The following is taken from an article written by Aishwarya Chaturvedi for Sustainable Brands. Read the full piece on their website.
Last week at Sustainable Brands' New Metrics 2018 conference in Philadelphia, PA, over 300 delegates from brands, NGOs, strategists and practitioners across sectors gathered to share the newest credible tools and solutions for assessing the ROI of Sustainable Business [Including South Pole's new Climate Neutrality and Renewable Energy labels]. The densely packed program dug deep into topics ranging from Finance & Investment to Operational Metrics and Strategy to the evolution of Stakeholder Engagement. South Pole's Corporate Climate Expert, Charles Henderson shared his thoughts on scenario analysis as a tool.
This Tuesday afternoon deep dive discussion kicked off with a brief overview of the Task Force for Climate Related Financial Disclosures (TCFD) — a multi-stakeholder industry task force established by the G20 Financial Stability Board in 2015, at the request of G20 leaders — the purpose and importance of which is highlighted by rapidly growing demand for climate-related information from which investors can base their decisions. Further, it allows companies to more effectively evaluate their climate risks and strategy. The relevance of climate change impacts on financial performance is becoming more undeniable. However, forward-thinking investors and lenders who are interested in weighing the associated opportunities and risks are often bombarded with thousands of metrics, which vary by industry. Therefore, another major focus of the TCFD was to boil down the metrics into a more digestible disclosure standard. Other key takeaways of the TCFD are outlined below:
Goals of the TCFD:
After the overview of the TCFD, moderator Julia Casciotti, Senior Project Officer of Disclosure Services at CDP, turned to the panel for a thought-provoking discussion of the implications of the TCFD for companies and investors. Key insights included:
"Start with year one and broad strokes. Identify where major risks/hot spots are and how new regulations and [carbon] pricing may affect them. Full economic analysis can come in future years. Be pragmatic at first. You don't need to start with sophisticated models. It's a really interesting way to take a look at what the future may hold for your organization." — Charles Henderson, Corporate Climate Change Expert at South Pole, on scenario analysis as a tool
"Science-based targets are a useful tool for benchmarking and serve as a great signal. However, following actual execution and performance relative to their peers is what we are more interested in." — Duane Roberts, Portfolio Manager at Dana Investment Advisors
"We are still trying to ask as many questions as answers. [TCFD] changed how we discuss risk management and broadened our view with a new lens for climate-related risks." —
Bruno Sarda, Head of Sustainability at NRG
"TCFD is starting a conversation on what investors see that they like, what would they would like to see more of. This also creates opportunities for proactive companies to engage with investors and lenders and also provides valuable information to those who may not be as proactive." — Dan Saccardi, Director of the Company Network at Ceres
Charles Henderson (middle) speaking on the panel at the event.