WTW launches climate reporting comparative table to assist global compliance

WTW launches climate reporting comparative table to assist global compliance | Insurance Business America

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WTW launches climate reporting comparative table to assist global compliance

It helps companies align with standards like TCFD, ISSB, SEC, and CSRD for climate disclosures

Risk Management News

By
Kenneth Araullo

WTW has released the latest edition of its Climate Reporting Comparative Table. The report provides an in-depth review of climate-related financial disclosure requirements across key global jurisdictions.

The table compares frameworks such as the International Financial Reporting Standards’ (IFRS) International Sustainability Standards Board’s (ISSB) S1 and S2, the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD), the US Securities and Exchange Commission (SEC) climate rule for standardising disclosures for investors, and the EU’s Corporate Sustainability Reporting Directive (CSRD), alongside the EU Taxonomy for sustainable economic activities.

The table is designed to help organisations align their internal reporting processes with evolving global standards, manage climate-related risks, and plan for future compliance requirements. It also serves as a communication tool for engaging stakeholders, including investors and regulators, on climate-related disclosures.

Peter Carter (pictured above), head of climate practice and head of captive and insurance management solutions at WTW, noted that the Climate Reporting Comparative Table is intended to help corporations navigate the complexities of the regulatory landscape and track relevant activities.

“We believe it is essential to look beyond mere disclosure and actually utilize resources such as diagnostic and quantification tools to aid the climate risk management process. The core message is clear: to successfully deliver your net-zero or transition commitments, you must model the associated risks,” Carter said.

One of the key themes in the latest update of the comparative table is the increasing interoperability between global climate reporting standards. This growing convergence is intended to reduce the reporting burden on companies, improve the comparability of disclosures across different jurisdictions, and provide more consistent information for investors and stakeholders.

TCFD remains foundational for many climate disclosure frameworks, including IFRS S1 and S2, the SEC’s Climate Rule, the California Climate Rule, the Swiss Ordinance for Climate Disclosures, and the CSRD’s associated European Sustainability Reporting Standards (ESRS).

Growing interoperability across frameworks

WTW’s report highlights the growing interoperability between these frameworks and how organisations can leverage climate disclosure methodologies for broader sustainability reporting. ISSB has adopted a “building blocks” approach that aims to create a global baseline for sustainability disclosures, which can be supplemented by jurisdiction-specific requirements.

ISSB has also been working with other organisations, including the Global Reporting Initiative (GRI) and the European Financial Reporting Advisory Group (EFRAG), to enhance compatibility between their respective standards. Efforts by IFRS to demonstrate interoperability between GRI, IFRS S1 and S2, TCFD, and CSRD aim to ease compliance with multiple frameworks.

Recent developments in global climate reporting include new measures introduced in California, which will require businesses with total annual revenues of $1 billion or more to submit independent third-party-assured emissions reduction reports starting in 2026.

Additionally, companies with revenues of $500 million or more will need to prepare climate-related financial risk reports aligned with TCFD by January 2026.

Other global developments include ISSB’s two-year work plan, announced during London Climate Action Week, which is focused on further harmonising sustainability reporting. The International Finance Corporation (IFC) has partnered with the IFRS Foundation to enhance sustainability reporting in emerging markets.

Meanwhile, several countries, including Brazil, Japan, South Korea, and Switzerland, are continuing consultations and proposing new sustainability disclosure requirements.

In the UK, two key initiatives are also gaining attention. The Task Force on Nature-related Financial Disclosures (TNFD) released its recommendations and guidance in September 2023. Although not yet mandated by regulators, TNFD builds on TCFD principles, extending them to nature-related risks, including biodiversity loss.

Another UK initiative is the Transition Plan Taskforce (TPT), launched by HM Treasury in 2022. In October 2023, the TPT released its final framework and guidance for private sector climate transition plans, with IFRS assuming responsibility for TPT as of June 2024.

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