ESG, and the business case for dealing with climate change

Recommendations of the taskforce on climate related financial disclosures (TCFD)

The reality is that, unless businesses embrace the need to build climate change into their strategy and planning, they will pay higher costs of capital or, in some cases, will not be able to raise capital at all.

As the world looks ahead to emerging from the Covidpandemic, there is increasing focus on another global imperative: climate change. From a straightforward commercial perspective, this should be high on the agenda for all companies, in particular those in more significantly affected industry sectors. In order to attract funding from investors and lenders, businesses will need to demonstrate how their operating models are sustainable in the short, medium and longer term. This is not something for the future; investors are demanding it now. Many governments are also driving change, by developing and implementing policies that are designed to encourage (and in some cases require) businesses to take substantive steps towards the long term goal of a zero carbon economy.Although, as noted above, a large number of non-financial reporting frameworks exist globally , for climate-related issues many companies are adopting (and in some jurisdictions, such as the UK (in 2021) and New Zealand (in 2023), are being required to adopt), the recommendations of the Taskforce for Climate-Related Financial Disclosures (TCFD). In this publication we set out the current landscape, and summarisethe TCFD recommendations and related guidance to help companies get started in reporting how they are working on a transformation which is not optional, but is instead a requirement for them to have a sustainable future.