Getting Started on Climate Risk Reporting
Tips
Here are three things you can be doing now, to get started on climate risk reporting in your organisation:
- Understand the terminology: Start talking “climate” in your organisation and familiarise yourself with some of the key material issued by the TCFD. The original 2017 report is a great place to start.
- Measure your footprint: One of the key disclosures in the TCFD is focused on measuring greenhouse gas emissions. There are a lot of resources available – such as the XRB's short guide on getting started on measuring your emissions, or MfE’s Measuring emissions: Detailed guide 2020 which includes interactive workbooks, sample reports and inventories.
- Create a coalition of the willing: Get climate-related disclosures on the agenda of senior management and the board to start a conversation about what implementation might look like in your organisation. Engage sustainability, finance and risk together because climate risks and opportunities shouldn’t be considered in isolation.
Lessons from early adopters
We recently talked with organisations who have made a start on implementing climate reporting and asked them:
- Where are you on your climate risk reporting journey?
- What were the first actions you took to get started?
- What roles in your organisation have been critical to being involved?
Here's what they said:
Fisher & Paykel Healthcare (F&P) has provided sustainability disclosures, including the recommendations of the Taskforce for Climate-Related Financial Disclosures (TCFD) for a number of years. Head of Sustainability & Environmental Innovation – Nic Bishop, notes below the steps taken by F&P to integrate the TCFD disclosures in responding to questions from the XRB. Bishop notes that the integration of the TCFD disclosures, built on existing disclosures to CDP (formerly the Carbon Disclosure Project).
Where are you on your climate risk reporting journey?
F&P has been disclosing to CDP Climate Strategy since 2010, which has included TCFD aligned questions for the last 4 years. We have also integrated the TCFD recommended disclosures into our annual report for the last two years. F&P also disclose to the CDP Water and Forests programs, which we see as aligned and will prepare us for the future Taskforce for Nature-Related Financial Disclosures (TNDF). We continue to work with our enterprise risk team to integrate climate-related risk assessment into broader risk assessment thinking, and have partnered with South Pole to support our ongoing climate risk assessment work.
What were the first three actions you took to get started?
We noted that CDP already integrated current TCFD questions, and reviewed these areas to understand TCFD more deeply. The sustainability team researched the requirements further for an integrated annual report disclosure, and completed the online TCFD courses and reviewed the guidance from TCFD / Carbon Disclosure Standards Board (CDSB) in full. We made sure we had alignment between our investor, finance, risk and sustainability teams to buy-in to integrated commentary throughout the annual report, so that these stakeholder groups understood the intent of the TCFD (integration) as well as the recommendations;
What roles in your organisation have been critical to get involved?
Key roles that have supported F&P to deliver integrated TCFD disclosures have included the investor, communications, risk and sustainability teams. In addition, the role of our CEO, CFO, Board Chair and Audit & Risk committee has supported the approvals for integrating the recommended disclosures into our last two annual reports. Early on, involving the communications team allowed for planning to understand the impact on the annual report, which was a critical step – given the integration through multiple sections of the report, with content in leadership commentary, governance, risk and environmental sections.
F&P annual reports can be found here, which include a TCFD index - https://www.fphcare.com/nz/our-company/investor/reports/”
Where are you on your climate risk reporting journey?
We completed a comprehensive climate risk and opportunity assessment during 2020, and published our first climate-related disclosures in line with the TCFD recommendations in our FY20 Annual Report. We acknowledged in that report that we still have more work to do to understand the resilience of individual assets in PFI’s portfolio to climate change in different climate change transition pathways, which we are now working on.
What were the first 3 actions you took to get started?
The first step was finding a sustainability expert (we partner with Proxima) who could provide us with advice on understanding and managing our corporate greenhouse gas emissions to give us context for the road ahead. The next step was measuring and understanding our carbon footprint – this gave us a good understanding of our company’s impact, and what we could do to change it.
From there, we did some research to understand the political and regulatory environment, the expected impacts of climate change for our country and industry, and what risks similar companies overseas (who were further along in their journey) had identified this made it easier for us to complete our climate risk and opportunity assessment.
What roles in your organisation have been critical to being involved?
Our Sustainability, Risk & Compliance Manager has led this work, with input from the Chief Finance & Operating Officer, Chief Executive Officer, Finance Manager and Portfolio Manager.
Where are you on your climate risk reporting journey?
We have prepared 2 disclosures to date (31 December 2019 – first with our interim report and second as part of our 30 June 2020 annual report). Key area we haven’t addressed is scenario analysis. We also are working at formalising the identification and assessment of climate risks into our risk reporting processes.
What were the first 3 actions you took to get started?
- Attended training on TCFD framework;
- Did self-study on TCFD framework; and
- Setup regular catch ups with the sustainability team to agree on a plan.
What roles in your organisation have been critical to being involved?
- Sustainability team members (Head of and an analyst);
- Risk team members (including at CCOs - head of and an analyst); and
- Finance team members (3 at managerial level).