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April 11, 2018

CDSB aligns reporting Framework with TCFD recommendations

The Climate Disclosure Standards Board (CDSB) has updated its Framework for reporting environmental information, natural capital and associated business impacts, to align it with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

At a CDSB conference held in London on 9 April CDSB chairman Richard Samans explained that the TCFD created momentum for the CDSB because carried by the charisma of Bank of England governor Mark Carney and businessman turned politician Michael Bloomberg the TCFD has brought into the mainstream what the CDSB has been focusing on for a decade.

The TCDF was established by the Financial Stability Board (FSB) at the end of 2015 under the chairmanship of Bloomberg. It aims at developing voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders. In the subsequent year the task force published its first set of recommendations for voluntary disclosures.

At the CDSB event, Samans pointed that the TCFD recommendations represented a good opportunity for CDSB as by nature the task force only suggest what should be done to improve sustainability disclosure but not how.

CDSB has also released its five-year strategy, which builds on the organisations previous work in the technical area and on regulatory engagement, but extends the remit of its actions to corporate and investor engagement.  CDSB managing director Simon Messenger commented on the revised Framework: “Historically, our primary activities were, for strategic and opportunistic reasons, focused on regulatory engagement and technical work […] we will continue not only our historical work with regulatory engagement, and we will grow it, but in particular we will have a large focus on our corporate engagement and our investor engagement.”

The increase in focus on corporate and investor engagement, according to Messenger comes down to the fact that “more and more companies are understanding that disclosing climate related information is in the companies’ self-interest”. If companies are becoming more aware of the importance and benefits of non-financial reporting it will increase transparency levels and improve attitudes towards new non-financial reporting legislation, he continued.

The launch of the updated framework coincided with CDSB’s 10 year anniversary. Reflecting on those 10 years and the future of non-financial reporting Paul Simpson CEO of CDP, which has hosted the CDSB secretariat since its inception, said: “I do think that giving the twentieth birthday speech of CDSB, we will be talking about this [ESG reporting] being mandated and regulated.”

An idea tempered by Messenger who highlighted that regulatory changes shouldn’t necessarily be high level. “Regulatory changes don't need to be cumbersome,” he said. “And we are working with regulators to be creative in making small adaptations to current legislation.”

 

By Joe Pickard

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