31. The Roadmap to Climate-Related Financial Disclosure
“Climate change presents markets with risks and opportunities that cannot be ignored, which is why a framework around climate-related disclosures is so important.”
– Michael R. Bloomberg
TCFD Chair and Founder of Bloomberg LP and Bloomberg Philanthropies, June 2017
In April, Sunwealth’s Banking on Solar featured regulatory insight on SEC’s recent proposal on climate-related financial disclosures from Steven Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets. Rothstein emphatically expressed the importance of accurate and timely data in a capital-efficient market, stating “Investors need consistent information on risks to make market-based decisions.” He also emphasized that the SEC’s recent proposal on climate-related disclosures is founded on the framework created by the Task Force on Climate-Related Financial Disclosures (TCFD). Today, this framework is supported by more than 1,384 financial firms responsible for $215.6 trillion in assets under management.
Introducing TCFD
The Financial Stability Board (FSB) created the Task Force on Climate-Related Financial Disclosures (TCFD) with aims to develop guidance on the information companies should disclose to help investors and lenders appropriately assess and price climate-related risks. The Task Force is chaired by Michael R. Bloomberg, founder of Bloomberg L.P., and consists of over 31 members across the G20 (including JPMorgan Chase and BlackRock), representing both preparers and users of financial disclosures. In 2021, the TCFD released recommendations designed to inform SEC’s proposal and further help companies implement, consider and adopt climate-related financial disclosures.
Climate Risks and Opportunities
The TCFD distinguishes between two drivers of risk in the financial markets: physical and transition. Rising temperatures and the increasing severity and frequency of extreme weather events represent physical climate-risks, while new climate policies and technological innovations represent transition risks. The physical risks are already resulting in business disruption, lower productivity, and asset devaluation, and predicted to accelerate these negative impacts. Community Banks are already turning transitional risks into opportunities by adding community-based solar tax equity and other clean energy investments to their portfolio.
For more information on TCFD
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Andrew Hollander joined Sunwealth as an Associate shortly after graduating from Bentley University. He is amped to put his degree to work and motivated to create a clean energy future for all. When he’s not managing solar assets, he can be found watching Seinfield or spending time with friends and family.