The Financial Stability Board (FSB) announced today it is establishing an industry-led disclosure task force on climate-related financial risks under the chairmanship of Michael R. Bloomberg. The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders.
Speaking at the COP21 Paris Climate Change Conference Mark Carney, FSB Chair, said “The FSB is asking the Task Force on Climate-related Financial Disclosures to make recommendations for consistent company disclosures that will help financial market participants understand their climate-related risks. Access to high quality financial information will allow market participants and policymakers to understand and better manage those risks, which are likely to grow with time. Michael’s experience working on climate change issues, his unparalleled track record of execution in a broad range of fields and his lifelong commitment to open and transparent financial markets make him the ideal leader for the Task Force.”
The Task Force will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures in this area. It will seek to develop a set of recommendations for consistent, comparable, reliable, clear and efficient climate-related disclosures, as set out in the FSB’s proposal in November. The wide range of existing disclosure schemes relating to climate or sustainability highlights the need for companies and relevant stakeholders to reach a consensus on the characteristics of effective disclosures and examples of good practices. In doing so, the industry-led Task Force will take account of the work of other groups related to effective disclosures.
Speaking about his role, Michael R. Bloomberg said “It’s critical that industries and investors understand the risks posed by climate change, but currently there is too little transparency about those risks. When Governor Carney laid out the idea for a Task Force on Climate-related Financial Disclosures, I offered him my full support to help make it a success. While the business and finance communities are already playing a leading role on climate change, through investments in technological innovation and clean energy, this Task Force will accelerate that activity by increasing transparency. And in doing so, it will help make markets more efficient, and economies more stable and resilient.”
The Task Force will conduct its work in two stages. During the first stage, the Task Force will consist of about 10 individuals, who will determine the scope and high-level objectives for its work. It is expected that this first stage will be completed by end-March 2016. During the second stage, the Task Force’s work is likely to be expanded to include up to 30 individuals, focused on delivering specific recommendations for voluntary disclosure principles and leading practices, if appropriate, with a view to completing its work by end-2016. As part of its work the Task Force will conduct public outreach.
In similar fashion to the Enhanced Disclosure Task Force (EDTF), an industry-led group that was established by the FSB in 2012 to make recommendations on financial risk disclosures for banks, the Task Force will comprise senior technical experts from firms that are the preparers and users of company risk disclosures, as well as risk analysts. The members of the Task Force will be private-sector individuals drawn from financial and non-financial companies across a broad range of countries within the FSB’s membership.
Fiona Reynolds, managing director of the PRI (Principles for Responsible Investment) said: “Investors are increasingly aware of the material risks associated with climate change, which has been underscored by a number of policymakers, including Bank of England Governor Mark Carney, who has warned of the risks associated with stranded assets. In the past, investors were content to let governments act; now, we are seeing a real shift, with investors being much more proactive and taking the lead in urging governments, policymakers and other stakeholders to take action on climate change.”
Ben Caldecott, Programme Director, University of Oxford’s Smith School said: “Climate-related disclosures are an important prerequisite for capital to cascade from higher risk, unsustainable investments towards those investments compatible with sustainability. The new Task Force has a vitally important role to play. Michael Bloomberg, who has built a successful business on ensuring the timely, accurate, and consistent provision of comparable information to markets, is surely one of the best possible people Mark Carney could have asked to chair this important process.”
Stephanie Pfeifer, Chief Executive of IIGCC – a European network of Institutional Investors with €13 trillion in assets, said: “Access to high quality information can only help accelerate the reallocation of capital by investors in ways that will accelerate the low carbon transition. More consistent and reliable carbon disclosure will make it easier for investors to evaluate climate risk in their portfolios and understand where the opportunities in clean energy and other essential low carbon technology lie.”
Mark Campanale, founder and executive director, Carbon Tracker said: “Carbon Tracker welcomes further steps to progress the Task Force on Climate-related Financial Disclosures. A key challenge the Task Force faces will be to identity and agree reliable, independent information on ‘carbon bubble’ and ‘stranded assets’ risks, to help market participants manage their transition to a low carbon economy. We remain ready to support this process.”
Alice Garton, Company and Financial Lawyer for ClientEarth, said: “This is a hugely welcome initiative. It’s essential that businesses report their climate-risks clearly and consistently. One of the strongest messages coming out of COP21 is that business as usual is no longer an option. Whether or not we get an international agreement, the INDCs already on the table change the landscape of business and investment decisions dramatically. This increased focus by the FSB, and our own litigation programme designed to create a step-change in climate risk reporting, will drive investors’ capital away from businesses who are unable to demonstrate they are adapting to climate change to those that are. Those businesses that fail to adapt to the new normal will find it impossible to survive.”
Julian Poulter, CEO of Asset Owner Disclosure Project, said: “The Paris climate talks are haggling over $100billion of climate finance, but the real story is the trillions of dollars that are already switching away from fossil fuels towards low carbon assets. Better disclosure of climate and carbon exposure can speed up this transition.”
Dr Raj Thamotheram, CEO, Preventable Surprises, said: “The Task Force on Climate-related Financial Disclosures (TCFD) is a very welcome step – corporate disclosure of 2C transition plans are critical if we are to stay within this 2C ceiling. And there also needs to be an equally hefty initiative to get investors to factor these disclosures into their valuation and stewardship decision–making processes.”
Simon Howard, Chief Executive of the UK Sustainable and Investment Finance Association (UKSIF), said: “This is excellent news. The financial risks in climate change are becoming obvious. Better disclosure and consistent data will not only help investors prepare for the significant challenges ahead but will play a part in identifying the profitable mitigation opportunities which will emerge.”
Chris Cheetham, Global Chief Investment Officer, HSBC Global Asset Management, added: “The establishment of this Task Force is an important step towards creating the transparency and consistent standards needed for investors and pension funds to understand the risks and opportunities within their portfolios as we transition to a low carbon economy.”
Seb Beloe, Head of Sustainability Research, WHEB Asset Management, commented: “This initiative is timely and comes with the high-level leadership needed to reinforce the need for, and rebut attempts to roll-back, climate-related financial disclosures.”
Richard Stathers, Head of Responsible Investment, Schroder Investment Management, added: “Few, if any, corporates have honestly assessed the implication of different climate change scenarios to the economy and their value chain. Yet the research suggests that unconstrained climate change poses a very real risk to long-term asset value and economic productivity and, as a result, to the ability of pension funds to meet future obligations.
The FSBs establishment of the Task Force on Climate-related Financial Disclosures is a very welcome and timely announcement. The outputs of which will not only build on the achievements of other disclosure groups but, more importantly, enable financial markets to better understand how companies are financially exposed, whether positively or negatively, to political efforts to decarbonise the global economy as well as to the physical impacts of climate change already at work.”
Two Ancient Japanese Philosophies Are the Future of Eco-Living
Our obsession with all things new has blighted the planet. We have a waste crisis, particularly when it comes to plastic. US scientists have calculated the total amount of plastic ever made – 8.3 billion tons! Unfortunately, only 9% of this is estimated to have been recycled. And current global trends point to there being 12 billion tons of plastic waste by 2050.
However, two ancient Japanese philosophies are providing an antidote to the excesses of modern life. By emphasizing the elimination of waste and the acceptance of the old and imperfect, the concepts of Mottainai and Wabi-Sabi have positively influenced Japanese life for centuries.
They are now making their way into the consciousness of the Western mainstream, with an increasing influence in the UK and US. By encouraging us to be frugal with our possessions, (i.e. using natural materials for interior design) these concepts can be the future of eco-living.
What is Wabi-Sabi and Mottainai??
Wabi-Sabi emphasizes an acceptance of transience and imperfection. Although Wabi had the original meaning of sad and lonely, it has come to describe those that are simple, unmaterialistic and at one with nature. The term Sabi is defined as the “the bloom of time”, and has evolved into a new meaning: taking pleasure and seeing beauty in things that are old and faded.
Any flaws in objects, like cracks or marks, are cherished because they illustrate the passage of time. Wear and tear is seen as a representation of their loving use. This makes it intrinsically linked to Wabi, due to its emphasis on simplicity and rejection of materialism.
In the West, Wabi-Sabi has infiltrated many elements of daily life, from cuisine to interior design. Specialist Japanese homeware companies, like Sansho, source handmade products that embody the Wabi-Sabi philosophy. Their products, largely made from natural materials, are handcrafted by traditional Japanese artisans – meaning no two pieces are the same and no two pieces are “perfect” in size or shape.
Mottainai is a term expressing a feeling of regret concerning waste, translating roughly in English to either “what a waste!” or “Don’t waste!”. The philosophy emphasizes the intrinsic value of a resource or object, and is linked to hinto animism, the notion that all objects have a spirit, or ‘kami’. The idea that we are part of nature is a key part of Japanese psychology.
Mottainai also has origins in Buddhist philosophy. The Buddhist monastic tradition emphasizes a life of frugality, to allow us to concentrate on attaining enlightenment. It is from this move towards frugality that a link to Mottainai as a concept of waste can be made.
How have Wabi-Sabi and Mottainai promoted eco living?
Wabi-Sabi is still a prominent feature of Japanese life today, and has remained instrumental in the way people design their homes. The ideas of imperfection and frugality are hugely influential.
For example, instead of buying a brand-new kitchen table, many Japanese people instead retain a table that has been passed through the generations. Although its long use can be seen by various marks and scratches, Wabi-Sabi has taught people that they should value it because of its imperfect nature. Those scratches and marks are a story and signify the passage of time. This is a far cry from what we typically associate with the Western World.
Like Wabi Sabi, Mottainai is manifested throughout Japanese life, creating a great respect for Japanese resources. This has had a major impact on home design. For example, the Japanese prefer natural materials in their homes, such as using soil and dried grass as thermal insulation.
Their influence in the UK
The UK appears to be increasingly influenced by thes two concepts. Some new reports indicate that Wabi Sabi has been labelled as ‘the trend of 2018’. For example, Japanese ofuro baths inspired the project that won the New London Architecture’s 2017 Don’t Move, Improve award. Ofuro baths are smaller than typical baths, use less water, and are usually made out of natural materials, like hinoki wood.
Many other UK properties have also been influenced by these philosophies, such as natural Kebony wood being applied to the external cladding of a Victorian property in Hampstead; or a house in Lancaster Gate using rice paper partitions as sub-dividers. These examples embody the spirit of both philosophies. They are representative of Mottainai because of their use of natural resources to discourage waste. And they’re reflective of Wabi-Sabi because they accept imperfect materials that have not been engineered or modified.
In a world that is plagued by mass over-consumption and an incessant need for novelty, the ancient concepts of Mottainai and Wabi-Sabi provide a blueprint for living a more sustainable life. They help us to reduce consumption and put less of a strain on the planet. This refreshing mindset can help us transform the way we go about our day to day lives.
How to be More eco-Responsible in 2018
Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.
Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:
1. Energy – produce it, save it
If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.
It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.
While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.
Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!
2. Don’t be just another tourist
Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.
3. Let your beauty be also eco-friendly
We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t mean that some of the product’s ingredients haven’t been tested on some poor animal.
To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.
It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.
4. Know thy recycling
People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.
People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.
5. Fashion can be both eco-friendly and cool
Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.
All in all
The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.
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