Author(s): Mark Carney
Date published: Jan 2020
SUERF Policy Note, Issue No 122
by Mark Carney, Bank of England
JEL-codes: E58, G28, Q54, Q56, Q58.
Keywords: Climate change, Global warming, Environmental reporting, Green growth, Sustainability, Climate policy, Stress testing, financial stability.
Changes in climate policies, new technologies and growing physical risks will prompt reassessments of the values of virtually every financial asset. Firms that align their business models to the transition to a net zero world will be rewarded handsomely. Those that fail to adapt will cease to exist. The longer that meaningful adjustment is delayed, the greater the disruption will be.
The TCFD provides the necessary foundation for the financial sector"s role in the transition to net zero that our planet needs and our citizens demand. Although the private sector has made rapid progress on reporting and risk management, more is required.
First we must work to increase the quantity and quality of disclosures by sharing best practice. Second, the TCFD disclosure recommendations should be refined to those that investors consider most decision-useful. Third, we must spread knowledge on how to measure and use information on strategic resilience to manage risks and realise opportunities. Fourth and finally, the TCFD should consider how asset owners could best disclose how well their portfolios are positioned for the transition to net zero.
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