FIGURE 8-1: TCFD Recommendations and Disclosures
Governance: Disclose the organization’s governance around climate-related risks and opportunities.
Strategy:
Disclose how the organization identifies, assesses and manages climate-related risks. Risk Management:
Metrics & Targets:
Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s business strategy and financial planning where such information is material.
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
While a variety of major climate-related financial disclosure (Climate Disclosure) frameworks are being used by issuers, each of those frameworks have, to a greater or lesser degree, now been aligned with, or continue to move toward, the TCFD framework and recommendations. 164 In particular, through participation in the Corporate Reporting Dialogue’s Better Alignment Project, significant progress has been made toward harmonizing the recommendations of the Global Reporting Initiative (GRI), 165 the CDP (formerly the Carbon Disclosure Project), the International Integrated Reporting Council (IIRC) and the Climate Disclosure Standards Board (CDSB). 166
– The TCFD recommendations have also been incorporated into the draft Net Zero Investment Framework, released for consultation in August 2020 by the Institutional Investors Group on Climate Change (IIGCC), an association of institutional investors aiming to mobilize capital for the transition to a low-carbon economy. 169 The IIGCC’s draft investment framework, developed with input from 70 investors who manage over $16 trillion in assets globally, outlines specific actions, metrics and methodologies that can be used by investors to align their portfolios with the goals of the 2015 Paris Agreement. – Tiff Macklem chaired Canada’s Expert Panel on Sustainable Finance, which released its Final Report – Mobilizing Finance for Sustainable Growth in 2019 recommending a number of measures aimed at “spurring the essential market activities, behaviours and structures needed to bring sustainable finance into the mainstream.” 170 According to the panel, “If Canada is to meet its long-term objectives, sustainable finance must become, simply, finance. In other words, climate change opportunity and risk management need to become business-as-usual in financial services, and embedded in everyday business decisions, products and services.” 171 The Final Report includes
The following are some recent examples of convergence on the TCFD framework:
– The Canadian federal government incorporated Climate Disclosure into the Large Employer
Emergency Financing Facility (LEEF). This program, announced on May 11, 2020, aims to provide bridge financing to large Canadian employers that have been affected by COVID-19. 167 A condition of participation in the LEEF program requires recipient companies to commit to publishing annual Climate Disclosure reports consistent with the recommendations made by the TCFD. 168
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Governance Insights 2020
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