The ubiquity of ‘climate' in today’s business world

Updated: Oct 13

The saying goes ‘all roads lead to Rome’, however the same sentiment could apply to the climate-related disclosures of TCFD these days, Fiona Donnelly of Red Links claims.

Let’s recap on the Taskforce on Climate-related Financial Disclosures (TCFD) story so far:


Almost six years ago, then governor of the Bank of England Mark Carney gave the now landmark speech in which he challenged the sector to “break the Tragedy of the Horizon”[1] when referring to climate change and financial stability.

Roll forward to 2017 and the recommendations of the TCFD[2] that came out of Carney’s speech were released. TCFD presents an approach and recommended disclosures around systematically considering climate-related risks and opportunities in forward-looking business scenario planning. It has spread across the world and is now gaining pace in its adoption as well as its indirect influence on and integration with other codes and frameworks.


TCFD means different things to different organisations and sectors depending on their vulnerability to the impacts of climate change. Climate change also has more profound importance in different geographic parts of the world. For example, those countries with low lying land masses are most at risk from rising sea levels. And even more will be impacted by the so-called transition risks, being the wide-sweeping changes that will occur to aspects like legal policies and technological developments that will be required to support goals such as making the EU carbon-neutral by 2050. So while these specific factors will contribute to the uptake of TCFD, what seems to be universal is the broader, more deliberate and strategic consideration of climate change.


TCFD uptake in Hong Kong


While there are over 2,000 signatories of TCFD worldwide, as at March 2021, only 19 organisations in the territory had officially registered as a Supporter [3]. These comprise: six professional services firms; three asset managers; two utilities; two real estate businesses with the remainder being financial services.


It’s interesting to note that not all Supporters are sharing any disclosures publicly, so what is not known is the extent to which they may be applying rigorous climate analyses in enterprise risk management and other business decisions: conversations on such issues could – and hopefully are – commanding more time with their respective boards.


Other organisations, including issuers, are disclosing TCFD-inspired information despite not having signed up as an official TCFD Supporter. So TCFD-adoption is more widespread than the registered number of Supporters would indicate.


Suffice to say, TCFD is less than four years’ old and will result in a profound change and new ways of thinking for many organisations. Many suggest it could take upwards of five years to properly grasp the application in the spirit of the recommendations, so at present it is very much a case of many organisations getting up to speed.


Other roads leading to TCFD


In Hong Kong, in addition to the broad encouragement to become an official Supporter, other bodies are also dovetailing their developments towards TCFD too, for example:

  • The Stock Exchange of Hong Kong is steering its issuers towards TCFD in its new Environment, Social and Governance (ESG) Reporting Guidelines, which sets out mandatory ‘comply or explain’ disclosures [4]

  • The Green and Sustainable Finance Cross-Agency Steering Group – comprising key regulators of Hong Kong’s financial sector set up in May 2020 to coordinate these issues while supporting international initiatives and alignment – has announced its first strategic priority to be strengthening the management of climate-related financial risks in order to consolidate Hong Kong’s position as a global risk management centre [5]

  • The Hong Kong’s Securities and Futures Commission’s proposed new Fund Manager Code of Conduct is likely to align with TCFD if the recent consultation paper is anything to go by [6]

And who knows what further developments will transpire. Hong Kong may even follow Canada’s [7] initiative to incentivise a more sustainable future and link finance to support the recovery from Covid to climate commitments and disclosures. Or take inspiration from Singapore: in December 2020, the Monetary Authority of Singapore issued Guidelines on Environmental Risk Management [8] tailored to financial institutions that are generally aligned to TCFD.


In terms of other jurisdictions of note, two stand out:

  • New Zealand was the first country in world to make TCFD reporting mandatory, to apply by 2023 [9]

  • The UK is aiming for mandatory TCFD-aligned disclosures across non-financial and financial sectors of the UK economy by 2025 [10]. In addition, disclosures such as those per TCFD are already being driven through other channels like the non-statutory guidance for the trustees of occupational pension schemes [11].

These and other offshore changes could impact Hong Kong, depending on the territory’s relationship with and accountability to asset owners and investors, among others, in these and other climate-sensitised locations. The upshot is that compliance by Hong Kong organisations with local requirements and norms may not be adequate for all the stakeholders that matter.


Overlay other optional disclosure approaches and tools that have global application, and there are many that have been modified to include specific TCFD alignment in their frameworks, for example CDP [12], Principles for Responsible Investment [13], Climate Action 100+ [14], GRESB [15] and other stock exchanges [16].


It’s very clear that climate thinking and analyses is here to stay in terms of enterprise risk management, and at least for now, the TCFD approach provides a widely accepted – and growing –approach to driving that change. That adoption is only expected to grow exponentially not only in Hong Kong but worldwide.



Another version of this article - titled "Climate-related disclosure" - was published in CSj, the monthly journal of The Hong Kong Institute of Chartered Secretaries, May 2021.

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Consideration of climate risk and adoption of the TCFD approach is daunting. The Red Links Sustainability Consortium can help unravel how to begin to apply these principles and to help directors understand how best to determine and evaluate climate risks and opportunities in their organisations in the short, medium and long term. Get in touch for more.


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  1. https://www.bankofengland.co.uk/speech/2015/breaking-the-tragedy-of-the-horizon-climate-change-and-financial-stability

  2. https://www.tcfdhub.org/recommendations/#:~:text=The%20TCFD%20recommendations%20are%20designed,to%20a%20lower%2Dcarbon%20economy

  3. https://www.fsb-tcfd.org/tcfd-supporters/

  4. https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-and-Guidance/Environmental-Social-and-Governance/Exchanges-guidance-materials-on-ESG/step_by_step.pdf?la=en

  5. https://www.hkma.gov.hk/media/eng/doc/key-information/press-release/2020/20201217e4a1.pdf

  6. https://apps.sfc.hk/edistributionWeb/api/consultation/openFile?lang=EN&refNo=20CP5

  7. https://www.forbes.com/sites/nishandegnarain/2020/05/19/what-canada-is-getting-right-with-its-covid-19-economic-response-plan/?sh=584597c85357

  8. https://www.lexology.com/library/detail.aspx?g=5d0409b6-67bb-4d66-aca1-b3bdc2f4d291

  9. https://www.cdsb.net/mandatory-reporting/1094/new-zealand-becomes-first-implement-mandatory-tcfd-reporting

  10. https://www.esgtoday.com/uk-becomes-first-country-in-the-world-to-make-tcfd-aligned-disclosure-mandatory/

  11. https://www.gov.uk/government/publications/aligning-your-pension-scheme-with-the-taskforce-on-climate-related-financial-disclosures-recommendations

  12. https://www.cdp.net/en/policy-and-public-affairs/tcfd-overview being a global disclosure system to help manage environmental impacts

  13. https://www.unpri.org/news-and-press/tcfd-based-reporting-to-become-mandatory-for-pri-signatories-in-2020/4116.article the Principles for Responsible Investment (PRI) comprises a voluntary and aspirational set of six investment principles about incorporating ESG issues into investment practice. Most signatories are either an investment manager or asset owner.

  14. https://www.climateaction100.org/approach/the-three-asks/ being an investor-led initiative to encourage the world’s largest corporate greenhouse gas emitters take necessary action on climate change

  15. https://documents.gresb.com/generated_files/survey_modules/2020/resilience/reference_guide/complete.html#:~:text=The%20Resilience%20Module%20addresses%20two,transition%20risk%20and%20physical%20risk.&text=Notably%2C%20the%20Module%20provides%20indicators%20related%20to%20social%20risks GRESB is a membership organisation concerning sustainable real estate. The Resilience Module, which is intended to address the information needs of investors, is aligned to TCFD.

  16. https://sseinitiative.org/esg-guidance-database/ over half of the exchanges recognised as Sustainable Stock Exchanges and that have written ESG Guidance make reference to TCFD