Task Force on Climate Related Financial Disclosures

I'm sure you're aware of as well, Vikash.

There are initiatives that have begun to bear fruit, like the Task Force on Climate-Related Financial Disclosure, which is an initiative that existed to ensure that central banks are working with others to fully comprehend the nature of climate-related risks for the financial system, related to that also the task force on nature-related financial risk disclosure.

which is exactly the same, but looking at nature-related risks and what they pose to financial systems.

And UNDP is very proud.

And so in disclosure, I think there's sort of two key areas.

There's, uh, we've seen, uh, uh, an incr- we've seen new laws requiring corporate-level disclosure, so that would be SB25, in California, SB253, the Climate, um, Corporate Data Accountability Act, which covers emissions disclosure, GHG emissions disclosure, and SB261, which is, uh, requires disclosure on climate-related risks and opportunities, um, along, uh, under a, uh, under a format, um, uh, uh, called TCFD, the, uh, Task Force on, um, uh, uh, Climate-related Financial Disclosure.

Uh, and these, uh, and that format, um, also covers a number of things that we might not have think of as directly within the context of climate risk.

It can cover targets and governance mechanisms, for example.

Well, ultimately, it does require regulation.

And if you see what's happened with the TCFD, the Task Force on Climate, the UK was the first country to mandate that.

And once it's mandated, then all companies have to do it.

And so I wonder who will become the first country to mandate the TNFD on nature.

Let's talk a bit more about the kind of disclosure and reporting aspect of TNFD, because, I mean, compliance can help get things on people's radars, but it doesn't always win those mindsets over.

And actually, lots of our members, um, have fed back to us that they feel that there's a lot of sustainability reporting burden, um, that takes up a lot of time for them, whether that's, uh, TCFD reports, uh, stewardship code reports, you know, meeting other sort of standards as well.

How do you see TNFD fitting into all of this?

Yeah.

Well, we've been very conscious about this from the beginning.

The first decision of the task force was to basically build, as our name suggests, build directly on top of TCFD.

So, um, we, we very quickly, I think in the first or second meeting of the task force back in 2021, we said, "If we don't need to change anything from TCFD, let's keep it, other than, you know, literally swapping out the word climate for nature.

If those disclosures were still meaningful for investors, and they were still, they still work, then let's simply do a minimum word change." One of the things the market said to us is, "If you change words, that causes a huge amount of, uh, extra work and due diligence.

[laughs] Sustainability.

Uh, yeah, no, so essentially, so we have the TCFD, which is all about, um, you know, climate risk, uh, which, uh, our dear Funny sit with, uh, quite a bit.

Mm-hmm.

And then we now have a nature risk-

Uh, so what was then, uh, done is that they've created this task force for, uh, nature-related, uh, disclosures, because similarly to, uh, with climate, we need to also look at those because they constitute a lot of risks and opportunities, et cetera.

Yes, Hanne? [laughs]

So, uh, so what they did was that they used the original TCFD framework.

Uh-huh.

This was the, the, the most recent paper that I wrote in June was kind of how we've confused risk, different types of risk and how, and different responses to risk, and then what different institutions can do about that risk, I think with perverse outcomes.

And I think TCFD and some of those climate risk frameworks have fallen into that trap, which is risk management frameworks where...

Or risk disclosure frameworks where the...

At best, what a risk disclosure framework tells you is what are the risks so I can manage them, but they have been, um, pushed as a means to think that that risk management will build a system.

As a reminder, USF is not currently required to comply with the UK sustainability disclosure requirements, but hopefully provide sufficient data for any investor who would wish to categorize USF under their own sustainability labeling.

Finally, we'll be updating the company's TCFD disclosures in the next annual report.

And with that, I'll hand back over to Tom.

That's great.

And so some of this, some of the action that we see in businesses is being driven by shareholders, by philanthropic donors.

If you're in the not for profit space, they will be asking some by regulation to TCFD, TNFD.

is driving some of the action as well.

I do think, and I do think that we have not done what we could do on this as sustainability professionals.