A new capital markets solution is opening up in the battle against climate change—and business is leading the charge.

Under the leadership of former New York City Mayor Michael Bloomberg, a global industry initiative just released its much-anticipated guidelines for voluntary climate risk disclosure by companies and investors in financial filings.

The guidelines, released Wednesday, of the Task Force on Climate-related Financial Disclosures, are a big deal because they were developed by business for business. The task force was created by the G20 with one specific goal: to cut through the confusion in the market around financial reporting on climate risk by providing a single set of concrete, workable guidelines for all industries.

The TCFD’s guidelines will help standardize how climate risks and opportunities are analyzed by companies, and generate critical information for investors to help them make better decisions. They are a powerful statement by some of the world’s largest corporations that climate change is a systemic material risk that requires clear and efficient disclosures.

With these proposals, business leaders from across our economy are saying that all parts of the capital markets need to be engaged on climate change and that the way to do that is through uniform analysis and disclosures by investors and companies alike.

We support the TCFD’s efforts because they include a level of corporate involvement and support from G20 nations that we haven’t seen before. We have worked for decades to advance corporate disclosure of climate change risks on behalf of investors, and the lessons we have learned have been incorporated into the task force’s work.

In fact, I met with task force members in London in February to outline the work we have done with investors and companies to make corporate disclosure a mainstream practice. The TCFD ended up incorporating the pioneering work we have done in corporate sustainability reporting with the Global Reporting Initiative and the U.S. Securities and Exchange Commission.

The TCFD’s robust guidelines—developed by major investors and companies, including Blackrock, Unilever, and Axa—have 11 specific recommendations for all industries, divided into four topics: governance, strategy, risk management, and metrics and targets. They include:

  • All companies should benchmark strategic and financial planning using a two-degrees Celsius economic scenario as their baseline for analyzing climate risks and opportunities. This recommendation is based on the Paris Climate Agreement’s goal of limiting global warming to two-degrees Celsius, It is a critical piece in the puzzle of understanding the real impacts of global warming on business and investments, which we strongly advocated for with our investor partners worldwide.
  • All companies should disclose information related to water, energy usage and efficiency, land use, and revenues from products and services designed for a low carbon economy.
  • All asset owners and asset managers should assess and disclose the climate risks in their portfolios, which is the first-ever global recommendation for investors.

Healthy markets and strong economies are built on transparency. By having more consistent, more comparable disclosure about the risks and opportunities of climate change, investors, banks, and insurers can make better, more informed decisions about where to put their money.

Disclosure is now more critical than ever. No matter the political winds in Washington, climate change is real and its impacts are being felt across our global economy. Climate risks affect 72 out of 79 industries or 93 percent of the capital markets worth $27.5 trillion, according to a recent report by the Sustainability Accounting Standards Board.

While the TCFD’s initiative promotes voluntary disclosure, we believe its guidelines can be part of the groundwork for the mandatory disclosure that regulators need to move towards. Mandatory disclosure is the only way to ensure that reporting is truly comparable and consistent.

For instance, it provides a basis that financial regulators or stock exchanges in any country can use as it considers providing guidance or rules on climate risk disclosure. The SEC’s 2010 guidance on climate risk disclosure still provides a strong model for guidance by other securities regulators, and the TCFD recommendations add useful information that investors have asked companies for—like two degrees scenario planning—that’s fully aligned with disclosure rules in the U.S. and abroad.

The demand for more information is clear. That’s why 45 institutional investors representing $1.1 trillion in assets under management called for stronger climate risk disclosure in response to the SEC’s request for public comments on a wide range of disclosure topics. And more than 140 legislators from more than 30 countries called on the world’s stock exchanges to take note of the TCFD recommendations and update their climate disclosure practices.

It is only by measuring these risks that our markets and economies can manage them. The TCFD guidelines are a profoundly important step forward in that direction.

Read the post at Forbes Sustainable Capitalism Blog

Meet The Experts


Mindy S. Lubber

Chief Executive Officer and President

Mindy S. Lubber is the CEO and President and a founding board member of Ceres, a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy.  Under her leadership, Ceres has launched visionary and practical guides, including The Ceres Blueprint for Sustainable Investing and The Ceres Roadmap for Sustainability, for investors and companies to succeed in the 21st century global economy.
Mindy leads negotiating teams of institutional investors, Fortune 500 CEOs and sustainability advocates who have taken far-reaching positions on corporate practices to tackle climate change, water scarcity and pollution, and human rights abuses. She briefs powerful corporate boards and directors on how climate change affects shareholder value, and regularly speaks about sustainability issues to high-level leaders at the New York Stock Exchange, United Nations, World Economic Forum, Clinton Global Initiative, American Accounting Association and the American Bar Association.
Mindy is a recognized thought leader and has received numerous awards for her leadership in helping to build a sustainable future. In 2016, she received the Climate Visionary Award from the Earth Day Network, and the William K. Reilly Award for Environmental Leadership from American University’s Center for Environmental Policy. She was honored by the United Nations and the Foundation for Social Change as one of the World’s Top Leaders of Change, and is a recipient of the Skoll Award for Social Change. Vogue Magazine recently named her a Climate Warrior for her contributions in mobilizing business support for the historic Paris Climate Agreement, and Directorship Magazine named her one of The 100 Most Influential People in Corporate Governance.  
Mindy is often featured in top media outlets including the New York Times, Wall Street Journal, Bloomberg, Financial Times, and has appeared on CNBC.com, National Public Radio, and other broadcasting outlets. She regularly pens blogs for Forbes, Huffington Post, and other popular news sites. In 2014, Mindy presented at TEDx Lake Geneva in Switzerland, highlighting the role of the private sector in solving climate change.
Prior to Ceres, Mindy held various leadership positions in government, financial services and the nonprofit sector. Mindy joined the U.S. Environmental Protection Agency (EPA) in 1995 as a Deputy Regional Administrator and was named Regional Administrator under President Bill Clinton in 2000. As Regional Administrator, she was responsible for the administration and management of the EPA’s New England Regional Office and its then $450 million annual budget. She organized aggressive cleanups of hazardous waste sites with a goal of redevelopment, job creation and urban revitalization, ensuring the protection of drinking water supplies and children’s health.
Mindy was also the Founder, CEO and President of Green Century Capital Management, a family of environmentally responsible mutual funds. She also served as Director of the Mass Public Interest Research Group.
Mindy holds a master’s in business administration from SUNY Buffalo and earned a law degree from Suffolk University. She resides in Brookline, Mass., with her husband and has two grown children