Lawyer group welcomes climate change financial disclosure endorsement
Lawyers for Climate Action NZ Inc has welcomed the Government’s decision to endorse the recommendations of the Financial Stability Board Task Force on Climate-related Financial Disclosures (the TCFD) on establishing a framework for disclosure of climate-related risks in company financial reporting.
In a report issued this week, Transition to a low-emissions future – the Government response to the Productivity Commission’s Low Emissions Economy report, the Government accepted the Productivity Commission’s recommendation to endorse the June 2017 recommendations by the TCFD as one avenue for the disclosure of climate risk.
Lawyers for Climate Action says the Government agreed that “High quality disclosures will help investors, lenders and insurers make more informed decisions. They will also provide reporting entities with incentives to manage risks and take advantage of opportunities.”
While the TCFD recommendations are voluntary, the report says that officials will work closely with a range of stakeholders over the coming months to consider how climate-related disclosure requirements should be implemented.
President of Lawyers for Climate Action NZ Inc, Jenny Cooper QC, says the endorsement of a clear set of principles around climate-risk reporting will be welcomed by investors and provide useful guidance for boards.
“There is growing awareness that climate change will have a material impact on asset values and income streams within the near and medium-term time horizons that investors are focused on, as the transition away from fossil fuels gathers pace and the physical impacts of global warming start to bite," she says.
Lawyers for Climate Action says the reporting frameword recommended by the TCFD focuses on four categories of disclosure: governance, strategy, risk management, and metrics and targets.
The climate-related risks identified in the report include both transition risks (eg, regulatory change, technological change, supply and demand change, and reputation risk), and also physical risks (eg, increased risk of extreme weather events as well as longer-term impacts such as weather pattern changes and rising sea levels). Belgium, France, Sweden, the UK and Canada have also expressed support for the TCFD recommendations.
“Better information gathering and analysis by companies for disclosure purposes will facilitate better decision making by boards” says Ms Cooper. “This will help ensure that New Zealand’s economy can adapt to climate change and that we are well-positioned to benefit from the opportunities that the global transition to low carbon technologies will bring.”
Last updated on the 16th September 2019