TCFD and the Evolution of Non-Financial Disclosure for PLCs
15th November 2021
Davy Horizons hosted virtual fireside chat on 28th October at 3pm which explored the expansion of climate related financial reporting disclosures (TCFD) plus the broader non-financial reporting requirements, global asset managers are setting for their portfolio holdings, read our key takeaways below;
- Institutionalise the thinking
“TCFD provides a framework to identify assess and report climate related financial disclosure. It presents an opportunity for firms to institutionalise the thinking, build the capacity and start to understand the direction of travel. I think there is one key message here … you are never going to figure it all out….. this is a journey, and once you think that you have figured it out, the field will evolve yet further, the science and data will get better. You really need to build this institutional capacity for this be an ongoing or continuous effort, TCFD is not a rote, check the box reporting effort, it continuously evolves.’’ Curtis Ravenel, TCFD
- No need to jump into Climate scenario modelling for TCFD compliance.
In TCFD reporting, there is no need to dive straight into complex climate scenario modeling. It is an iterative process built off strong foundations. If the ability and capacity to do this type of climate modeling is already there, then it is welcomed. The investment community really wants to know that a company is aware and engaged on their key focal areas, building a true understanding of their climate related risks and opportunities before embarking on complex climate modelling.
- Own your narrative
It is crucial for businesses to ‘’own their own narrative’’, no matter where they are in their TCFD journey and they must commit to transparency. With the growth in Artificial Intelligence and Natural Language Processing, companies that don't currently disclose may have their climate risks and opportunities predicted for them by outside sources. Being able to communicate to investors that a company is aware of these real issues and that they have engagement with senior leaders on what it means, is essential. We live in an increasingly hyper transparent world. The assurance requirements associated with that are also very real.
- SFDR Article 8 & 9 funds present a challenge for real economy companies
“I know there's a number of companies who have real economy businesses and therefore have relatively high impact, businesses’ with products that we all continue to want and need and use. While the SFDR is still evolving, there is a concern that many real economy or hard to abate companies could get screened out completely from Article 8 and Article 9 funds. Right now, there is a danger that asset management industry could gravitate towards very low impact, clean, defensible funds and….turn its back…on the real industrial economy which actually needs the most support to transition their business models. Hopefully these funds will also invest and support those companies through their transition phase and act as a force for good change. “ Andrew Cave Ballie Gifford.
Watch the virtual fireside chat
Meet the Speakers
Andrew joined Baillie Gifford as Head of Governance and Sustainability in May 2015. He is also a member of the Global Stewardship Portfolio Construction Group. In his previous role as Chief Sustainability Officer for RBS, Andrew was responsible for helping to rebuild RBS’s approach to corporate responsibility after the financial crisis. He is a member of the Financial Reporting Council’s Investor Advisory Group and is a former Chairman of the UK Global Compact Network.
Curtis Ravenel is currently a Senior Advisor to former Bank of England Governor Mark Carney, COP26 Finance Advisor and UN Special Envoy for Climate Finance and serves as a founding member of the Secretariat for the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Curtis founded the Sustainable Business & Finance Group at Bloomberg LP and served as its Global Head from 2007-2019.
Dr. Dorothy Maxwell FICRS
Dorothy is the Senior Director of Sustainability at Davy Horizons. She has over 20 years experience working in the sustainability arena with business, government and NGOs in the USA, Europe and Asia. She has a Ph.D. in Environmental Science and a proven track record leading and delivering sustainability projects in business including transport, energy and financial services. She is one of HRH The Prince of Wales's Responsible Business Ambassadors, a visiting lecturer on sustainable business at Imperial College London and is a board member of the Institute of Corporate Responsibility and Sustainability (ICRS UK).
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