result, driving to an unstable global system. 3 XBRL WEEK IN FRANKFURT 2016
Lack of finan ancial cial significanc nificance and exposure to environmental aspects. Lack of alignm nment ent between financial and environmental disclosure regimes. Data quality lity gaps: incompleteness, reliability, comparability, verifiability and data structure. Lack of inform rmat atio ion n systems that facilitates the disclosure and use. 4 XBRL WEEK IN FRANKFURT 2016
In 2015, the Finan Financial cial Stabil Stabilit ity Board Bo rd (FSB (FSB) stablished the industry-led Task Ta sk Force Force on on Climate imate-re rela lated ed discl dis clos osure ure (TCFD FD) to make recommendations for improving principles and practices for voluntary disclosure and selected a diverse group of experienced members (users, preparers, and market participants from a variety of industries and regions). 5 XBRL WEEK IN FRANKFURT 2016
The main goal of the TCFD is to develop along 2016, a coherent framework to : ◦ support the disclosure of climate-related financial risks and opportunities ◦ promote the alignment across existing disclosure regimes ◦ improve the production of consistent, comparable, reliable, clear and efficient information ◦ increase the consideration of environmental matters on decisions in the short, medium and long-term 6 XBRL WEEK IN FRANKFURT 2016
Preparers eparers: : listed companies and issuers of public securities, Financial and nonfinancial companies. Users rs: : investors, lenders, and underwriters. Report rting ng chann nnel: el: mainstream financial filings and investor annual reports. G20 landscape 7 XBRL WEEK IN FRANKFURT 2016
Phase e 1: 1: Develop scopes and objectives for the proposed work and create a set of fundamental disclosure principles. (March, 2016). Phase e 2: 2: Delivering specific recommendations and guidelines for voluntary disclosure by identifying leading practices to improve consistency, accessibility, clarity and usefulness of climate- related financial reporting. (December, 2016). 8 XBRL WEEK IN FRANKFURT 2016
Climate-related financial risks and opportunities 9 XBRL WEEK IN FRANKFURT 2016
Promotes alignment across existing disclosure regimes, Mandatory regulations affecting banks Disclosure frameworks promoted by governments: mandatory and voluntary way Disclosure frameworks, exchange listing requirements and Indices. Voluntary and Mandatory Disclosure frameworks, NGOs. Voluntary 10 XBRL WEEK IN FRANKFURT 2016
Mandatory regulations Source: Phase I Report of the Task Force on Climate-Related Financial Disclosure 11 XBRL WEEK IN FRANKFURT 2016
Disclosure Framework from Government Source: Phase I Report of the Task Force on Climate-Related Financial Disclosure 12 XBRL WEEK IN FRANKFURT 2016
Disclosure frameworks, NGO Source: Phase I Report of the Task Force on Climate-Related Financial Disclosure 13 XBRL WEEK IN FRANKFURT 2016
The Financial Stability Board (FSB), at the direction of the G20 countries, has set up the Task Force on Climate-related Financial Disclosure (TCFD) to draw up recommendations on voluntary disclosure. The TCFD has a clear mandate from governments, companies and investors to improve the disclosure landscape so they can better manage climate-related financial risks. However, several challenges have to be addressed to increase the use of climate-related information for purposes of financial and corporate decision making. Collect relevant, timely, reliable, material and complete information is important 14 XBRL WEEK IN FRANKFURT 2016
15 XBRL WEEK IN FRANKFURT 2016
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