We were fortunate to be invited to speak at Tech UK's recent webinar on the Task Force on Climate Related Financial Disclosures and the implication of its recommendations for the tech industry.
It was particularly interesting to reflect on TCFD in the context of net zero: as various speakers at the webinar noted there is a close relation between the two.
A challenge, both for lawyers and for business, is to appreciate also the distinctions. When applied to individual companies, a net zero agenda looks to reduce a company's contribution to climate change. TCFD, on the other hand, seeks to present an accurate picture of the impact of climate change on the business.
The same measures that contribute to the net zero goal (e.g. switching to electric fleet vehicles) can also be relevant in the context of TCFD recommendations (by making the business more resilient to the transition risk of phased out or more expensive fossil fuels).
However, companies should bear in mind that a net zero agenda, if not properly administered, can create risks in the context of TCFD. For example, overly ambitious emissions reduction targets and/or a parent company's over-optimistic commitment to ensuring high environmental standards across a group could increase exposure to legal liability risk if these targets are not met or if subsidiaries fail to live up to these standards.
Climate change will have a massive impact on companies' exposure to risk, both in direct and indirect ways. It will be critical for companies to fully understand the implications, especially given pressure on everyone to make bold plans to address climate change (and the temptation to couple these with prominent public statements).