randal k quarles : disclosures and data - building strong foundations for addressing climate - related financial risks speech by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the venice international conference on climate change, venice, italy, 11 june 2021. * * * introduction thank you for inviting me today. it is an honor to be here and, after more than a year of remote conversations, it is truly wonderful to see so many people in person. as chair of the financial stability board ( fsb ), i have the privilege of collaborating with the italian g20 presidency, the g20 finance ministers and central bank governors, and with the fsb membership on the most pressing issues affecting financial stability. 1 among those issues, one of increasing focus is understanding and monitoring climate - related financial risks. given the global nature of climate change, this demands a coordinated international effort. the fsb published last wednesday a climate roadmap that presents a comprehensive and coordinated plan to address climate - related financial risks. the fsb's roadmap dovetails with the ongoing work of the g20 sustainable finance working group ( sfw g ) to develop a broader sustainable finance roadmap. today, in my role as chair of the fsb, i would like to focus on the two foundational components of the fsb roadmap : disclosures and data. globally consistent, comparable, and reliable disclosures, as well as a broader set of high - quality, relevant data, together, can provide the basis to assess climate - related financial risks and the impact on financial stability. disclosure the fsb was an early leader in bringing attention to the importance of reliable, entity - level disclosures to assess and manage climate - related financial risks and opportunities. in 2015, the fsb submitted a proposal to the g20 to create an industry - led disclosure task force on climaterelated risks. 2 the work of this fsb - sponsored task force on climate - related financial disclosures, or tcfd, has led to greater recognition of the importance of climate - related financial risk and of comparable and reliable disclosure. the early development of industry - led recommendations and a usable framework by users and producers of this information was critical. the four core elements of the tcfd recommendations have provided a widely accepted framework for disclosures — covering governance, strategy, risk management, and metrics and targets. the task force has continued

to provide significant support to those seeking to disclose and has encouraged steadily increasing uptake. these initial steps greatly helped to define appropriate parameters, drive towards consistency, and give the public sector a running start in developing their own approaches. now it is time to build on that work. it will be useful to establish a globally consistent baseline standard for climate - related disclosures. globally consistent and comparable entity - level disclosures by non - financial companies, banks, insurers, and asset managers are increasingly important to market participants and financial authorities as a means of providing information needed to assess and manage risks. the g20 presidency, in developing its 2021 work program, asked the fsb to encourage more consistency in disclosure practices. as a start, the fsb surveyed what financial authorities across our membership were doing to promote disclosures. almost all our members have 1 / 3 bis central bankers'speeches already set requirements, guidance, or expectations or plan to do so. we found some heterogeneity in the approaches they were taking. some members prefer mandated disclosure while others would make it voluntary. there is also variation in the desired scope of disclosures. however, there is a trend towards an important baseline that focuses on one - way materiality — or the financial risk that climate change could have on a particular entity — based on the tcfd recommendations. the majority of our membership are already using the tcfd recommendations as a baseline for their own requirements or guidance. the international financial reporting standards foundation ( ifrs ), in consultation with other international organizations, will develop a set of standards, starting initially with climate and building upon these tcfd recommendations. as reflected in our december 2020 statement, the fsb supports ifrs's advancement of an international sustainability standards board to take this work quickly forward. 3 this work holds the promise of providing baseline standards that could inform or be built upon by national authorities as they develop their approaches to climate - related financial disclosure or broader sustainability disclosure. the initial focus of the ifrs will be on climate standards, while allowing for interoperability with individual jurisdictions'frameworks, that may go beyond climate - related impacts. consistency in one - way disclosures would provide a needed avenue for accurate and appropriate risk assessment and comparability to assess investment decisions. simultaneously, the ifrs standards are intended to provide flexibility for national authorities to build on the baseline. the " interoperability " feature will allow jurisdictions to address broader or jurisdiction - specific concerns in a