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August 21, 2019 Feature

SciTech and the Task Force on Climate-related Financial Disclosures

By Robert F. Brammer and Preetha Chakrabarti

The ABA Board of Governors recently approved the recommendation of the Science and Technology Law Section (SciTech) to become a supporting organization of the Task Force on Climate-related Financial Disclosures (TCFD).1 The growing list of supporting organizations now has more than 500 enterprises from a variety of sectors and industries,2 including companies and firms in the financial services, materials, technology, consumer products, energy, and professional services industries.3

Here we provide a summary of the objectives for ABA SciTech’s relationship with TCFD, results to-date, and plans for TCFD. We describe potential benefits to the ABA membership and some possible future joint ABA-TCFD activities.

This action is in keeping with the SciTech mission to “provide leadership on emerging issues at the intersection of law, science, and technology; to promote sound policy and public understanding on such issues, and to enhance the professional development of its members.4 In particular, the mission of SciTech’s Cleantech and Climate Change Committee is to “raise[] awareness to law, policy, science, and technology issues related to climate change and sustainability.”5 We see a growing collaboration with the TCFD as integral to our mission concerning climate change, one of the most significant issues for our country and our members.

We recognize that other sections of the ABA have engaged with legal issues associated with climate change for years (e.g., the Section on Energy, Environment, and Resources published a book on climate change law;6 other sections have climate-related committees). We are reaching out to other sections to broaden the impact of this initiative. Our collaboration with the TCFD will bring a new dimension to ABA activities on climate change law.

The continuing growth of adverse impacts from weather and climate on public safety and economies globally has led to an increasing emphasis on associated risk management by government and corporate organizations. For example, the Global Risks 2018 report7 produced by the World Economic Forum analyzes dozens of significant risks, including weapons of mass destruction, geopolitical instability, economic crashes, and others. The report states that “environmental risks have grown in prominence in recent years.” For the first time, “extreme weather events,” “natural disasters,” and “failure of climate change mitigation and adaptation” are in the top five global risks for both impact and likelihood of occurrence within the next ten years.

We believe that a knowledge of issues associated with climate change and measures taken by a wide range of enterprises to mitigate and adapt to climate-change-related risks will become increasingly significant to ABA members and their clients. This article is intended to communicate some vital climate-change-related information to our membership and to help stimulate future action.

The Task Force on Climate-related Financial Disclosures

The Financial Stability Board under the G20 created the TCFD in 2015.8 The TCFD’s objectives are to “develop voluntary, consistent climate-related financial risk disclosures for use by companies to give information to investors, lenders, insurers, and other stakeholders. The TCFD will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries.” Michael Bloomberg, TCFD chair, has stated that “Increasing transparency makes markets more efficient, and economies more stable and resilient.”9

These climate-related disclosures are becoming increasingly important to all companies. However, the process of making such disclosures in SEC filings and annual reports is in a nascent stage. A recent report by the Economist Intelligence Unit states, “[o]f the more than 400 disclosure standards currently in operation, almost all are voluntary and non-financial in nature. Existing climate disclosure standards are fragmented, and none requires disclosure of the financial impacts of climate change.”10 This report concludes, however, that “[t]he Task Force on Climate-related Financial Disclosure (TCFD) of the Financial Stability Board (FSB) is widely regarded by our interviewees as having the clearest mandate to provide possible solutions.”11

The TCFD Recommendations and Some Initial Implementations

In June 2017, the TCFD released its recommendations for climate-related financial disclosures along with supplements for implementing these recommendations and the use of scenario analysis in disclosing climate-related risks and opportunities.12 The recommendations are “[d]eveloped by a global panel of experts drawn from large banks, insurers, asset managers, pension funds, large nonfinancial companies, accounting firms, and credit rating agencies [and] based on substantial consultation with stakeholders in the business and investor community.”13

In September 2018, the TCFD evaluated the first year of implementations. For the status report,14 the TCFD performed artificial intelligence (AI) analysis of reporting from 1,700 companies, in addition to human analysis of 200 leading companies whose reporting includes the word “climate.” The report found that “104 companies that, in their financial filings or sustainability reports, stated they are already aligning their reporting with the TCFD or expressed intent to implement the recommendations.” The report also noted that “[t]he Task Force also recognized the challenges associated with measuring and disclosing information on risks related to climate change, but underscored that moving climate-related issues into mainstream annual financial filings would allow practices and techniques to evolve more rapidly.”

The TCFD organized its recommendations into four areas, for their internal analysis as well as for public disclosures in annual reports, SEC filings, and sustainability reports: (1) Governance, (2) Strategy, (3) Risk Management, and (4) Metrics and Targets. Figure 1 provides a top-level description of these recommendations. This TCFD report15 provides the necessary details.

Various organizations have begun to assist in implementing the TCFD recommendations. For example, in April 2018, sixteen leading global banks, convened by the UN Environment Finance Initiative (UNEP FI), announced a jointly developed methodology16 to increase banks’ understanding of how climate change and climate action could impact their business. This methodology will help to enable banks to become more transparent about their exposure to climate-related risks and opportunities in line with the TCFD recommendations. The European Bank for Reconstruction and Development released a report17 last July, entitled “Advancing TCFD Guidance on Physical Climate Risks and Opportunities.” The Business for Social Responsibility, a global nonprofit organization that works with its network of more than 250 member companies and other partners, is yet another source of information about implementation of the TCFD recommendations.18

Recent U.S. legislation could lead to more rapid implementations of the TCFD recommendations. For example, new California legislation in effect on January 1, 2019, “requires the two largest pension funds in the country with over $550 billion in combined assets under management—the California Public Employees’ Retirement System, or CalPERS, and the California State Teachers’ Retirement System, or CalSTRS—to publicly report on their climate-related financial risks every three years starting in 2019.”19 There is the expectation that “the new California law will result in more widespread adoption of the TCFD recommendations.”20

The TCFD’s online platform, the TCFD Knowledge Hub, guides quality climate-related disclosures “in line with the recommendations of the Task Force.”21 Launched in May 2018, the Knowledge Hub hosts more than 300 resources covering governance, strategy, risk management, and metrics & targets. The Hub has resources to help “companies to take the steps necessary to provide transparency to the capital markets about how the company identifies, measures, manages and mitigates climate-related financial risk. With more companies providing case studies and best practices others will follow suit.”22

Possible Concerns About Implementing the TCFD Recommendations

Companies’ concerns about implementing TCFD recommendations are grounded in possible liability exposure arising from future uncertainty and lack of assurance. In response to such concerns, the Commonwealth Climate and Law Initiative released two reports.23 The first presents an analysis of potential liability risks and concludes that failure to disclose climate-related risks is a far greater liability risk than disclosure risk; the second presents guidance for the disclosure process consistent with the TCFD recommendations.

Looking Ahead

SciTech is eager to collaborate with other ABA sections to plan joint activities with the TCFD, as the implications of climate-related financial disclosures impact many segments of the ABA membership. We will create an informal network of interested ABA members who wish to work with us in TCFD-related activities. We are currently discussing a variety of legal categories including implications for such areas as intellectual property protection,24 labor law,25 and legal education.

We will organize a series of TCFD-related CLE events that will help benefit ABA members by providing high-quality legal education, thereby promoting professional growth. As a TCFD-supporting organization, SciTech and other collaborating ABA members will have opportunities to demonstrate thought leadership in the legal aspects of climate-related business risks and opportunities, which is an increasingly important area for many industries and clients of ABA members. We will have opportunities to participate in TCFD events and will appear as a supporter of the TCFD on its website and in its various publications.

We believe that the ABA can have an important role in helping the TCFD in realizing the above vision. We invite your participation. u


1. Task Force on Climate-related Fin. Disclosures,

2. TCFD Supporters, Task Force on Climate-related Fin. Disclosures,

3. These include financial services firms (e.g., Blackrock, Citigroup, Fidelity Investments, Goldman Sachs, Morgan Stanley, State Street Global Advisors, Vanguard), materials firms (e.g., DowDuPont, Eastman), technology firms (e.g., Bloomberg LLP, Hewlett Packard Enterprise, NEC, Salesforce), consumer product firms (e.g., Coca Cola HBG AG, Nestlé, Pepsi Cola, Unilever), energy firms (e.g., Royal Dutch Shell, Statoil, Total S.A.), professional services firms (e.g., Accenture, Deloitte Global, EY Global, KPMG International, PwC), and industry associations (e.g., Association of International Certified Public Accountants, the American Bar Association (Science and Technology Law Section)).

4. Section of Science & Technology Law, Am. Bar Ass’n,

5. SciTech Committees, Am Bar Ass’n,

6. ABA SEER, Global Climate Change and U.S. Law (2d ed., 2014).

7. World Economic Forum, The Global Risks Report 2018 (13th ed. 2018),

8. About the Task Force, Task Force on Climate-related Fin. Disclosures,

9. Id.

10. The Economist Intelligence Unit, The Road To Action: Financial Regulation Addressing Climate Change 4 (July 7, 2017),

11. Id. at 3.

12. Publications, Task Force on Climate-related Fin. Disclosures,

13. Cynthia Williams & Ellie Mulholland, Climate-Related Disclosures and TCFD Recommendations, Harv. L. Sch. Forum on Corp. Governance & Fin. Reg. (Sept. 2, 2018),

14. Task Force on Climate-related Fin. Disclosures, 2018 Status Report (Sept. 2018),

15. Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017),

16. UN Finance Initiative, Navigating a New Climate: Assessing Credit Risk and Opportunity in a Changing Climate (July 2018),

17. European Bank for Reconstruction & Dev., Advancing TCFD Guidance on Physical Climate Risk and Opportunities (May 31, 2018),

18. G. Berruti & D. Wei, How to Implement the TCFD Recommendations, Bus. for Soc. Responsibility (Nov. 29, 2018),

19. K. Blase, J. Solomon, A. Caldwell & J. Tagliaferro III, A Closer Look at New California Pension Fund Climate Law, Law360 (Dec. 5, 2018),

20. Id.

21. TCFD Knowledge Hub,

22. Press Release, Climate Disclosure Standards Bd., TCFD and CSDB Launch Knowledge Hub to Help Organizations Implement the TCFD Recommendations (May 1, 2018),

23. A. Staker, A. Garton & S. Barker, Concerns Misplaced: Will Compliance with the TCFD Recommendations Really Expose Companies and Directors to Liability Risk?, (Commw. Climate & Law Initiative, Briefing Paper, Sept. 2017); S. Barker, The Climate Risk Reporting Journey: A Corporate Governance Primer (Commw. Climate & Law Initiative, Nov. 2018),

24. Climate Change and Intellectual Property, World Intellectual Prop. Org.,

25. David J. Doorey, Just Transitions Law: Putting Labour Law to Work on Climate Change, 30 J. Envtl. L. & Prac. 201 (Mar. 21, 2017).

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By Robert F. Brammer and Preetha Chakrabarti

Robert F. Brammer and Preetha Chakrabarti are members of the Section’s Cleantech and Climate Change Committee.