Climate-related disclosures: quick listen with the FRC
10 February 2020: if you are a company and you know your business model needs to adapt to accommodate climate risk; or you are a preparer of company reports with little experience of writing climate-related disclosures; or if you are an investor – do listen to the FRC’s podcast on climate risk.
In the podcast, Phil Fitz-Gerald, Director of the Financial Reporting Lab, and Hannah Armitage, Project Manager at the Lab, discuss the Lab's new report on climate reporting.
They also talk about all the areas of narrative reporting they have considered and consulted on over the years. Importantly, in this podcast they hone in on climate risk. They comment that, when considering how best to account for climate in reporting, a number of frameworks were proposed, but the Taskforce on Climate-Related Financial Disclosures (TCFD) always stood out as the most used.
Why? Perhaps the TCFD’s themes of governance, strategy, risk management, and metrics and targets truly reflect how businesses manage information. And let’s not forget, point out Phil and Hannah in the podcast, the TCFD recommendations also apply to investors. So, rather than create its own framework, the FRC chose to structure its work around that of the TCFD.
So far, concedes the FRC, it hears that companies are supportive of the framework but there are challenges; that is where the work of the Lab comes in. Phil and Hannah are optimistic overall that the challenges will be met, business models will be reviewed, and disclosures/financial statements will be perfected – with best practice shared.