Issues & Trends | June 2022

 

Insight

Banks’ climate-related disclosures

A look at the key trends observed on climate-related disclosures of some global banks; now with TCFD comparison.

In April 2022, KPMG released benchmarking of the climate-related disclosures of 35 major banks. The banks spanned the UK and Europe, Australia, Canada, Asia and the US. New in June 2022, those disclosures are compared to the recommended disclosures of the Task Force on Climate-related Financial Disclosures (TCFD).

Applicability

  • Investors, regulators, preparers and other stakeholders interested in banks’ climate-related disclosures 

Relevant dates

Effective immediately

Key impacts

KPMG’s latest analysis of banks' climate-related disclosures confirms that the overall progress banks are making in disclosing climate-related matters slowed down in 2021.

In the first part of the analysis (published in April 2022) KPMG looked at banks’ climate-related disclosures within their 2021 annual reports.

In this second part of the benchmarking analysis (published in June 2022), KPMG look at how the climate-related disclosures of banks align with the recommended disclosures of the TCFD. 

In phase one of the benchmarking analysis, KPMG found that where there is regulation (or even regulatory guidance) on banks’ climate-related disclosures, there are enhanced disclosures by banks in annual reports. This finding was confirmed in an even more pronounced way in phase two of KPMG’s analysis – similarly banks in countries where there is regulation (or even regulatory guidance) on the matter provided climate-related information that aligns better with the TCFD recommended disclosures.

The global benchmarking analysis includes three key findings:

  • Banks have put in place governance structures and risk management frameworks – however, their impact is not yet clear.
  • Many banks have committed to achieving net zero by 2050 – however, metrics are not yet disclosed at a granular level, which makes it challenging for users to understand and assess how banks have progressed towards their targets.
  • There's limited quantitative disclosure of scenario analysis – making it challenging to use the information disclosed to assess the resilience of their strategies. 

The analysis comes at an important moment when the SEC, the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) all have climate-related proposals out for comment, which further pushes companies to consider how to effectively operationalize climate risks, which can include: 

  • Ensuring consistency across financial and nonfinancial reporting and disclosures
  • Integrating climate risks into governance and risk management frameworks
  • Developing initial assumptions and models for climate risk scenario analysis
  • Factoring potentially disproportionate impacts into decision-making processes

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