Dollars and Sense; Reviewing Industry Implementation of the Climate-Related Disclosures Mandate in New Zealand

Abstract

The global commitment to sustainable development has catalysed the climate policy environment and its multiverse of non-financial reporting frameworks. One such framework, the TCFD (Task Force on Climate-Related Financial Disclosures) is dependent on assumptions that organisations view risk management the same way as the framework’s intent; prioritising the decarbonisation pathway. The purpose of non-financial reporting is to challenge existing business-as-usual values of profit-seeking without regard for the environment. This study employs a systems-based methodology (Critical Systems Heuristics) to uncover the issues that arise as a result of organisations implementing the TCFD, as demonstrated by their risk management process. The key findings of this study show that organisations are primarily motivated by financial growth, which directly competes with the intentions of the TCFD. Mandating the TCFD fails to address the tensions between business-as-usual business models and the regulatory intent towards decarbonisation. The findings raise concerns about the TCFD’s potential effectiveness; unchanged risk management processes risk a continuation of existent best practices leading to status quo outcomes. Keywords: Non-financial reporting, sustainable development, systems thinking, climate risk, risk management, critical systems heuristics