How to Manage Climate Risk

HOW YOU CAN COMPLY:

Adapt to the fast-changing regulations. Your ability to adequately address climate-related risk relies on adapting to the fast-moving regulatory environment. Many regulators globally are replacing voluntary guidelines with mandatory reporting. This hasn’t always been consistently applied, but that’s changing. New regulatory regimes are coalescing around a single globally recognized standard, and it’s becoming more integrated with how you would report any other financial measure. Know the TCFD & IFRS recommendations. At the center of more unified obligations is the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, which serve as a reference point in most regulatory policies globally. While they are voluntary standards, they are increasingly embedded within regulatory policies and adopted by many companies. As well, they are informing new standards under the International Financial Reporting Standards (IFRS), and the International Sustainability Standards Board (ISSB) established in 2021. The industry goal is to drive greater alignment and consistency, rather than a range of disparate definitions.

While not exhaustive, on the next page we take a look at the different scopes and stages of progress for regulatory developments by region. Regardless of where you are in your regulatory journey, it suggests regulation will only get tighter.