PwC comments on the FSB Task Force on Climate-related Financial Disclosures (TCFD) 2019 Status Report on Climate-related Financial Reporting

Jun 05, 2019

PwC comments on the FSB Task Force on Climate-related Financial Disclosures (TCFD) 2019 Status Report on Climate-related Financial Reporting

Over the past 2-3 years it has become increasingly accepted that climate change is a financial issue, as well as an environmental and societal one. Regulators, investors, companies and individuals are now more focused on the consequences of climate change on the performance of companies that they regulate, invest in, work for or buy from. Only through better disclosure by companies across the G20 will we have a greater understanding of the impacts of climate change and our ability to transition to a low carbon, low risk and high growth economy.

The FSB Task Force on Climate-related Financial Disclosures (TCFD) is at the centre of efforts to encourage greater disclosure. Today’s release of the second TCFD Status Report shows a further increase in companies supporting and disclosing against the recommendations, with nearly 800 organisations supporting the TCFD, an increase of 50% since September 2018.  70% of the companies reviewed are disclosing against at least one recommendation and a similar number planning to fully disclose within three years.

Commenting on the FSB's Task Force on Climate-related Financial Disclosures (TCFD) 2019 Status Report, Jon Williams, sustainability & climate change partner at PwC and TCFD member said:

“It’s really positive to see the increase in companies supporting the TCFD and beginning to disclose against its recommendations. We expect the momentum to continue, driven by the financial institutions responsible for assets of nearly $118 trillion who have signed up as TCFD supporters and regulators that supervise them. We know companies are finding it a challenge, particularly in respect of scenarios analysis, a lack of data availability and the need for standardised metrics and targets. We also know that users of disclosures want to see more on the financial implications of climate-related impacts on companies.

“It’s vital that financial institutions better manage the risks and opportunities that addressing climate change will bring. The more companies know about the risks they face, and the better they disclose the financial impacts, the faster and more effectively they can address them.

"Data is a limitation in the monitoring of disclosures and we’ve played an important role in closing this gap. Our custom-built AI tool has been invaluable in enabling the analytics and insights used in the status report – reviewing the uptake of the Task Force’s recommendations.

Commenting on PwC’s role in developing the technology for the AI review, Euan Cameron partner and artificial intelligence leader at PwC UK said:

“This tech-enabled solution enables us to automate the generation of a comprehensive set of insights  on whether businesses are doing enough to disclose the financial impacts of climate change on their businesses. It is a huge development and one that emphasises our commitment  to help solve the world’s important problems.

“Publicly-available documents, such as annual reports, often hold important information but have been difficult to review on a large-scale. Using natural language processing and machine learning, we have been able to learn from previous review exercises in order to identify TCFD-related disclosures quickly and reliably.

“Our custom-built AI tool allows us to help companies understand the potential impacts of climate change on their business by monitoring TCFD disclosures, providing valuable insight to both investors and regulators.”

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