Task Force on Climate-Related Financial Disclosures—Phase I Report1

EXECUTIVE SUMMARYBACKGROUND
Many users and providers of financial capital increasingly recognize the risks and opportunities inherent
in a changing climate, and there has been a corresponding increase in demand for decision-useful
information. Nevertheless, users of climate-related financial disclosures commonly identify
inconsistencies in disclosure practices, a lack of context for information, and uncomparable reporting as
major obstacles to incorporating climate-related risks as a consideration in their investment, credit, andunderwriting decisions. Enhanced disclosures on climate-related risks that are used by investors,
creditors, and underwriters can improve market pricing and transparency and thereby reduce thepotential of large, abrupt corrections in asset values that can destabilize financial markets.
At the request of the G20, the Financial Stability Board (FSB) engaged the private and public sector toreview how the financial sector can incorporate climate-related issues in financial reporting. In
December 2015, the FSB established the Task Force on Climate-related Financial Disclosures toundertake a coordinated assessment of what constitutes efficient and effective disclosure and design a
set of recommendations for voluntary company financial disclosures of climate-related risks that are
responsive to the needs of lenders, insurers, investors, and other users of disclosures. The Task Forcemembership spans private providers of capital, major issuers, accounting firms, and rating agencies,
thereby presenting a unique opportunity to form a collaborative partnership between the users andpreparers of financial reports.

THE TASK FORCE’S REMIT
A key objective of the Task Force’s work, as outlined by the FSB, is to promote more effective climaterelated disclosures that (1) will support informed investment, credit, and insurance underwriting
decisions about reporting companies, and (2) will enable a variety of stakeholders to understand theconcentrations of carbon-related assets in the financial sector and the financial system’s exposures toclimate-related risk.
The Task Force has been asked to deliver two reports:••

A first report (to be delivered by March 31, 2016) that will set out the scope and high-levelobjectives for the proposed work, together with a set of fundamental principles of disclosure, toprovide an enduring disclosure framework and guide the Task Force’s Phase II recommendations.
A final report (to be delivered by the end of 2016) that will set out specific recommendations andguidelines for voluntary disclosure by identifying leading practices to improve consistency,
accessibility, clarity, and usefulness of climate-related financial reporting.

3

In keeping with the FSB remit, this Phase I Report discusses four key areas:

LANDSCAPEFirst, the Task Force has conducted a high-level review of the existing landscape of climate-related
disclosures—including current voluntary and mandatory climate-related disclosure regimes—to identify
commonalities, gaps, and areas for improvement. The review highlighted the progress that has been
made by governments, stock exchanges, nongovernmental organizations (NGO), and others in thecontext of disclosure frameworks. At the same time, despite these successes, climate-related disclosure
remains fragmented and incomplete, with only a limited number of reporting regimes focusing on thefinancial risks posed by climate-related impacts. In general, existing laws and regulations already require
disclosure of climate-related risk in financial filings if it is deemed material. The Task Force plans to build
on existing work to provide a framework that promotes alignment and focuses on financial risks
stemming from physical and nonphysical climate-related impacts (including transition and liability risks)
to better meet the specific needs of users and preparers. The approach will be market-driven.

OBJECTIVES AND SCOPE
Second, the Phase I Report defines the scope and objectives of our work for Phase II. The Task Force’s
recommendations in Phase II will target climate-related financial disclosures pertaining to near-,medium- , and long-term physical and nonphysical impacts faced by both nonfinancial companies andthe financial sector, with the goal of furthering market understanding and evaluation of relevant
financial risks and opportunities. The Task Force will consider the features and characteristics ofinformation to be disclosed—including quantitative, qualitative, historical, and forward-looking
metrics—and how disclosures are used, analyzed, and aggregated. The Task Force will focus primarily on
developing recommendations for issuers of public securities, listed companies, and key financial-sector
participants. The Task Force will seek to promote and drive voluntary adoption by ensuring that its
recommendations reflect a consensus view of leading practices for disclosure; advance principles ofgood governance, fiduciary duty, and stewardship; and provide a basis for consistent and comparable
application by firms in countries throughout the G20.

FUNDAMENTAL PRINCIPLES FOR EFFECTIVE DISCLOSURES
Third, the Task Force has identified seven fundamental principles that are critical for an effective regime
for climate-related financial disclosure, summarized as follows:
1.
2.
3.
4.
5.
6.
7.

Present relevant information
Be specific and complete
Be clear, balanced, and understandable
Be consistent over time
Be comparable among companies within a sector, industry, or portfolio
Be reliable, verifiable, and objective
Be provided on a timely basis

4These principles will underpin the Task Force’s Phase II recommendations for enhancing climate-related
disclosures and provide an enduring framework for future work on these issues.

STAKEHOLDER OUTREACH AND ENGAGEMENTThe Task Force is strongly committed to extensive stakeholder engagement and public consultation,
soliciting input from nonprofit organizations, industry, the official sector, and academia and ensuringthat our work builds on their efforts.

TERMS OF REFERENCE FOR PHASE II
The Task Force will focus next on the financial impact of climate change on reporting companies’
businesses, as the starting point for the development of recommendations for voluntary disclosures
within mainstream financial reports. In general, climate-related disclosures should be subject to goodgovernance processes and address as comprehensively as possible the significant impacts of climatechange on the company’s business and the company’s strategy for managing related risks. The
fundamental principles will underpin the Task Force’s work on these issues in Phase II of the project.
In order to conduct our work, the Task Force will hold four additional plenary meetings in the remainderof the year. In Phase II, we will organize ourselves into four workstreams:•••

The governance workstream will focus on developing a common and baseline set ofrecommendations for voluntary disclosures pertaining to the processes that guide how boards andmanagement consider these issues across sectors.
Two other workstreams, on nonfinancial companies and the financial sector, will consider further
industry-specific recommendations.
The stakeholder outreach and communications workstream will continue to support the Task
Force’s engagement strategy.

The workstreams will consist of a balance of users, preparers, and other experts to ensure that findings
reflect the challenges faced by preparers, the needs of users, and a variety of functional, regional, andindustry perspectives.

TRANSPARENCY AND CONSULTATION
We recognize that effective engagement requires an open and transparent process. The Task Force willcontinue to proactively connect with a broad array of interested stakeholders. To provide the publicwith access to Task Force materials and offer greater transparency at Task Force events, we havelaunched a website (www.fsb-tcfd.org) and Twitter account (@fsb_tcfd).
In tandem with the April 1, 2016, publication of the report, the Task Force will post a structured, online
form at www.fsb-tcfd.org/survey to open a one-month public consultation on our work in Phase II.
Respondents with additional comments will be invited to submit a comment letter during theconsultation period.
5

TABLE OF CONTENTS
1. Background and Remit .............................................................................................................................. 7
2. Landscape................................................................................................................................................ 12
3. The Task Force’s Objectives and Scope .................................................................................................. 21
4. Fundamental Principles for Effective Disclosures ................................................................................... 29
5. Stakeholder Outreach and Engagement ................................................................................................. 33
6. Terms of Reference for Phase II .............................................................................................................. 35
7. Select References .................................................................................................................................... 37
Appendix 1: Glossary and Abbreviations .................................................................................................... 39
Appendix 2: Selected Disclosure Frameworks ............................................................................................ 41
Appendix 3: Climate-Related Disclosures across the International Landscape .......................................... 45
Appendix 4: Supplemental Charts and Tables ............................................................................................ 56
Appendix 5: Public Consultation Questions ................................................................................................ 58
Appendix 6: FSB Press Release (December 4, 2015)................................................................................... 60
Appendix 7: Task Force Members............................................................................................................... 626

1. BACKGROUND AND REMIT
Climate change is one of the most complex issues facing business, governments, and society at large.
The Intergovernmental Panel on Climate Change 2014 synthesis report notes that “each of the last three
decades has been successively warmer at the Earth’s surface than any preceding decade since 1850.” 1
Independent analyses by both NASA and the U.S. National Oceanic and Atmospheric Administration
found that 2015 was the hottest year on record by a wide margin, and that 15 of the 16 warmest years
on record have come in the 21st century. 2 The large-scale and long-term nature of the problem makes it
uniquely challenging, especially in the context of long-term economic decisions. Moreover, our current
understanding of the potential financial risks posed by climate change—to companies, investors, andthe financial system as a whole—is still at an early stage.
Considerable global agreement has emerged regarding the threats posed by climate change, as
evidenced by the 2015 United Nations Climate Change Conference (“COP21”) held in Paris, where nearly
200 governments agreed to curb carbon emissions and limit global warming to below 2 degrees Celsius
above pre-industrial levels.
There is also increasing agreement in the business and financial communities that some degree ofclimate change is inevitable, and that its impacts, both physical and nonphysical, may present material
risks and opportunities that span both adaptation and mitigation strategies. In the runup to COP21, 350
investors representing more than US$24 trillion in assets under management called on world leaders toforge a meaningful and ambitious climate agreement, in recognition of the risks that climate changepresents to their investments. 3 The Montreal Carbon Pledge, 4 with 120 investors representing over
US$10 trillion in assets, commits investors to undertaking and disclosing the carbon footprint of theirinvestment portfolios. And, the CDP (formerly the Carbon Disclosure Project) signatories—with morethan 822 institutional investors representing over US$95 trillion in assets—asked companies worldwide
to disclose their carbon emissions and how they are managing climate-change issues.
These efforts reflect a growing demand for decision-useful climate-related information by a range ofparticipants in the financial markets. Creditors and investors today are more sensitive to complex or
opaque financial disclosures, and increasingly demand better access to risk information that is
consistent, comparable, reliable, clear, and efficient. There has also been a realization that weak

1

Intergovernmental Panel on Climate Change, “Climate Change 2014 Synthesis Report: Summary for
Policymakers,” 2014, available at http://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_SPM.pdf.
2
NASA, “NASA, NOAA Analyses Reveal Record-Shattering Global Warm Temperatures in 2015,” January 20, 2016,
available at http://www.nasa.gov/press-release/nasa-noaa-analyses-reveal-record-shattering-global-warmtemperatures-in-2015.
3“Global Investor Statement on Climate Change,” September 2014, http://www.iigcc.org/files/publicationfiles/11DecemberGISCC.pdf.
4
See http://montrealpledge.org/.

7

corporate governance can have a negative impact on shareholder value, which propels issues aroundtransparency and risk management to the top of the investor agenda.
This growing demand from investors resulted in a proliferation of climate-related disclosure frameworks
and the continuing development of disclosure standards for certain types of information, particularlyaround greenhouse gas (“GHG”) emissions. Nevertheless, users of climate-related financial disclosurecommonly identify inconsistencies in disclosure practices, a lack of context for information, anduncomparable reporting as major obstacles to incorporating climate-related risks as a consideration in
their investment, credit, and underwriting decisions over the medium and long term. Evidence suggeststhat the lack of consistent information hinders investors from considering climate-related issues in theirasset valuation and allocation processes. 5
In general, inadequate information on risk exposures can lead to a mispricing of assets and/or
misallocation of investment and can potentially give rise to concerns about financial stability, sincemarkets can be vulnerable to abrupt corrections. 6 Recognizing the potential concerns, in April 2015, theG20 Finance Ministers and Central Bank Governors in their communiqué requested the FSB to convene
public- and private-sector participants to review how the financial sector can take account of climaterelated issues. 7 In response to the G20’s request, the FSB held a public-private-sector meeting in
September 2015 to consider the implications of climate-related issues for the financial sector.
Participants exchanged views on the existing work of the financial sector; authorities and standard
setters in this area and the challenges they face; areas for possible further work; and the possible roles
the FSB and others could play in taking that work forward. The discussions continually returned to acommon theme: the need for better information.
By some measures, almost 400 climate or sustainability disclosure regimes promulgated by industry
groups, NGOs, stock exchanges, regulators, and international organizations are estimated to exist. 8
These regimes either indirectly or directly approach climate-related disclosure, from the perspectives ofa variety of users and scopes of coverage. Many regimes focus on broader environmental, social, andgovernance (“ESG”) issues rather than solely on climate-related risks and data. The divergent range ofapproaches reflects the lack of consensus around what constitutes a material climate risk, which has led
to a corresponding lack of consistency, comparability, reliability, and clarity of the information provided.
5

Mercer LLC, “Investing in a Time of Climate Change,” 2015, available at
http://www.mercer.com/content/dam/mercer/attachments/global/investments/mercer-climate-change-report2015.pdf.
6Mark Carney, “Breaking the tragedy of the horizon—climate change and financial stability,” (speech, Lloyd’s,
London), September 29, 2015.
7
G20, “Communiqué from the G20 Finance Ministers and Central Bank Governors Meeting in Washington, D.C.
April 16-17, 2015.”
8
Quoted in Mark Carney, “Breaking the tragedy of the horizon—climate change and financial stability,” (speech,
Lloyd’s, London), September 29, 2015. OECD and CDSB report available at
http://www.oecd.org/daf/inv/mne/Report-on-Climate-change-disclosure-in-G20-countries.pdf. Included in this list
are advocacy campaigns, platforms for registering sustainability commitments, guidance, policies, ratings schemes,
laws, and measurement tools.

8Practically speaking, the lack of consensus results in inefficiencies for both providers and users of
disclosure.
In most G20 jurisdictions, issuers have a legal obligation to disclose any material risk in their financial
reports—which includes climate-related risks. The absence of a standardized framework for disclosing
climate-related risks makes it difficult for preparers to determine what information should be includedin their financial filings and how it should be presented. The resulting fragmentation in their reporting
practices has prevented investors, creditors, and underwriters from accessing information in a complete
form that can inform their economic decisions. Furthermore, because financial sector disclosuresdepend on those from the underlying companies, regulators face challenges in using existing financial
disclosures to determine systemwide exposures to climate-related impacts.
In response, the FSB established the Task Force on Climate-related Financial Disclosures (Task Force) on
December 4, 2015, to design a set of recommendations for voluntary company financial disclosures that
promote alignment across existing regimes and clarify what may constitute material and relevant
climate-related risks. In devising a principle-based framework for voluntary disclosure that is responsive
to the needs of lenders, insurers, 9 investors, and other users of disclosures, the Task Force seeks to
improve the ease of both producing and using financial disclosures. 10 The FSB emphasized that “anydisclosure recommendations by the task force would be voluntary, would need to incorporate theprinciple of materiality and would need to weigh the balance of costs and benefits.” 11
The Task Force membership, which was announced on January 21, 2016, spans private providers ofcapital, major issuers, accounting firms, and rating agencies, thereby presenting a unique opportunity toform a collaborative partnership between the users and preparers of financial reports. 12 The Task Forceseeks to capitalize on and better align the work already being done in many forums to improve thequality, content, and comparability of climate-related financial disclosures.
The FSB’s approach to the Task Force is modeled on work done by a prior FSB-sponsored industry group,
the Enhanced Disclosure Task Force (“EDTF”). The EDTF’s primary objectives were to develop
fundamental principles for enhanced risk disclosures by banks, recommend improvements to current
risk disclosures, and identify examples of best or leading practices. Similarly, the Task Force’s
assessment will identify a set of voluntary-disclosure principles supported by detailed recommendations
and examples of leading practices. A key objective of the Task Force’s work, as outlined by the FSB, is topromote more effective climate-related financial disclosures that: (1) will support informed investment,
credit, and insurance-underwriting decisions about reporting companies, and (2) will enable a variety offinancial market participants to better understand the concentrations of carbon-related assets in thefinancial sector and the financial system’s exposures to climate-related risks. The FSB writes that
9Unless otherwise specified, the use of the term “insurers” in this report includes re-insurers within its scope.
Financial Stability Board, “FSB to establish Task Force on Climate-related Financial Disclosures,” December 4,
2015.
11
Financial Stability Board, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.
12
Financial Stability Board, “FSB announces membership of Task Force on Climate-related Financial Disclosures,”
January 21, 2016.
109

disclosures by financial institutions in particular would “foster an early assessment of these risks,
facilitate market discipline and encourage firms to manage what they are measuring.” 13 It would also
“provide a source of data that can be analyzed at a systemic level, to facilitate authorities’ assessmentsof the materiality of any risks posed by climate change to the financial sector, and the channels throughwhich this is most likely to be transmitted.” 14 The Task Force seeks to develop recommendations thatalign existing disclosure schemes and fill any identified gaps with the larger aim of improving theconsistency and effectiveness of climate-risk financial disclosures for global capital markets.
The FSB has asked the Task Force as a first stage to determine the scope and high-level objectives for
our work. The Task Force has done so, based on preliminary research on the following:
•
•
•
•
•

A stocktaking of existing climate-related disclosure schemes and related analysis
The nature of climate risks faced by the financial sector and the scope of firms to be covered
The needs of users of climate-related disclosures, particularly financial market participants
The challenges faced by firms in applying and using existing disclosure schemes andAny gaps in current disclosures.

The FSB’s November 9 proposal asked the Task Force to address the following questions about thescope and objectives of our work in the first stage (Phase I) with our responses outlined in a reportdelivered by the end of March 2016: 15•

Which types of firms should recommendations cover? Which types of nonfinancial corporates?
Which types 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 ofstakeholders that monitor climate issues)?

•

Should the group take into account the potential importance of being able to aggregate orotherwise analyze information for financial stability purposes? If so, what does this imply for therecommended level of consistency of disclosures?

•

Should the Task Force seek input from the official sector during our work (for instance, throughworkshops or other 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 ofclimate-related exposures (e.g., including physical or legal exposures)?

13

Financial Stability Board, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.
Ibid.
15
Ibid. (slightly paraphrased).
14

10

•

Should the 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?

To discuss and deliberate these questions, the Task Force held plenary meetings in London andSingapore and established four Phase I workstreams: landscape; scope and objectives; principles of
disclosures; and a standing committee on stakeholder outreach and engagement. In turn, theworkstreams have given rise to a series of conference calls and e-mail exchanges as the work has
progressed.
This report represents the culmination of the deliberations within each workstream and the collective
views of the Task Force; it will guide the Task Force’s work moving forward. It covers Phase I andcontains detailed terms of reference for the second stage (Phase II). In Phase II, we will focus ondelivering specific recommendations for voluntary disclosure principles and leading practices that
promote the consistency, comparability, reliability, clarity, and efficiency of climate-related financial
disclosures. A final report is targeted for delivery to the FSB by the end of 2016.
In addition to discussing and deliberating these questions, a core part of the Task Force’s mandate is totake into account the work of other groups involved in climate-related disclosure and to conduct
stakeholder and public outreach (see Section 5). In developing our principles, proposed scope andobjectives, and Phase II work plan, the Task Force began a review of current voluntary and mandatory
climate-related disclosure regimes (outlined in Section 2). One of the key features of the Task Force’s
mandate is its focus on building upon the existing disclosure efforts, rather than creating another,entirely new disclosure regime. The Task Force has been and will continue to conduct extensive
outreach to parties with an interest in climate-related financial disclosures, including users, preparers,
standard-setting bodies, and other stakeholders. We also plan to hold a public consultation to seek
external feedback on our Phase I report and solicit input on substantive questions related to our work in
Phase II. The Task Force’s website, www.fsb-tcfd.org, will be a key channel for communicating about andsharing the Task Force’s work. The website provides an online questionnaire for the public to submit
comments by May 1, 2016 (see Appendix 5 for more information).
The Phase I report is organized as follows: Section 2 provides an overview of the current landscape ofclimate-related disclosure regimes, including voluntary and mandatory frameworks/guidelines; Section 3lays out the Task Force’s proposed high-level objectives and scope; Section 4 identifies sevenfundamental principles for effective financial disclosure; Section 5 describes our plan and strategy forstakeholder outreach; and Section 6 outlines the Task Force’s plans for Phase II and next steps.
In the following section, we outline the key findings from our preliminary stocktaking, which, in turn,forms the basis for the later sections of the report on principles for disclosure, scope and objectives, andnext steps.

112. LANDSCAPE
In its first phase, the Task Force reviewed existing mandatory and voluntary frameworks for climaterelated disclosure, to identify commonalities and gaps across existing regimes and areas that meritfurther work and focus by the Task Force. We drew heavily on research conducted by NGOs and industry
participants, and focused on disclosure regimes that pertain most directly to the Task Force’s remit—
namely those with a focus on climate-related financial risk and opportunities that apply broadly tocompanies 16 across sectors.
To the extent there is corporate reporting of climate-related information and risks, it happens through amultitude of mandatory and voluntary schemes. Although a complete and comprehensive survey ofexisting schemes is beyond the scope of this report, the Task Force considered a broad range of existing
frameworks, both voluntary and mandatory, in our stocktaking.
Tables A2.1 through A2.4 in Appendix 2 list select disclosure frameworks considered by the Task Forceand identify a few key characteristics of each, including whether disclosures are mandatory or voluntary,
what type of information and risk exposures are reported, who the target reporters and target
audiences are, where the disclosed information is placed, and whether there are any specified
materiality standards. These disclosure frameworks were chosen to illustrate the broad range of
disclosure regimes around the world; the tables are broken out into disclosure frameworks, sponsoredby banking regulators (Table A2.1), governments (Table A2.2), stock exchanges (Table A2.3), and NGOs
(Table A2.4). 17
The Organization for Economic Cooperation and Development and Climate Disclosure Standards Board’s
2015 review 18 of mandatory climate-related reporting in G20 countries provides a comprehensive
assessment of mandatory frameworks. They write that climate-risk reporting in G20 countries generally
includes some or all of the following:•••

Strategy, governance practices, and policies implemented by companies to mitigate, adapt to,
and manage climate-change impacts including: extreme weather events, resource shortages,
and changing market conditions;
Resource consumption that affects climate change, including consumption of fossil fuels;
Production of waste and pollutants that affect the climate, including GHG emissions; and16Unless otherwise specified, this report’s use of the term “companies” refers to companies both in thenonfinancial and financial sectors.
17
The Task Force also considered four mandatory regimes, in particular: the European Union’s because of its focus
on nonfinancial information; France’s because of its unique requirements for the financial sector; Brazil’s becauseof its unique incorporation of environmental risks into bank stress tests; and Japan’s because of its mandatory
requirement to disclose emissions for large energy-consuming businesses.
18
Organization for Economic Cooperation and Development and Climate Disclosure Standards Board, “Climate
Change disclosure in G20 countries: Stocktaking of corporate reporting schemes,” November 2015.

12•The principal risks and opportunities expected by companies as a result of climate change—suchas demand for new products, climate-related regulation, and supply-chain resilience.

Our review of the landscape highlighted the immense progress that has been made by governments,
exchanges, NGOs, and others in promulgating and articulating disclosure frameworks and guidelines.
Yet, despite these successes, climate-related disclosure remains fragmented and incomplete, with only alimited number of reporting regimes focusing specifically on the financial risks posed by climate-related
impacts. Studies of climate-related financial reporting show that financial filings vary considerably basedon what disclosure regime is used and, as a result, currently lack sufficient completeness, comparability,
and consistency to be actionable for investors. Our findings, based on our review and an array of
research reports, 19 identify a variety of challenges for both the users and preparers of reports:•

Materiality: Most G20 countries have some form of required climate-related disclosures, but alimited number of them pertain directly to climate-related financial risks. In general, disclosureof climate-related risk is required in mainstream financial filings if it is determined to bematerial. 20 However, there is a lack of consensus on what constitutes a material climate risk,
particularly at the sector, subsector, and asset-class level. As a result, disclosure frameworks candiffer widely in terms of content, metrics reported, form, and linkages to financial risks.

•

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

•

Disjointed placement: Climate change-related information is currently reported throughmultiple routes, including: to central government bodies where required; by publication of asustainability report; in annual financial reports through inclusion of specific sections onenvironmental information; on company websites; or provided directly to NGOs or investors in
response to surveys.

•

Financial Sector: Few regimes currently require climate-related disclosures from the financial
sector. 21•

Technical/methodological complexities: The further growth and development of climate
science likely means that the technical metrics and methodologies associated with disclosures
will evolve. Companies struggle to provide a balanced view of the range of possible outcomes

19

KPMG, Centre for Corporate Governance in Africa, GRI, and UNEP, “Carrots and Sticks: Sustainability reporting
policies worldwide—today’s best practice, tomorrow’s trends,” 2013.
20
Debevoise & Plimpton, “Environmental and Climate Change Disclosure under the Securities Laws: A
Multijurisdictional Survey,” March 16, 2016, available at
http://www.debevoise.com/insights/publications/2016/03/environmental-and-climate-change-disclosure.
21
Large banks can be required to disclose their climate-related risks as listed members of stock exchanges, andthere has been a recent push by governments to ask insurers and investors to report on their climate-related risks(see tables in Appendix 2).

13that could affect their business model, primarily because of the inherent uncertainty inassessing when and where climate risks will likely manifest. Quantitative metrics and forwardlooking analyses often rely on specified probability distributions for different climate-related
scenarios, which can be difficult to estimate due to uncertainty about the likelihood of different
climate events.
•

Emissions: Direct GHG emissions are the most commonly required disclosure, yet they
represent a small proportion of organizations’ overall carbon footprints. “Other,” indirect GHG
emissions and value-chain risks are often very significant but frequently overlooked bydisclosure frameworks. The identification and calculation of such emissions remain complex, inpart due to poor and inconsistent data from suppliers.

•

Lack of verification/assurance: Although many schemes request some form of assurance of
information, the quality of assurance is rarely stipulated and standards for conducting assurance
activities are limited.

As the Task Force moves forward (discussed further in Section 3 on Objectives and Scope), we will build
on our Phase I stocktaking and continue to consider how our recommendations can address the issues
identified above and can better connect existing reporting frameworks in different jurisdictions in termsof substance/content, form, and type (mandatory/voluntary). A comprehensive understanding of thewide range of relevant users and their data needs, gaps, and limitations will be crucial to ensuring thatany recommendations by the Task Force will lead to disclosures that are actually used by the financial
sector in making informed investment, credit, and insurance-underwriting decisions (see Appendix 3,
Table A3.1).
A key consideration for Phase II will be to recognize that companies’ disclosure obligations may differ
across G20 legal and financial systems/jurisdictions. The Task Force will need to ensure that any
recommendations factor in these differences. This includes assessing which political, legal, economic,
and financial characteristics across jurisdictions may be relevant considerations in formulating Task
Force recommendations, such as market structure (bank-centric vs. market-based finance);
predominant types of investors (e.g., retail vs. institutional); and differing legal codes (e.g., governance,
fiduciary duty, and stewardship) (see Appendix 3).
The Task Force recognizes that the impact of increasing the supply of relevant and timely information to
the market will depend on whether there is sufficient demand for such data by market participants.
Therefore, the Task Force will need to consider possible constraints on the demand for suchinformation. For example, investment managers may not be properly incentivized by their asset ownerclients to incorporate such information in decision-making. The Task Force will thus seek to explore howreporting by investment managers and asset owners on how they manage climate-related risks in theirportfolios can increase incentives to utilize climate risk data.

142.1 CURRENT DEFINITIONS OF CLIMATE-RELATED FINANCIAL RISKS
Climate change has the potential to have enduring economic, social, and financial consequences for
economies around the world. 22 As the effects of climate change become more prevalent and better
understood by market participants, changing economic and regulatory conditions may affect, positively
or negatively, the commercial viability, competitiveness, and/or value of certain physical assets,companies, and investments. These changes will develop in different ways, over different time horizons,and at varying intensities depending on the sector, asset class, and type of financial activity. The ways inwhich the global economy, specifically the financial system, could be affected by climate change arevaried, complex, and uncertain.
Currently, climate-related financial risks and their implications are described using different taxonomies
that focus on varying aspects and definitions of climate risks—GHG emissions, carbon risk, water risk,
resource availability, physical impacts, and policy/regulatory risk, among others. At a high level, climatechange has been categorized along nine interlinked “planetary boundaries”: 23
•
•
•
•
•
•
•
•
•

Global warming (e.g., temperature change)
Biosphere integrity (e.g., biodiversity)
Freshwater use
Land-system change (e.g., deforestation and human migration)
Ocean acidification
Depletion of stratospheric ozone
Biochemical flows (e.g., nitrogen and phosphorus cycles)
Atmospheric-aerosol loading
Novel entities (e.g., chemical pollution and new types of engineered materials or organisms)

Since each of these climate impacts may pose risks to economic and financial activity through multiple
channels, a wide range of information can be included under the heading of “climate,” which, in turn,affects information to be disclosed under various regimes (see Table A4.1 in Appendix 4 for an overview
of select risk frameworks). This can range from GHG emissions (see Boxes 2A and 2B) to climate-related
treaties and impacts that might affect a firm’s viability, value, or risk profile.
This fragmentation also stems, in part, from the lack of a generally agreed-upon definition of material
climate risk. In particular, there is considerable disagreement over what constitutes a “material” climate
risk that triggers disclosure requirements in most jurisdictions. This is due to the (often) significant
uncertainty surrounding the severity, timing, and impact of different climate-related risks on a company
or asset class. These issues are open to interpretation and debate, and they drive much of thedisagreement around what companies should disclose.
22

WRI and UNEP-FI Portfolio Carbon Initiative, “Carbon Asset Risk: Discussion Framework,” August 2015.
J. Rockström et al., “A safe operating space for humanity,” Nature, vol. 461, no. 24, September 2009, 472–475;
and Will Stefen et al., “Planetary boundaries: Guiding human development on a changing planet,” Science, vol.
347, February 13, 2015.

23

15

16

2.2 SNAPSHOT OF ISSUES IN CLIMATE-RELATED FINANCIALREPORTING
Even though climate-related impacts on business operations may present material risks to investors,
financial institutions, and the wider public, climate-related reporting remains a relatively new andinfrequent practice. As a result, climate-related financial risks and opportunities may not be adequatelyreflected in companies’ financial reporting today.
A general survey of disclosures provided by corporations reveals the varied quality and content ofreported information across jurisdictions and industries, even though the reporting of material risks is
generally required. Data from the Sustainability Accounting Standards Board (SASB), which pertains
specifically to the 2014 financial filings by the top U.S.-listed companies by revenue within eachindustry, 24 demonstrates the types of challenges faced by users of climate-related disclosures globally.
For example, 27% of companies identified no climate risk at all. Of the approximately 70% that did, only
15% used metrics, and approximately 40% used boilerplate language—broad, nonspecific wording that
does not describe the realities of the reporter’s particular operating context (Figure 2C). 25 The use ofboilerplate language by reporters may reflect uncertainty regarding the climate-related impacts andconcerns about reporting uncertain information in financial filings that carry legal obligations (Figure
A4.2 in Appendix 4). Risks related to the transition to a low-carbon economy are unlikely to be disclosed.

Users often face a variety of challenges in forming a clear and complete understanding of the climate
risks faced by companies with existing disclosures. In considering the state of climate-related reportingat a global level, data on reporting patterns of climate-related financial information across jurisdictions
would be ideal; unfortunately, such analyses are rare. For investors and lenders making capitalallocation and other financial decisions, these limitations can prevent meaningful analytical comparisonsacross entities and sectors, thus restricting the value of a firm’s climate disclosures, even where they24

While SASB is U.S.-focused and the data presented here looks at 10-K forms, SASB’s general research is based onlisted firms, which include foreign private issuers that file 20-F forms with the Securities and Exchange
Commission.
25
Jean Rogers, “Better than boilerplate: More detailed disclosures benefit investors,” September 25, 2015,
available at http://www.sasb.org/better-than-boilerplate/.

17

provide relevant information. Surveys show that a large number of asset managers (nearly half by someestimates) do not analyze climate risks and opportunities at all, due in part to lack of access to adequate
disclosure information. 26
Another challenge is the multitude of different users of financial disclosures, spanning investors(including shareholders and investment managers), asset owners, sell-side analysts, investment
consultants, proxy advisers, index providers, beneficial users, individual investors in fund structures,banks, credit rating agencies, exchanges, governments, regulators, and other stakeholders with aninterest in climate change and sustainability issues. These different users require information fordifferent, often multiple purposes, including informing consumer decisions, assessing performanceagainst policy objectives, investment/portfolio analysis, and credit/risk analysis.
Ultimately, there is no single representative user, nor can any single constituency of users be treated asa homogeneous entity. For example, investors with a long-term investment horizon, such as pension
funds and insurance companies, may be particularly interested in information on how climate change
may affect a company in the medium or long term. While investors may primarily care about climate
information for risk assessments and financial analysis, a small but significant number of ethicalinvestors also care about whether the company they are investing in is contributing disproportionately
to climate change and environmental degradation.
Addressing these gaps and challenges in the context of climate-related financial disclosures could help
market participants and other stakeholders better assess to what extent companies are considering andmanaging climate-related risks and could reveal underlying systemwide exposures.

2.3 MANDATORY CLIMATE-RELATED DISCLOSURE FRAMEWORKS
The FSB’s proposal creating the Task Force noted that: “any disclosure recommendations by the task
force would be voluntary, would need to incorporate the principle of materiality and would need toweigh the balance of costs and benefits.” 27 Therefore, as part of our review, the Task Force considered
what companies are currently required to report by law on climate-related matters, in furtherance ofour goal to produce disclosures that are voluntary, incorporate the principles of materiality, andminimize the likelihood of duplication or conflicting recommendations—thereby reducing burdens on
the preparers of financial reports.
In reviewing the OECD and CDSB report and other sources concerning the different regulatory or
mandatory regimes for climate-related disclosure that exist in the different G20 jurisdictions (seeAppendix A2.2 and A2.5), we identified a number of characteristics.

26

High Meadows Institute, “Charting the Future for Capital Markets,” May 2015, available at
http://www.highmeadowsinstitute.org/wp-content/uploads/2015/07/FOCM-SustainabilityInitativesSurvey.pdf.
27
Financial Stability Board, “Proposal for a Disclosure Task Force on Climate-Related Risks, November 9, 2015.

18

First, 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:•

As mentioned earlier, disclosure of climate-related risk is generally required if it is deemedmaterial. 28
The four countries lacking a mandatory government-led framework (Argentina, India, Russia, andSaudi Arabia) have other frameworks for climate-related disclosure in place, often applied to listedcompanies by their local stock exchanges and with varying degrees of obligation.
In many cases, utilities and energy companies are specifically required to make climate-related
disclosures under mandatory frameworks (or at least have to disclose more information thancompanies from other sectors).

••

Second, in looking across all types of regulatory frameworks (those promulgated by central and local
government, stock exchanges, financial supervisors, market authorities, etc.), virtually all G20 countries(with the exception of Saudi Arabia) have some form of carbon- or climate-related disclosure
framework:••

Stock exchanges and market authorities often appear as initiators and supervisors of these
disclosures, and have designed frameworks with the objective of providing information that isuseful to financial actors.
As a natural consequence, disclosure requirements most often apply to listed companies above
a certain size threshold, which varies by regime (e.g., the level “500 employees or more”
appears as a common reporting threshold).

Third, mandatory disclosure requirements generally pertain to climate-related information generally andare not explicitly focused on climate-related financial information. For instance, most mandatory
disclosure frameworks require the reporting of GHG emissions, with a clear focus on Scope 1, someextension to Scope 2, and very rare extension to Scope 3 (see previous Box 2A). Some jurisdictions, theEuropean Union among them, explicitly encourage Scope 2 and 3 reporting.
Fourth, mandatory and regulatory frameworks generally do not require dynamic or forward-looking
disclosures or a framing in terms of risk assessment and strategic decisions to cope with risks; however,some changes are underway:••

In the most recently developed frameworks, some governments (nine of the G20 countries)
have started to require disclosure beyond GHG emissions.
Stock-exchange listing requirements often require an initial qualitative presentation of thecompany’s risks and strategy, encouraging forward-looking and strategic thinking on broader
challenges such as climate.

28

Debevoise & Plimpton, “Environmental and Climate Change Disclosure Under the Securities Laws: A
Multijurisdictional Survey,” March 16, 2016, available at
http://www.debevoise.com/insights/publications/2016/03/environmental-and-climate-change-disclosure.

19

•

•

Brazil has introduced a framework for banks as part of the local implementation of Basel III’s
Pillar 3, which requires disclosure of banks’ physical and transition risks; these disclosures can beused by the Central Bank of Brazil to conduct specific stress tests (see A2.1 in Appendix 2—
which focuses specifically on mandatory regulations affecting the banking sector—and Appendix
3, for more information).
France has recently introduced Article 173 of the Energy Transition Act that encompasses a large
set of dimensions under which climate risk should be analyzed and reported, and requires thatspecific information be disclosed by companies—for the use of financial investors—on theirstrategy for addressing transitions to a low-carbon economy. In addition, asset managers andother investors are required to report on how they take into account ESG criteria in theirinvestment processes and decisions.

Finally, among mandatory frameworks, the majority specify some format and location guidance for thedisclosure; refer at least implicitly to concepts of relevance and materiality; and include a form ofverification to ensure proper compliance and potential enforcement (see Appendix 2).
In conclusion, these characteristics taken together show the wide-ranging requirements that apply tocompanies across jurisdictions. In considering how to develop a coherent framework for climate-related
financial disclosures that takes into account these requirements and successfully describes and clarifies
climate-related risks and opportunities, the Task Force can significantly improve the production offinancial disclosures and make them easier to use.
In our next section, we outline the scope and objectives for our upcoming work; these build on our key
findings and identify areas for further study by the Task Force.

20

3. THE TASK FORCE’S OBJECTIVES AND SCOPE
Many market participants believe that climate-related risks are not adequately understood in today’s
markets. Our review of the landscape of climate-related financial reporting supports the view that this isdue—at least in part—to difficulties in measurement, differences in disclosure requirements, anddifferent perceptions of what is considered material to companies. As a consequence, climate-relatedrisks and opportunities are potentially mispriced and unlikely to be properly incorporated in investment
analyses and lending decisions. In turn, this raises concerns about whether financial-stability risks could
emerge if an abrupt and widespread correction in the pricing of assets were to occur—particularly if theadjustment were concentrated in significant segments of the economy.
Improved disclosures that address these issues have the potential to enable more informed decisionmaking by financial market participants through a variety of channels, including by:•••

Improving their understanding and monitoring of climate-related risks and opportunities facing
reporting entities, including external developments that impact risk exposure (e.g., transition toa low-carbon economy), and how the risks are being managed;
Promoting incorporation of these considerations into investment, credit, and insuranceunderwriting decisions; andAllowing for increased investor engagement with boards and management regarding theimpact of climate change, which in turn increases boardroom engagement on how and whenclimate change may impact a business.

In creating a coherent framework that promotes alignment across existing regimes and clarifies what
constitutes material and relevant risks, the Task Force seeks to improve the ease of both producing andusing climate-related financial disclosures. In turn, improved disclosures and more informed financialsector decision-making can yield broader positive impacts throughout the economy, by:••Enabling more consistent and appropriate pricing and distribution of risks throughout markets;
andReducing the potential for financial instability by reducing the likelihood of large, unexpectedchanges in value.

In conclusion, more complete, consistent disclosure of climate-related risks and opportunities canpromote more informed decision-making by the users of disclosures and better risk management byboards and management, which, in turn, will enable a more appropriate pricing of risk, thereby helping
promote a more stable financial system.

21

3.1 OBJECTIVES
Building upon the existing large, well-developed, but often disjointed body of work already available, theTask Force will develop a set of recommendations and guidelines that help facilitate useful, consistent,
comparable, reliable, clear, and efficient voluntary climate-related financial disclosures by:•

Encouraging reporting that is balanced and addresses both climate-related financial risks andopportunities;•

Reviewing the demand for climate-related financial information by the financial sector,
including assessing the relevant legal/regulatory factors that influence demand (such as
differing views of governance, fiduciary duty, and stewardship);•Developing a principle-based framework that promotes consistency in disclosures andenhanced user understanding and decision-making;•Considering elements with potential impacts over the short, medium, and long term and how
to assess their relevance to disclosure, recognizing that climate-related risks may vary overtime, geography, and industry, and among individual companies;•

Ensuring that our recommendations provide a basis for consistent and comparable application
across G20 countries;•

Identifying and incorporating examples of leading practices, whenever possible; and•Engaging extensively with key stakeholders throughout our process to ensure that the Task
Force’s work promotes alignment across existing disclosure regimes, considers the perspectives
and concerns of users and preparers of financial disclosures, and can be efficiently
implemented by companies in their financial reporting.

The Task Force will seek to ensure that our recommendations reflect a consensus view of best practices
for financial disclosure, and are accepted by market participants as advancing principles of good
governance, fiduciary duty, and stewardship. Because disclosures evolve over time, the Task Force has
also outlined principles of disclosure, discussed in Section 4, which will serve as an enduring frameworkand guide the development of the Task Force’s recommendations in Phase II.
The Task Force expects that our recommendations will be presented to the FSB in December 2016.

22

23

24

3.2 SCOPE
The Task Force has begun to define our scope along four main dimensions, outlined in Figure 3A—typesof risk and opportunities, governance, entities that prepare and use disclosures, and types of
information to be disclosed.

CLIMATE-RELATED FINANCIAL RISKS AND OPPORTUNITIES•Climate-related Risks: The Task Force is focused on financial risks and opportunities related toclimate change rather than on broader sustainability issues such as poverty, health, andmigration, which, while related, do not pertain directly to the Task Force’s remit.

•

Financial Risks: In this context, financial risks include, but are not limited to, risks to both
physical and financial assets/liabilities and future cash flows resulting from climate-related
impacts.

•

Physical and Nonphysical Risks: The Task Force will consider both climate-related financial risks
and opportunities in the context of physical and nonphysical risks (see Table 3B). Physical risks
can be event-driven (acute) and also relate to longer-term changes in precipitation,
temperature, and weather patterns (chronic). Nonphysical risks can be grouped into four
categories: policy/legal/litigation; technological changes; market and economic responses (e.g.,
consumer preferences); and reputational considerations.

•

Varied Impacts: The Task Force also recognizes that the impact of climate-related risks andopportunities vary over time, geography, and industry—and even among individual companies.
Different companies may require different disclosures that reflect the nature of their businessand the specific risks they face. The Task Force’s recommendations will seek to consider,account for, and reflect the need for companies to use judgment when determining what
information is most suitable and appropriate for disclosure.

This framework is similar in substance to other existing risk taxonomies (see Appendix 4, Table A4.1). For
example, in the context of the framework set out by FSB Chairman Mark Carney, “liability risks” form asubset of policy/legal/litigation risks; and “transition risks” span multiple types of nonphysical risks,
including policy/legal/litigation and technology, reflecting the fact that there are a number of channels
through which the transition to a low-carbon economy can be achieved.

GOVERNANCE
Enhancing the usefulness of climate-related financial disclosures requires reporters to bring climaterelated considerations into their existing processes for risk identification, assessment, management, andstrategy in relation to their particular business models. The Task Force will, therefore, focus onrecommendations that relate to disclosures in firms’ mainstream financial filings and investors’ annual
reports of how boards and management identify, assess, manage, and ultimately disclose climate25

related risks and opportunities. These include processes guiding: risk identification, assessment, andmanagement; measurement, reporting, and verification; and strategy. Concrete explanations of thelinkages and connections between these topics also provide insight into how boards address climaterelated risks and opportunities.
Any Task Force recommendations, including those in the area of verification, will need to consider thelegal obligations placed on board members and others regarding annual reports and other mainstream
financial reports.
These topics provide the business context within which disclosures need to take place and will provide
the larger structure for the Task Force’s detailed recommendations in Phase II.

ENTITIES
Report Preparers:
The Task Force will seek to develop our recommendations for reporting by nonfinancial companies,
financial intermediaries, and other capital market participants (including investors and asset managers)that may be exposed to material physical and nonphysical risks or potential risks and opportunities
associated with climate change.
•

Issuers of Public Securities (Nonfinancial and Financial Companies): While the Task Force’s
recommendations for companies can be adopted widely, they are primarily expected to be usefulfor publicly listed companies and other issuers (capturing some private companies, partnerships,
and other issuers of public securities) above a certain size or activity threshold that will be
determined in Phase II. The Task Force may also deliberate and consider whether potential
disclosure principles for unlisted companies should be articulated, to the extent they represent asignificant portion of large portfolios in the capital markets.

•

Financial Sector: The Task Force’s recommendations for capital market participants are expected tofocus on larger institutional investors, fund managers, and financial intermediaries (including
lenders). Specifically, the Task Force will consider disclosures by equity/credit investors, institutional
investors/asset managers, commercial and investment banks, insurance companies (including reinsurers), and institutional or fiduciary asset owners (e.g., pension funds), among others, to makesure that all relevant parts of the credit and investment chain are covered. Since risks to thefinancial sector stem from risks associated with underlying loans to and investments in companies,
effective financial-sector reporting will depend on and be derived from effective corporate
reporting.

•

Other Considerations: While the Task Force will focus primarily on developing recommendations for
publicly listed companies and other issuers, including key financial sector participants, and willconsider unlisted companies as described above, it also recognizes and will consider opportunities
to enhance disclosures related to non-equity asset classes, including debt, real estate, andinfrastructure.
26

Users of Financial Disclosures:
In forming our recommendations, the Task Force will seek to develop voluntary climate-related financial
disclosures that are consistent, useful, and relevant for the primary consumers of this information forunderstanding opportunities and material risks faced by reporters: investors, lenders, and underwriters.
More specifically, these users span the credit and investment chain (see Appendix 3), and can include:
•
•
•
•
•
•
•
•
•
•

Equity and debt investors
Commercial and investment banks
Insurers
Credit rating agencies
Analysts
Asset owners
Stock exchanges
Investment consultants
Proxy advisers
Index providers

For disclosures by banks, investors, and other financial institutions, the Task Force will consider how
portfolio-wide disclosures are used and how they can be aggregated for analysis.
The Task Force will consider how our recommendations for voluntary disclosures can best be integrated
into existing standards, practices, and procedures used in risk assessments, portfolio analyses, asset
allocation, and/or engagement strategies. The Task Force recognizes that in some cases the same
institution may be both a user and a preparer of climate-related financial disclosures.

INFORMATION TO BE DISCLOSEDThe Task Force will consider both quantitative and qualitative disclosures. Quantitative disclosures
should provide consistent and comparable data and metrics that could be aggregated across portfolios
and classes of reporters. The Task Force will also discuss the best way to disclose granular data to enable
users of financial disclosures to perform their own independent analyses. Qualitative disclosures should
enable users to understand approaches to governance, transition strategies, priorities, and processes ofpreparers and should be useful in assessing performance, which, in turn, affects company financial
positions or portfolio exposures. Qualitative disclosures provide key context for quantitative disclosures;and both, together, are necessary to provide a fully integrated view of the company’s climate-related
financial risks and opportunities.
A critical challenge in climate-related disclosures relates to information that is either not currently
knowable or highly uncertain. Given the inherent uncertainty around the future impacts of climatechange and the response to those impacts, the Task Force will consider to what extent scenario andother sensitivity analyses can provide useful and flexible tools for forward-looking assessment of risks
and opportunities. Such analyses can enable evaluations of portfolio or business-plan resilience to arange of possible events, helping ascertain whether today’s decisions are robust across a range of27

possible situations. The Task Force will also consider how historical performance and progress against
management-established targets should be reported.
Climate-related disclosures should also help users determine whether companies/investors haveestablished and implemented an effective risk management process, including key risk indicators andkey performance indicators, and are committed to continuous improvement.
The Task Force will also consider the appropriate level of discretion for management in determining
relevance and materiality and the balance of qualitative and quantitative disclosures. We plan todevelop our recommendations with an eye to flexibility and minimizing burden, provided they meet the
Task Force’s high-level objectives and are consistent with our principles. This approach is intended tofacilitate disclosures that focus on the issues that matter to boards of directors and would be consistent
with the paradigm of “through the eyes of management,” which governs segmental reporting underInternational Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles(U.S. GAAP). This approach would also acknowledge the need for disclosures to evolve over time as risks,business models, and external operating environments change.
While positive disclosure is preferred, the Task Force will consider whether negative disclosures at aminimum could also encourage board-level accountability. 29 As discussed earlier, the Task Force will also
consider disclosures over the short, medium, and long term, while considering sector flexibility indetermining how to define appropriate time frames, particularly for disclosures over the longer term.

29

Positive disclosures require preparers to express views in the financial report regardless of whether the view isfavorable or unfavorable regarding supposed exposures to risks. In contrast, negative disclosures are those inwhich a report preparer states that he or she has no reason to believe that anything is wrong, but never positively
states that he or she believes things to be right. See Michael Sherer and Stuart Turley, Current Issues in Auditing,
SAGE Publications, 189.

28

4. FUNDAMENTAL PRINCIPLES FOR EFFECTIVEDISCLOSURESIn our upcoming work, the Task Force will focus on the financial impacts of climate change on thebusiness of reporting entities, as the starting point for developing recommendations for voluntary
disclosures within mainstream financial reports. In general, climate-related disclosures should be subject
to good-governance processes and address as comprehensively as possible the significant impacts ofclimate change on the company’s business and/or the investor’s portfolio.
To codify the above observations in a systematic manner, the Task Force has identified sevenfundamental principles for climate-related financial disclosures, which underpin the more specific,
voluntary recommendations and guidelines that the Task Force will set out in our Phase II Report andprovide an enduring framework for future work on these issues. Since climate-related risks, investment
strategies, business models, and operating environments are likely to evolve, it is expected thatreporters’ actual disclosure practices will vary, especially in the near term. It is therefore important thatclimate-related reporting evolves alongside the climate impacts such reporting is designed to disclose.
The principles seek to establish a solid foundation, extending beyond any specific disclosure frameworkor regime (including those of the Task Force in Phase II), and reflect the ultimate aspirations and goals offinancial disclosure generally in the context of climate-related risks and opportunities.
For that reason, the principles can be used by reporters as a guide for achieving transparent, highquality disclosures that enable users to understand the impact of climate on a company’s strategy, risk,
opportunities, and financial performance, in an integrated manner. 30 The principles, taken together, aredesigned to make clear the linkages and connections between climate-related issues and a businessmodel, strategy, and key metrics (depending on sector and jurisdiction). In addition, disclosure should
be designed and provided in as efficient and cost-sensitive a manner as possible.
Ultimately, the usefulness of the principles themselves stems from how they are implemented within
financial reports and, in turn, how those disclosures are used in economic decision-making—for bothbusinesses and investors. To this end, active engagement with key stakeholders will be crucial.
The Task Force has formulated seven principles for disclosures on climate-related financial risk and risk
management:
1.
2.
3.
4.

Present relevant information
Be specific and complete
Be clear, balanced, and understandable
Be consistent over time

30

These principles are focus primarily on company reporting, which includes reporting by investors and otherfinancial institutions.

29

5. Be comparable among companies within a sector, industry, or portfolio
6. Be reliable, verifiable, and objective
7. Be provided on a timely basis
Importantly, these principles are largely consistent with other mainstream, internationally acceptedframeworks for financial reporting and are generally already applicable to most providers of financial
disclosures. They are informed by the qualitative and quantitative characteristics of financial
information and further the overall goals of producing disclosures that are consistent, comparable,
reliable, clear, and efficient, as highlighted by the FSB in establishing the Task Force.

PRINCIPLE 1: DISCLOSURES SHOULD PRESENT RELEVANT INFORMATION
•

•

•

•

•

The company should explain the implications of climate-related risks and opportunities for its
business model and corporate strategy. This means that the company may need to provide details
on the markets, business divisions, and assets or liabilities that are significantly exposed to theserisks.
The company should provide disclosures to the extent the underlying aspects can have a significant
impact on the business model, strategy risks, or future cash flows. Accordingly, disclosures should be
eliminated if they are immaterial or redundant, in order to be decision-useful for users and to avoid
undue obfuscation of otherwise relevant information. However, when a particular risk or issue
attracts investor and market interest or attention, it may be helpful to include a statement that it
has no or an insignificant impact on the company. This shows that the risk or issue has been
considered and not just ignored or overlooked.
Disclosures should be presented in sufficient detail to enable users to assess the company’s
exposure and approach to addressing climate-related issues, while understanding that the type of
information, the way in which it is presented, and the accompanying explanatory notes will differ
between companies and will be subject to change over time.
The nature of climate-related issues is such that impacts can occur over the short, medium, and longterm. Also, companies can experience chronic, gradual impacts (such as shifting temperaturepatterns), as well as acute, abrupt disruptive impacts (such as from flooding, drought, or sudden
regulatory actions). A company should provide all information from the perspective of theirpotential impact on value creation, taking into account and addressing the different time frames andtypes of impacts.
Companies should avoid generic or boilerplate disclosures that do not add value to users’
understanding or do not relay useful information. Furthermore, any proposed metrics shouldadequately describe or serve as a proxy for risk or performance and reflect how the company
manages the risk and opportunities.

PRINCIPLE 2: DISCLOSURES SHOULD BE SPECIFIC AND COMPLETE•

The company’s reporting should provide a thorough overview of its exposure to climate-related
impacts; the nature and size of such impacts; the company’s strategy, governance, assessment andmanagement of climate-related risks and performance with respect to adapting to or mitigatingthese risks. The above mentioned should also cover business opportunities that may arise.

30

•

•

•

Due to their characteristics, assessing climate-related issues requires forward-looking dynamic
disclosures. Therefore, in order to be sufficiently comprehensive, disclosures should both containhistorical and future-oriented information in order to allow users to both confirm their previous
expectations and assess possible implications for future financial impact on the company.
For quantitative information, the disclosure should include an explanation of the definition andscope applied. For future-oriented data this includes clarification of the key assumptions used.
Forward-looking quantitative disclosure should align with data used by the company for investment
decision-making and risk management.
When appropriate, meaningful and relevant disclosures should be supplemented by sensitivity or
scenario analysis. Such analyses should be based on data used by the company for investment
decision-making and risk management. They should also demonstrate the effect on selected risk
metrics or exposures to changes in the key underlying methodologies and assumptions, both inqualitative and quantitative terms.

PRINCIPLE 3: DISCLOSURES SHOULD BE CLEAR, BALANCED, AND UNDERSTANDABLE
•

•
•

•

Disclosures should be written with the objective of communicating to a range of financial-sector
participants (investors, creditors, analysts, etc.) financial information that serves their needs. Thisrequires reporting at a level beyond compliance with minimum requirements. The disclosures should
be sufficiently granular to inform sophisticated users, but should also provide concise information
for those with a justified interest who are less specialized. Clear communication will enablenavigation through the information and disclosures being organized so that key information andmessages are prioritized and easy to find.
Disclosures should show an appropriate balance between qualitative and quantitative information,using text, numbers, and graphical presentations.
Fair and balanced narrative explanations should provide insight into the meaning of quantitative
disclosures, including the changes or developments they portray over time. Furthermore, balanced
narrative explanations require that risks as well as opportunities are portrayed in a manner that is
free from bias.
Disclosures should provide straightforward explanations of more complex issues. Terms used in thedisclosures should be explained or defined for a proper understanding by the users.

PRINCIPLE 4: DISCLOSURES SHOULD BE CONSISTENT OVER TIME••

Disclosures should be consistent over time to enable users to understand the development and/or
evolution of the impact of climate-related risks and related aspects on the company’s business.
Disclosures should be presented consistently from period to period, allowing for inter-period
comparisons. Presenting comparative information is preferred; however, in some situations it may
be preferable to include a new disclosure even if comparative information cannot be prepared orrestated.
Changes in disclosures and related approaches or formats (e.g., due to shifting climate changerelated issues and evolution of risk practices, governance, measurement methodologies, or
accounting practices) can be expected due to the immaturity of the field. Any such changes should,
however, be carefully considered and explained.

31

PRINCIPLE 5: DISCLOSURES SHOULD BE COMPARABLE AMONG COMPANIES WITHIN A SECTOR,
INDUSTRY, OR PORTFOLIO•

Disclosures should allow for meaningful comparisons of business model and strategy, activities,risks, and performance across companies and within sectors and jurisdictions. The level of detailshould enable benchmarking and the comparison of risks across sectors and/or at the portfolio level.
The placement of reporting would ideally be consistent across companies—i.e., in financial filings, inorder to facilitate easy access to the relevant information.

PRINCIPLE 6: DISCLOSURES SHOULD BE RELIABLE, VERIFIABLE, AND OBJECTIVE•••

Disclosures should meet the essential criteria of high-quality reliable information. They should be
accurate and neutral—i.e., free from bias.
Future-oriented disclosures will inherently involve the company’s judgment (which should be
adequately explained where relevant). However, to the extent possible, disclosures should be basedon objective data and use best-in-class measurement methodologies, which would include common
industry practice as it evolves.
Disclosures should be defined, collected, recorded, and analyzed in such a way that the information
reported is verifiable to ensure its high quality. For future-oriented information, this means thatmodel assumptions used can be traced back to their sources. This does not imply, however, arequirement for independent external assurance, although it is expected that such disclosures are
subject to internal governance processes that are the same or substantially similar to those used forfinancial reporting.

PRINCIPLE 7: DISCLOSURES SHOULD BE PROVIDED ON A TIMELY BASIS••

Information should be delivered or updated to users in a timely manner using appropriate media onan annual basis within the mainstream financial report.
Climate-related risks can result in disruptive events. In case of such events with a material financial
impact, the company should provide a timely update of climate-related disclosures as appropriate.

In the application of these principles, reporters will inevitably encounter tension or conflict between two
or more of the fundamental principles set out above. For example, a company may need to change its
methodology to meet the comparability principle, which may result in a tension with the principle ofconsistency. Equally, tension can arise within a single principle. For example, Principle 6 states that
disclosures should be verifiable, but this might not be possible for the assumptions made about futureoriented disclosures that require significant judgment by management.
Such tensions are considered to be inevitable given the wide-ranging and sometimes competing needsof users and preparers of disclosures. Disclosures require both preparers and users (often a single entity
performing both roles) to find an appropriate balance in disclosures and ensure the right amount of
information for the market while not being excessively burdensome for both parties.

32

5. STAKEHOLDER OUTREACH AND ENGAGEMENTThe Task Force is fortunate that many organizations and experts have undertaken high-quality work
alongside many in industry on the topics that we are addressing. As an industry-led effort, the Task
Force intends to be highly consultative in the way it works with this broader body of stakeholders.
This consultative approach is reflected in the process already undertaken. To date, the Task Force has
held two plenary meetings—one in London, the other in Singapore—both of which included stakeholder
forums through which the Task Force sought and received helpful feedback from external experts onthemes and issues related to this report. In London, twelve NGOs and organizations working actively inthis area were invited to present to the Task Force and more than 160 public attendees on theirperspectives and suggestions regarding the issues that the Task Force should consider in developing ourscope, principles, and eventual recommendations. Our public session in Singapore included 115
attendees representing more than 100 organizations. Throughout this period, the Task Force has also
conducted more than 100 individual consultations with a wide range of experts in financial and climaterelated matters. Direct solicitation of feedback has been and is a priority to ensure that the next phaseof work reflects a consensus view of the issues (many of which are still rapidly evolving) from a broad
spectrum of stakeholders. The Task Force’s overall approach to engagement is as follows:
1. The Task Force intends to engage with stakeholders to learn from their expertise and consider
their feedback as we develop final recommendations that reflect their input. Our
recommendations will be greatly strengthened by building on others’ expertise.
2. The Task Force is committed to an ongoing process of stakeholder engagement throughout ourwork. The impact of the Task Force’s work will depend upon the community of stakeholders
who share our commitment. Consequently, our Phase II Report will outline a detailed roadmap
that will encourage voluntary, widespread usage of the Task Force’s recommendations by all
stakeholders within scope.
3. Wherever appropriate, the Task Force intends to continue to use all plenary meetings asadditional opportunities for stakeholder engagement.
4. The Task Force intends to have two periods of public consultation on our work to provide
external parties opportunities to provide formal input.
5. Task Force representatives may share information on our work and solicit feedback as panelists
or speakers at events hosted by others. Parties interested in inviting a Task Force representative
to attend an event may contact info@fsb-tcfd.org.
6. The Task Force also intends to host a series of forums and meetings, work closely with experts
both in groups and bilaterally, and regularly seek input and feedback throughout this process.
The Task Force will engage relevant participants in all sectors including potential preparers and users ofclimate-risk disclosure, standard setters, experts from NGOs, academics, and the official sector. We will
coordinate our work with those considering similar issues to ensure complementary outcomes.

33

In keeping with these goals, we plan to launch a public consultation following the delivery of the report(see Appendix 5 for the consultation questions, which will be posted in the form of a questionnaire on
our website at www.fsb-tcfd.org/survey).
We recognize that effective engagement requires an open and transparent process. The Task Force has
already received extensive inquiries and feedback from external stakeholders through email, social
media, and our events, and will continue to seek out additional stakeholders working in this area. To
support our public consultation and promote transparency, our website and Twitter account(@fsb_tcfd) will provide the public with access to Task Force materials and a schedule of the Task
Force’s activities. We welcome and encourage all interested parties to actively engage in the Task Force
process.

34

6. TERMS OF REFERENCE FOR PHASE II
The Task Force is scheduled to hold four additional plenary meetings in the remainder of 2016 andconduct additional outreach to stakeholders. The Task Force will address the following topics in Phase II:
•

•

•

•
•

The needs of users of climate-related disclosures (these may include insurers, lenders,
underwriters, intermediaries such as credit rating agencies and equity analysts, the buy side andits customers, and public authorities); 31
Potential gaps in disclosures, the types of entities that could provide disclosures to fill thesegaps, and challenges to achieving consistency, comparability, reliability, clarity, and efficiency of
the information provided; 32
Specific recommendations for voluntary-disclosure principles and leading practices that
promote the consistency, comparability, reliability, clarity, and efficiency of climate-related
disclosures; 33
Strategies to promote adoption and implementation; andA methodology for measuring progress in adopting the Task Force’s recommended disclosures.

A Phase II report addressing these points is targeted for delivery to the FSB by December 2016, with afinalized report expected to be published in February 2017.
The Task Force has established four initial workstreams to begin organizing our Phase II work. Eachworkstream will consist of a balance of users, preparers, and other experts to ensure that outputs
reflect a consensus view informed by functional, regional, and industry perspectives. (Due to the size ofthe task at hand and the potential outcomes of this initial Phase II exercise, the Task Force may need todesignate additional workstreams or establish subgroups within workstreams.)•

GOVERNANCE: This workstream will focus on developing a common and baseline set ofrecommendations on disclosures pertaining to the governance processes that guide how boards
and management consider, approach, and ultimately disclose climate-related risks andopportunities.

•

FINANCIAL SECTOR: This workstream will consider climate-related disclosures by financialsector participants and aggregate and/or industry-specific financial risks arising from climaterelated impacts. It will also consider the needs of financial-sector participants as users of
disclosure.

31

Financial Stability Board, Proposal, November 9, 2015, 4 (slightly paraphrased).
Ibid. (slightly paraphrased).
33
Financial Stability Board, Press Release, December 4, 2015, 2.
32

35

•

NONFINANCIAL COMPANIES: This workstream will focus on nonfinancial companies andconsider aggregate and/or industry-specific financial risks and opportunities arising fromclimate-related impacts.

•

STRATEGY FOR STAKEHOLDER OUTREACH AND COMMUNICATION: Established in Phase I
and outlined in Section 5, this workstream will continue its work to support the Task Force’s
outreach and engagement with key stakeholders, develop the appropriate strategy to promoteusage and implementation, and measure progress.

36

7. SELECT REFERENCES
Agha, Mahenau, Nick Robins, and Simon Zadek. UNEP FI. “The Financial System We Need.” Report. October 2015.
Accessed January 22, 2016.
AXA. “IFRS Key Principles.” Report. January 6, 2005. Accessed January 22, 2016.
http://www.axa.com/lib/axa/uploads/presentationsinvestisseurs/2005/20050106_ifrs_principles.pdf.
Carbon Tracker Initiative. “Carbon Avoidance? Accounting for the Emissions in Hidden Reserves.” Report. December 4,
2013. Accessed January 22, 2016.
Carney, Mark. "Breaking the Tragedy of the Horizon – Climate Change and Financial Stability." Speech, Lloyd’s of London,
London. September 29, 2015. http://www.bankofengland.co.uk/publications/Pages/speeches/2015/844.aspx.
CDSB. “Climate Change Reporting Framework: Advancing and Aligning Disclosure of
Climate Change-related Information in Mainstream Reports.” Report Edition 1.1. October 2012. Accessed
January 22, 2016.
http://www.cdsb.net/sites/cdsbnet/files/cdsb_climate_change_reporting_framework_edition_1.1.pdf.
Enhanced Disclosure Task Force. “Enhancing the Risk Disclosures of Banks.” Report. October 2012. Accessed January 31,
2016. http://www.fsb.org/wp-content/uploads/r_121029.pdf?page_moved=1
IOSCO. “Principles for Financial Benchmarks.” Report. July 2013. Accessed January 22, 2016.
https://www.iosco.org/library/pubdocs/pdf/IOSCOPD415.pdf.
KPMG, Centre for Corporate Governance in Africa, Global Reporting Initiative, and UNEP. . “Carrots and Sticks:
Sustainability reporting policies worldwide – today’s best practice, tomorrow’s trends.” Report. 2013. Accessed
January 23, 2016. https://www.globalreporting.org/resourcelibrary/Carrots-and-Sticks.pdf
Leaton, James. “Unburnable Carbon 2013: Wasted Capital and Stranded Assets.” Report. 2013. Accessed January 22,
2016. http://www.carbontracker.org/wp-content/uploads/2014/09/Unburnable-Carbon-2-Web-Version.pdf.
Mercer LLC. “Investing in a Time of Climate Change.” Report. 2015. Accessed January 22, 2016.
http://www.mercer.com/content/dam/mercer/attachments/global/investments/mercer-climate-changereport-2015.pdf.
OECD and CDSB. “Climate Change Disclosure in G20 Countries: Stocktaking of Corporate Reporting Schemes.” Report.
November 18, 2015. Accessed January 22, 2016. http://www.oecd.org/investment/corporate-climate-changedisclosure-report.htm.
OECD. “Corporate Disclosure of Climate Change-Related Information: Convergence, Differences and Impact.” Report.
June 18, 2015. Accessed January 22, 2016.
https://mneguidelines.oecd.org/globalforumonresponsiblebusinessconduct/2015GFRBC-Corporate-Disclosureof-Climate-Change-Related-Information.pdf.

37

OECD. “G20/OECD Principles of Corporate Governance.” OECD Report to G20 Finance Ministers and Central Bank
Governors. September 2015. Accessed January 22, 2016. http://www.oecd.org/daf/ca/Corporate-GovernancePrinciples-ENG.pdf
SASB. “Conceptual Framework of the Sustainability Accounting Standards Board.” Report. October 22, 2013. Accessed
January 22, 2016. http://www.sasb.org/wp-content/uploads/2013/10/SASB-Conceptual-Framework-FinalFormatted-10-22-13.pdf.
SASB. “Climate Risk: SASB Technical Bulletin 2016-01.” Report. October 22, 2013. Accessed
January 22, 2016. http://using.sasb.org/sasb-climate-risk-framework/.
Sullivan, Rory, Will Martindale, Elodie Feller, and Anna Bordon. “Fiduciary Duty in the 21st Century.” UNEP FI Report.
2015. Accessed January 22, 2016.
http://www.unepfi.org/fileadmin/documents/fiduciary_duty_21st_century.pdf.

38

APPENDIX 1: GLOSSARY AND ABBREVIATIONSGLOSSARY
Companies—Unless otherwise specified, the use in this report of the term “companies” refers to both financial andnonfinancial companies.
Corporate social responsibility—CSR is generally refers to how companies manage their business to produce an overall
positive impact on society. However, definitions of CSR vary internationally. The European Commission’s definition is“the responsibility of enterprises for their impacts on society.” In India and Indonesia, the concept of CSR includes
environmental, social, and governance elements, but also refers to charity and investment in community activities.
Environmental, social, and governance—ESG is a term used to describe the three areas of concern that have developed
as the central factors in measuring the sustainability and ethical impact of an investment in a company or business.
Materiality—A principle for classifying the importance of information. Derived from a principle of financial reporting,material information is information on economic, environmental, social, and governance performance or impacts thatshould be disclosed on the grounds that it is (a) highly relevant to an organization and (b) is expected by key
stakeholders as it may significantly affect their assessment of the organization.
Natural capital—The stock of renewable and nonrenewable natural resources (e.g., plants, animals, air, water, soils, andminerals) that combine to yield a flow of benefits to people.
Scope levels—•••

Scope 1: All direct GHG emissions.
Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat, or steam.
Scope 3: Other indirect emissions, such as the extraction and production of purchased materials and fuels,transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related
activities (e.g., transmission and distribution losses) not covered in Scope 2, outsourced activities, waste
disposal, etc.

Stakeholders—Stakeholders are defined as entities or individuals that can reasonably be expected to be significantly
affected by the organization’s activities, products, and services; and whose actions can reasonably be expected to affectthe ability of the organization to successfully implement its strategies and achieve its objectives. This includes entities orindividuals whose rights under law or international conventions provide them with legitimate claims vis-à-vis theorganization. Stakeholders can include those who are invested in the organization (such as employees, shareholders,and suppliers), as well as those who have other relationships to the organization (such as vulnerable groups within local
communities and civil society).
Sustainability report—A sustainability report is an organizational report that gives information about economic,
environmental, social, and governance performance and impacts. For companies and organizations, sustainability —theability to be long-lasting or permanent—is based on performance and impacts in these four key areas.
39Sustainable value chain approach—A sustainable value chain approach is the methodology employed by a business todescribe how it has scoped, documented, and assessed the impact of its value chain on its sustainability performance. It
enables both business and society to better understand and address the environmental and social challenges associatedwith the life cycle of products and services.
Value chain—Value chain is the terminology used to describe the upstream and downstream life cycle of a product,
process, or service, including material sourcing, production, consumption, and disposal/recycling. Upstream activities
include operations that relate to the initial stages of producing a good or service, i.e. material sourcing, material
processing, supplier activities. Downstream activities include operations that relate to processing the materials into afinished product and delivering it to the end user, i.e., transportation, distribution and consumption.

ABBREVIATIONSCBD—United Nations Convention on Biological Diversity
CDP—Carbon Disclosure Project
CDSB—Climate Disclosure Standards Board
Ceres—Coalition for Environmentally Responsible
Economies
CO2—Carbon dioxide
COP—Conference of the Parties to the United Nations
Framework Convention on Climate Change
CSI—Cement Sustainability Initiative of the World BusinessCouncil for Sustainable Development
DMA—disclosure on management approach
EFFAS—European Federation of Financial Analysts
Societies
EU—European Union
ERM—enterprise risk management
ESG—Environmental, social and governance
GAASS—Generally Accepted Assurance Standards for
Sustainability
GHG—greenhouse gas
GISR—Global Initiative for Sustainability Ratings
GRI G4—Global Reporting Initiative G4 Guidelines
GRI—Global Reporting Initiative
GPC—Global Protocol for Cities
IAASB—International Auditing and Assurance Standards
Board
IASB—International Accounting Standards Board
IFRS—International Financial Reporting Standards
IIRC—International Integrated Reporting Council
IPCC—Intergovernmental Panel on Climate Change
ISAE—International Standard on Assurance Engagements
ISO—International Organization for Standardization
KPI—key performance indicator

LCTPI—Low Carbon Technology Partnership Initiative
NGO—nongovernmental organization
OECD—Organization for Economic Cooperation andDevelopment
PRI—Principles for Responsible Investment
RAFI—Human Rights Reporting and Assurance Framework
Initiative
SASB—Sustainability Accounting Standards Board
SDGs—Sustainable Development Goals
UN—United Nations
UNEP—United Nations Environmental Program
UNEP FI—United Nations Environmental Program Financial
Inquiry
UNFCCC—United Nations Framework Convention on
Climate Change
U.S. SEC—U.S. Securities and Exchange Commission
WBCSD—World Business Council for Sustainable
Development
WRI—World Resources Institute
WWF—World Wide Fund for Nature

40

APPENDIX 2: SELECTED DISCLOSURE FRAMEWORKS
Note: The information below in the Tables A2.1-A2.4 is based on information released by governments, stockexchanges, and standard setters, and is supplemented by UNEP FI, “The Financial System We Need: Aligning the
Financial System with Sustainable Development,” October 2015, and OECD, “Report to G20 Finance Ministers andCentral Bank
Governors,” September 2015.
Table A2.1: Select Mandatory Regulations Affecting Banks*
Country

Name of framework

Scope

Targeted constituency

Bangladesh

Environmental Risk Management Guidelines
for Banks and Financial Institutions in
Bangladesh

Environmental and social risk
management

Brazil(Internal Capital Adequacy and Assessment
Process under Basel III) (2011)

Risk assessment and capital sufficiency

Resolution No. 4,327 (2014)

Social and Environmental Responsibility
Policy (PRSA) guidelines (governancestructure and management ofenvironmental risks)

China

Green Credit Guideline (GCG)

Environmental and social risk
management, internal management andmanagement structure, information
disclosure

European
Union

Directive on annual and consolidated
accounts of certain types of companies,
banks and other financial institutions andinsurance undertakings (2003; mandatory
for EU states to transpose in national
legislation)
Nigerian Sustainable banking Principles andGuidance Note, incl. 3 Sector-Specific
Guidelines

Reporting: states that it should not be
restricted to the financial aspects of thecompany’s business, but, whereappropriate, include analysis ofenvironmental and social aspects
Environmental and social risk
management

Banks, discount houses,and development
finance institutions

Peru

Resolution 1928—2015 of the SBS, March2015

Environmental and social risk
management

All Peruvian banks

VietnamEnvironmental and Social Risk Management
Circular

Environmental and social risk
management

All Vietnamese banks

Nigeria

Banks and financialorganizations under the
Financial Institutions Act(former nonbank
financial institutions)
Regulated financial
institutions, financial
institutions, integrated
in the National Rural
Credit System (SNCR)
Financial institutions andother entities authorized
by the Central Bank ofBrazilNotes

Requires banks todemonstrate how they take
exposure to social andenvironmental damage into
account.

Policy banks, stateowned commercial
banks, joint-stockcommercial banks,financial assets
managementcompanies, Postal
Savings Bank of China,
provincial rural credit
unions, all trust firms,
enterprise group financecompanies and financial
leasing firms directly
regulated by the China
Banking Regulatory
Commission
Most credit institutions
and other financial
institutions

Quasi-mandatory regulation*Taken directly from: Centre for Research on Multinational Corporations, “Mobilising the financial sector for a sustainable future,” October 2015.

41

Table A2.2: Select Disclosure Frameworks, Governments
Target ReporterTarget ReporterRegion: Framework
Financial Firms
Nonfinancial Firms
European Union:
EU Directive
2014/95 regarding
disclosure ofnonfinancial anddiversity
information (2014)

France:Article 173, Energy
Transition Law(2015)

Australia:
National
Greenhouse andEnergy Reporting
Act (2007)
US:
SEC Guidance
RegardingDisclosure Related
to Climate Change
US:
NAICs,2010 Insurer
Climate Risk
Disclosure Survey

TargetAudience

Mandatory or
Voluntary

Types of Information Disclosed

Disclosure Location

Investors,
consumers,
and otherstakeholders

Mandatory; must
be effective in
Member States
by December 6,
2016

Land use,water use,greenhouse gas emissions,use of materials,
and energy use,

Corporate financial
report or separate
report (published withfinancial report or on
website six months
after the balance sheet
date and referenced infinancial report)

Investors,
generalpublicMandatory

Listed companies: consequenceson climate change of thecompany's activities and of theuse of goods and services it
produces, Institutional investors:
GHG emissions, contribution togoal of limiting global warming

Yes, if meets
Yes, if meetsspecified emissions
specified emissions
or energy/energy production
production or/consumption
consumption
thresholds
thresholds

GeneralpublicMandatory if
thresholds aremet

Yes, if subject to
SEC periodic
reportingrequirements

Yes, if subject to
SEC periodic
reportingrequirements

Investors

Yes, insurers
meeting certain
premium
thresholds

No

Regulators

Yes, if meets size
criteria (i.e., havemore than 500
employees)

Yes, if meets size
criteria (i.e., havemore than 500
employees)

Materiality Standard

External Assurance Required

None specified

Member States must require thatstatutory auditor checks whether thenonfinancial statement has been
provided
Member States may require
independent assurance for
information in nonfinancial statement

Annual report

None specified

Not specified (according to Two
Degrees translation); may depend on
assurance requirements for annual
reportGHG emissions,energy consumption,and energy production

Report to government

Based on emissions
above a certain
threshold

Regulator may, by written notice tocorporation, require an audit of its
disclosures

Mandatory

Climate-related: requirements,
treaties and agreements,
business trends, and physicalimpacts

Annual and otherreports required to be
filed with SEC

US securities law
definition

Not specified; depends on assurance
requirements for information
disclosed

Mandatory if
thresholds are
met

General disclosures about climatechange-related risk management
and investment management

Survey sent to state
regulators

None specified

Not specified

Voluntary

Materials,
energy consumption,water,
discharge of effluents,
GHG emissions, andbiodiversity

None specified"State whether the
person/committee head responsible
for oversight review is independent
from the executive authority or not. Ifyes, how." (p.37). Guidelines include
third-party assurance as a "leadershipindicator" of company's progress in
implementing the principles

None specified

Not required, but statutory auditor
must consider whether information ismaterially incorrect or materiallyinconsistent with financial statements
based on information obtained during
financial statement audit

Yes, if listed
Additional
requirements for
institutional
investors

Yes, if listed

India:
National Voluntary
Guidelines on Social,
Environmental, andEconomicResponsibilities ofBusiness (2011)

Yes

Yes

UK:
Companies Act 2006
(Strategic Report
and Directors
Report) Regulations
2013

Yes, if a "Quoted
Company," perCompanies Act
2006

Yes, if a "Quoted
Company," asdefined by theCompanies Act 2006

Investors,
generalpublicInvestors

Mandatory

GHG emissions

Not specified;companies may furnish
a report or letter fromowner/CEO

Directors report42

Table A2.3: Select Disclosure Frameworks, Exchange Listing Requirements and IndicesTarget Reporter- Target ReporterTarget
Mandatory or
Region: Framework
Financial Firms Nonfinancial Firms Audience
Voluntary
Singapore: Singapore
Exchange Ltd.,
Policy Statement on,
and Guide to,
Sustainability
Reporting for Listed
Companies (2011)
Australia:
Australia Securities
Exchange,
Listing Requirement
4.10.3;
Corporate GovernancePrinciples andRecommendations(2014)
Brazil: Stock
Exchange(BM&FBovespa)
Recommendation ofreport or explain(2012)South Africa:
Johannesburg Stock
Exchange Listing
Requirement
Paragraph 8.63;
King Code ofGovernance Principles(2009)
China:
Shenzhen Stock
Exchange
Social Responsibility
Instructions to Listed
Companies (2006)
World, regional, andcountry-specificindices: Dow Jones
Sustainability Index,
SampleQuestionnaires

Yes, if listed

Yes, if listed

Yes, if listed

Yes, if listed

Investors

Investors

Types of Information Disclosed

Disclosure Location

Materiality Standard

External Assurance Required

Business/legal developments
related to climate change that may
affect company,
biodiversity management,
environmental management, andsystems (Jan. 5, 2016 consultation
paper: materials, energy, water,
emissions, waste)

Discretion ofcompany

None specified

Not required

Mandatory;comply or
explain

General disclosure of material
environmental risks

Annual report must
include either the
corporate
governancestatement orcompany website
link to the corporate
governancestatement oncompany's website

Discretion ofcompany

Criteria explained in
Reference Form (Annex24) of the Instruccion
CVM nº 480/09

Not specified

Annual report

None specified

Required

None specified

Not specified"Companies shall allocate
dedicated human resources forregular inspection of
implementation of environmental
protection policies." (Art. 31)

None specified

Disclose whether external
assurance was provided andwhether it was pursuant to arecognized standard

Voluntary,(Jan. 5, 2016
consultation
paper, proposal
for reporting on
comply or explain
basis)

Yes, if listed

Yes, if listed

Investors,
regulator

Voluntary;Comply or
Explain

Provide information on whether
they prepare a sustainability report,
or explain why not. Report socialand environmental information
disclosed; methodology used; if
audited/reviewed by anindependent entity; and link to
information (i.e. webpage).

Yes, if listed

Yes, if listed

Investors

Mandatory;
Comply or
Explain

General disclosure regarding"sustainability performance"

Investors

Voluntary: social
responsibilities
Mandatory:
pollutantdischarge

Waste generation,
Resource consumption,
Pollutants

Voluntary

GHG emissions, SOx emissions,energy consumption, water, waste
generation, environmental
violations, electricity purchased,biodiversity, carbon, and mineralwaste management

Yes, if listed

Yes

Yes, if listed

Yes

Investors

Not specified

Nonpublic“a real possibility thatthe risk in question could
substantively impact the
Not specified; may depend on
listed entity’s ability toassurance requirements for annual
create or preserve value
reportfor security holders overthe short, medium orlong term"

43

Table A2.4: Select Disclosure Frameworks, NGOs
Target Reporter- Target ReporterRegion: Framework
Financial Firms Nonfinancial Firms
Global: CDP
Annual Questionnaire(2016)Yes

Yes

Global: CDSB
Climate Change
Reporting Framework,
Ed. 1.1 (2012)

Yes

Yes

US: SASB
Conceptual
Framework (2013)
and SASB Standards(Various)

Yes; any publiccompany tradedon US exchanges

Yes; any publiccompany tradedon US exchanges

TargetAudience

Mandatory or
Voluntary

Investors

Voluntary

Investors

Investors

Voluntary

Types of Information Disclosed

Disclosure Location

Energy use, Carbon,
GHG emissions (Scope 1-3),
Water (separate questionnaire),
Forests (separate questionnaire)

CDP database

GHG emissions

Annual report (orany mainstream
financial report)

Voluntary

Sector-specific requirements

SEC filings

Materials,
Energy,Water,
Biodiversity,
Emissions,
Waste

Sustainability
reports or "any typeof document which
requires suchdisclosure"

Global: GRI,
G4 Sustainability
Reporting Guidelines(2013)

Yes; any public or
private company

Yes; any public or
private company

All
Stakeholders

Voluntary

Global: IIGCC,
Oil & Gas (2010)

No

Yes, oil & gas

Investors

Voluntary

Global: IIGCC,
Automotive (2009)

No

Yes, automotive
industry

Investors

Voluntary

Global: IIGCC,
Electric Utilities (2008)

No

Yes, electricalutilities

Investors

Voluntary

No

Asset
managers,
investment
industry,
government

Voluntary

GHG emissions,
CarbonVoluntary

General challenges related toclimate change, loss of
ecosystems, and resource
shortages

Yes, pension
Global: Asset Owners
funds, insurers,
Disclosure Project,
sovereign wealth2016 Global Climate
funds >$2bn
Risk Survey
AUM
Global: IIRC,
International<IR>Framework(2013)

Yes; any publiccompany tradedon international
exchanges

Yes; any publiccompany tradedon international
exchanges

Investors

GHG emissions,Clean technologies data
GHG emissions,Clean technologies data,
CarbonGHG emissions,Electricity production

Materiality Standard
None specified
Allow “‘investors to see
major trends andsignificant events related
to climate change that
affect or have thepotential to affect thecompany’s financial
condition and/or its ability
to achieve its strategy"“a substantial likelihoodthat the disclosure of theomitted fact would havebeen viewed by thereasonable investor as
having significantly alteredthe ‘total mix’ of theinformation madeavailable”“may reasonably beconsidered important forreflecting theorganization’s economic,
environmental and social
impacts, or influencing thedecisions of stakeholders”

External Assurance Required
Encouraged; information
requested about verification andthird party certification
No requirement “except and to
the extent that International
Standards on Auditing (ISA 720)
require the auditor of financial
statements to read informationaccompanying them to identify
material inconsistencies between
the audited financial statements
and accompanying information..."Conceptual Framework
encourages use of AT 101 forassurance on SASB disclosures;
assurance may be required,depending on circumstances

Disclosure of policy and practice
regarding external assurance

Not specified

None specified

Not specified

Company’s
discretion

None specified

Not specified

None specified

Disclose how accuracy of GHG
emissions information was verified

None specified

Disclose whether external
assurance was provided

Company’s
discretion
Survey responses;
respondents are
asked whether
responses may bemade publicStandalone
sustainability or
integrated report"Substantively affect theorganization’s ability tocreate value over the
short, medium and longterm"

Not specified; discussion paper
released on issues relating toassurance

44

APPENDIX 3: CLIMATE-RELATED DISCLOSURESACROSS THE INTERNATIONAL LANDSCAPE
A review of the tables and content in Appendix 2 reveals some broad themes regarding climate
disclosures that help explain the level of inconsistency and fragmentation observed in existing company
disclosures and can help inform the work of the Task Force.

A3.1: SUSTAINABILITY DISCLOSURES:
Climate-change-related information is a subset of sustainability information generally. Though the Task
Force will focus primarily on climate-related issues, a view of how sustainability information is disclosed
and used by a wide range of individuals can cast light on related themes in the more narrow area ofclimate-related risks. The users of climate-risk disclosures include institutional and individual investors,
financial institutions, regulators, credit rating agencies, and other stakeholders with an interest in
climate change and sustainability issues. Furthermore, the information can be used for multiple
purposes, including informing consumer decisions, assessing performance against policy objectives,
investment and portfolio analysis, and credit and risk analysis. To illustrate, some companies request
information from their suppliers and customers on how they identify and manage climate risks andrequest disclosure of data and performance against improvement targets. (Companies themselves also
use the reporting to derive a variety of benefits, as discussed in Section 4.)
A closer examination of uptake patterns by various user groups in financial markets reveals a mixed
picture when it comes to levels of engagement, knowledge, and integration of sustainability
information, including climate change-related data. The Task Force will undertake to understand how
information needs vary in the capital markets, which actor(s) is best placed to provide the required
information, and how disclosures from each actor should vary to meet each unique need. The capital
markets users for whom current practice, current data availability, and current upward reporting
practices would be addressed include: investment managers, sell-side analysts, asset owners, asset
consultants, creditors, proxy advisers, and index providers. The Task Force will also consider whether toevaluate the information needs of beneficial users of institutional investment and individual investors infund structures.
The following is intended to provide a glimpse—not a comprehensive treatment—of the wide-ranging
needs and challenges faced by different types of users of climate-related financial disclosures. The Task
Force plans to undertake further study of these matters to formulate recommendations that can andwill be incorporated in the economic decisions of users of climate-related financial disclosures.

45

ACTIVE ASSET MANAGERS: Asset owners and managers globally have begun to consider longer-termrisks and opportunities but at a slow and inconsistent pace. 34 Some surveys show that a large number ofasset managers (nearly half by some estimates) may not analyze climate risks and opportunities at all. 35
Of those asset managers that do adopt some kind of sustainability strategy, the majority tend to use
broad-based screening techniques that do not fully capture the growth potential of individual firms
using a climate lens. 36

INDEXING: Given that so much of asset management is now passive (by some measures, over 30% of
total assets are now invested in passive strategies 37), there have been growing efforts to develop
indexes that incorporate climate-related information for more passive investment strategies. Dow
Jones’ Sustainability Index is one such effort that dates back to 1999; it tracks the stock performance of
the world’s leading publicly traded companies in terms of economic, environmental, and social criteria
to serve as benchmarks for investors that actively integrate sustainability considerations into theirportfolios. To construct the index, Standard & Poor’s Dow Jones Indices and RobecoSAM request datafrom over 3,000 publicly traded companies by inviting them to voluntarily participate in an independent
sustainability assessment (see Appendix 2, Table A2.3). 38 Similarly, MSCI offers a family of sustainability
indexes based on its benchmark market indexes under three fund families, categorized as low-carbon,
fossil-fuel-exclusionary, and thematic index funds. These indexes are designed to closely track theparent market index while minimizing carbon exposures by continuous rebalancing of constituent
stocks. 39 More recently, New York State’s pension fund, in partnership with Goldman Sachs, formed a $2
billion “low carbon” index fund that reduces or excludes investments in high-emitting companies while
increasing investment in lower emitters. 40 In Brazil, the BM&FBovespa has established some indiceslinked to ESG issues, serving as a benchmark for the composition of an investment portfolio. They rely
primarily on publicly disclosed GHG emissions data. A low0carbon index with a low tracking error
relative to a parent index helps to reduce exposure to climate-related risks while otherwise maintaining
exposures to other risk factors that have been priced. This has the potential to produce superior
34

According to the High Meadows Institute, no more than 11% of assets under management in the US, forexample, are managed under a long-term investment strategy. See High Meadows Institute, “Charting the Future
for Capital Markets,” May (2015) at 13, available at http://www.highmeadowsinstitute.org/wpcontent/uploads/2015/07/FOCM-SustainabilityInitativesSurvey.pdf.
35
See ibid. at 15.
36
Ibid. at 14. Indeed, more than thematic investment (which would include a climate change-related focus) the
managers are more often on the road towards a more general “ESG integration” approach, which if executed well,would certainly take into account climate change risks and opportunities where material. See ibid. at 16, 21.
37
Morningstar, Assets under Management by Category, as of June 2015, available at
http://gordianadvisors.com/active-vs-passive-fund-assets-where-are-we-now/.
38
ROBECO Sam, Dow Jones, “DJSI Family Overview,” accessed January 30, 2016 at http://www.sustainabilityindices.com/index-family-overview/djsi-family-overview/index.jsp.
39“Impact Investment and Institutional Investors,” Columbia University Master of Science in Sustainability
Management Program, December 2014, available at http://sustainability.ei.columbia.edu/files/2015/02/ImpactInvestment-and-Institutional-Investors-Final-Report.pdf.
40
Bloomberg News, “New York Pension, Goldman Form $2 Billion Low-Carbon Fund,” December 4, 2015, available
at http://www.bloomberg.com/news/articles/2015-12-04/new-york-pension-fund-goldman-create-2-billion-lowcarbon-fund.

46

financial returns at the point when markets do not adequately price in climate-related risks. 41 Whileinnovation abounds, sustainable and low-carbon index variants still represent the minority of assets
invested, as most passive investors use broad-market indices.

BANKS: Banks are tied to every market sector through their lending practices, making them uniquely
exposed to climate-related risks. Credit-risk analysis undertaken by lending banks will need to consider
how the impacts of a changing climate will manifest in companies across sectors and geographies. 42 A
2015 survey by Boston Common Asset Management of 61 global banks found heterogeneity in how
banks considered climate change in their risk management, strategy, and opportunities. 43 Of these three
climate areas assessed, global banks performed best in terms of identifying opportunities, but banks
across all regions failed to adequately assess the climate risk of their lending and underwriting
portfolios. The survey also did not find much evidence of any comprehensive, climate-related stresstests or adjusted loan pricing in view of climate risk. Banks did, however, express support for thedevelopment of comprehensive carbon-footprint analyses of lending and underwriting portfolios, andthe validity of conducting stress tests to model climate-related events. The report also identifies
individual examples of leading practices. Several Chinese banks signed the Common Commitment ofChinese Banking on Green Credit in 2013, promising to intensify credit management and practice green
credit.
China’ Green Credit Guidelines, as outlined by the China Banking Regulatory Commission, requires
supervised banking institutions to “develop client environmental and social risk assessment criteria,
dynamically assess and classify client environmental and social risks, and consider the results asimportant basis for credit rating, access, management and exit.” In addition, for “credit involving major
environmental and social risks,” banks are required to “disclose relevant information according to laws
and regulations, and be subjected to the oversight by the market and stakeholders.” 44
Additionally, DNB’s “Megatrends Initiative” aims to model climate risk scenarios, such as sea-level
increases and extreme weather situations, for the coming 10 to 20 years. Canada’s TD Bank’s review
process includes reviews of the borrowers’ policies, processes, and performance regarding climatechange, and over 87% of the bank‘s lending is currently to low-carbon-emitting sectors.
41

Patrick Bolton, “Hedging climate risk with decarbonized indices,” in Potential Climate Risks in Financial Markets:
Report from a workshop, January 20, 2016, ed. by Ingrid Hjort, January 20, 2016, available at
http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2016/memo-022016.pdf. We recognize, however, that the picture can become more complicated in a general equilibrium setting
to the extent that the indices can create risk transfer mechanisms yield outperformance for sophisticated investors
who can essentially transfer risk to less sophisticated investors. While individual investors might benefit, theaggregate stability impact of such indices is less clear (and a full analysis is beyond the scope of this paper).
42
Bray, C., Colley, M. and Connell, R., “Credit Risk Impacts of a Changing Climate,” Barclays Environmental Risk
Management and Acclimatise, 2007.
43
Boston Common Asset Management, “Are Banks Prepared for Climate Change,” Impact Report 2015, available at
http://www.bostoncommonasset.com/documents/ImpactReport-2015-10-Banks_ClimateChange.pdf.
44
China Banking Regulatory Commission, “Notice of the CBRC on Issuing the Green Credit Guidelines,” available at
http://www.cbrc.gov.cn/EngdocView.do?docID=3CE646AB629B46B9B533B1D8D9FF8C4A.

47

CREDIT RATING AGENCIES: Credit rating agencies are in the early stages of incorporating ESG into
their ratings criteria in a systematic way as evidenced by recent research reports like the OECD’s “TheEconomic Consequences of Climate Change,” 45 S&P’s "How Environmental and Climate Risks Factor into
Global Corporate Ratings," 46 or Moody’s “Approach to Assessing the Credit Impacts of Environmental
Risk.” 47 Certain specific sustainability-related areas have more structured treatment, like the S&P’s
establishment of management-and-governance and ERM criteria. The failure to fully integrate climaterelated considerations in ratings, however, could contribute to furthering a marketwide mispricing ofrisks. 48

STOCK EXCHANGES: Stock exchanges are increasingly requiring listed companies to disclose climaterelated information, though at an uneven pace (see Appendix 2, Table A2.3). Of the top 10 exchanges bymarket capitalization, eight offer sustainability-related indices, five have signed onto the Sustainable
Stock Exchanges commitment letter, and four require comprehensive sustainability reporting. 49 To help
promote a uniform corporate reporting framework, the World Federation of Exchanges 50 issued
guidance in November 2015 recommending that member stock exchanges incorporate a set of 34 ESG
factors into their disclosure guidance for listed companies and offered advice on how to roll out
enhanced sustainability disclosure. Suggested disclosure metrics include direct and indirect GHG
emissions, carbon intensity, water management (water used, recycled, and reclaimed), and waste
management (waste recycled and reclaimed). 51

OTHER USERS: There has been a recent push across jurisdictions to ask investors to report on theirclimate-related risks, such as the recent French Energy-Transition Law (Appendix 2, Table A2.2), theAsset Owners Disclosure Project (Appendix 2, Table A2.4), and the Montreal Carbon Pledge, the last ofwhich represents a voluntary commitment by 120 investors across the globe to measure and publicly
disclose the carbon footprint of their investment portfolios. In the U.S., the California Insurance

45

OECD, “The Economic Consequences of Climate Change,” November 03, 2015, available at
http://www.oecd.org/environment/the-economic-consequences-of-climate-change-9789264235410-en.htm.
46
S&P, “How Environmental and Climate Risks Factor into Global Corporate Ratings,” Oct. 21, 2015, available athttps://www.environmentalfinance.com/assets/files/How%20Environmental%20And%20Climate%20Risks%20Factor%20Into%20Global%20Co
rporate%20Ratings%20Oct%2021%202015%20(2).pdf.
47
Moody’s, “Global: Moody’s Approach to Assessing the Credit Impacts of Environmental Risk,” November 30,
2015.
48
McAdam, M., “Exploring the role and responsibility of credit rating agencies in the transition to a sustainableeconomy,” Cambridge Programme for Sustainability Leadership, 2010, at 27.
49
See note 25, “Charting the Future for Capital Markets,” at 26.
50
The World Federation of Exchanges is a trade association that represents 64 publicly regulated stock, futures,and options exchanges that combined have more than 44,000 listed companies with a market capitalization of
US$64 trillion.
51
World Federation of Exchanges, “World Exchanges Agree Enhanced Sustainability Guidance,” November 4, 2015,
available at http://www.world-exchanges.org/home/index.php/news/world-exchange-news/world-exchangesagree-enhanced-sustainability-guidance.

48

Commission announced in January 2016 that it will require insurers to disclose their holdings in coalcompanies.52
Outside of the financial system, other users like governments and policymakers, nonprofits, and evenconsulting firms with sustainability-focused practices (often serving the aforementioned constituentsand corporations themselves) also display a decidedly heterogeneous approach to engaging
sustainability issues.

A3.2: JURISDICTION-SPECIFIC CONSIDERATIONS
The mixed adoption rates and different content of climate-related disclosures may reflect a variety offactors, such as differences in financial-system structures, regulatory and legal environments, and evenculture. Though the literature on this is sparse, these questions merit consideration. For example,
European firms’ continue to rely primarily on bank lending, with bank loans comprising more than 70%
of debt in Europe. In contrast, more than 70% debt funding in the U.S. comes from capital markets.
Furthermore, though 80% of bonds in emerging markets are owned by global institutional investors,
retail investor flows to emerging markets play a critical role at the margin, since they tend to be very
sensitive to market volatility. 53
From this perspective, careful consideration should be given to the market profiles in the different G20
jurisdictions, as well as their legal and cultural differences, to make sure that the format, nature, andcontent of the information disclosed is relevant and useful to these actors.

ECONOMIC AND FINANCIAL CHARACTERISTICS OF G20 JURISDICTIONS
A starting point to identify pertinent financial users of climate-related information is to analyze thefunding structure and nature of nonfinancial corporations across the G20. Figures A3.1 (Bank Market
Ratio) and A3.2 (Funding of Companies) assess the relative importance of bank versus market finance inall G20 countries (with the caveat that banks can be very large in a given country because they fundinternational operations—e.g., in the U.K.’s case) and shed light on the funding practices of nonfinancial
corporations. These differences among national markets will need to be taken into account in climaterelated disclosure frameworks in order to produce disclosures in the different jurisdictions that are
relevant to particular market participants and structures and provide information that fits the
expectations and needs of equity investors in the U.S. versus bank lenders in Spain and Italy.
Other differences have implications for the scope of disclosure requirements: (1) the relative economic
importance of listed companies (illustrated in Figure A3.3 by market capitalization as a percentage ofGDP) and (2) the number of listed companies in each jurisdiction.

52

California Department of Insurance, “California Insurance Commissioner Dave Jones Calls for Insurance Industry
Divestment from Coal,” Press Release, January 25, 2016, available at http://www.insurance.ca.gov/0400news/0100-press-releases/2016/statement010-16.cfm.
53
International Monetary Fund, “Global Financial Stability Report,” April 2015.

49

Another difference in market structure that may have implications for disclosure is the degree to whichmarkets have large institutional investors such as asset managers, pension funds, sovereign wealthfunds, or insurance companies. For example, pension funds and large life insurers are specific types ofinvestors that require more granular and forward-looking information on climate-related risks given
their long-term investment horizons (Figure A3.4 shows the relevant size of pension funds in various
G20 countries as a share of GDP).

50

LEGAL AND CULTURAL ENVIRONMENT FOR G20 INSTITUTIONAL INVESTORS
Within G20 countries, investors have varying degrees of discretion as to how they invest the funds they
control. Within the discretion left to investors, certain legal rules define their ability to integrate ESG
considerations such as climate-related risks into decision-making.
Within common-law jurisdictions—such as Australia, Canada, South Africa, the U.K., and the U.S.—
fiduciary duties are the key factors limiting the discretion of investment decision-makers. These duties
are articulated in statute and decided in the courts: Some rules are open to reinterpretation over timeor when applied to new factors. In the U.S., for example, the decision-maker’s duty is to exercise
reasonable care, skill, and caution in pursuing an overall investment strategy that incorporates risk andreturn objectives that are reasonable and suitable to the trust.
Within civil-law jurisdictions—such as Brazil, France, Germany, and Japan—any obligations equivalent to“fiduciary duties” will be set out in statutory provisions regulating the conduct of investment decisionmakers and in the governmental and other guidelines that assist in the interpretation of theseprovisions. Common themes include: duty to act conscientiously in the interests of beneficiaries, duty toseek profitability, recognition of the portfolio approach to modern investment (e.g., adequate
diversification), and other duties relating to liquidity and limits on the types of assets that may be
selected in funds.
In both common-law and civil-law jurisdictions, the rules that affect investment decision-making takethe form of both specific laws and general duties that must be fulfilled. Generally, the rules do notprescribe how investors should concretely go about integrating ESG risks in their investment practices
and processes, or the time frame over which investors define their investment goals.
Beyond the specific legal setting, a range of factors affect the use of climate-related financial disclosuresby institutional investors. These barriers include governance culture, incentives, and capacity. 54

54

Indicators of these barriers include findings from PRI’s 2015 reporting framework. This covers 936 PRI signatories
globally, comprising 245 asset owners and 691 investment managers.
• Governance: Less than one-third of signatories (32%) have a policy or guidance on specific environmental
issues, and those with an explicit climate policy are a subset of this. Barely more than half of PRI signatories(527, or 56%) made any reference to climate change, and fewer than 10% (89) showed detailed consideration.
This suggests that the majority of PRI signatories are either not regularly considering climate-related risks as afactor in investment policy or decision-making or are not comfortable disclosing this.
• Incentives: As a snapshot of asset owner practices, in fixed-income corporate, over 60% of signatories
evaluate quality and coverage of ESG research by managers, but less than 40% assign specific weighting to ESG
factors in manager evaluation. Investors reporting to PRI made little mention of climate change whenreporting on selecting, appointing, and monitoring managers. Responding to the objectives or key
performance indicators, 42 out of 650 signatories reported that they had climate-related objectives or KPIs
over the last year, and 55 out of 738 reported having some for the coming year.
• Capacity: Describing the key elements of their environmental policies or guidance notes, 74 signatories
referred to climate change, with responses mainly focused on mitigation actions. Just one signatory madereference to the scientific evidence of the Intergovernmental Panel on Climate Change.

51

Governance-related barriers can stem from various sources such as misalignment of interests in theinvestment chain, short-termism, and lack of clarity on fiduciary duty leading to non-integration ofclimate-related financial disclosures within investment analysis. Investors are also encouraging
policymakers to support efforts to address governance challenges in the investment chain throughclarifications on fiduciary duty and public support for stewardship codes and disclosure. 55 This also
relates to potential litigation-related concerns that can be substantial enough in the absence of clarity
on consistency of ESG matters with fiduciary duty. Indeed, some argue that current challenges include
outdated perceptions about fiduciary duty where climate-related risks may be characterized as“nonfinancial factors” by lawyers and investment consultants. 56
Misalignment of incentives can also occur and can in turn deter progressive investors seeking to deliverrisk-adjusted returns based on consideration of climate-related risks. Until an asset owner specifically
includes climate-related risks within instructions, mandates, and appointment decisions of managers,
climate-related risks may not be considered systematically in investments.
The inclusion of climate-related risks is also highly dependent on the actual capacity of the investmentcommunity to factor in climate-related financial disclosures. Trustees and investors may lack sufficient
time to build their knowledge and competencies on climate-related risks and opportunities.
Another cultural factor to be taken into account is the degree of active ownership of shareholders (alsoreferred to as shareholder engagement). Active ownership refers to the manner in which investors use
their formal rights—proxy voting and the filing of shareholder resolutions—and their position as aninvestor to influence the activity or behavior of companies or other entities they invest in. 57
Stewardship codes exist in the following G20 countries: France, Germany, Indonesia, Italy, Japan, South
Korea, and the U.K. Active ownership is one of the six principles of the Principles of Responsible
Investment, with 1,345 signatories within the G20.
The economic, financial, legal, and cultural characteristics across markets and jurisdictions haveimportant implications for the adoption and application of climate-related financial risk disclosures. The
Task Force’s recommendations, therefore, will need to take these differences into consideration in order
to be applicable to a wide range of companies and asset classes across the 24 FSB member jurisdictions
and beyond.
In Phase II of our work, the Task Force will undertake a more in-depth review of these considerations
and conduct a more in-depth assessment of the jurisdictional landscape in order to ensure that the Task
Force’s recommendations are compatible with the institutional features of each market. This will allow

55

The investment industry is also building capacity for long-term investment, through initiatives such as the
Focusing Capital on the Long Term initiative.
56
st
UN Environment Program Finance Initiative (UNEP FI), “Fiduciary Duty in the 21 Century” (2015), available at
http://www.unepfi.org/fileadmin/documents/fiduciary_duty_21st_century.pdf.
57
For example, see http://www.ceres.org/investor-network/resolutions

52

the Task Force’s recommendations to be applicable across jurisdictions, institutions, and asset classes
with minimal or no transposition into local regimes.

A3.3 SELECTED REGULATORY EXAMPLES OF CLIMATE-RELATEDDISCLOSURESTHE EUROPEAN UNION’S EVOLVING DISCLOSURE FRAMEWORKIn the EU, some regulations require mandatory disclosures for companies on sustainability issues, andwith varying levels of explicit dedication to financial actors’ use. None of this disclosure framework is
directly focused on climate risks but rather refer to emissions, pollutants, or more generally tosustainability indicators. It is possible to classify the EU regulation about nonfinancial disclosures into
three different branches:
1. Direct GHG emissions—included in the “EU-Emissions Trading Scheme” (EU-ETS), which is themain pillar of EU climate policy and an excellent source to quantify the current exposure ofcompanies to carbon pricing related financial risks.
2. Polluting emissions—included in the “Industrial Emissions Directive (IED)” and the “E-PRTR,”
which provide information on GHGs not covered by EU-ETS, such as methane.
3. Environmental, social, and employee matters—included in the “Disclosure of non-financial andDiversity information Directive,” which will apply in all EU countries by the end of 2016.
Directive 2014/95/EU (“Disclosure of non-financial and Diversity information”) was adopted inorder to provide shareholders and other stakeholders with a meaningful, comprehensive view ofthe positions and performances of major entities. The obligations of nonfinancial disclosure will
start in 2017 for large (with either a balance-sheet total of 20 million euros or a net turnover 40
million euros) public-interest entities (listed companies, banks, insurance undertakings, andother companies that are so designated by member states) with more than 500 employees.
These shall disclose in their management report all relevant and useful information on theirpolicies, main risks, and outcomes relating to environmental matters, social and employee
aspects, human rights, and other CSR issues.
This regulation will provide investors with a broad scope of information, but is not focused on climate
and does not explicitly require specific disclosures on it. While there are no specific details on the typesof environmental risks as such, the directive provides that the “statement should contain, as regards
environmental matters, details of the current and foreseeable impacts of the undertaking's operations
on the environment, and, as appropriate, on health and safety, the use of renewable and/or nonrenewable energy, greenhouse gas emissions, water use and air pollution.”
In addition, there is a generic reference to developed frameworks such as EMAS, GRI, and ISO. The
directive also brings in the notion of materiality, stating that: “The undertakings which are subject to thisDirective should provide adequate information in relation to matters that stand out as being most likely
to bring about the materialization of principal risks of severe impacts, along with those that have alreadymaterialized. The severity of such impacts should be judged by their scale and gravity. The risks ofadverse impact may stem from the undertaking's own activities or may be linked to its operations, and,53

where relevant and proportionate, its products, services and business relationships, including its supply
and subcontracting chains.”

ARTICLE 173 OF FRANCE’S ENERGY TRANSITION ACTEnacted in August 2015, France’s Energy Transition Act spells out the French strategy on energy for the
coming decades. This legislative package touches on a wide range of stakeholders and areas (from thedevelopment of renewable energy and smart grids to the biodegradability of bags), with the global
objective of accelerating the transition toward a low-carbon, sustainable economy.
Among the numerous provisions, Article 173 stands out with its aim of spurring better integration ofclimate-related issues into the decision-making process of corporations, nonfinancial and financial alike,through four dedicated and interdependent provisions closely related to the EU’s directive on financial
reporting and the Task Force’s work.
1. It requires listed companies and/or large non-listed firms (both nonfinancial and financial) toreport on financial risks related to the consequences of climate change, as well as the measurestaken to reduce those risks.
2. It extends existing carbon-related disclosure requirements (currently, Scope 2) and requires
corporations to report on the (most material aspects of the) “climate change implication of theiractivity”—including, in their supply chain—“and of the use of goods and services they produce.”
This, effectively, is a first step toward a materiality-based Scope 3 assessment.
3. It promotes the integration of climate-related considerations into financial institutions’ capitalallocation decisions, by:a. Requiring the government to report by the end of 2016 on how to assess climate risks inthe banking sector and implement related stress testing.
b. Extending existing ESG-related requirements for asset managers to report on how theytake into account ESG criteria in their investment processes and decisions. First, it asks
for a more detailed assessment of climate-related considerations as part of reporting on
environmental criteria (more specifically, the reporting encompasses an explanation of
how climate-related risks—both physical and transition risks—are taken into accountand an assessment of the allocation of assets to low-carbon holdings). Second, it
extends the reporting requirements to institutional investors, so that both asset
managers and institutional investors are now required to report on how they
incorporate ESG criteria in their investment strategy.

ENVIRONMENTAL RISKS INCORPORATED IN BRAZIL’S BANK STRESS TESTS
Brazil’s Federal Regulation under the Climate Change National Policy and the Climate Change National
Plan (Law 12.187/09) lists activities and priorities for mitigating climate effects and adapting thecountry’s economy and development to a sustainable model. To promote climate disclosure, Brazil alsouses an online platform for public registration on corporate emissions:
https://www.registropublicodeemissoes.com.br/index.php.
54

Brazilian stock exchange BM&FBOVESPA has led numerous initiatives aimed at integrating ESG issues
into investment decision-making, creating self-regulatory initiatives and benchmarks, and encouraging
ESG disclosure. Brazil has also pursued an original approach to implementing Pillar 3 of the Basel III
capital accord. In 2011, the Central Bank of Brazil established an internal capital-adequacy assessment
process that requires the financial institutions under its supervision to evaluate the adequacy of capitalgiven the risks they face. Beyond assessing the traditional credit, market, liquidity, and operational risks
determined by the regulator, the financial institutions perform a self-assessment that considers otherrelevant risks, even if they cannot quantify those risks (e.g., reputational, strategy, and environmental
risks). In the ICAAP, the financial institutions are asked to consider the non-quantifiable risks of severe
events and stress scenarios arising from environmental and climate risks.
Finally, in 2014, a new banking regulation (Resolution CMN No. 4,327) began to require the adoption ofa social and environmental responsibility policy (commonly known by its Portuguese abbreviation, PRSA)
by financial and other institutions supervised by the Central Bank of Brazil. The purpose was to addsocial and environmental risks to other risks already evaluated in financial institutions’ risk management
processes, enforce good governance over those processes, and require the designation of a director
responsible for PRSA compliance. The rule also requires the formalization of the PSRA and its disclosure
to the general public.

JAPAN’S GHG EMISSIONS ENVIRONMENTAL LAWS
Japan’s Act on Promotion of Global Warming Countermeasures requires businesses that consume large
amounts of energy to implement programs that quantify and report their GHG emissions. This programaims to encourage corporate entities to recognize their own emission levels and promote self-motivatedcorporate action toward achieving a low-carbon economy, while also increasing transparency byproviding emission data to the public.
As part of the government’s efforts to enhance the use of environmental data by financial institutions,
the Ministry of the Environment since 2013 has led an initiative to set up a platform for corporate
environmental disclosures. Once established, the platform is intended to help data users evaluate
corporations’ efforts at reducing their GHG emissions.

55

APPENDIX 4: SUPPLEMENTAL CHARTS AND TABLES
Table A4.1—A Sample of Key Climate-Related Risk Frameworks
Framework
Elements
Mercer “Investing in a
Time of Climate Change”

WRI/UNEP-FI “Carbon
Asset Risk Discussion
Framework”; and2° Investment
Initiative working paper“Financial risk and thetransition to a lowcarbon economy”

SASB Climate Risk
Technical Bulletin (201601)

UK Prudential Regulation
Authority “The impact ofclimate change on the
UK insurance sector”

SEC Climate disclosure
guidance

Technology (T), broadly defined as the rate of progress and investment in the development oftechnology to support the low-carbon economy.
Resource Availability (R), defined as the impact on investments of chronic weather patterns (forexample, long-term changes in temperature or precipitation) and related physical changes.
Impact (I), defined as the physical impact on investments of acute weather incidence/severity(that is, extreme or catastrophic events).
Policy (P), broadly defined as all international, national, and sub-national targets; mandates;
legislation; and regulations meant to reduce the risk of further man-made or “anthropogenic”
climate change.
Physical climate risks, which are risks associated with physical impacts from climate change that
could impact carbon assets and operating companies. These impacts may include physicaldamage and/or capital expenditures necessary in response to variations in weather patterns (suchas severe storms, floods, and drought) and “slow onset” impacts such as sea level rise,desertification, etc.
Carbon risks, which this paper defines as nonphysical climate change-related factors facing assets
and companies. This principally encompasses policy and legal, technology, market and economic
factors as well as reputational risks. Depending upon their nature and severity, carbon risks may
translate to carbon asset risk to financial intermediaries and investors.
Physical effects, Climate change has a range of current and projected acute (punctuated) andprogressive effects on the physical environment, leading to risks and opportunities for business
entities.
Transition risks, the range of market-based responses with the transition to a low-carbon,
resilient economy. These comprise the mitigation and adaptation responses of business entities,
customers, and suppliers, which may create a range of risks and opportunities.
Climate regulation, the spectrum of policies, rules, non-binding agreements, and other regulatory
mechanisms that currently exist or are likely to come to bear in response to climate change.
Physical risks: the first-order risks which arise from weather-related events, such as floods andstorms. They comprise impacts directly resulting from such events, such as damage to property,
and also those that may arise indirectly through subsequent events, such as disruption of global
supply chains or resource scarcity.
Transition risks: the financial risks which could arise for insurance firms from the transition to alower-carbon economy. For insurance firms, this risk factor is mainly about the potential repricing of carbon-intensive financial assets, and the speed at which any such re-pricing mightoccur. To a lesser extent, insurers may also need to adapt to potential impacts on the liability side
resulting from reductions in insurance premiums in carbon-intensive sectors.
Liability risks: risks that could arise for insurance firms from parties who have suffered loss anddamage from climate change, and then seek to recover losses from others who they believe may
have been responsible. Where such claims are successful, those parties against whom the claims
are made may seek to pass on some or all of the cost to insurance firms under third-party liability
contracts such as professional indemnity or directors’ and officers’ insurance.
Impact of climate-related legislation, regulation and international accords;
Physical impacts of climate change (e.g., disruptions to operations, transportation, supply chains,and distribution chain);
Indirect consequences (e.g., changes in demand or competition; reputational risk);
Changes in investment risks (e.g., new trading markets for climate-related financial products)

56

57

APPENDIX 5: PUBLIC CONSULTATION QUESTIONS
Recognizing that the success of the Task Force and its recommendations will depend on ensuring that
our work reflects a wide range of views, the Task Force is committed to engaging and soliciting input
from a broad spectrum of stakeholders across academia, industry, NGOS, and the official sector.
Stakeholder outreach has been central to our process thus far and will continue to be crucial as we
conduct our second phase of work. The following questionnaire seeks to gather input to help inform ourthinking throughout the year as we develop recommendations that will be greatly strengthened bybuilding on your expertise and input. The Task Force also seeks to promote public discussion aroundrelated questions that, while extending beyond our remit, provide important context for our work andmay merit additional study.
To this end, the Task Force posted a structured, online form targeting specific aspects of our work,
available on April 1, 2016, at https://www.fsb-tcfd.org/survey. Respondents will be asked to provide
their responses by May 1. The questions below will appear in the online comment questionnaire.
Respondents with additional comments will be invited to submit a comment letter by May 1 to
info@fsb-tcfd.org, though we ask that such submissions be structured to specifically address thenumbered questions, with any comments or views that do not fit one of the questions placed at the endof the letter in an “other views” section.

COVERAGE AND AUDIENCES
1. Which types of nonfinancial firms should any disclosure recommendations cover? List in order ofimportance.
2. Which types of financial firms should any disclosure recommendations cover?
3. Which users in the financial sector should be considered as the target audience?

CLIMATE-RISK DIMENSION
4. For nonfinancial preparers of climate risk and opportunity information, what are the top three key
concerns that you would like the Task Force to keep in mind in making our recommendations?
5. For users of climate risk and opportunity information, what are five specific points of informationthat you wish to secure?
6. Are there any best-practice disclosures of climate risks by companies that you would like to bring toour attention? What specific climate elements of this disclosure would you like to highlight? (Please
limit to two examples)
7. “Transition Risk” in terms of climate is an evolving term. How would you define this risk? What
specific disclosures would help measure it?
8. Which three sectors do you think most exposed to climate risks? For these sectors, how are physical,
transition, and liability risks best measured and reported?
9. How should the task force consider the challenge of aggregate versus sector-specific climate-related
financial risks and opportunities?
10. Is there a role for scenario and sensitivity analysis—for the nonfinancial and/or financial sectors?
Please provide three specific examples.
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ASSET-CLASS DIMENSION
11. Which are the key asset classes that require initial attention? Are there any gaps that we should
focus on? Within this, what are the top two priorities for action?

INTERMEDIARY/USER SCOPE
12. Considering the breadth of services the capital supply chain provides, please provide up to three
examples of leading work (research or other) from sell-side brokers’ investment recommendations,listing rules of stock exchanges, portfolio management and stewardship examples by fundmanagers, fund-manager recommendations by consultants, or others we should consider.
13. Please identify three examples of existing disclosure practices on climate risk and opportunities thatyou consider to be effective by investment banks, stock exchanges, investment managers,
investment consultants, or asset owners. Please indicate the preparer and type of disclosure.
14. How can climate risk information be simply summarized for retail investors? What standards ormechanisms exist for assuring end investors that climate risks and opportunities have been
considered in the way that their savings and investment and pension products have been managed?

MACRO SCOPE
15. In conducting macroeconomic analysis, what are the top three key measures of macroeconomic
climate risk performance when seeking to measure the extent to which the global economy istransitioning towards net-zero emissions?
16. One way to measure transition risk is by considering disclosures based on sector/market scenario
analysis. What scenario planning work is currently available in this area?
17. The United Nations Framework Convention on Climate Change five yearly “global stocktakes” seek
to establish in part whether financial flows are consistent with the less-than-two-degree scenarios.
Are there any climate-risk disclosure recommendations that would appropriately feed into such aneffort?

LOOKING AHEAD
18. How should the Task Force define “success”?
19. What are the key barriers that you believe the Task Force needs to overcome?
20. Is the Task Force focused on the appropriate set of topics for its Phase II work plan?
21. What additional topics should it consider?
22. The Task Force plans to reach out to a broad sample of key stakeholders among preparers, users,
and standard setters. Are there particular types of entities or organizations that you believe the Task
Force should reach out to?

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APPENDIX 6: FSB PRESS RELEASE (DECEMBER 4,
2015)
Press enquiries:+41 61 280 8138
Joe.Perry@bis.org
Ref no: 91/2015
The Financial Stability Board (FSB) announced today it is establishing an industry-led disclosure task
force on climate-related financial risks under the chairmanship of Michael R. Bloomberg. The Task Forceon Climate-related Financial Disclosures (Task Force) will develop voluntary, consistent climate-related
financial risk disclosures for use by companies in providing information to lenders, insurers, investors
and other stakeholders.
Speaking at the COP21 Paris Climate Change Conference Mark Carney, FSB Chairman said “The FSB isasking the Task Force on Climate-related Financial Disclosures to make recommendations for consistentcompany disclosures that will help financial market participants understand their climate-related risks.
Access to high quality financial information will allow market participants and policymakers tounderstand and better manage those risks, which are likely to grow with time. Michael’s experience
working on climate change issues, his unparalleled track record of execution in a broad range of fields
and his lifelong commitment to open and transparent financial markets make him the ideal leader for
the Task Force.”
The Task Force will consider the physical, liability and transition risks associated with climate change andwhat constitutes effective financial disclosures in this area. It will seek to develop a set ofrecommendations for consistent, comparable, reliable, clear and efficient climate-related disclosures, as
set out in the FSB’s proposal in November. The wide range of existing disclosure schemes relating toclimate or sustainability highlights the need for companies and relevant stakeholders to reach aconsensus on the characteristics of effective disclosures and examples of good practices. In doing so, theindustry-led Task Force will take account of the work of other groups related to effective disclosures.
Speaking about his role, Michael R. Bloomberg said “It’s critical that industries and investors understandthe risks posed by climate change, but currently there is too little transparency about those risks. When
Governor Carney laid out the idea for a Task Force on Climate-related Financial Disclosures, I offered
him my full support to help make it a success. While the business and finance communities are alreadyplaying a leading role on climate change, through investments in technological innovation and clean
energy, this Task Force will accelerate that activity by increasing transparency. And in doing so, it will
help make markets more efficient, and economies more stable and resilient.”

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The Task Force will conduct its work in two stages. During the first stage, the Task Force will consist of
about 10 individuals, who will determine the scope and high-level objectives for its work. It is expectedthat this first stage will be completed by end-March 2016. During the second stage, the Task Force’s
work is likely to be expanded to include up to 30 individuals, focused on delivering specificrecommendations for voluntary disclosure principles and leading practices, if appropriate, with a view tocompleting its work by end-2016. As part of its work the Task Force will conduct public outreach.
In similar fashion to the Enhanced Disclosure Task Force (EDTF), an industry-led group that wasestablished by the FSB in 2012 to make recommendations on financial risk disclosures for banks, theTask Force will comprise senior technical experts from firms that are the preparers and users ofcompany risk disclosures, as well as risk analysts. The members of the Task Force will be private-sector
individuals drawn from financial and nonfinancial companies across a broad range of countries within
the FSB’s membership.
Notes to editors
Mark Carney and Michael R. Bloomberg will discuss the Task Force at the Paris Climate Change
Conference. The discussion will be available as a live webcast and recording on the COP21 website.
In April 2015, G20 Finance Ministers and Central Bank Governors asked the FSB “to convene public- andprivate- sector participants to review how the financial sector can take account of climate-related
issues”. G20 Leaders, in their Antalya Summit communiqué in November 2015 asked the FSB to continue
to engage with public- and private- sector participants on this subject.
Michael R. Bloomberg is the United Nations Secretary-General’s Special Envoy for Cities and Climate
Change, Founder, Bloomberg LP and Bloomberg Philanthropies and was the 108th Mayor of the City of
New York.
Details on the full membership of the Task Force and its terms of reference will be released later in
December. The FSB will publish periodic updates on the work of the Task Force on its website.
The FSB has been established to coordinate at the international level the work of national financial
authorities and international standard setting bodies and to develop and promote the implementationof effective regulatory, supervisory and other financial sector policies in the interest of financial stability.
It brings together national authorities responsible for financial stability in 24 countries and jurisdictions,international financial institutions, sector-specific international groupings of regulators and supervisors,and committees of central bank experts. The FSB also conducts outreach with 65 other jurisdictions
through its six regional consultative groups.
The FSB is chaired by Mark Carney, Governor of the Bank of England. Its Secretariat is located in Basel,
Switzerland, and hosted by the Bank for International Settlements.
For further information on the FSB, visit the FSB website, www.fsb.org.

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APPENDIX 7: TASK FORCE MEMBERS
Chairman and Vice-Chairs
ChairmanMichael Bloomberg
Founder and President
Bloomberg LP

Vice-Chair

Yeo Lian Sim
Special Adviser
Singapore Exchange

Vice-Chair

Denise Pavarina
Managing Officer
Banco Bradesco

Vice-Chair

Graeme Pitkethly
Chief Financial Officer
UnileverVice-Chair

Christian Thimann
Group Head of Strategy, Sustainability and Public Affairs
AXA

Members
Matt Arnold
Head, Social and Sustainable Finance Group
JPMorgan Chase
David Blood
Senior Partner
Generation Investment Management
Ruixia Liu
General Manager, Risk Department
Industrial and Commercial Bank of China
Masaaki NagamuraHead, Corporate Social Responsibility
Tokio Marine Holdings

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Martin Skancke
Chair, Risk Committee
StorebrandAndreas Spiegel
Head Group Sustainability Risk
Swiss Re
Steve Waygood
Chief Responsible Investment Officer
Aviva Investors
Deborah Winshel
Managing Director, Global Head of Impact Investing
BlackRock
Koushik ChatterjeeGroup Executive Director, Finance and Corporate
Tata Group
Liliana Franco
Director, Accounting Organization and Methods
Air Liquide Group
Thomas Kusterer
Chief Financial Officer
EnBW
Giuseppe Ricci
Health, Safety, Environment and Quality Executive Vice President
ENI
Fiona Wild
Vice President, Environment and Climate Change
BHP Billiton
Jane Ambachtsheer
Partner and Global Head of Responsible Investment
Mercer Investments
Wim Bartels
Global Head, Sustainability Reporting and Disclosures
KPMG
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Michael Wilkins
Managing Director, Environmental FinanceStandard and Poor’s
Special Adviser

Russell Picot
Co-Chair, Enhanced Disclosure Task ForceGroup Chief Accounting Officer
HSBC

Secretariat
Mary Schapiro
Special Adviser to the Chair
Former Chair, U.S. Securities and Exchange Commission
Curtis Ravenel
Global Head, Sustainable Business & FinanceBloomberg LP
Didem Nisanci
Managing Director
Promontory Financial Group
Parinitha Sastry
Associate
Promontory Financial Group
Observers
Rupert Thorne
Deputy to the Secretary General,
Financial Stability Board
Richard Thorpe
Adviser Accounting and Auditing,
Financial Stability Board
Joe PerryMember of Secretariat,
Financial Stability Board

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