In a communique issued by G7 Finance Ministers and Central Bank Governors following meetings hosted in London last week, the wealthy country leaders expressed support for numerous initiatives to tackle climate change, including the movement towards mandatory climate disclosures.
Discussing the need to mobilize trillions of dollars of private sector finance, and to “green” the financial system on the road to meeting the nations’ net zero commitments, the G7 communique said:
“We support moving towards mandatory climate-related financial disclosures that provide consistent and decision-useful information for market participants and that are based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, in line with domestic regulatory frameworks. Investors need high quality, comparable and reliable information on climate risks.”
The support for required corporate climate reporting comes as several countries, both within and outside the G7, are moving closer to mandatory disclosure systems. The UK announced in November last year that it will implement mandatory TCFD-based climate disclosures economy-wide by 2025, and the EU recently strengthened its own Non-Financial Reporting Directive (NFRD), requiring more companies to disclose information on the way they operate and manage social and environmental challenges. In the U.S. last month, President Biden signed an executive order calling on regulators to consider plans to improve climate-related disclosures, and to incorporate climate-related financial risk into regulatory and supervisory practices.
The G7 ministers also backed the momentum towards the creation of global sustainability reporting standards, expressing its support for the International Financial Reporting Standards Foundation’s (IFRS) initiative to create an International Sustainability Standards Board (ISSB) ahead of COP26.
Other initiatives addressed and supported by the G7 include the recently established Glasgow Financial Alliance for Net Zero (GFANZ) and Taskforce on Nature-related Financial Disclosures (TNFD).
GFANZ was launched in April 2021, bringing together several net zero-focused financial industry alliances, including the Net Zero Asset Managers Initiative, the Net-Zero Asset Owner Alliance, and the Net Zero Banking Alliance, representing more than 160 firms, responsible for assets of over $70 trillion.
Formally established last week, TNFD aims to deliver a framework by 2023 for organisations to report and act on evolving nature-related risks.