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Recommended Read: The UK Green Finance Taskforce Reports
By: Ben Caldecott - Director, Oxford Sustainable Finance Programme Smith School of Enterprise and the Environment
The UK Green Finance Taskforce was established by the UK Government in October 2017 with a six-month mandate. The final report from the Taskforce is out now, and Taskforce member Ben Caldecott picks out some highlights in the area of disclosure.
I have been a Taskforce member and in that capacity have chaired its Disclosure and Data Workstream, particularly focused on TCFD implementation, other forms of sustainability-related reporting, and data. The workstream has been incredibly busy and has involved over 60 people across 25 different organisations.
The workstream has produced a detailed set of recommendations on these topics that are published as an Annex to the main Taskforce report (which you can download above). Our core recommendations are as follows:
First, that the TCFD recommendations should be integrated throughout the existing UK corporate governance and reporting framework.
The recommendations made by the TCFD should also be clarified to support their integration into the UK corporate governance framework and be reviewed on a regular basis as the norms of climate-related risk disclosure change over time. The Government and relevant regulators should also clarify that disclosing material climate-related risks is already mandatory under existing law and practice.
Critically, this would make the TCFD recommendations mandatory and would make them flush with the existing UK corporate governance and reporting framework. You can’t get more mainstreamed than that!
Second, that new and voluntary UK Sustainability-related Financial Disclosure (SFD) recommendations introducing additional elements not fully covered by the TCFD recommendations or beyond the scope of the TCFD process should be created. These could include: a new framework for measuring and reporting on impacts related to climate change, the environment and the Sustainable Development Goals (SDGs); clarifying reporting processes and standards for disclosing green revenues, asset-level data and committed emissions; and requirements for knowledge and training, among other things.
Third, that there must be a comprehensive effort by the Government and relevant regulators to support successful adoption, implementation and enforcement of the TCFD recommendations and the voluntary SFD recommendations, including through public rankings, off-the-shelf tools and scenarios, and publicly available datasets.
We also make a recommendation on the need to enhance disclosure with data generated from new developments in data capture (satellites and remote sensing) and data processing (machine learning and natural language processing). These recommendations have also been adopted. A Green Fintech Hub is being proposed, which (perhaps unsurprisingly) looks rather similar to our original proposal for a Green Fintech Catapult (see here).
I should add that there are lots of important sub-recommendations, particularly in relation to building on the climate risk focus in the TCFD and moving to cover other aspects of sustainability.
There is a lot in the report and plenty more to do. But the key thing on disclosure is that we set out a high-ambition framework for how the UK corporate governance and reporting framework should evolve to take account of all environment-related risks and impacts. The starting point is effective TCFD implementation, but that is not the be all and end all in our efforts to ensure effective and world-leading disclosure.