This is the last COP before 2020 when the Paris Agreement should come into effect. The stakes could not be higher. 
COP25, the Conference of the Parties to the UN Convention on Climate Change, UNFCCC, is well underway in Madrid, tasked with making sure that the Convention, and the 2015 Paris Agreement, which strengthens the Convention, are being implemented, with the talks focused on how to intensify the efforts to rein in the greenhouse gas emissions that cause global warming. 
It’s been a roller-coaster ride getting here; this COP was due to take place in Santiago, Chile, but due to the risk of civil unrest the Spanish government generously offered Madrid as the venue although the event is still hosted by Chile. Just prior to the start a blunt warning was issued. The world is already approaching 1.1°C of warming above pre-industrial activity. If current trends persist and no significant action is taken, global temperatures are expected to rise by 3.2°C to 3.8°C this century, bringing catastrophic climate impacts. 
On 3rd December as the representatives from 190 countries gathered for the conference, the Global Carbon Project published its annual analysis of emission trends indicating that CO2 will go up by another 0.6% in 2019.The data was published simultaneously in three scientific journals. This rise is due mostly to continuing strong growth in the utilisation of oil and gas. Since the Paris agreement was signed in 2015, CO2 emissions have actually risen by 4%, moving countries further away from the goal of halting global warming. 
Data from the 2019 WMO Greenhouse Gas Bulletin shows the same trend, with levels of heat-trapping greenhouse gases in the atmosphere having reached another new record high. This continuing long-term trend means that future generations will be confronted with increasingly severe impacts of climate change, including rising temperatures, more extreme weather, water stress, sea level rise and disruption to marine and land ecosystems. 
The UN Environment Programme (UNEP) has warned, in its 2019 Emissions Gap Report, that greenhouse gas emissions reductions of 7.6 per cent per year from 2020 to 2030 are needed to meet the internationally agreed goal of a 1.5°C increase in temperatures over pre-industrial levels. Scientists agree that’s an onerous challenge, and that the window of opportunity is growing smaller. 
But we are still - just - in the realm of the possible; we can do something about it. And one of the major keys to unlock change is to build a clear understanding for companies of the financial impact of the changing climate. The question is no longer “What is my business doing to the environment”, it should be “What’s the environment doing to my business?” 
Enabling a clear understanding of the cost of inaction will provide the impetus for change. 
Since 2017 there has been a global framework available for businesses to make this analysis, and to disclose that information in their mainstream annual accounts encouraging investment away from high carbon emitting businesses and thus driving the global Energy Transition. The Taskforce on Climate-related Financial Disclosures (TCFD), under a mandate from the G20’s Financial Stability Board, developed their framework for companies to ensure that climate-related risks and opportunities are being properly assessed, measured and incorporated into governance, risk management and business strategy processes and to inform investors and other stakeholders about how the company is managing and mitigating these risks and seeking to benefit from any potential opportunities. 
This framework, known as the TCFD recommendations, urges companies to identify the short and longer-term risks and opportunities they face from climate change, gauge the resilience of their business strategy under at least two possible future climate and policy scenarios, and then use this information to make a set of 11 climate-related disclosures to investors in their mainstream reports. 
The TCFD recommendations are widely supported by many of the world’s leading companies and financial institutions. They have received renewed impetus over the past twelve months as governments, central banks and institutional investors ramp up demands for companies to provide the type of information recommended by the TCFD. In the UK, the government has set a target of achieving net-zero emissions by 2050. In July, it published its Green Finance Strategy, one of the main aims of which is to direct all listed companies and large asset managers to become TCFD-aligned. 
Central banks and other regulators around the world are also developing policies to require companies to disclose climate-related information and investment managers to consider climate change risks in investment decisions. In the EU, the TCFD recommendations are being integrated into the reporting guidelines under the Non-Financial Reporting Directive (NFRD). There is significant movement towards making disclosure of climate-related information mandatory. In October 2019 Mark Carney, currently Governor of the Bank of England and soon to become the UN Climate Envoy gave a timeline of 2 years from now to agree the rules for the reporting of climate risk. In his opinion “Firms ignoring the climate crisis will go bankrupt” 
JS Global is advising businesses in the assessment and disclosure of climate risk and opportunity, and specialises in the implementation of the TCFD framework for companies across sectors. Contact us now to discuss how we can help you. 
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