Bloomberg’s taskforce issued plan to enhance disclosure of climate financial risk

The taskforce led by Michael Bloomberg to promote more effective climate-risk disclosures from companies on Thursday (March 31) presented its first report.

The Task Force on Climate-related Financial Disclosures (TCFD) was established in December 2015 by the Financial Stability Board (FSB) with the assignment of developing “voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders”.

The first report sets out the scope and objectives for TCFD’s work, together with a set of fundamental principles of disclosure. It specifies the Task Force will focus on “risks to both physical and financial assets/liabilities and future cash flows resulting from climate-related impacts”.

While information on climate-related financial risk are increasingly valued, “inconsistencies in disclosure practices, a lack of context for information, and uncomparable reporting” are seen as major obstacles for investors and decision-makers willing to incorporated it in their investment and financial decisions.

Enhancing disclosure “can improve market pricing and transparency and thereby reduce the potential of large, abrupt corrections in asset values that can destabilize financial markets”, the report states.

A final report will be issued by the end of 2016, presenting specific recommendations and guidelines for voluntary disclosure.

 

(Image: Michael Bloomberg with UN Secretary General Ban Ki-Moon, Mary Schapiro, and others at the Investor Summit on Climate Risk, January 2016. Photo credit: Mike Bloomberg/Flickr)