9 July 2020
Louise Pryor, IFoA President-elect and a Fellow of the Institute of Environmental Management and Assessment, blogs about ‘A user guide to climate-related financial disclosures’ developed collaboratively by actuaries and sustainability professionals.
It’s true what they say. What gets measured, gets managed.
The recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) were aimed at doing just that – helping organisations of all types to assess and communicate key climate-related information. Since their publication in 2017, the TCFD recommendations and resulting disclosures are proving to be hugely influential in changing the disclosure landscape. As they become more widely adopted and the disclosures evolve to become more informative, we will all be better placed to understand the impacts of climate change and the risks and opportunities posed to different organisations.
There are many resources for those who prepare disclosures, providing advice and support about what should be included and how it should be presented. But there has much less focus on the users of disclosures; how they can make the best use of them and avoid some of the pitfalls that are inevitable in a rapidly changing field.
That’s why I’m so pleased about the publication of ‘A user guide to climate-related financial disclosures’. The guide is the result of a collaboration between the Institute and Faculty of Actuaries (IFoA) and the Institute of Environmental Management and Assessment (IEMA). The IFoA’s actuaries and IEMA’s sustainability professionals are ideally placed to bring their complementary experience to bear on these issues for the benefit of all potential users of TCFD disclosures, regardless of their background. The guide reflects the type of fruitful collaboration between specialists that is becoming increasingly necessary as we recognise and respond to the nature of the systemic risks that the world is currently facing.
The guide has been written to support all users of climate-related financial disclosures. We hope it will help a wide range of stakeholders, from risk management specialists and sustainability practitioners, from investors, lenders and insurers, through to interested members of the public. It aims to help readers understand the purpose behind the disclosures and the type of information they can expect to find in them. It provides a framework that will help readers get the most out of a set of disclosures and advises what to look for in the disclosures so that they can draw valid and robust conclusions. The guide also identifies potential questions to help in probing the disclosures or following up with the organisation that has produced them. Finally, the guide also suggests some further resources stakeholders might find helpful.
Users of the disclosures have varying objectives: some stakeholders are interested in the financial impacts of climate change on the disclosing organisation, others in the impacts of the disclosing organisation on the environment, and still others in broader sustainability issues, such as whether an organisation has committed to net-zero or other climate goals. The processes and challenges described in the guide are intended to be relevant to them all.
The guide is an example of professions with complementary knowledge collaborating to address climate risk, arguably the greatest challenge facing our world today. It will be freely available to all and we hope that it supports users of disclosures to feel confident in understanding and in applying the insights obtained.
If you are interested in learning about the guide in more detail, please join Paul Pritchard (IEMA) and myself for a webinar on Friday 10th July at 10am.