The governor of the Bank of England has warned major corporations that they have two years to agree rules for reporting climate risks before global regulators devise their own and make them compulsory.
Carney, who spoke this week at a Tokyo conference hosted by the Taskforce on Climate-Related Disclosures, has little time for niceties any more. He bluntly warned that companies would cease to exist if they failed to align their business models to the climate reality, while those that did would be rewarded “handsomely”.
“The longer that meaningful adjustment is delayed, the greater the disruption will be,” the BoE chief said.
Carney launched the TCFD with US billionaire Michael Bloomberg in 2015. Its overriding objective is to convince chief executives and financiers that the only way to meaningfully tackle climate change is to report on the interaction of their businesses with the environment as temperatures continue to rise.
One of the challenges, however, is to reach a conclusive view on what counts as high-quality disclosure.
Carney told the Tokyo conference that the next two annual reporting periods should “balance the urgency of the task and the imperative of getting it right” before any mandatory standards are introduced. The standards, he said, should be comparable, efficient and help the decision-making of both capital-suppliers and users.
The demand for TCFD disclosure was “enormous” — current supporters control balance sheets totalling $US120 trillion, including the world’s top banks, asset managers, pension funds, insurers, credit rating agencies, accounting firms and shareholder advisory services.
The supply of disclosure was responding, with four-fifths of the top 1100 companies in the G20 now disclosing climate-related financial risks in line with some of the TCFD recommendations.