Climate risk as a business opportunity

Interview with Jane Stevensen, Engagement Director to the Task Force on Climate related-Financial Disclosure (TCFD) at CDP

This interview first appeared in Climate change, The New Economy: http://publications.climatechange-theneweconomy.com/g7-2017/54-1

The Task Force on Climate-related Financial Disclosures (TCFD) is an industry initiative led by Mark Carney and  Michael Bloomberg. It represents a significant step forward in disclosing and managing climate risk through mainstream reports making board members more accountable for climate governance and strategy. Its final recommendations will be presented to the G20 in Hamburg in July. 
 As CDP and CDSB’s Engagement Director to TCFD what are the synergies between the three organisations? 
 
CDP has been promoting investor-relevant corporate climate disclosure for 15 years. Last year more than 5,600 companies disclosed environmental data through CDP. The main aim of the TCFD is to mainstream climate information for increased governance and oversight at board-level. This will allow investors, auditors, shareholders and key stakeholders to access this critical information as part of the annual filing. CDP and CDSB facilitates this. CDP’s core mission is the drive for mandating regulatory global disclosure and CDSB is the organisation with the framework to translate environmental and natural capital information into mainstream financial language. The CDP reporting platform in partnership with CDSB’s frameworks provide businesses with the toolkit and the methodology to disclose for financial markets. CDP has  committed to adopt the Task Force’s recommendations in their entirety in the 2018 disclosure cycle. 
 
Why is theTFCD so significant given there are no members of governments, no regulators or NGOs among its 32 members?
 
The Task Force was created by Mark Carney and Michael Bloomberg’s vision  to  create a business environment which clearly recognises that an organisation’s climate exposure and financial risks are  interrelated. The Task Force itself is made up of a group of  senior executives from across the private sector representing global businesses, creating jobs and driving economies and GDP. Task Force members have taken time out of demanding roles at the top of businesses to work within the TFCD for more than a year. In a remarkably short timeframe, an impressive set of recommendations on the implications of climate risk and climate disclosure has been published. This report is a game changer which will drive boards to engage with climate risk beyond the sustainability department. The focus is squarely on climate governance, strategy and risk management from board level to the frontline. The Task Force has demonstrated real leadership sending a clear message that climate change is recognised by global businesses as critical to  addressing long-term financial risks. 
 
While it is the leaders of multinationals who drive the TFCD, how can SMEs or businesses who may not be so well versed on climate risks be encouraged to follow the TFCD’s recommendations? What is in it for them? 
I think this touches on a very important issue. There are quite a number of major global businesses who perhaps are not as advanced as the members of the Task Force in understanding climate risk. One of the key recommendations in the report is an acknowledgement that there is a lack of climate competence at Board level, which must be addressed as part of a company’s governance. SMEs will, of course, be looking at what the major players are doing and as is always the case, what hits big business first will start to cascade down. Some SME’s because of their size will be able to react quickly and take advantage of the opportunities presented by the transition to a well below 2 degree world. The other aspect of this is that although the TCFD’s  recommendations are voluntary there is likely to be considerable interest from regulators. CDP’s mission is to continually work towards a world in which disclosing this information becomes a mandatory requirement for all businesses irrespective of size. 
 
So climate risk reporting should not be seen just as an obligation but also as an opportunity for businesses to improve their bottom line?  
 
Absolutely. The Task Force’s Report highlights not only climate risks but opportunities.  The changing markets for low-carbon technologies and subsequent job creation opportunities are exciting. The added value benefits of understanding where your physical and transitional risks associated with climate change actually are and by addressing them, means you can actually cut liabilities and reduce costs across operational systems and supply chains. Companies on CDP’s ‘Climate A List’ outperformed the market by 6% over four years, according to STOXX. 
 
How certain can we be that the TFCD’s work will not be ‘undone’ by the political uncertainty on both sides of the Atlantic? 
 
We are currently in a political maelstrom around the world which in climate risk terms could be we viewed in a number of ways. This could be a positive lever and a number of top global leaders in climate are talking in this way. The  TCFD is driven by business and industry. It sees the value in ensuring that the world does not go over a tipping point in 2020 – and will act on it independent of the political systems we are in. I have always believed in the transformative power of business, seeing business as providing the impetus ‘ to get stuff done’. A recent article confirmed that 27 CEOs of major companies have publicly backed the TCFD recommendations which are yet to be finalised. That stamp of approval is enormously important. 
 
When speaking about climate leadership, it cannot go without mention that there are so many influential female leaders in the climate arena, such as UNFCC’s former and present Chiefs: Christiana Figueres and Patricia Espinosa and of course your contribution is remarkable too. What is it that makes women and climate a perfect match and what do women ‘bring to table’? 
I think women have an ability to take a long-term view and in the world of climate change and climate risk this is critical. You have to be able to work hard for something that is a very long way in the future and certainly may not be achievable in your own lifetime. But you can see that this is what we must strive for for this and future generations. There are many examples of female leaders in climate change I have been proud to work with. You’ve mentioned Christiana Figures. At CDP we have worked with her for a long time, also within our organisation we have Helen Wildsmith who has made a phenomenal impact on oil companies and how shareholder resolutions have been tabled at AGMs to ensure greater transparency and accountability for a well below 2 degree world. I think it is tough for women in climate but we believe strongly that what we are doing is the right thing and in this long term game it doesn’t matter that we are there for only part of the journey. It is where the journey is taking us that is paramount. 
 
Thank you and… hold that thought. We will continue this conversation in our next edition when the TFCD recommendations will be finalised. 
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