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TCFD Update: Growing but Mixed Support for Climate-Related Reporting

The Task Force on Climate-related Financial Disclosures (TCFD), headed up by Michael Bloomberg on behalf of the Financial Stability Board, released official guidelines in June 2017, and has since seen rapid growth in public support. An official press release from the TCFD in December 2017 highlights the growing support for the task force from the investment and business communities.  Just a few months ago, around 100 companies publicly supported the TCFD, but that number has more than doubled. About 237 companies, from a diverse number of sectors, have now come out in support of the TCFD recommendations.

The supporting organizations come from 29 different countries, suggesting positive support from the international business community. Over 150 of the supporting organizations are financial firms. The transparency and reporting TCFD advocates for is helpful to investors, especially within sustainable investing.

Although the TCFD has seen a good amount of growth, some of its supporters have recently voted inconsistently on shareholder resolutions for climate change disclosure practices. Vanguard and BlackRock, two public supporters of the TCFD, have voted both for and against resolutions that would force companies to report on how climate change will affect their organization. In some instances, investors have opted to vote against a shareholder resolution, but continue to apply pressure and work with a company through other means. The Financial Times argues that climate risk reporting could be harmful for investors with large holdings in utility companies. Utility groups accounted for 63% of CO2 emissions in the U.S. in 2016, and in order to protect their clients, some institutional investors have been voting against resolutions for better disclosure practices.

The TCFD works to prepare companies for an easier transition to a low-carbon economy, but action must be taken by the companies themselves to incorporate the recommendations into their business strategies. The task force’s goal is to advocate for more effective climate change-related disclosures. You can read more about these efforts in our previous blog posts here and here.