From Morningstar: 2024-08-27 08:15:00

In 2015, the Financial Stability Board established the Task Force on Climate-Related Financial Disclosures (TCFD) to enhance climate reporting standards for financial market participants, leading to more informed capital allocation decisions.

The TCFD disbanded in October 2023, transitioning monitoring responsibilities to the International Financial Reporting Standards (IFRS) as planned.

Wealth managers utilizing TCFD reporting can attract clients seeking sustainable investments, with Europe-based climate funds reaching USD 453 billion in 2023, reflecting increasing demand for climate-focused funds.

TCFD recommendations encompass four key areas: Governance, Strategy, Risk Management, and Metrics and Targets, essential for transparent climate reporting and informed decision-making.

Climate-conscious wealth managers addressing TCFD requirements see benefits like expanding client base with Millennial and Gen Z investors, who prioritize sustainability, offering an opportunity to retain sizable portfolios amid a looming generational wealth transfer.

TCFD reporting for wealth managers must adhere to seven principles, ensuring disclosures are relevant, clear, and reliable, enabling timely, comparable, and objective climate risk information delivery.

Wealth managers can navigate the evolving landscape by incorporating TCFD principles into reporting, aligning with global trends as major economies implement or consider mandates while large asset owners request TCFD disclosures.

Morningstar offers comprehensive solutions to aid wealth managers in adapting to evolving regulations and clients’ demands, supporting financial market participants with a detailed guide to climate reporting and holistic solutions for asset and wealth managers.



Read more at Morningstar: TCFD Reporting: How to Win Over Climate-Conscious…