Group of 7 (G7) finance ministers and central bank governors have voiced their support for mandatory climate-related financial disclosures based on the Task Force on Climate-related Financial Disclosures (TCFD) framework.
Consisting of 31 members from across the G20 and chaired by Michael R. Bloomberg, TCFD was established to develop recommendations for more effective climate-related disclosures that could promote more informed investment, credit, and insurance underwriting decisions.
Following their meeting in London earlier this month, the ministers emphasised the need to green the global financial system so that financial decisions can take climate considerations into account.
An official communiqué stated: “This will help mobilise the trillions of dollars of private sector finance needed, and reinforce government policy to meet our net zero commitments.
“Investors need high-quality, comparable and reliable information on climate risks.
“We therefore agree on the need for a baseline global reporting standard for sustainability, which jurisdictions can further supplement.
“We welcome the International Financial Reporting Standards Foundation’s programme of work to develop this baseline standard under robust governance and public oversight, built from the TCFD framework and the work of sustainability standard-setters, involving them and a wider range of stakeholders closely to foster global best practice and accelerate convergence.”
In addition, the ministers and central bank governors recognised the growing demand for more information on the impact that firms have on the climate and the environment.
The communiqué stated: “We recognise that many jurisdictions and organisations are already developing impact reporting initiatives, including but not limited to reporting on net zero alignment and broader sustainability metrics.
“We will work closely together and with our international partners to determine the best approach to ensure global consistency.”
The topic will now move to the wider G20 group of nations, with hopes of an international agreement possibly being achieved for COP26 in November.