We spoke to two of the study’s authors, US-based corporate
climate risk,
adaptation, and resilience practice leader, Emily Wasley, and Canada-based
climate change and resilience advisor, Rick Alsop, to get some insight into the findings, current uptake amongst WSP clients, old and new, and what’s ahead in terms of TCFD.
“In summary, we identified sectoral and regional variations in TCFD disclosures, that can be tied to a lack of a formal governance structure or strategic frameworks in certain regions. Geographically, North America and Europe are leading the globe, while Asia is showing the lowest uptake. Sectorally, it is not unexpected to see that the financial services and information technology (IT) and software sectors scored highest, but we were initially surprised to see the renewables sectors rank the lowest. It seems counterintuitive as they are a key part of the transition to a low- or zero-carbon economy. But historically they have not faced the same pressure to disclose on climate risk and yet their potential exposure to physical climate risks is no different to other sectors.
“We also found that TCFD disclosures can help identify the climate maturity of a company. That’s important for aiding investors in assessing a company’s understanding of climate change impact on business and their level of preparedness. So, to help companies understand how to advance to the next phase, we devised the maturity model, developed through our Gap Analysis and Benchmarking Tool, which provides a set of narratives to guide them.”
Sense of urgency
The study comes at a crucial moment, given a surge in requests for support in this area, according to Emily and Rick, either as stand-alone projects or included within broader sustainability and resilience support services.
“We’re seeing requests for TCFD services from both existing and new clients. Many of the companies we already provide support to, for example in strategy and reporting, resource optimization, value chain, and buildings and infrastructure, have asked us for assistance on aligning with and implementing the TCFD recommendations. Other clients ask us to focus on TCFD alignment for a 6-month period so they can begin integrating it into their enterprise risk management processes or describe the inherent, relative, or residual risks in their next CDP Climate Change response. We’ve also had a significant increase in brand new clients looking for support to help them understand and align with TCFD recommendations.”
With the Task Force now in its fifth year, WSP’s TCFD experts are finding that the levels of client awareness and maturity vary considerably. Some have been exploring climate-related risks and opportunities since its formation in 2015. Others have yet to start reporting through the CDP Climate Change or GRESB Resilience Module questionnaires where TCFD is now embedded and are only just now beginning to explore what the TCFD recommendations mean for them.
But what Emily and Rick are seeing is an increasing sense of urgency around TCFD-alignment. This they attribute to a variety of factors including financial impacts from physical and transition risks; investor pressure; regulatory changes post Paris; and market and technological advancement opportunities.
But, regardless the drivers, the process doesn’t have to be highly complex, they stress.
“Aligning with the TCFD recommendations can seem daunting if you’re not familiar with the framework or the steps necessary to align appropriately. However, we have found that a simple phased approach over time that starts with discovery, leading to assessment, then planning, and resulting in transformational change has been incredibly effective with our clients – regardless of their size, TCFD maturity, or resource availability.”
