Mark Campanale, founder & executive director, said:
“The publication of the final recommendations of the industry-led Task Force on Climate-related Financial Disclosure (TCFD) concludes the first stage of a critical venture to bring to the fore those future challenges that companies and financial institutions face from climate change. Carbon Tracker welcomes the report and the efforts of the TCFD, which have contributed significantly toward the placing of climate-related risks on the agendas of investors, banks and regulators around the world.
“The recent shareholder resolution votes at ExxonMobil and Occidental Petroleum demonstrate that climate risks are material to investors, even if they unfold beyond traditional short-term investing horizons and demonstrate the timeliness of the recommendations.
“The TCFD’s recommendations are voluntary; a critical question is now whether national bodies and international standard-setters will incorporate them into their legislative and regulatory reporting regimes.
“While the future is uncertain, the debate about whether climate change is a material risk for fossil fuel companies is settled. Indeed, the TCFD has previously recognised the potential for a low-carbon transition to have “significant, near-term financial implications for organizations dependent on extracting, producing, and using coal, oil and natural gas.
“A combination of rapid technological development and ambitious national policy targets is fundamentally and quickly altering the global energy system. We need look only to the value lost across US coal and European power markets to observe the disruptive potential of the transition towards lower-carbon fuels.
“The TCFD’s intervention in disclosure comes at a key moment. Today, many fossil fuel companies already acknowledge that action on climate change presents a material risk, but few offer disclosures that adequately assess the financial impact.
“The recommendations make a great leap forward in standardising climate-related financial disclosure and enable investors to compare impacts across companies and sectors. Moreover, the recommended use of scenario analysis, including against a 2°C target, is a step forward in helping companies assess their resilience over the longer term. Carbon Tracker’s recent report, Two Degrees of Separation, provides one template for how such analysis could be conducted.”
Robert Schuwerk, US senior counsel, said:
“The TCFD recommendations provide a template for applying requirements to report on material risks in the context of climate change. They also provide recommendations for new metrics and scenario analysis that extend the regulator’s toolkit for ensuring fair and transparent markets. Ultimately, this is a question of which company projects would or would not be competitive in a carbon constrained world.
“Carbon Tracker’s latest report offers a market test of the largest oil and gas companies’ potential portfolios and concludes that $2.3 trillion of oil and gas company spending on potential projects is surplus to what is needed to meet demand in a 2°C scenario. Our work demonstrates the potential for better-resourced companies to evaluate their portfolios and disclose the results.”
The report and supporting materials are available on the TCFD website:
https://www.fsb-tcfd.org/publications/final-recommendations-report
https://www.fsb-tcfd.org/publications/final-implementing-tcfd-recommendations
https://www.fsb-tcfd.org/publications/final-technical-supplement/
