As global financial markets take steps towards better integrating climate risks and opportunities into pricing mechanisms, disclosure provides the enabling bedrock for progress in the pursuit of a more sustainable global economy. The growing demand1 for decisionuseful, climate-related financial information in annual reports and financial filings has led to an increased need for issuers to update their knowledge on climate-related risks and reporting frameworks. Climate disclosure is a prerequisite to enable finance-industry commitments such as the Global Financial Alliance for Net Zero (GFANZ) where asset owners, banks, asset managers and the insurance sector have commited to align with a trajectory of emissions reduction to net zero by 2050.
Following this trend, there are rapid advances associated with regulation and policy frameworks aiming to support climate resiliency in markets. At the same time, a number of leading economists and experts see climate change as representing the greatest commercial opportunities of our time. Companies and countries most effectively navigating the transition to net zero and identifying the opportunities in providing solutions will not only be more resilient but will also achieve more sustainable growth. Stock exchanges are uniquely positioned to advance climate disclosure through market guidance. They can have a special role in supporting consistency and standardization of information that enables both local and global progress in climate reporting and use of climate-related data. Stock exchanges have the infrastructure, networks and experience to contribute to addressing climate change via capital markets. By working with and learning from their peers, they can be essential in achieving greater climate-resiliency of markets.
In order to assist stock exchanges in their efforts to guide issuers on climate-related disclosure, this guidance document includes two parts: Part I: An introduction on how and why to use this guidance for stock exchanges; and Part II: A template guide and diagnostic checklist that stock exchanges can utilize to develop guidance on climate-related disclosure for issuers. After a brief introduction to the topic and how it relates to other guidance from the SSE in Part I, Part II of this guidance document, herein referred to as the “Model Guidance on Climate Disclosure”, provides a template that exchanges can use to develop issueroriented guidance for their markets on climate-related disclosure. The template is structured around the Financial Stability Board’s (FSB) Task Force for Climate-Related Disclosures (TCFD) recommendations, the current best practice for climate-related disclosure. While many stock exchanges (more than half tracked by the SSE) already provide guidance on environmental, social and governance (ESG) disclosure, the TCFD recommendations are unique in their application to mainstream financial filings. Therefore, stock exchanges should see this guidance as supplementary to both their financial filing guidance as well as their ESG reporting guidance.