* Recommends climate risk disclosure in financial reports
* Regime would be voluntary, some push for mandatory
* Disclosure could help make markets more efficient
By Nina Chestney
LONDON, Dec 14 Companies will be asked to
disclose how they manage the risks to their business from
climate change and greenhouse gas emission cuts by a global task
force set up to try to prevent market shocks from the warming of
Although the measures recommended by the Task Force on
Climate-Related Financial Disclosures (TCFD) are voluntary, some
of its members argue they should become mandatory.
"Only then will climate risk become integral to corporate
governance and how we all do business," Mark Wilson, chief
executive of insurance firm Aviva Plc, said in a statement.
The TCFD was called for by the Group of 20 economies and set
up by the G20's Financial Stability Board (FSB).
It recommended on Wednesday that companies disclose how they
identify, assess and manage climate risks and opportunities and
how risks in the short, medium and long- term impact their
business, strategy and financial planning.
They should also describe the potential impact of limiting
global temperature rise to 2 degrees C on their business, and
how greenhouse gas emission cuts will impact their bottom line.
"The disclosure recommendations will give financial markets
the information they need to manage risks and seize
opportunities stemming from climate change," Bank of England
Governor Mark Carney, who chairs the FSB, said.
Concerns among the financial community are growing that
assets are being mispriced because the full extent of climate
risk is not being factored in, threatening market stability.
According to Barclays, the fossil fuel industry could lose
$34 trillion in revenues by 2040 as a global deal to limit
temperature rise to well below 2 degrees Celsius reduces demand
for oil, coal and gas, turning reserves into stranded assets.
There are also calls for increased company transparency.
U.S. oil company Exxon Mobil Corp. is currently
being investigated in the United States on whether it misled
investors and the public about climate risks.
The TCFD wants all financial and non-financial organisations
with public debt or equity such as asset managers, insurance
companies, endowments and foundations to implement its
It has 32 members from large banks, insurance companies,
asset management companies, pension funds, credit rating
agencies and accounting and consulting firms.
A 60-day public consultation will run until Feb. 12, 2017 to
get feedback on the recommendations. (www.fsb-tcfd.org/)
(Editing by Alexander Smith)