2021 Status Report: Task Force on Climate-related Financial Disclosures

14 October 2021 | PDF full text (9 MB)

This report from the Task Force on Climate-related Financial Disclosures (TCFD) is an annual report on TCFD-aligned disclosures by firms.

The latest status report finds that disclosure of climate-related financial information aligned with the TCFD recommendations has accelerated over the past year, growing by nine percentage points in 2020 compared to four percentage points in 2019 in the prior year and finds that over 50% of firms disclosed their climate-related risks and opportunities.

More specifically, the status report finds that:

  • Disclosure increased more between 2019 and 2020 than in any previous year assessed, consistent with global momentum around climate-related reporting. However, significant progress is still needed as an average of only one in three companies reviewed disclosed climate-related information aligned with the TCFD recommendations.

  • Companies remain more likely to disclose information on their climate-related risks and opportunities (Strategy a in the TCFD recommendations), than on any other recommended disclosure, with over half of the companies reviewed including such information in their 2020 reports.

  • Disclosure of the resilience of companies’ strategies under different climate-related scenarios (Strategy c in the TCFD recommendations), although still the least reported recommended disclosure, encouragingly increased from 5% of companies in 2018 to 13% in 2020.

  • Although the TCFD recommends disclosure of governance regardless of materiality, the Governance recommendation remains the least disclosed recommendation with the two Governance recommended disclosures the second and third least disclosed.

  • Materials and buildings companies now lead on disclosure. The average level of disclosure across the 11 recommended disclosures for fiscal year 2020 was 38% for materials and buildings companies.

  • The insurance industry significantly increased its average level of disclosure by 11 percentage points between 2019 and 2020, and now leads all groups by at least 15 percentage points in disclosure of risk management processes (Risk Management b in the TCFD recommendations).

  • Europe remains the leading region for disclosures, with average level of reporting across the 11 recommended disclosures from fiscal year 2020 now at half of European companies assessed. European companies have increased their average disclosure by 15 percentage points since 2019, and now disclose 16 percentage points more than the next closest region.

More than 2,600 organisations have expressed their support for the TCFD recommendations, an increase of over a third since the 2020 status report. These supporters include 1,069 financial institutions, responsible for assets of $194 trillion. TCFD supporters now span 89 countries and nearly all sectors of the economy, with a combined market capitalization of over $25 trillion — a 99% increase since last year.

The status report further notes that, as support from the private sector has grown, governments around the world have begun to codify aspects of the TCFD recommendations into policy and regulation, using the TCFD’s work as a foundation for climate-related reporting requirements. In addition to the support of dozens of regulators and supervisors, Brazil, the European Union, Hong Kong, Japan, New Zealand, Singapore, Switzerland, and the United Kingdom have announced requirements for domestic organizations to report in alignment with the TCFD recommendations. The IFRS Foundation is establishing an International Sustainability Standards Board (ISSB) to develop a baseline global sustainability reporting standard, built from the TCFD framework and the work of an alliance of sustainability standard setters.

The TCFD has also published alongside the 2021 status report two additional documents:

The FSB has asked the TCFD to continue its work to promote and monitor progress in firms’ take-up of its recommendations, and publish a further status report in September 2022, reviewing disclosures by companies in their public reporting for 2021.

FSB welcomes TCFD status report

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Ref: 25/2021

The Financial Stability Board (FSB) welcomed the publication today of the 2021 status report by the industry-led Task Force on Climate-related Financial Disclosures (TCFD), which reports on the further progress in TCFD-aligned disclosures by firms.

The latest status report finds that disclosure of climate-related financial information aligned with the TCFD recommendations has accelerated over the past year, growing by nine percentage points in 2020 compared to four percentage points in 2019 and finds that over 50% of firms disclosed their climate-related risks and opportunities. More than 2,600 organisations have expressed their support for the TCFD recommendations, an increase of over a third since the 2020 status report. But the report highlights that significant further progress is still needed.

The TCFD has also published today two additional documents to support decision-useful disclosure. Guidance on Metrics, Targets, and Transition Plans to support preparers in disclosing decision-useful information and linking those disclosures with estimates of financial impacts; and updates to the implementation guidance on its Recommendations initially published in 2017.

Next steps for TCFD

The TCFD Recommendations have become a widely supported basis for climate-related reporting. This is not only through voluntary private-sector adoption but also more recently through jurisdictional initiatives to make such disclosures mandatory or promote voluntary implementation, as well as through the IFRS Foundation’s work to develop a baseline global sustainability reporting standard, built from the TCFD framework and the work of an alliance of sustainability standard setters. The FSB asks the TCFD to be ready to respond to requests for technical advice relating to the TCFD recommendations that may arise when designing such initiatives.

The FSB welcomes the continued progress the IFRS Foundation is making on its initiative to develop a global sustainability reporting standard, beginning with climate. As the IFRS Foundation advances its work, there is an important continuing role for the TCFD in monitoring and reporting on take-up of its recommendations in the period until a global baseline standard is agreed and the implementation of that standard across jurisdictions begins to be monitored. The FSB therefore asks the TCFD to continue its work to promote and monitor progress in firms’ take-up of its recommendations, and publish a further status report in September 2022, reviewing disclosures by companies in their public reporting for 2021. Such monitoring will complement the FSB’s monitoring of jurisdictions’ initiatives to make TCFD-based disclosures mandatory or to promote their voluntary implementation, and will promote disclosures that, by being TCFD-aligned, will be using a common basis with the planned global baseline standard.

FSB Chair Randal K. Quarles said: “Consistent and comparable disclosures are foundational for enabling accurate risk assessment. The TCFD recommendations have become widely supported by the private and official sectors as the basis for climate-related disclosures, and this year’s report shows further momentum but also where disclosure gaps remain. As the IFRS Foundation continue to develop a global sustainability reporting standard, working with an alliance of standard-setters, I am pleased that they will be able to draw from the strong work of the TCFD.”

Michael R. Bloomberg, Chair of the Task Force and Founder of Bloomberg LP and Bloomberg Philanthropies said: “When companies disclose clear, consistent, and accurate information on the risks they face from climate change, investors and business leaders can make more informed and sustainable financial decisions. That strengthens our global economy, improves health, and helps address the climate crisis. The Task Force has had an exceptional year in rallying global support for climate risk reporting – but we still have a long way to go. As governments and businesses around the world work to accelerate the transition to a clean energy economy, they should continue to draw on the TCFD recommendations as a critical tool in their efforts.”

Notes to editors

The TCFD was established by the FSB in 2015 to develop a set of voluntary, consistent disclosure recommendations for use by companies in providing information to investors, lenders and insurance underwriters about their climate-related financial risks. The industry members of the TCFD, who are drawn from a wide range of industries and countries from around the globe, finalised the recommendations in 2017 after extensive public engagement and consultation. They set out the disclosures that a wide range of users and preparers of financial filings have said are essential to understanding a company’s climate-related risks and opportunities.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Press release available as: PDF

G20 Roadmap for enhancing cross-border payments: First consolidated progress report

13 October 2021 | PDF full text (2 MB)

The G20 has made enhancing cross-border payments a priority.

This report summarises progress during the first year of the Roadmap, bringing together in one place the work under the wide-ranging, but interconnected, set of initiatives. The report also confirms the next steps in the Roadmap for 2022 and beyond.

Work in 2020-2021 has primarily focused on laying the foundational elements for future Roadmap actions. A key part of that foundation has been the publication of specific quantitative targets at the global level that address the challenges of cost, speed, transparency and access faced by cross-border payments. These targets play an important role in defining the ambition of the work, creating accountability. The targets will be made fully operational in 2022 through the development of the implementation approach to monitoring progress toward them.

The foundational work during the first year of the G20 Roadmap has also included stocktakes and analysis of both existing and emerging systems and arrangements. These stocktakes have covered diverse topics such as existing international standards and guidance, and national and regional data frameworks; operating hours of and access to payment systems; common elements of service level agreements/schemes; the use of payment-versus-payment mechanisms; the interlinking of payment systems; and CBDC design. This work will provide a strong basis and guide for the operational improvements to come.

The report highlights that most of the milestones set by the Roadmap for 2021 have been successfully completed or are close to finalisation. The breadth of the work underway and the recognition of the importance of conducting sufficient external outreach has led some of the timelines to be extended. But the end-goals of the overall Roadmap remain firmly on track.

The next stage of work in 2022 includes the development of specific proposals for material improvements of underlying systems and arrangements, as well as the development of new systems. Making these practical improvements and taking advantage of new developments will require global coordination, sustained political support and investment in systems, processes and technologies. The success of this work will depend heavily on the commitment of public authorities and the private sector, working together.

Targets for addressing the four challenges of cross-border payments: Final report

| PDF full text (618 KB)

The targets define the ambition of the work and create accountability for the improvements being sought under the Cross-Border Payments Roadmap.

Summary of document history

Summary of document history

The targets define the ambition of the work and create accountability for the improvements being sought under the Cross-Border Payments Roadmap.

This report sets out global quantitative targets for addressing the challenges of cost, speed, transparency and access faced by cross-border payments. They play an important role in defining the ambition of the work of the G20 Roadmap for Enhancing Cross-border Payments, creating accountability. They have benefited from responses to a public consultation launched in May 2021.

The FSB has developed the targets based on the following principles. The targets should:

  • be directly related to the challenges

  • provide a clear indication of the extent of progress

  • be appropriately ambitious

  • be able to be readily communicated

  • be meaningful to the wide range of stakeholders.

The targets are based on a consideration of the current payment landscape and publicly available data from multiple sources for the four challenges across three market segments: wholesale; retail (e.g. business-to-business (B2B)/ person-to-business (P2B)/ business-to-person (B2P)/ person-to-person (P2P)) payments (other than remittances); and (as a separate category from other P2P payments) remittances.

End-2027 has been set as the common target date across the individual targets, with the exception of the remittance cost target, where a 2030 date has already been set as a United Nations Sustainable Development Goal (UN SDG) and endorsed by the G20. Stakeholders who are able to pursue faster implementation are encouraged to do so.

The full table of targets is shown below.

The FSB has developed proposals for an implementation approach for monitoring progress towards the targets that set out, in outline form:

  • how targets will be measured and data sources and data gaps to be filled;

  • how progress toward meeting the targets will be monitored; and

  • the frequency of data collection and publication.

By October 2022, the FSB will provide a report to the G20 and the public with further details of the implementation approach for progress monitoring, and with Key Performance Indicators (KPIs) providing estimates of current performance of cross-border payments in order to provide a baseline against which future progress toward the targets can be monitored. The October 2022 date for the report has been chosen to allow time for the approach to be developed with input from external stakeholders.

The FSB will publish an interim report in June 2022 on progress in developing the implementation approach.

Table 1: Targets for the Cross-Border Payments Roadmap

Table 1: Targets for the Cross-Border Payments Roadmap

 

Report on Targets for Addressing the Four Challenges of Cross-Border Payments: Overview of the responses to the consultation

| PDF full text (216 KB)

Summary of document history

Summary of document history

On 31 May 2021, the FSB published, for public consultation, proposals for quantitative targets at the global level for addressing the challenges of cost, speed, transparency and access faced by cross-border payments. The FSB received 43 responses to the consultation, which ended on 16 July 2021, from payments industry participants and other stakeholders.  All non-confidential responses have been published on the FSB’s website.

This note summarises the comments raised in the public consultation, including to the specific questions set out in the consultation, and provides an overview of the changes made as a result.

FSB publishes targets for enhancing cross-border payments and progress under its Roadmap

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Ref: 24/2021

The Financial Stability Board (FSB) today published a progress report on the first year of the G20 Roadmap for Enhancing Cross-Border Payments, bringing together in one place the work under the wide-ranging, but interconnected, set of initiatives.

The FSB has also published today, as a key early action under the Roadmap, specific quantitative global targets for addressing the challenges of cost, speed, transparency and access faced by cross-border payments. These targets define the ambition of the work under the Roadmap and create accountability. The targets, which follow a public consultation launched in May, are small in number, simple, and focus on improvements in the end-user experience. An implementation approach for monitoring progress toward the targets will be developed in 2022.

Other work under the Roadmap in 2020-2021 has primarily focused on laying the foundational elements for future Roadmap actions, including stocktakes and analysis of both existing and emerging payments systems and arrangements. These stocktakes have covered diverse topics such as existing international standards and guidance, and national and regional data frameworks; operating hours of and access to payment systems; common elements of service level agreements/schemes; the use of payment-versus-payment mechanisms; the interlinking of payment systems; and CBDC design. This work will provide a strong basis and guide for the operational improvements to come.

Most of the milestones set by the Roadmap for 2021 have been successfully completed or are close to finalisation. The breadth of the work underway and the recognition of the importance of conducting sufficient external outreach has led some of the timelines to be extended. But the end-goals of the overall Roadmap remain firmly on track.

The Roadmap will not be achieved merely on paper through analyses and recommendations. The next stage of work in 2022 includes the development of specific proposals for material improvements of underlying systems and arrangements, as well as the development of new systems. This practical work involved will require global coordination and sustained political support. It will also require investment in systems, processes and technologies.

The report stresses that the success of this work will depend heavily on the commitment of public authorities and the private sector, working together. The public and private sector will therefore need to begin planning and budgeting for the needed enhancements very soon.

Notes to editors

The FSB published the G20 Roadmap for Enhancing Cross-border Payments in October 2020. The targets for addressing the four challenges of cross-border payments have benefitted from responses to a public consultation launched in May 2021. A summary of responses to the consultation and changes made in light of this have also been published today.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chair for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: October 2021

11 October 2021 | PDF full text (152 KB)

The FSB is sharpening its focus on the road ahead.

This letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their meeting on 13 October focuses on two key areas of the FSB’s work on which the FSB has submitted reports to the upcoming G20 meeting:

Developing a more resilient NBFI sector

The letter notes that, following the market turmoil in March 2020, the FSB agreed on an ambitious multi-year workplan to enhance NBFI resilience.

A key priority of this workplan has been work to address vulnerabilities in money market funds (MMFs), conducted in collaboration with the International Organization of Securities Commission (IOSCO). The FSB has delivered to the G20 a final report with policy proposals to enhance money market fund resilience. FSB members are assessing, or will assess, MMF vulnerabilities in their jurisdiction and will address them using the framework and policy toolkit in the report, in line with their domestic legal frameworks. The FSB, working with IOSCO, will then take stock of progress made and assess the effectiveness of the measures taken. The FSB and IOSCO will also carry out further work, complementing MMF policy reforms, to enhance the functioning and resilience of short-term funding markets.

The letter also notes the considerable progress made on assessing vulnerabilities and identifying policy considerations in other areas within NBFI, including open-ended funds; the impact of margin calls; and the structure of core funding markets. The FSB will leverage insights from the analysis in these areas to develop a systemic risk perspective on NBFI and policies to address such risks. The FSB will submit to G20 Leaders later this month a full progress report on its work to enhance resilience of NBFI, including areas where continued focus is needed.

Addressing challenges in cross-border payments

The COVID Event has brought into even sharper focus the need to address the limitations of current arrangements for cross-border payments. Last year, the FSB delivered a roadmap to enhance cross-border payments, so they are faster, more inclusive, less expensive and more transparent. Taking forward work on the roadmap, the FSB is submitting to the G20:

The letter notes that the FSB will also be submitting its latest work on cyber incident reporting, which brings together cross-sectoral expertise to explore whether harmonisation in cyber reporting can be achieved and what additional work needs to be undertaken.

FSB Chair updates the G20 on enhancing resilience in non-bank financial intermediation and addressing challenges in cross-border payments

Press enquiries:
+41 61 280 8477
[email protected]
Ref: 23/2021

The Financial Stability Board (FSB) today published a letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their meeting on 13 October. The letter focuses on two key areas of the FSB’s work on which the FSB has submitted reports to the upcoming G20 meeting.

Developing a more resilient non-bank financial intermediation (NBFI) sector

The letter notes that, following the market turmoil in March 2020, the FSB agreed on an ambitious multi-year workplan to enhance NBFI resilience.

A key priority of this workplan has been work to address vulnerabilities in money market funds (MMFs), conducted in collaboration with the International Organization of Securities Commission (IOSCO). The FSB has delivered to the G20 a final report with policy proposals to enhance money market fund resilience. FSB members are assessing, or will assess, MMF vulnerabilities in their jurisdiction and will address them using the framework and policy toolkit in the report, in line with their domestic legal frameworks. The FSB, working with IOSCO, will then take stock of progress made and assess the effectiveness of the measures taken. The FSB and IOSCO will also carry out further work, complementing MMF policy reforms, to enhance the functioning and resilience of short-term funding markets.

The letter also notes the considerable progress made on assessing vulnerabilities and identifying policy considerations in other areas within NBFI, including open-ended funds; the impact of margin calls; and the structure of core funding markets. The FSB will leverage insights from the analysis in these areas to develop a systemic risk perspective on NBFI and policies to address such risks. The FSB will submit to G20 Leaders later this month a full progress report on its work to enhance resilience of NBFI, including areas where continued focus is needed.

Addressing challenges in cross-border payments

The COVID Event has brought into even sharper focus the need to address the limitations of current arrangements for cross-border payments. Last year, the FSB delivered a roadmap to enhance cross-border payments, so they are faster, more inclusive, less expensive and more transparent. Taking forward work on the roadmap, the FSB is submitting to the G20:

The letter notes that the FSB will also be submitting its latest work on cyber incident reporting, which brings together cross-sectoral expertise to explore whether harmonisation in cyber reporting can be achieved and what additional work needs to be undertaken.

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chair for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.