22 February 2023
We thought it was worthwhile re-stating the case and give some context as to why the adoption of the Taskforce for Financial related Financial Disclosure (TCFD) reporting standards can play a significant role in mitigating the risks.
We are responsible
The Intergovernmental Panel on Climate Change (IPCC)’s sixth assessment report, confirms that human activities have unequivocally caused the observed increases in atmospheric greenhouse gas emissions since around 1750, the pre-industrial revolution. The amount of carbon dioxide in the atmosphere has increased to around 420 parts per million, an increase that is estimated as nearing 50% higher than pre-industrial levels.
This further confirms what Swedish scientist Svante Arrhenius and English engineer Guy Callendar predicted and theorised in 1896 and 1938, respectively: that rising atmospheric carbon dioxide concentrations are linked to global temperature by exacerbating the greenhouse effect. As a result, the world is now about 1.2°C warmer than it was in the 19th Century.
Even if you are a climate sceptic, you will probably acknowledge that the world is starting to run low on fossil fuels, we have seen significant declines in North Sea Gas and oil wells are starting to run dry. When our grandchildren start to ask what happened to the raw materials that produce plastics, we may give the truthful answer “we burned it!”. This is another reason why we must learn to do without fossil fuels for energy and transport.
According to this landmark IPCC report, climate change is already affecting every region, with unambiguous evidence of changes in extremes such as heatwaves, heavy rain, droughts, and tropical cyclones. Additionally, each of the last four decades have been successively warmer than any decade that preceded it since 1850, and the last 10 years has seen nine of the hottest years on record. This leaves the planet on a trajectory of continued warming.
Unless emission reduction measures are taken rapidly, the world is likely to exceed 2°C of warming, and if we take a business-as-usual approach and continue to make climate change worse for ourselves, then it is projected that temperature rise could be between 2.4°C and 6.4°C, and would have a truly catastrophic impact on civilisation. This is the climate crisis and “business as usual will lead to greater than 2⁰C warming.
An upward trajectory
Atmospheric and ocean temperatures will continue to rise, melting the ice sheets and raising sea levels, acidifying oceans, changing the hydrological cycle, and causing more frequent and more severe extreme weather events. The impacts this will have are almost incomprehensible. To name but a few:
To prevent a climate crisis, these risks need to be managed now through ambitious action by governments and businesses.
Building a virtual circle
The problem with climate change is that the exact outcome is unknown – hence all the climate sceptics – the timeline and horizons and future pathways are uncertain. But these risks will affect businesses, across all industries and geographies. The impact of the risks and their actual costs will be determined by the mitigation measures we take today.
The former Governor of the Bank of England and Chair of the G20 Financial Stability Board, Mark Carney summed up well why the greater disclosure associated with TCFD can make a difference; “With better information as a foundation, we can build a virtuous circle of better understanding of tomorrow’s risks, better pricing for investors, better decision making by policymakers, and a smoother transition to a lower-carbon economy”
In our next blog, we will explain more about how organisations should approach and get the most out of TCFD. In the meantime, to find out more contact us on 08451 46 36 26.