TCFD: strengthening the foundations of sustainable finance Speech given by Mark Carney, Governor of the Bank of England  Tokyo, TCFD Summit 2019 08 October 2019  I am grateful to Jennifer Nemeth for her assistance in preparing these remarks, and to Ryan Barrett, Jennifer Bell, Benjamin Bowry, Kaja Chhapia, Lawrence Dimery, Benjamin Guin, Christopher Gynn, Sini Matikainen, Gordon Readhead, Mathesh Sripraba, Quynh-Anh Vo and Matthew WIllison for background research and analysis, as well as to PwC for their research work. . 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Introduction It is an honour to join this inaugural TCFD Summit. There could be no better host than Japan. Prime Minister Abe made climate change an important theme of the Japanese G20 presidency, calling on nations to put ‘promises into practice’. And Environment Minister Koizumi recently said Japan is “committed to realising a decarbonised society.” Japanese companies are heeding these calls. In the past year, almost 200 Japanese firms have joined the TCFD, bringing Japan to the top of the TCFD league table.1 This welcome progress, and that of the TCFD more generally, must be set against growing challenges. Over the past five years, global carbon emissions have risen by 20% and sea levels by over 3.3mm per year.2 Global temperatures are on course to increase by 3.4°C by 2100.3 Chart 1: Global warming projections to 2100 under different policy pathways  The physical impact of these changes will not be evenly distributed.

Current supporters control balance sheets totalling $ trillion and include the world’s top banks, asset managers, pension funds, insurers, credit rating agencies, accounting firms and shareholder advisory services.4 The supply of disclosure is responding, with four fifths of the top 1100 G20 companies now disclosing climate-related financial risks in line with some of the TCFD recommendations.5 On every recommended metric in TCFD, disclosures have been steadily increasing, rising from an average of 2.8 to 3.6 over the past three years. Three quarters of investors are now using TCFD disclosures when investing and the same percentage report a marked improvement in the quality of climate disclosures.6 Japanese TCFD supporters increased from 9 to 199 in just over a year and now have a market cap of almost $ trillion. Japanese government support through the Implementation Study Group and the TCFD Consortium has catalysed action and created a blueprint for other countries in “how-to-TCFD”. 4  Full list of current TCFD supporters available at: https://www.fsb-tcfd.org/tcfd-supporters/. The TCFD’s June 2019 Status Report assessed, using artificial intelligence, 1100 companies reports over three years from 2016 to 2018 inclusive. Full report available at: https://www.fsb-tcfd.org/wp-content/uploads/2019/06/2019-TCFD-Status-Report-FINAL053119.pdf. 6 TCFD Status Report (2019) 5  3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  Chart 2: Changes in TCFD disclosures by recommendation 2016 – 2018  As the volume of disclosures has increased, so has their sophistication. Companies, financial firms and policymakers increasingly recognise that disclosures must go beyond the static to the strategic.