Resource Database

The TCFD reporting example on ABN AMRO focuses on the use of scenario analysis.

ABN AMRO Bank N.V. is headquartered in Amsterdam, Netherlands. It is the third largest bank in the Netherlands with total assets of €375 billion and assets under management (AUM) of €296.5 billion.

The bank reported against the TCFD framework for the first time in its 2019 Annual Report. Reporting in line with each of the four thematic areas enabled the company to show the breadth of their TCFD response. It also revealed the key areas where implementation of the recommendations can be enhanced, with some of the planned ‘next steps’ referred to in their disclosures.

As an increasing number of countries legislate for net zero, investors and lenders will need tools to identify risks and opportunities in the transition to a net zero economy. This requires forward looking, robust, decision useful and comparable metrics. The report provides a critical assessment of different approaches on a spectrum of sophistication, with a particular focus on portfolio warming metrics. The report sets out their key building blocks, initial views on potential best practice, and identifies the data needs and methodological questions that require further work to make these metrics robust.

With this report, the ECB has endeavoured to provide a snapshot of the level of disclosure of climate-related and environmental risks in the SSM countries. The assessment was performed in view of the supervisory expectations set out in the “ECB Guide on climate-related and environmental risks”. To that end, the comprehensiveness of climate-related and environmental risk disclosures of 107 significant institutions (SIs) and 18 less significant institutions (LSIs) in the reference year 2019 were assessed.

While the assessment did not cover exhaustively all the elements needed to comprehensively disclose institutions’ risk profiles, and although only the existence of disclosures was assessed, this report provides an overview of the state of climate-related and environmental risk disclosures in the SSM area in 2020, also with respect to the related supervisory expectation. It also provides an overview of observed practices and areas for improvement. It is the second assessment of this type to be performed by the ECB, with the first one focusing on disclosures in the reference year 2018. It provides a baseline against which progress towards alignment with supervisory expectations can be measured going forward.

This guide outlines the ECB’s understanding of the safe and prudent management of climate-related and environmental risks under the current prudential framework. It describes how the ECB expects institutions to consider climate-related and environmental risks – as drivers of existing categories of risk – when formulating and implementing their business strategy and governance and risk management frameworks. It further explains how the ECB expects institutions to become more transparent by enhancing their climate-related and environmental disclosures.

This report investigates banks’ climate-related financial risks and their exposure to a disorderly transition. Based on the finding that a majority of bank lending is in climate-exposed sectors, the report also lays out a blueprint for bank action with key recommendations for how banks can discuss their climate risk exposure and the mitigation strategies they can use to address this risk exposure and broader climate-related societal impact.

This report develops a robust and inclusive strategy to amplify and mainstream the global transition to a net-zero emissions economy. It calls upon governments, businesses, and financial institutions to each take steps toward achieving the net-zero imperative. The report makes clear that the actions taken today and in the very-near term will be essential to ensuring our collective environmental, social, and economic sustainability.

The report urges governments to establish comprehensive and transparent policy frameworks for reaching net-zero emissions by 2050, which must be built upon robust policy credibility. These frameworks will serve as transition guides for businesses who, for their part, must implement corporate reforms to align themselves with the net-zero imperative. Additionally, the report highlights the need for expanded disclosure of decision-useful, environment-related information by firms. The report further presses financial actors to more fully assess the risks inherent to climate change and the net-zero transition and seek the benefits that can be had by channeling capital toward green innovation. It is incumbent upon all economic actors today to act boldly and quickly to implement the measures necessary to ensure a prosperous and temperate future for humanity and the planet.

Financial institutions are the key to unlocking the system-wide change needed to reach net-zero emissions and limit global warming to 1.5°C above pre-industrial temperatures. The Science Based Targets initiative’s new framework allows financial institutions – including banks, investors, insurance companies, pension funds and others – to set science-based targets to align their lending and investment activities with the Paris Agreement.

Already a leading online tool for companies and investors to assess and respond to water risks, the WWF Water Risk Filter launched in 2020 new forward-looking scenarios of water risks. The WWF Water Risk Filter scenarios, based on climate and socio-economic changes, are aligned with TCFD recommendations.

The aim of this brief is to provide an overview of the WWF Water Risk Filter scenarios and guidance on how scenario analysis can help companies and investors to understand future water risks and build resilience in an uncertain future.

To determine the physical risks in a credible and comparable way, Australian companies need reliable information for scenario analyses. The Climate Measurement Standards Initiative (CMSI) is an industry-led collaboration between Australian insurers, banks, scientists, reporting standards professionals, service providers and supporting parties to assist with TCFD reporting. The CMSI is initially developing technical, business and scientific standards for climate-related physical risk to buildings and infrastructure assets.

This is a technical summary of the report ‘Scenario analysis of climate-related physical risk for buildings and infrastructure: climate science guidance’. The report, which was independently authored by the Earth Systems and Climate Change Hub of the National Environmental Science Program (NESP), describes methods, scenarios for acute and chronic climate hazards, gaps and needs, and a roadmap for the future.

In its first phase, the CMSI has recommended financial disclosure guidelines and developed scientific scenario specifications for the purpose of disclosure of scenario analyses for climate-related physical damage to buildings and infrastructure. It considers a wide range of chronic and acute risks for the general insurance, banking and asset owner sectors. These guidelines and specifications are open-source and voluntary.

The financial disclosure guidelines seek to develop a common interpretation of the TCFD recommendations, considering the decision useful information for users of TCFD and the reporting practices of these sectors. The disclosure guidelines aim to improve comparability of disclosures in this specific area. These recommendations are considered in detail in the Financial Disclosure Guidance Report.

As businesses consider the impacts of climate change on their long-term sustainability, it has remained difficult to measure such risks – until now. Future activities must consider physical impacts of climate change and the transition to a low-carbon economy. Transition Check allows corporate lenders and other financial institutions to quantify the impact of transition risk on their customers and corporate lending portfolios across a wide variety of climate scenarios. Transition Check applies the risk assessment methodology collaboratively developed by Oliver Wyman, the UNEP Finance Initiative (UNEP FI) and thirty-nine global financial institutions as part of UNEP FI’s Task-Force on Climate Related Financial Disclosures (TCFD) pilot program. That methodology is detailed in Extending Our Horizons, UNEP FI and Oliver Wyman’s joint whitepaper.

This maturity map is designed to enable you to assess what you are currently doing in terms of reporting, and how you can advance to a leading position. It considers each element of the TCFD recommendations, providing guidance on how to provide a full and comprehensive response.