This article was first published by PRI.
The strategy and governance indicators of the PRI's climate risk indicators are to become mandatory for signatories to report on from 2020.
Supporting the adoption of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) is a high priority for the PRI as they provide a global framework for translating information about climate into financial metrics.
As part of our programme on championing climate action, in 2018, the PRI introduced TCFD-aligned indicators to its Reporting Framework. Despite the indicators being voluntary, over 480 investors representing US$42 trillion opted to complete the indicators and submit responses. In 2019 the climate indicators will again be voluntary.
However, from 2020, it is the PRI's intention to make the climate indicators within SG 01 CC, SG 07 CC and SG 13 CC, mandatory to report but voluntary to disclose. The remaining PRI climate risk indicators will stay voluntary with a view to becoming mandatory as good practice develops.
Signatories will retain the option of being able to make their responses to this module either private or public. To support signatories in developing a response to the climate indicators, the PRI has consolidated guidance notes, investor case studies, webinars and a matrix of climate reference scenarios on a resource page.
Climate-related risks and opportunities are set to grow in the coming years. The impacts of 1.5°C of warming are now better understood with the IPCC reports stating that the world is on track to miss a manageable level of warming by a wide margin.
The PRI is concerned that the longer the world goes without a safe trajectory on climate change, the greater the risks for investors of an abrupt policy response,
Commenting on this announcement, Fiona Reynolds, CEO of the PRI said, “It is increasingly important for investors to incorporate emerging mega risks such as climate change into their view of the future. TCFD provides the best available framework for systematically including climate-related risks and opportunities into investment strategy. The PRI is pleased to further incorporate TCFD into our Reporting Framework and continues to be a strong supporter of the task force's recommendations."
What is the TCFD?
What were the TCFD recommendations?
South Pole's climate risk assessment tool can help in preparing TCFD-aligned disclosure – click here to learn more.