London, 9 February 2017: CDP, which began securing climate disclosure from companies in 2002 has today responded to the public consultation of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
Paul Simpson, CEO of CDP, said: "Undoubtedly the work of the Task force has the potential to be game-changing as climate risk moves more squarely into the boardroom. It is our mission at CDP to drive global environmental disclosure and ensure progress towards a well below 2-degree pathway is tracked. We will continue to work with investors and companies to ensure market adoption of the TCFD recommendations and support mandating disclosure over time. We will also continue to innovate in the 'next phase of implementation' to 2020 and beyond taking the best developments in science, benchmarking and new technologies. This will ensure companies and investors better understand climate risk and can prepare for a more sustainable future."
CDP is fully supportive of the TCFD recommendations and has already committed to adopt them in their entirety into the CDP disclosure platform. CDP particularly welcomes the scope of the work of the TCFD delivered in a short time frame and its commercial and outward-facing make-up.
CDP's summary of the TCFD response to the public consultation can be viewed here. It will focus on the following core areas where we believe further action is required to maximize success:
Mandatory disclosure: While the voluntary recommendations are aimed at the integration of climate information into mainstream filings meaningful disclosure will be global, comparable and consistent. We are strong advocates of mandating and enforcing universal company disclosure to obtain consistent, comparable and high-quality information to reach companies who resist voluntary norms. We believe policy intervention is necessary to drive the cultural behaviours and action required. This should be taken into account by the governments of the G20 and other regulators as they consider how to respond to the TCFD’s recommendations.
Scenario analysis: CDP sees this as a top priority, particularly across the high-emitting sectors, namely oil and gas, heavy industry and electric utilities. We welcome the use of scenario analysis for a 2°C economy so companies and investors can better understand and track their own performance. We would also like to see more guidance on the models and frameworks used to ensure they are high-quality, consistent and robust. We also believe that the TCFD needs to acknowledge the shortfalls of focusing on 2°C scenarios which do not correlate with the Paris agreements goal of a well-below 2°C world.
Comparability: The TCFD references a number of frameworks and metrics that align with their recommendations. Providing such a broad and diverse set could lead to issues of comparability. We would recommend more prescriptive direction to companies. With such a broad selection of metrics distilling what is relevant will be critical. The recommendations do not outline a pathway for companies or investors to track and benchmark performance , for example Science Based Targets or carbon pricing corridors which can provide year on year comparability.
Geographic reach: With a largely US/Euro-centric Task Force membership the TCFD needs to ensure global stakeholder buy-in and adoption. There is also a need for global universal reporting frameworks that are relevant to all markets. To date, developing countries have been under-represented in the TCFD process (through outreach and responses to the Phase I Report).
Future proofing: The recommendations from the Task Force run the risk of being a snapshot in time. Disclosure and climate action is an evolving process based on the latest science, technology and investor action. We are working with over 200 major multinationals committed to setting Science Based Targets and over 1,200 companies adopting internal carbon pricing. We see a period of great opportunity and adoption to 2020 to target high-emitting sectors and geographies that need to address and act on climate change.
Alongside our colleagues in the reporting community, we welcome the TCFD recommendations and would highlight in particular, the submissions provided by our colleagues at CDSB, We Mean Business, WWF, 2 Degree Investor Initiatives (2DII), ClientEarth and the Corporate Reporting Dialogue (CRD).
We welcome the TCFD's engagement through the public consultation and look forward to the final recommendations when they are launched at the end of June. For maximum relevance at launch CDP would want to ensure regular review and further clarification on for example, scenario analysis or the relevant metrics to be used for Financial and Non-Financial institutions to drive impact for companies and investors. We would also support the implementation of the TCFD recommendations and monitoring for compliance and go.
For media information and interviews please contact Claire Barraclough on [email protected] +44 7957 730631