A plan for mandatory TCFD-aligned disclosure

June 29, 2021
ESG Insights

The roadmap is a plan to establish mandatory financial disclosure on climate risk in Australia over the next few years. The plan details the actions Australian financial regulators and the Federal Government can take to build on existing work and further ensure there is clear and consistent reporting from companies, investors, banks and insurers. This reporting will produce investable disclosure and ensure financial markets can properly price and act on the physical and transitional risks of climate change.

Ethical Partners advocates for TCFD reporting with our portfolio engagements companies as we believe it provides us valuable insights into how how companies are understanding and managing their climate related risks. Furthermore, we believe that the process of undertaking a TCFD gives a company valuable insights into their own climate risk management and areas for improvement.

Ethical Partners believes mandatory TCFD-aligned disclosure in Australia is required because:

• It is critical for financial stability and investment in net zero emissions and climate resilient economic activities.

• Boards and trustee have a duty to consider material climate risks.

• Voluntary approaches have proven insufficient for transparency, consistency and comparability of disclosures for informed and efficient asset allocation.

• Governments and financial regulators around the world are moving to consider and implement mandatory TCFD reporting requirements.

• Setting clear, mandatory requirements will help provide clarity to align regulation with industry expectations and global standards, reduce existing burdens by reducing and streamlining decision making, and help cut red tape/duplication/confusion about reporting for business.

• The Alignment of reporting expectations across global jurisdictions is important for investors and companies subject to multiple regulatory frameworks.

We look forward to continuing to engage with companies and to support investor collaboration around implementing mandatory financial disclosure on climate risk.

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