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ESG

Standards boards to release climate-related financial disclosure recommendations

A guide for implementing recommendations of the Task Force on Climate-related Financial Disclosures is being released Wednesday by the Sustainability Accounting Standards Board and the Climate Disclosure Standards Board.

Since the Financial Stability Board's Task Force on Climate-related Financial Disclosures published recommendations for climate-related financial risk disclosures in mainstream corporate filings in June 2017, more than 600 organizations have pledged to implement them, with many seeking further guidance on how to do so.

Both SASB and CDSB are independent standard-setting non-profit organizations that participate in the Corporate Reporting Dialogue's Better Alignment Project aimed at making it easier for companies to prepare standardized disclosures to meet the needs of investors and others.

Last October, a sizable group of institutional investors and asset managers, state treasurers and ESG advocates petitioned the SEC to mandate standardized disclosure of environmental, social and governance information by publicly traded companies, and suggested that one place to start is the TCFD's 11 recommended guidelines.

The new guide covers the core elements of the TCFD recommendations — governance, strategy, risk management, and metrics and targets — plus sample disclosures and steps to help companies get started.

"The guide takes the recommendations from principles to practice, increasing the adoption of the TCFD recommendations and enhancing the robustness, consistency and comparability of such information," CDSB Managing Director Mardi McBrien said, adding that it will benefit companies through better risk management and help investors allocate capital "at the scale and pace required to accelerate the transition to a low-carbon and climate-resilient economy."

SASB Foundation CEO Madelyn Antoncic said in the same statement that "companies are showing strong interest in managing their exposure to climate-related risk by committing to the TCFD recommendations," but few have a clear understanding of how to implement them.