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:
“In the FY2019 reporting cycle we will continue to evolve our disclosures to be consistent with all the relevant Taskforce recommendations.”
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.
Check which Australian companies are taking climate risk seriously and those that are not: click here to read our recent report.