G20 firms to disclose climate-change risks under new FSB plans

London — G20 companies will face common disclosure requirements on climate-change risks under plans by the Financial Stability Board (FSB), which co-ordinates financial rules for the group.

In the latest sign of how policymakers want faster action to replace the patchy progress seen so far, the FSB said on Tuesday that it will set out in July ways to promote consistent, high-quality climate disclosures.

Investors have long called for globally comparable disclosures to stop greenwashing, whereby firms exaggerate their responses to climate change or underplay how global warming is likely to affect their business.

Though recommendations by the FSB’s task-force for climate-related financial disclosures (TCFD) are being applied by some companies, they are voluntary and critics say they lack detail, and implementation has been patchy.

While the 27-member EU is pushing ahead with reforms to define which investments are “sustainable” and how to disclose them, the FSB said it would build on the TCFD recommendations.

The FSB, which members include central banks, financial regulators and treasury officials from G20 countries, said it backed plans by the International Financial Reporting Standards Foundation for a global sustainability reporting standards board based on the TCFD recommendations initially.

Given a proliferation of work on climate disclosures, the FSB said there was a need for a “strategic vision, good co-ordination, and clear communication to the G20 and the public” and it will present a multi-year road map this summer.

“This will leverage work being carried out by standard setting bodies and international organisations, while using our mechanisms to identify vulnerabilities and build consensus on ways forward,” it said.

The FSB and the Network for Greening the Financial System, a forum of central banks and financial regulators for climate related issues, will also work with each other. 

Reuters