Newsletter: A Market Imperative

 

 

TCFD releases recommendations on climate risk disclosures


Four Twenty Seven Climate Solutions

From the Desk of Emilie Mazzacurati

Climate risk disclosures are more important than ever. In the context of the Trump Presidency and the latest round of cabinet appointments, it may be tempting to dismiss the risk associated with the “Energy Transition” — the rapid transition to a low-carbon economy. It may be tempting to ignore the need to disclose risks from the physical impacts of climate change in a context that promises fewer regulations and a dismissal of climate policy.

Yet, there’s no escaping the science and the reality of climate change, and the Trump administration’s stance on climate change gives even more urgency to both transition and physical risks of climate change.

Climate change and its impacts are not going away, and will likely worsen at an increasing rate if we continue to ignore them. Looking out a few years, these same physical impacts from climate change will eventually force us to transition rapidly away from fossil fuels to stop further degradation of the climate, leading to a ripple effect across the economy as entire value chains relying on fossil fuels, including major energy and transportation systems, will need to adapt – potentially at a high cost. The only question is how fast, and how expensive.

Markets have a chance to avoid being blindsided by a predictable risk. The TCFD offers a market solution, by the market, for the market. Mark Carney and Mike Bloomberg point out in an Op-Ed in The Guardian that “early disclosure rules allowed 20th-century financial markets to grow our economies by pricing risks more accurately.” This is our chance to repeat a good deed.

Disclosures are a small step that can help set in motions much larger changes through market forces, by pricing risk accurately, rewarding companies that take appropriate steps to prepare and adapt, and unlocking finance for resilience. Climate risk disclosures are an opportunity and a necessity for markets to both accelerate the energy transition and prepare for growing climate impacts.


Emilie Mazzacurati, Founder and CEO
Four Twenty Seven

TCFD Risk Disclosure Recommendations

The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) released a comprehensive set of recommendations on December 14. The TCFD provided detailed guidance for companies on how and what to integrate in their financial disclosures related to climate change, including both transition and physical risks. The TCFD recommends companies disclose how they address climate risk and opportunities across governance, strategy and risk management, and what metrics and targets they use to measure ambition and progress. The recommendations also encourage companies to consider opportunities to be found in climate-related efforts such as cost savings through improved resource efficiency or supply chain resilience. The Task Force’s recommends the use of scenario analysis to disclose an organization’s planning under future scenarios, most notably one with in a 2°C scenario.

The TCFD will take comments on the draft recommendations until February 12, 2017.

Read the TCFD Recommendations

Four Twenty Seven hosts webinar on TCFD Recommendations Jan 12.

How will the disclosure recommendations developed by the Task Force on Climate-related Financial Disclosures be put into action? Four Twenty Seven, in partnership with Crowell & Moring LLP, will host a webinar on January 12th at 9:00am PST to present present key recommendations from TCFD and discuss feasibility, next steps, and issues to consider for implementation.

Speakers:

Save the date for this event and email events@427mt.com to express interest and ensure you receive registration information.

Register

Climate Risk Portfolio Screening: the Right Tool for the Job

Scanning large portfolios of assets for exposure to physical impacts of climate change raises a number of challenges – from accessing raw climate data to selecting appropriate indicators and time frame, and interpreting the output while accounting for climate data’s unique complexity and sources of uncertainties.

To support corporations and investors looking to identify hotspots and quantify value at risk in their portfolio of assets, facilities or across their supply chain, Four Twenty Seven has developed a suite of enterprise applications that provide rapid, cost-effective screening across portfolios of 10,000+ assets.

Learn more about CREST, our Climate Resilience Support Tool for corporate climate risk management, and our climate data analytics services for financial institutions.

Growing Regulatory Momentum in Europe

Responsible investing received a big boost in Europe, as the European Parliament voted to confirm a law that will require pension fund managers in the EU to account for climate-related risks in their investment strategies. The law introduces new requirements for risk management and reporting. The law echoes Art. 173 in France‘s Law on the Energy and Ecology Transition (Loi TEE), which requires asset owners and asset managers to disclose financial climate risks ranging from carbon and energy risks to physical impacts of climate change.

Report: the Energy Transition Risk Toolbox

2 Degree Investment Initiative launched this week a new report entitled “Transition Risk Toolbox: Scenarios, Data and Models.” This report was published as part of the Energy Transition Risks project funded by the European Commission.

The toolbox is designed as a guide for relevant stakeholders seeking to define the ‘tools’ -scenarios, data needs, and models – required for transition risk modelling. It seeks to map these inputs, how they have been used to date, and the missing pieces requiring further research and analysis.The Energy Transition Risks & Opportunities (ET Risk) research consortium seeks to provide research and tools to assess the financial risk associated with the energy transition. The Consortium is funded by the European Commission and brings together academic researchers (University of Oxford, think tanks (Carbon Tracker Initiative, Institute for Climate Economics, and 2°Investing Initiative), industry experts (The COFirm), and financial institutions (Kepler Cheuvreux, S&P Global). A summary of the initiative can be found here.

Panel on Disclosures at 2017 Climate Leadership Conference

Join the 2017 Climate Leadership Conference in Chicago on March 1-3 for a panel on”The Changing Landscape of Climate Risk Disclosures”. Four Twenty Seven CEO Emilie Mazzacurati will be joined by Rick Saines, partner at Baker & McKenzie, and other market stakeholders, to discuss the future of climate risk disclosures.

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:
  • December 12-15: AGU 2016 Fall Meeting, San Francisco, CA: Director of Analytics Nik Steinberg, Director of Finance Colin Shaw, and Climate Data Analyst Colin Gannon each will be presenting on tools for evaluating and preparing for extreme heat events.
  • January 12: Webinar on climate risk disclosures co-hosted by Four Twenty Seven and Crowell & Moring
  • January 22-26American Meteorological Society Annual Meeting, Seattle, WA: Nik Steinberg will present on a decision-support tool for adapting to extreme heat.
  • January 24-26: NCSE 2017, Arlington, VA: Director of Advisory Services Yoon Kim will moderate a panel, “Climate Data and Public Health: Mobilizing Adaptation Action”
  • January 25-26: California Climate Change Symposium, Sacramento, CA: Meet Climate Adaptation Senior Analyst Kendall Starkman at this event focused on practical applications of California climate science.
  • March 1-3 Climate Leadership Conference, in Chicago. Emilie Mazzacurati will join a panel on climate risk disclosures on March 1st.

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