In less than a year Macquarie has moved from not knowing what the Task Force on Climate-related Financial Disclosures (TCFD) was, to committing to adopt all of the Task Force’s recommendations.
Yesterday Macquarie published this in its climate change report:
The TCFD was set up specifically for financial institutions like Macquarie, and so far has attracted the support of 150 financial institutions managing a combined $100 trillion worth of assets. This support is based on the sound knowledge that climate change will have serious financial risk globally, so it’s important to create a global framework for companies to disclose those risks.
Arguably the most important TCFD recommendation relates to scenario analysis. Stress testing Macquarie’s operations against a number of warming scenarios, including one in which the Paris Agreement’s aim of limiting global warming to well below 2°C is met, is integral to demonstrate that the company’s has a long term, sustainable future in a carbon constrained economy.
If Macquarie does a good job of assessing the risks it faces as a result of climate change, this could have significant implications for the fossil fuel industry. Macquarie plays a significant role in the fossil fuel industry through project and company financing, along with equity and infrastructure investments.
Aligning the company’s operations with a goals of the Paris Agreement would make it more difficult for fossil fuel companies to access finance to drive further global warming.