Where are banks' environmental disclosures?
Environmental disclosures are set to attract greater scrutiny as policy-makers put pressure on financial institutions to consider new types of risks. In the UK, the government has already made the Task Force on Climate-related Financial Disclosures (TCFD) mandatory for financial institutions as of the end of 2021.
The framework, created in 2017, has gained the support of some of the world’s largest financial groups — but not all, however. And out of the banks that did endorse TCFD, not all have begun disclosing, according to a recent study by BCS Consulting.
At present, 38 of the 100 largest banks globally have not signed up to the framework. Many of the missing names are from emerging markets, led by China (China Construction Bank and Agricultural Bank of China, being two of the world’s largest lenders). But there are a few European and US lenders too, including France’s BPCE and US Bancorp.
Moreover, out of the total 111 banks that had committed to TCFD as of June 2020, only 76 started disclosing their climate-related financial risks. Levels of granularity vary. The study found that banks tend to be better at disclosing their environmental footprint than they are at reporting on their climate risk management metrics and scenario analyses, for example. This is a new and complex area. But it might be time banks stepped up their efforts.
