Credit: Thomas Richter
Switzerland has become the latest country to boost sustainability reporting requirements, announcing 2024 as the timeline for major companies to publicly report on climate issues. The requirements, which impact public companies, banks, and insurance companies with 500 or more employees, with more than CHF 20 million in total assets or CHF 40 million in turnover, will apply to the 2023 fiscal year.
With increasing numbers of countries pressing for improved reporting, the question becomes, will it make a difference as we work towards 2030 and net-zero goals?
What Gets Measured Gets Done
The Swiss reporting model will leverage the Taskforce on Climate-related Financial Disclosures (TCFD) aligned disclosures. Created in 2015, the TCFD published their recommendations in June 2017, launching pilot projects for banks, investors, and insurers globally thereafter, with almost 100 global participants taking part. The pilot projects resulted in numerous tools, frameworks, and guides, supporting participating institutions, and the wider global financial industry to better manage and disclose climate risks.
Now in phase three of their work, the TCFD pilots have proven the taskforce’s ability to balance comparability and alignment while acknowledging the unique challenges faced by different regions.
“It’s encouraging to see more and more countries embracing the TCFD recommendations,” notes Jose Maria Ortiz, Palladium Managing Director.
“Governments, businesses and investors need to work together towards a more sustainable future and embracing reporting tools such the one
Switzerland is implementing is a very relevant step – probably not enough for what the world needs, but a clear step in the right direction,” he adds.
With Transparency Comes Conversation
Alliances formed in support of the United Nations Race to Zero campaign, including those in banking, insurance, and global asset owners (institutional investors), not only support improved transparency but also drive the worldwide conversation on sustainability more broadly.
When global companies report on progress, the media, and more importantly, consumers, take note. Increasingly consumer opinions, their personal values, attitudes, and preferences, are reportedly driving purchasing behaviour – and with that in mind, corporations simply must take note.
So, aside from the old adage that what gets measured gets done, it serves to reason that the reporting on the measurement itself further perpetuates the need for improvement.
But, as Ortiz adds, it’s not enough. “Reporting is just a drop in the ocean of what is needed to address climate change. A good drop but it’s certainly not sufficient.”
Is There Any Other Way?
Leading economists have pointed to climate change as the greatest market failure in human history. With wide-ranging, and potentially catastrophic implications, disrupting social well-being, economic development, and the financial stability of current and future generations – is there any choice but to commit to reporting, and continuous improvement?
The UN reports that conservative estimates see persistent climate change leading to global losses of between 5 and 20 percent of global gross domestic product each year, every year.
As such, the status quo simply won’t do. The future demands new thinking, new approaches, and new solutions. To get there, we must come together and align around solutions for building and transitioning towards more resilient and sustainable economies.
As Oritz notes, reporting requirements are necessary but will need to work in tandem with sustainable strategies. “Leveraging research-based strategies, building global partnerships and implementing programs that have a lasting social and financial impact is needed, however more decided regulation and enforcement from governments and regulators will also be needed to ensure impact is sustainable.”
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