Task Force on Climate-Related Financial Disclosures Report
In 2017, the Financial Stability Board (FSB) created the Task Force on Climate-Related Financial Disclosures (TCFD) in an effort to standardize the climate-related information that companies disclose. Since its creation, the TCFD has become a widely-recognized and respected effort with over 4,000 supporting organizations from 100+ countries representing a combined market capitalization of $27 trillion.8
The general adoption of climate-related disclosure legislation is a positive sign for investors because it promises to improve the availability and consistency of material climate-related information that may influence investment decisions. However, the potential piecemeal implementation of the TCFD by regulators also presents challenges for firms that invest across different regions, such as inconsistent information on potential investments and varying degrees of reporting expectations.
Fortunately, recent industry developments are focused on mitigating further fragmentation in climate disclosure regulations, and we view these more recent developments as positive for both firms and investors and support the global alignment and consistency of climate-related disclosures.
In July 2023, two key announcements were made by the International Organization of Securities Commissions (IOSCO), the hallmark association of over 230 global regulators that oversee the world’s securities and futures markets:
1. IOSCO formally endorsed the first two standards published by the International Sustainability Standards Board (ISSB) which relate to general sustainability-related financial information (IFRS S1) and climate-related disclosures (IFRS S2), respectively. In practice, this means that IOSCO has encouraged its global membership to look to the ISSB Standards as a best practice when contemplating sustainability disclosure into their local regulation.
2. Because the ISSB aligned the climate-related components of IFRS 1 and 2 to the TCFD recommendations, the FSB viewed the Standards as “the culmination of the work of the TCFD,” and transferred the monitoring and oversight of TCFD alignment by companies to the IFRS Foundation beginning in 2024. Through IOSCO’s endorsement of the ISSB, this effectively aligns the oversight of TCFD implementation more closely to global regulators.
HarbourVest’s 3rd Annual TCFD Report
We are pleased to share the third edition of our TCFD report, highlighting our general approach, important updates, and actions taken over the past year.
The Recommendations of the TCFD provide the framework for building consistent climate disclosures. We have organized our climate change strategy in line with the four pillars of the TCFD and our corresponding commitments are:
We will articulate our position on climate change and clarify oversight and management responsibilities for that position internally.
We will engage the senior investment team to have a meaningful discussion on the potential impact of climate change scenarios to our investment strategies.
We will engage with GPs on the adoption of the TCFD framework to assess and manage climate-related risks. As part of our ESG Scorecard and reporting, we will begin to capture data regarding adoption amongst GPs and use this knowledge to educate and lead the industry.
Metrics and targets
We will support and collaborate with GPs on the identification of climate-related risks and target-setting for risk management.