The TCFD delivered – to the Hamburg G20 Leaders’ Summit last year – final recommendations for voluntary disclosures of material, decision-useful climate-related financial risks.9 Suitable for use by all companies that raise capital, the recommendations:   Include disclosure of governance, strategy and risk management;    Establish consistent and comparable metrics and targets applicable across all sectors, as well as specific metrics for the most carbon-intense industries;    Encourage use of scenario analysis in order to assess the potential impact of the risks and opportunities of the transition to a low carbon economy on strategy and financial planning. The combination of the Paris Accord and the TCFD has led a clear transition in thinking and action about climate-related financial risks. Consider the changes in demand, supply and impact of climate disclosure. The demand for climate-related financial disclosure from the providers of capital has increased significantly. Current supporters of the TCFD include three-quarters of the world’s globally systemic banks, 8 of the top 10 global asset managers, the world’s leading pension funds and insurers, major credit rating agencies, the Big Four accounting firms, and the two dominant shareholder advisory service companies. These financial firms are responsible for managing nearly $ trillion in assets (or 20% more than global GDP). With climate-related shareholder resolutions tripling last year and litigation risks rising, the incentives for companies to disclose and manage climate-related risks have increased dramatically. Not surprisingly, the supply of climate disclosure is responding.

6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  Scenario analysis will be part of this over time (and there are already some good examples) but most important at this stage will be for companies to demonstrate that they have the governance processes and strategic flexibility to consider and manage the opportunities associated with different climate pathways. Adoption can be expected to widen and improve as the private sector refines emerging good practice in efficient, decision-useful climate-related disclosure. To continue the momentum behind the Task Force’s recommendations, the TCFD will provide a major implementation report to the Japanese G20 Presidency. Impact The impacts of these developments could be enormous. TCFD’s voluntary disclosure is creating a virtuous circle by encouraging learning by doing: as companies apply the recommendations, investors are increasingly differentiating between firms based on the information they receive. As good practice emerges, adoption will continue to spread, disclosure will become more decision-useful and efficient, and its impact will grow. As climate disclosure moves into the mainstream, it is increasingly seen as necessary in and of itself, and as informative about which companies are focused on long-term value creation. Moreover, as a ‘market’ in the transition to a 2 degree world is built, it can pull forward adjustment by the private sector – particularly if the policy responses of governments and the prospects for private sector innovation are credible. Finally, as stressed by HRH, the transition to a low-carbon economy will bring unparalleled opportunities for companies minded to seize them.