Resource Database

Research addressing compound and connected events, and their integrated risk to the natural and built world, is gaining momentum. Paradigms are now evolving to classify and analyse the processes forming such links — whether physical or societal, direct or indirect — and the role of climate change in their ultimate impacts.

This report reflects interviews with corporate professionals about the roles and activities of finance in their organizations’ sustainable business and integrated enterprise activities. An overarching consensus is the need for proven, supported methodologies that demonstrate enhanced performance and added value. This is a key mission for the current cohort of CFOs and professionals who aspire to senior business leadership roles. In order to break silos on the way to the C-suite, these corporate professionals need a value-creation mind-set and a working command of the concepts of risk management, governance, innovation, talent management, technology, environmental management, and social responsibility.

For decades, Environmental, Social, and Governance (ESG) scoring of investments, and public reporting of those scores, has focused mainly on one side of a two-sided coin, namely, what a business or asset is doing to the planet — particularly, the “Carbon Footprint” of that company measured by CO2 greenhouse gas emissions. The other side of that coin is, of course, what the planet is doing to the same business or asset, or its physical climate risk or “Risk Footprint.”

A growing number of building owners are benchmarking and disclosing resilience performance, due in part to increased investor and market pressure. However, the plethora or reporting frameworks and approaches can create confusion and uncertainty on how to proceed. This fact sheet provides an overview of common trends and barriers related to disclosure of climate and resilience performance. It reviews how each of the major reporting frameworks treats resilience, compares these frameworks against each other, and provides insight on where to begin.

This paper provides a tool to build climate change scenarios to forecast Gross Domestic Product (GDP), modelling both GDP damage due to climate change and the GDP impact of mitigating measures. It adopts a supply-side, long-term view, with 2060 and 2100 horizons. It is a global projection tool (30 countries / regions), with assumptions and results both at the world and the country / regional level. Five different types of energy inputs are taken into account according to their CO2 emission factors.

The implications of climate change have become widely recognized and could significantly impact a company’s business model. This publication sets out a process and considerations to assist companies in assessing materiality of climate-related matters.

In July 2019 the UK Government released their Green Finance Strategy with the expectation that all listed companies and large asset owners disclose in line with the TCFD recommendations by 2022. This report examines how the TCFD recommendations are currently reported by FTSE 100 companies to establish a baseline of adoption, discusses the role of leadership in implementation and provides tips on how companies can develop their reporting in the future.

This guide provides a practical roadmap for developing a climate change strategy, focusing on the crucial steps of understanding the risks and opportunities of climate change adaptation, engaging with key stakeholders, and reporting on progress.

In this case study, part of the Sustainability Accounting Standards Board (SASB) Integration Insights series, PineBridge Investments explains how it uses SASB’s framework to help build TCFD-ready, climate-resilient portfolios. Leveraging SASB’s focus on financial materiality, PineBridge defines sector-specific, climate-stress scenarios that allow it to readily incorporate key climate exposures alongside traditional risk-adjusted portfolio metrics, enhancing its analysis and facilitating more effective mitigation of the risks associated with a transition to a low-carbon economy.

Following the release of the TCFD second status report this June, we analyzed TCFD supporters’ disclosure around climate change using natural language processing, finding that financial services are talking about climate change more than ever before.

In particular:
1) The number of finserv TCFD supporters mentioning climate change with a high emphasis has more than doubled from 14% in 2016, the year before the TCFD recommendations were published, to 33% in 2019.

2) Climate change is predominantly discussed through a risk rather than an opportunity lense – with 54% of finserv TCFD supporters referring to the topic in relation to risk and 20% in relation to opportunity in 2018.

3) Interestingly, climate change has been predominantly mentioned in the context of distant future risks, rather than in recognizing the upcoming implications to business.

4) High emphasis reporting among the largest financial services companies that don’t support the TCFD (market capitalization above $20bn) has risen from 12% in 2017 to 19% in 2019, the period since the introduction of the TCFD recommendations.

5) The number of climate-related regulations and voluntary initiatives has almost doubled since 2014 (211 between 2009 and 2013, and 418 between 2014 and 2018).

The TCFD’s second status report provides an overview of disclosure practices aligned with the Task Force’s recommendations between 2016 and 2018. The report also examines the decision-usefulness of existing climate-related financial disclosures to users of disclosure, and evaluates disclosures of strategy resilience and the challenges faced by preparers using scenario analysis. At the time of publication, nearly 800 organizations have expressed their support for the TCFD recommendations, a more than 50% increase from the publication of the first status report in September 2018.

Potential financial risks arising from climate change are an increasing area of focus, particularly for investors and regulators. To provide a benchmark for how mature firms are in their approach to climate risk management, in the first quarter of 2019, the GARP Risk Institute undertook a global, cross-sectoral survey.

The survey was structured around the main themes for climate risk reporting that have been developed through the TCFD.