‘We’re comparing apples, oranges and bananas’: Calls for standardised approach to banks’ climate disclosure

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Many companies, including the banks, follow the approach of the Task Force on Climate-Related Financial Disclosure (TCFD), an international framework used by thousands of companies in 92 countries. The influential Australian Council of Superannuation Investors has called for TCFD reporting to be made mandatory in Australia.

A KPMG study released in June found that while the big four banks were widely considered leaders in TCFD reporting domestically, the banks had not kept up with the international pace of change.

Julian Vincent, executive director of environmental finance campaign group Market Forces, said while it would be beneficial to have a set of standards mandated, in the meantime it was important that the banks continued to disclose material.

“The most important thing is that the information is actually out there for people, and predominantly investors, to see what the risks are and how they’re manifesting,” he said.

“Ideally, they will be all standardised and you can easily compare like for like, but just the fact that you’ve got material out in the public domain that can show just how acute and severe one of these risks actually are is the main thing.”

“They can always be more comprehensive. I think the information they put out has been really valuable and we need more of it.”

He said that the standard reporting guidelines should be embedded in ASX listing rules, and should be required by the regulator APRA. Vincent said that for banks, it was now more a matter of moving from climate risk disclosure to climate risk management by stopping fossil fuel lending.

“I think the main thing is just how absurd it is that institutions that identify tens of billions of dollars of risk … that they are still financing projects and companies that are making the problem worse.”

CoreLogic data and analytics executive Tim Jenner said recognising the potential challenges of climate change required a raft of new expectations and benchmarks for the finance and banking industry, but the scope and speed of the change was uncharted territory for many.

“Australia hasn’t introduced mandatory reporting yet, however guidelines have been published as recently as last year by APRA and while companies aren’t forced into climate-related disclosures, they provide clarity around regulatory expectations and examples of better industry practice.”

He said he wouldn’t be surprised if Australia followed New Zealand, which recently introduced a mandatory climate change reporting law that requires insurers, banks and investment managers to report on the impacts of climate change on their businesses.

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