TCFD: Is it useful?
The purpose of the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations is to help investors, insurers, and underwriters assess climate risk within their portfolios. Since the recommendations were released in 2017, there has been a steady uptake of TCFD-aligned climate disclosures. However, many investors and stakeholders do not find current disclosures useful in making climate-informed investment decisions. There is often a lack of consistency and sufficient detail between the disclosures, making comparisons challenging. Investors need to understand the maturity of investee companies to assess and manage climate change risks and opportunities.
In WSP’s latest study, Advancing Meaningful Climate Action from TCFD Disclosures, we study TCFD disclosures and, leveraging patterns within the TCFD data, propose a method for assessing a company’s climate maturity by leveraging climate disclosures. The maturity model may be a useful tool for assisting investors and other stakeholders in assessing the climate-readiness of companies by leveraging climate disclosures, thereby making disclosure more decision-useful.
Climate change and financial risk disclosures: what you should know
The study uncovered the following key findings, which can be leveraged to enable smart, informed and cost-effective decisions for portfolios, helping to mitigate risk and minimize disruptions.
