July 19, 2017
On June 29, the Financial Stability Board Task Force on Climate-Related Financial Disclosures (TCFD) published their final report including key recommendations for the Agriculture, Food and Forest Products sector. The Financial Stability Board (FSB) monitors and makes recommendations about the global financial system with FSB members including all G20 economies, the European Commission and other relevant financial and monetary leaders. Its current chair is Mark Carney, Governor of the Bank of England.
Bruno Bertocci, Managing Director, Head of Sustainable Investors, UBS Asset Management and TCFD member stated:
“TCFD framework enables addressing material deforestation risks in agriculture supply chains and for downstream buyers.” (Interview, July 19, 2017).
Steve Waygood, Chief Responsible Investment Officer, Aviva Investors stated and TCFD member stated:
“The TCFD will be both a mirror and a widow. A mirror as it will help companies study where they can improve their own risk management practices. A window as it helps the market understand where climate risks exist in their portfolios. This is particularly important where those risks are not being managed well.” (Interview, July 19, 2017).
The purpose of the TCFD work is to develop voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear and efficient. They also aim to provide information to lenders, insurers and investors the aids decision making. The TCFD was developed in response to Mark Carney’s Breaking the Tragedy of the Horizon: Climate Change and Financial Stability speech in fall 2015. The FSB chose 32 members to lead the TCFD. These individuals represent financial markets and economic sectors from the G20 and broadly cover both users and preparers of disclosures of financial data. Over an 18-month period, the TCFD developed voluntary guidance on climate-related financial disclosures, seeking input from global stakeholders through an exhaustive set of engagements, and then published their final recommendations.
These TCFD disclosures and their specific Agriculture, Food, and Forests Products sector recommendations are built upon years of experience from implemented disclosure platforms and knowledge generated from recent sustainable banking initiatives. As an industry-led initiative, the TCFD recommendations bring climate-related disclosures to a mainstream audience. The TCFD process is important for investors to be aware because it provides voluntary guidelines for better data as a climate risk mitigation tool in the Agriculture, Food, and Forests Products sector.
The TCFD stated in their findings that they see clear evidence for the need for climate-related financial disclosure in the Agriculture, Food, and Forest Products sector’s financial statements, specifically its: Continue reading