Insurance supervisors and regulators in 16 jurisdictions have welcomed guidance on climate change risk disclosure developed by the Task Force on Climate-related Financial Disclosures (TCFD).
The TCFD was initiated by the Financial Stability Board to develop voluntary standards for companies to disclose their climate risk to investors, lenders and insurers.
Supervisors participating in the Sustainable Insurance Forum (SIF) – including the UK's Prudential Regulation Authority, the Australian Prudential Regulation Authority and France's Autorité de Contrôle Prudentiel et de Resolution – welcomed the TCFD's specific guidance for insurance firms, saying it will help drive convergence in reporting across the sector.
The group added that they appreciated "the forward-looking orientation of the TCFD recommendations, and specific guidance on scenario analysis".
California Insurance Commissioner Dave Jones said: "As a financial regulator, I believe it is important that financial institutions, including insurance companies, recognise and address potentially significant climate risks facing their investments in coal, oil and gas and utilities.
"The TCFD sets a new global standard for disclosure by insurance firms – which can help supervisors and regulators assess how insurance companies are addressing climate related risks and opportunities across underwriting and investment. Going forward, the department will seek to integrate aspects of the TCFD recommendations into its existing regime."
The guidance provides a practical way for translating climate change factors into decision-useful information that identifies the material financial impacts for corporate and financial sectors.
While the TCFD expects implementation to be led by the private sector, some supervisors have already introduced requirements for climate risk reporting from insurance companies, according to the SIF.
Aside from the supervisors and regulators mentioned above, SIF participants include representatives from Brazil, Ghana, Jamaica, Mongolia, Morocco, the Netherlands, Portugal, Singapore, South Africa, Sweden, UAE and Washington state in the US.