Here’s Why It Makes Sense for Companies to Support Climate-related Disclosure

15 November, 2018

The recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) are a valuable tool for companies to disclose on their climate impacts. Ørsted was among the first 500 companies globally to express support for the TCFD and we explain here why the TCFD matters to us.

Mainstream investors are increasingly conscious of the impacts of climate change and they want to know how companies disclose and manage climate-related risks. The TCFD provides recommendations that aim to meet investors’ demand for just such information.

By adopting the TCFD recommendations, companies signal they are considering, and reacting to, the impacts of climate change on their business. It is an important first step in helping the market to allocate capital in ways that drive the transition towards a sustainable, low-carbon economy.
Jeppe Hoff Nielsen, Vice President of Reporting & Accounting Excellence, and Rasmus Skov, Head of Group Sustainability, explain why the TCFD matters to Ørsted and how we work with TCFD.

Why is Ørsted supporting the TCFD?
Jeppe Hoff Nielsen: Ørsted has transitioned from being one of the most coal-intensive utilities in Europe, to a renewable energy company with a global footprint. The TCFD recommendations help us continuously improve our understanding of climate-related financial risks and opportunities and disclose it in a useful way to our investors. The recommendations help us address the gap between our current approach to financial reporting and what more investors would like to know from us in the future.

How do you work to close gaps to align with the TCFD?

Rasmus Skov: In 2018 we conducted a gap analysis of how far our current reporting and practices are from TCFD alignment. The analysis showed that we are aligned with the TCFD to a large extent but have important gaps to close, including better reporting on scenario analysis and scope 3 emissions. To address these gaps, we’ve established an internal working group, with implementation rooted in Ørsted’s Finance organisation and Sustainability coordinating and maintaining process overview.

Is TCFD changing the way you work?
Rasmus Skov: At Ørsted, we realized more than a decade ago that fossil-based energy production was not going to make us successful in the long term. That triggered actions that today help rank us among the world’s 100 most sustainable companies. This is the kind of thinking and action that TCFD advocates. Their guidelines inspire us to think even more comprehensively about our approach and reporting on exposure to climate risks. Our internal cross functional working group will help to implement the TCFD recommendations.

Is TCFD good for business?

Jeppe Hoff Nielsen: We believe that the private sector needs to be a key driver in the transition to a world that runs entirely on renewable energy. The TCFD recommendations can guide companies towards running more sustainable and climate-resilient businesses, while the resulting disclosures can help investors take climate-related risks into account and avoid stranded assets. However, TCFD is more than just an exercise in risk management. It’s a means to examine opportunities that make companies resilient to the challenges of climate change, and to help them respond to climate threats with climate action.

Ørsted ranked one of the world's most sustainable company

Change is possible