Task Force on Climate-Related
Financial Disclosures
Special Session following Phase I
report submission to FSBBloomberg
Marunouchi BuildingTokto, JapanTK100-6321
31 March 2016
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THREE PROBLEMS: ONE SOLUTION• In G20 jurisdictions, issuers generally have a legal obligation todisclose material climate-related financial information, but they don't
have a coherent framework to do so• Fragmented, non-comparable reporting prevents investors, creditors,
and underwriters from effectively using existing disclosures in theirfinancial decisions• In turn, regulators struggle to use existing financial disclosures todetermine whether financial systems might be vulnerable to climaterelated risks
The solution to all three is a clear, efficient disclosure framework that
improves the ease of both producing and using financial disclosures
2BACKGROUND•

Established by the FSB on 4 December 2015
– Phase I: Survey of landscape to help inform our scope, high-level objectives,principles of disclosure
Due by end-March, 2016
– Phase II: Identify gaps in disclosure and leading disclosure practices, deliver
recommendations to improve consistency, accessibility, clarity and usefulness ofclimate-related financial disclosures by a wide range of financial sector participants
Due by end-December, 2016•

Membership: 21 total members– 1 Chair, 4 International Vice-Chairs– 7 disclosure users; 6 disclosure preparers; 3 other experts– Includes private providers of capital, major issuers, accounting firms, and a credit
rating agency; geographically diverse•

FSB Remit: The Task Force will seek to develop a set of voluntary recommendations that
help facilitate consistent, comparable, reliable, clear and efficient disclosures that are3
decision-useful for the financial sector

TASK FORCE PROCESS – PHASE I•

Plenary meetings: Task Force has met twice, in London and Singapore– Each plenary meeting included a program for outreach with external
stakeholders for engagement and input– London: 12 external presenters, 160 public attendees– Singapore: 3 Task Force panels, 115 attendees representing more than 100
organizations•Four workstreams– G20 Landscape– Objectives and Scope– Principles– Stakeholder Outreach•Transparency and Consultation:– Task Force website, Twitter, and e-mail account• Public sessions of plenary meetings are recorded and posted website– Public consultations to solicit structured feedback from external stakeholders
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LANDSCAPE |DEMAND FOR DISCLOSURES• Background: Considerable agreement has emerged globally that climate-related impacts pose
financial risks. This has resulted in a proliferation of climate-related disclosure frameworks,
including those by governments/regulators, stock exchanges, industry organizations, andNGOs– Increasing agreement in the business and financial communities that they may present
material risks and opportunities– Corresponding increase in demand for decision-useful, climate-related financial information byinvestors, lenders, and underwriters• G20 Landscape: Most G20 jurisdictions (16 out of 20) have some type of rule or regulatory
guidance that requires climate-related disclosure for (at least some) corporations, but a limited
number pertain directly to climate-related financial risks.
• Stock Exchanges: Stock exchanges are increasingly requiring listed companies to disclose
climate-related information– Of the top 10 exchanges by market capitalization, eight offer sustainability-related indices, five
have signed onto the United Nations Sustainable Stock Exchanges commitment letter, and four
require comprehensive sustainability reporting– The World Federation of Exchanges issued guidance in November 2015 recommending thatmember stock exchanges incorporate a set of 34 ESG factors into their disclosure guidance forlisted companies and offered advice on how to roll out enhanced sustainability disclosure 5

LANDSCAPE | KEY CHALLENGES•Materiality: a lack of consensus on what constitutes a material climate risk; uncertainty inassessing when, where, and to what extent climate risks will likely manifest– Climate risk is ubiquitous but can manifest differently in different industries and geographies– Information that may not be material now could be material over the medium and long-term•

Technical/methodological complexities: uncertainty surrounding the severity, timing, andimpact of different climate-related risks on a company or asset class•

Fragmentation: Different frameworks and mandatory reporting requirements can be seen
as complex, costly, confusing, and burdensome for the preparers of financial reports•

Inconsistent placement: difficult for users to know where to look (sustainability report;
annual financial reports; company websites; or provided directly to NGOs or investors)•Constraints on demand for disclosure: demand can be influenced by skewed incentives
and differing views on governance, duties to shareholders, and stewardship
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TASK FORCE OBJECTIVES
Given our review of the landscape of climate-related financial disclosures, the Task
Force has identified the following objectives for its work moving forward:•Build on the large, well-developed but often disjointed body of work already available•

Review the demand for climate-related financial information, including assessing therelevant legal/regulatory factors•

Develop a principle-based framework that promotes consistency in disclosures andenhances user understanding and decision-making•

Consider elements with potential impacts over the short, medium, and long-term andhow to assess their relevance to disclosure•Ensure that Task Force recommendations provide a basis for consistent andcomparable application across G20 countries•

Identify and incorporate examples of leading practices•

Engage extensively with key stakeholders throughout our process to encourage early,
voluntary usage by preparers

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SEVEN FUNDAMENTAL PRINCIPLESWill underpin the recommendations that the Task Force will set out
in our Phase II report and provide an enduring framework for future
work on these issues:
1.
2.
3.
4.
5.
6.
7.

Present relevant information
Specific and complete
Clear, balanced, and understandable
Consistent over time
Comparable among companies within a sector, industry, or portfolio
Reliable, verifiable, and objective
Provided on a timely basis

9TERMS OF REFERENCE FOR PHASE IIThe Task Force will address the following topics in Phase II:• The needs of users of climate-related financial disclosures• Gaps in disclosures that are currently provided and gaps in the types of entities thatshould provide disclosures• Challenges faced by preparers and users around consistency, comparability,reliability, clarity and efficiency of information• A common and baseline set of voluntary disclosures pertaining to the governanceprocesses that guide how boards and management consider, approach, andultimately disclose climate-related risks and opportunities• Specific recommendations, guidelines, and leading practices for voluntary disclosure• Strategy to promote adoption and implementation of principles and recommendations• Methodology for measuring progress in the adoption of Task Force recommendations
The Task Force has established the following workstreams for Phase II:• Governance• Financial Sector• Nonfinancial Companies• Stakeholder Outreach and Communication Strategy10

TASK FORCE TIMELINE FOR PHASE IIThe Task Force is scheduled to hold four additional plenary meetings in 2016. The TaskForce will also organize events to facilitate regional outreach and participate in external
events to discuss our work with key stakeholders.
• 31 March 2016: Presentation of Phase I Report to FSB; Task Force outreach event in Tokyo• 1 April 2016: Phase I Report published• April 2016: One-month public consultation period• 4-5 May 2016: Task Force plenary meeting, Washington DC• 12-13 July 2016: Task Force plenary meeting, New York• 13-14 September 2016: Task Force plenary meeting, Paris• 15-16 November 2016: Task Force Plenary meeting, London• Fall 2016: Task Force update to FSB• End-December 2016: Phase II Report delivered to FSB
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Questions?

12APPENDIX
Questions Posed by the FSB for Phase I:•Which types of firms should recommendations cover? Which types of non-financial corporates? Whichtypes of financial firms?

•

Which users should be considered as the target audience? Should it be extended beyond lenders,investors and insurers to other users of corporate disclosures (e.g., a wider set of stakeholders whichmonitor climate issues)?

•Should the group take into account the potential importance of being able to aggregate or otherwise
analyze information for financial stability purposes? If so, what does this imply for the recommended levelof consistency of disclosures?

•

Should the Task Force seek input from the official sector during its work (for instance through workshops orother outreach)?

•What are the key characteristics of effective disclosures for climate-related risks that any recommendations
should seek to meet?

•

Should the work be focused on carbon emissions, or instead seek to capture other types of climate-related
exposures (e.g. including physical or legal exposures)?

•Should the disclosure task force seek to go beyond disclosures of quantitative measures of existing
exposures, to more qualitative and forward-looking disclosures of plans to manage risks?

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APPENDIX

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TASK FORCE SCOPE
In narrowing its scope, the Task Force made the following determinations:•Focus on climate-related financial risks and opportunities•

Will consider a baseline set of recommendations that apply generally acrosscompanies related primarily to governance•Will also consider industry-specific risks and opportunities•Primary scope of coverage:– Target preparers: listed companies and issuers of public securities– Target users: investors, lenders, and underwriters– Target location: mainstream financial filings and investor annual reports•

Characteristics of Information:–––––

Financially relevant
Efficient
Qualitative and quantitative (“through the eyes of management”)
Historical and forward-looking – scenario analyses
Short, medium, and long term

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