Insurers must address climate issues if they are to retain investor supportCredit: Shutterstock/Romolo Tavani

Insurers must address climate issues if they are to retain investor support

The casualties of the climate crisis could include financial stability, the global economy and the value of investments, warns the Task Force on Climate-related Financial Disclosures (TCFD).

In a new guide, produced by Bloomberg, the TCFD stresses the message that, as governments catch up to the realities of climate change and the policy response continues to gather pace, global markets need transparency on the financial impacts of climate change on companies.

The TCFD released its recommendations in 2017 to improve and increase reporting of climate-related financial information. Today, 2,000-plus organisations support the TCFD, including more than 110 regulators and government entities across 78 countries. The new guide outlines the benefits of climate reporting for firms and explains how companies and regulators are implementing the TCFD’s recommendations.
It believes firms implementing the recommendations can:

  • Efficiently identify climate-related opportunities and risks
  • Proactively address investors’ demands for climate-related information in a framework that investors are increasingly asking for
  • More effectively meet current requirements to report material information in financial filings
  • Enhance risk management and strategic planning, through better understanding of climate risk.

Michael Bloomberg, UN special envoy on climate ambition and solutions, UN ambassador for the Race to Zero and Race to Resilience, TCFD chair and founder of Bloomberg L.P. and Bloomberg Philanthropies, said: “Climate change isn’t just a serious and growing threat to people’s health and livelihoods – it’s a major economic risk.”

His words were echoed by former Bank of England Governor Mark Carney, who stressed: “Now is the time to ensure that every financial decision takes climate change into account.”

The TCFD believes companies and providers of capital, therefore, should consider their longer-term strategies and most efficient allocation of capital in light of these changes. Organisations that invest in activities that may not be viable in the longer term will likely be less resilient to the transition to a lower-carbon economy – and their investors will likely experience lower returns.

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