June 6, 2019 / News

Climate-related information insufficient for investors

By Joe McGrath, ESG Clarity

Companies need to do more to anticipate how climate change will impact their business in the years to come

Climate-related information insufficient for investors

Not enough companies are disclosing climate-related financial information that would be useful to investors when making allocation decisions, a report has warned.

In spite of the disclosure of information increasing among firms over the past three years, the Task Force on Climate-related Financial Disclosures’ (TCFD) 2019 Status Report found that it was still insufficient for investors.

The report, which reviewed financial filings, annual reports, integrated reports, and sustainability reports, suggested more clarity is needed on the potential financial impact of climate-related issues on companies.

It also found the majority of companies do not disclose information on the resilience of their strategies to investors.

Randal Quarles, chairperson of the Financial Stability Board, said: “The Task Force continues to provide a forum for market participants to develop and use a valuable private-sector solution to assess climate-related business risks.

“The increased participation levels confirm the value of these voluntary disclosures, allowing the public, markets, and investors to better monitor risks.”

The report’s findings come after a meeting of fund managers, bankers and sustainability experts in London during May to look at ways to improve climate disclosures.

Prior to the event, UN Secretary General, António Guterres urged governments to play a role in influencing corporate behaviour, warning that climate change continues to run faster than expected.

The TCFD, which was established at the end of 2015 to develop voluntary, consistent disclosure recommendations for the industry, has now been tasked with delivering another report to the Financial Stability Board in September 2020.