Canada’s Royal and TD Financial Group are among 11 large international banks that will cooperate to implement recommendations from a task force led by Bank of England Governor Mark Carney to improve disclosure of corporate exposure to climate and other environmental risks.
“The group, representing more than US$7 trillion, started a pilot project to implement the recommendations of a task force set up by Carney to increase financial reporting standards on issues related to the environment,” Bloomberg reports, citing a statement Tuesday from the United Nations Environment Finance Initiative. The news agency’s owner and former New York mayor Michael Bloomberg led the task force’s actual work, releasing a draft report last December and presenting a final report to G20 leaders last week in Hamburg.
“One of the essential functions of financial markets,” the draft stated, “is to price risk to support informed, efficient capital allocation decisions.” However, “one of the most significant, and perhaps most misunderstood, risks that organizations face today relates to climate change.”
To correct that, the Task Force on Climate-Related Financial Disclosures set out a framework for greater transparency on corporate governance, strategy, climate risk management, metrics, and targets. Its final report, Bloomberg writes, suggests that “companies impacted by climate change should conduct scenario analysis and include results in their financial reports.”
The international banks will work together to develop a response to that direction, the outlet said. In addition to the two Canadian institutions, the group includes American giant Citigroup Inc., Britain’s Barclays PLC, Switzerland’s UBS AG, Spain’s Banco Santander, and banks from Australia and New Zealand.