G7 has mandated TCFD — is it enough?

Pace. Repeatability. Materiality.

With the G7 backing TCFD, there are now $trillions of assets and financial instruments that will have to quantify their climate risk: it is fantastic to see progress to robust reporting on Climate & Finance. This is one of the areas which we watched emerging and led to the creation of Icebreaker One.

Today, there is about $2T* (that’s $2,000,000 million) being spent on renewables PER ANNUM at the moment and this needs to double in short order. So, while the financial system is riding on the Green Swan [citation] principles, there are still big questions about how this will affect change, will it be enough and will it happen quickly enough? What are the carrots and inevitable sticks?

James Vaccaro argues that the TCFD’s remit is too narrow “Whilst it’s entirely sensible and necessary to look at how to protect finance from the climate, all the scientific evidence suggests that this will be hopelessly insufficient unless we also address how we protect the climate and society as a whole from finance. Shifting focus to climate impacts will allow financial institutions and regulators alike to better establish how finance can become an ally, rather than an antagonist, in the just transition to a climate-safe world.” and calls for a Taskforce on Finance-related Climate Impacts.

We have highlighted challenges with TCFD previously and ask how we can move from theory to tangible.

We can’t create a ‘fair’ transition until we have our core infrastructure in place (too rapid, and we will experience other forms of systems collapse that will make things worse) and we need to balance this with the fact that physics doesn’t care about our economy. It is to be seen whether TCFD and related (e.g. SFDR which is, strangely, not joined up) create the right change at the right pace.

The material areas where Icebreaker One is and can contribute are to help unlock and automate the flow of commercial, sensitive and secure data (as well as Open Data) that help demonstrate and evidence materiality.

Open Energy is laying the foundations to automate access to all energy data across the economy.

Energy

SERI is laying the foundations of how to unlock and automate non-financial data that is relevant to insurance, risk modelling and investment.

SERI

Our Data Infrastructure paper provides an overview of the market architecture for non-financial data sharing, nationally and internationally. Let’s start by automating our measurement and radically reduce the cost of data sharing to enable markets to get the price right, better manage risk and de-risk the vast capital (we have set a target of $3.6T/y) on a continuous basis.

Report — Enabling secure and scalable non-financial data flows to help deliver demonstrable Net Zero

* $2T/y is the latest figure I’ve had communicated to my privately by an industry expert (broker) based on the aggregate of global investment including Biden’s plan (link below).

Related links