Abstract
Climate-related financial risks have become a crucial concern in financial policymaking. This recent development is propelled by concerns that financial markets have underestimated, and are unprepared for, the costs and losses that will follow as the effects of climate change escalate. It is also driven by the enormous scale of investments required to facilitate the transition to a low-emission society. The Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) are one example of a response to these developments in the realm of financial policymaking. They aim to encourage disclosure of climate-related risks, by introducing new categories of risk – namely, physical risk and transition risk. This article examines the new categorization of risks and discusses both its integration into non-binding reporting guidelines in the European context and its potential for broader adoption. Climate-related financial risk, Action Plan on Financing Sustainable Growth, ESG, TCFD, physical risk, transition risk, non-financial reporting, responsible investment
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