Insurance Europe has published its response to a consultation by the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) on its proposed guidance on climate-related metrics and financial impacts.
Insurance Europe, which supported the recommendations when they were first issued in 2017, welcomed the changes to the proposed climate-related metrics, targets, and transition plan guidance. It noted that the updated TCFD recommendations are a step towards common global standards and best practices that are necessary to deal with sustainability and curb climate change. These are global issues and as such require a global approach and international coordination. The TCFD’s framework can provide a basis to help set the right level of ambition and facilitate global coordination between public actors.
Climate-related disclosure by companies from all sectors would be beneficial for insurers’ investment and underwriting activities. On the investment side, the recommendations of the TCFD can support access to reliable sustainability information that insurers need to assess sustainability risks and refine their long-term investment strategies. On the underwriting side, the metrics proposed for the TCFD can help insurers to improve their understanding of their exposures to physical and transitional risks.
For universal acceptance of and greater adherence to the framework, the recommendations should remain manageable for all companies. Therefore, the reporting requirements should consider the principles of materiality and proportionality, while also accounting for existing issues related to methodologies and data. In the European Union significant steps have already been taken to develop sustainability-related disclosures. The TCFD should also collaborate with regulators and other standard-setting bodies to ensure a common global baseline is achieved about climate change disclosures and transition plans.