New climate-related financial disclosure guidelines to improve risk transparency
Swiss Re believes that new climate-related financial disclosure guidelines, drafted by the Task Force on Climate-Related Financial Disclosures (TCFD), will increase transparency on climate-related risks and help with measuring and evaluating the financial implications of climate change.
The TCFD, which was established by the Financial Stability Board (FSB), has developed voluntary guidelines for more consistent and comparable climate-related financial disclosures. These are set to help providers as well as users of such disclosures make more informed decisions about the climate risks that could affect their business and investments.
The TCFD has focused on disclosures related to the financial impacts of climate change on the reporting companies.
More data will enhance how climate-related risks and opportunities are managed, Swiss Re said. For re/insurers, climate-related risks and opportunities constitute a key topic linked to the industry's core business, including weather-related risk transfer business.
The scientific consensus is that a continuing rise in average global temperatures will have a significant effect on weather-related natural catastrophes and will account for an increasingly large share of natural catastrophe losses.
As a global long-term investor, taking into account the additional climate-related disclosures of companies in which it invests will help Swiss Re make better informed investment decisions, the company said.
Swiss Re will itself adopt the recommendations of the task force. This means that Swiss Re will include in its future annual financial report aggregated expected losses from weather-related catastrophes, a description of physical risks from changing frequencies and intensities of weather-related perils, as well as the impact of a 2°C scenario on the business, strategy and financial planning.
Swiss Re will also report on the transition risks resulting from a reduction in insurance interest due to a decline in value, changing energy costs, or implementation of carbon regulation.
