Abstract
The property and construction industry are known to be a main contributor to climate change contributing more than 40% of the world's emissions. In direct response to this, there has been a call for corporations to be more transparent and align themselves to the requirements of the task force for climate financial disclosures (TCFD). This paper seeks to provide a briefing on the requirements of the TCFD. It highlights common challenges faced by the property and construction industry in implementing TCFD such as the difficulty in integrating climate related risks and translating them into quantitative measures, lack of capability within the industry to understand the complexities of climate risks and data collection issues among others. Recommendations are proposed to address these issues including setting up an industry specific network to share best practices in TCFD, harmonisation of existing frameworks to include TCFD requirements and exploring opportunities for incentivisation and rewards for early movers. This paper will be useful to property and construction industry practitioners who are looking at aligning to the requirements of the TCFD.
Highlights
Climate change is recognised as the defining issue of this era
The aim of task force for climate financial disclosures (TCFD) is to provide guidance for consistent climate-related financial risk disclosures by companies that are meaningful to stakeholders including investors, lenders and insurers among others
A survey conducted by South Pole [13] revealed that while two thirds of responding organisations recognised the first mover advantage of early adoption of TCFD but less than one in ten have decided on a disclosure strategy. 40% of respondents believe that TCFD will improve the understanding of both physical and transition risks connected with climate change but only 25% have developed scenarios to explore how these risks will impact their business
Summary
From shifting weather patterns which threaten food security [1] to rising sea levels that increases the risk of catastrophic flooding, the impacts of climate change are global in scope and unprecedented [2]. The recommendations provided by TCFD are intended to help companies better understand what financial markets want from such disclosures in order to monitor and respond to climate change risks. 40% of respondents believe that TCFD will improve the understanding of both physical and transition risks connected with climate change but only 25% have developed scenarios to explore how these risks will impact their business Another landmark study by [8] revealed that there has been a 10% increase in the number of companies (1126 sample companies) disclosing relevant climate information between 2016 to 2018 (see [8,14]).
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