Principles for effective disclosure
Since 2017, UNEP FI has been working with its members to better equip the banking industry to implement the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Now in its third phase of work, the programme has brought together more than 40 banks on six continents to pilot the recommendations and jointly develop tools and guidance. UNEP FI and the banks are being supported in this work by a wide range of expert partners. The first phase of the project developed transition and physical assessment models and metrics to enable scenario-based, forward-looking assessment and disclosure of climate-related risks and opportunities. The second phase built on the previous work, helping banks enhance their climate risk toolkits and improve their climate risk disclosures. The work focused on the four pillars of TCFD disclosures – Governance, Strategy, Risk Management, and Metrics and Targets – developing tools, frameworks, and thought papers that enabled participants to better address each of the recommended disclosures within these pillars. Beyond building capacity for participants, the Phase II outputs aimed to establish good practices for TCFD disclosures across the financial sector. The third phase commenced in January 2021 and includes nearly 50 banks and investors who are exploring ways to add depth, granularity, and nuance to their climate risk assessments, consolidate best practices in climate risk management, and standardize climate disclosures across the industry. Using a flexible programme format, these institutions have built capacities around climate stress testing, sectoral risk assessments, and climate risk management among others.