TCFD Summit 2021 was successfully held on October 5th.
Please see below for the Digest version video of the summit.
Click here to download the Speaker's presentation materials.
Background to the TCFD Summit
With increasing interest in climate change, more than 120 countries around the world have declared they are aiming to be carbon neutral by 2050. In order to achieve this, financial institutions are also actively working toward achieving net zero emissions among their investees.
The TCFD is internationally supported as a framework for disclosure. With disclosing information on climate change becoming increasingly important for companies, their endorsement of the TCFD is also gaining pace. As of September 30, 2021, the number of TCFD endorsers had grown to 2,529 organizations worldwide (up by 1,096), with 509 of these in Japan (up by 203).
In order to achieve a virtuous cycle of economic growth and environmental protection, it will be important for companies to further their commitment to TCFD disclosure, and to improve the quality and depth of disclosure in order to help investors make appropriate financing decisions. It will also be vital for investors to accurately understand the disclosures.
The event in 2021 was the third TCFD Summit. Leaders from the industrial and financial sectors discussed how to promote further use of the TCFD recommendations in order to encourage the expansion of disclosure that will provide a sound basis for appropriate investment decisions. Specifically, the following shared views comprised the key results of the event:
- It is important to obtain commitments to carbon neutrality from investors through engagement, not divestment.
- Given the importance of reducing emissions throughout the supply chains, Scope 3 needs to establish calculation methods in order to solve the practical issues. It is also important to understand the background to why Scope 3 disclosure is necessary rather than simply using a tick-box format.
- Transition financing is essential worldwide, and it is important that disclosures include transition strategies. This is especially true of Asia, which is highly reliant on fossil fuels.
- The activities of the Japanese consortium are leading to consortiums being established overseas. The contributions from Japan are playing a major role in expanding global disclosure.
- Green Investment Guidance 2.0 and Zero Emissions Challenge 2 were announced.
Overview of TCFD Summit 2021
Date: October 5 (Tue.), 2021
Meeting format: Online style
Co-organizers: The World Business Council for Sustainable Development (WBCSD) and the TCFD Consortium
Number of registered viewers: About 3,600
|Welcome Message||HAGIUDA Koichi (Minister of Economy, Trade and Industry) *Message read on behalf|
|HIROSE Naoshi (Vice-Minister for International Affairs, Ministry of Economy, Trade and Indust|
|Opening Remarks||Valdis Dombrovskis (Executive Vice-President, European Commission)|
|Mark Carney (Finance Adviser to the Prime Minister of the United Kingdom for COP26, UN Special Envoy for Climate Action and Finance)|
|Mary Schapiro (Head Of The TCFD Secretariat, Vice Chair For Global Public Policy At Bloomberg And Senior Adviser To The Founder)|
|KURODA Haruhiko (Governor, Bank of Japan)|
|Peter Bakker (President & CEO, World Business Council for Sustainable Development (WBCSD))|
|ITO Kunio (Chair of the TCFD Consortium/ Director of Hitotsubashi CFO Education and Research Center)|
|Keynote Speech 1||MIYAZONO Masataka (President, Government Pension Investment Fund (GPIF))|
|Ronald P. O’Hanley (Chairman and Chief Executive Officer, State Street Corporation)|
|Panel Discussion 1
「Asset owner’s role in
MIZUNO Hiromichi (Special Envoy Of U.N Secretary-general On Innovative Finance And Sustainable Investment)
Marcie Frost (CEO, California Public Employees' Retirement System (CalPERS))
|SUGANO Akira (President & CEO, Asset Management One Co., Ltd.)|
|Edward Baker (Head of Climate Policy, PRI)|
|SHIGEMOTO Kazuyuki (Executive Officer, Chief General Manager, Investment, The Dai-ichi Life Insurance Company, Limited)|
|Keynote Speech 2||TOKURA Masakazu (Chairman of Keidanren)|
|YAMAJI Hiromi (President & CEO, Tokyo Stock Exchange, Inc.)|
|Panel Discussion 2
「Efforts to improve
the quality of
NAGAMURA Masaaki (Fellow International Initiatives, Tokio Marine Holdings, Inc.)
IKEDA Satoshi (Chief Sustainable Finance Officer, Strategy Development and Management Bureau, Financial Services Agency)
|Becky Swanson (TCFD Secretariat Support / Senior Consultant, Financial Services, Oliver Wyman)|
|TSUDA Megumu (Deputy General Manager of Sustainability Promotion Division, Government & External Relations Group, Hitachi, Ltd.)|
|IWANAGA Yasunori (Chief Responsible Investment Officer, Amundi Japan Ltd.)|
|Keynote Speech 3||NASUNO Futoshi (Director-General, Industrial Science and Technology Policy and Environment Bureau, Ministry of Economy, Trade and Industry)|
|Panel Discussion 3
and transition strategy」
ITO Kunio (Chair of the TCFD Consortium, Director of Hitotsubashi CFO Education and Research Center)
Kaja Pergar(TCFD Secretariat Support / Engagement Manager, Climate and Sustainability, Oliver Wyman)
|Nicholas Pfaff(Head of Sustainable Finance, ICMA)|
|Sergio Molisani(Finance, Insurance, Tax Director & SVP International Assets, Snam SpA)|
|TERAKAMI Michiyo (Executive Officer (Regional Revitalization Business Department) and General Manager, Corporate Sustainability Department), Idemitsu Kosan Co., Ltd.)|
|HAYASHI Reiko (Director and Deputy President, BofA Securities Japan Co., Ltd.)|
|Keynote Speech 4||TAKASHIMA Makoto (Chairman, Japanese Bankers Association/ President and CEO, Sumitomo Mitsui Banking Corporation)|
|Panel Discussion 4
「CFD disclosures in
FUJIMURA Takehiro (General Manager, Corporate Sustainability & CSR Department, Mitsubishi Corporation)
Ma. Victoria A. Tan (Executive Director, Group Risk Management And Sustainability, Ayala Corporation)
|TANAKA Toshiaki (Member of the Board, Senior Managing Executive Officer, Chief Environment & Sustainability Officer, Director General, Dry Bulk Business Unit, Mitsui O.S.K. Lines, Ltd.)|
|Yulanda Chung(Head Of Sustainability, Institutional Banking Group, DBS Bank)|
|OSHIMA Koichiro (Managing Executive Officer, Head of Financial Solutions Group, MUFG Bank, Ltd.)|
Juan Carlos Belausteguigoitia(Consorcio TCFD México / Director, Centro De Energía Y Recursos Naturales, Instituto Tecnológico Autónomo De México）
|Closing Remarks||MIZUNO Hiromichi (Special Envoy Of U.N Secretary-general On Innovative Finance And Sustainable Investment)|
- Please download Key Takeaways of the TCFD Summit 2021 from here.
Details of the Discussions
Welcome message by Mr. Hagiuda Kouichi, Minister of Economy, Trade and Industry (Read on his behalf by Mr. Kishimoto Michihiro, Deputy Director-General for Industrial Science, Technology and Environmental Policy, METI)
It is important that Japan rise to the challenge of achieving its targets and becoming carbon neutral by 2050, and contribute to global carbon neutrality. As it does so, it is important that all countries pursue their own variety of paths to achievement, in line with their actual circumstances. Creating innovation will be the key. The Japanese Government will support TCFD disclosure and take the initiative in contributing to measures against climate change.
Welcome message by Mr. Hirose Naoshi, Vice-Minister for International Affairs
With a view toward total carbon neutrality worldwide, Japan will lead global decarbonization by aiming to establish innovative technologies and actually implementing them within society, in order to achieve "Beyond Zero." By funding these technologies, we will aim to create a trend whereby financing provides companies with the impetus to engage in efforts toward achieving carbon neutrality. Disclosure will become the basis on which companies’ endeavors are assessed.
Message from Mr. Valdis Dombrovskis, Executive Vice-President, European Commission (EC)
Realizing the EC’s goal of a sustainable economy relies heavily on investments from the private sector. Disclosure of correct information is necessary to avoid greenwashing. The EC endorses the TCFD recommendations, which provide common ground for international initiatives on disclosure standards. The EU’s sustainability reporting standards are clearly rooted in the TCFD recommendations. The EU and Japan can cooperate more in the areas of sustainable finance and climate action, and are expected to work closely together in future high-level economic dialogues and economic partnership agreements.
Message from Mr. Mark Carney, Finance Adviser to the Prime Minister for COP26 and UN Special Envoy for Climate Action and Finance
For climate change to become a determining factor of corporate value, it is essential to have reporting, risk management, mainstreaming of climate returns, and creation of new markets to mobilize capital at scale. Ahead of COP26, we are calling on major countries to make TCFD disclosures mandatory. Japan has been a leader in voluntary disclosures, and has also adapted progressively to mandatory disclosures by revising its Corporate Governance Code. To enhance disclosure, we want investors to disclose how their portfolios are aligned with the net zero transition, and we will release a technical report on portfolio alignment in October. We appreciate the efforts Japan is making through the TCFD Summit to create a world where all financial decisions take climate change into account.
Message from Ms. Mary L. Schapiro, Head of the TCFD Secretariat
The efforts of the Japan TCFD Consortium have been remarkable and have become a model for other countries, including Mexico. This summer, the TCFD held a public consultation on metrics, targets, and transition planning that will yield guidance. Japan released basic guidelines on climate transition finance based on the Climate Innovation Finance Strategy 2020 of METI. These guidelines encourage disclosure of transition strategies in line with the TCFD framework. With the G7 and G20 also supporting mandatory disclosures based on the TCFD recommendations, the establishment of a global standard for climate and sustainability reporting is an important mission for the TCFD. The TCFD recommendations serve as a foundation for these standards, acting as a common thread to tie together this work to establish the standards.
Message from Mr. Kuroda Haruhiko, Governor of the Bank of Japan (BoJ)
Climate change is a global challenge that could have a broad impact on society and the economy into the future. Therefore, promoting climate-related information disclosure will enable investors to appropriately identify risks and make investments, and companies to engage in more active production activities and research in response to climate change. The BoJ decided on a comprehensive action policy on climate change and will enhance TCFD disclosures by financial institutions through monetary policy and dialogues during examinations and monitoring, and will also work on the BoJ’s own TCFD disclosures.
Message from Mr. Peter Bakker, President & Chief Executive Officer of the World Business Council for Sustainable Development (WBCSD)
The implementation of the TCFD has made significant progress, not only in the increase in supporters but also in the compulsory climate reporting in line with the TCFD by a number of governments, supervisory organizations, and securities organizations. We must strengthen communication and alignment between companies and investors in order to integrate sustainability into capital allocation decisions.
Message from Prof. Ito Kunio, Chair of the TCFD Consortium and Director of Hitotsubashi CFO Education and Research Center
Momentum for TCFD disclosures is increasing, and there is a trend being established toward proactively addressing and disclosing information on climate change. To respond to these changes in the situation, the TCFD Consortium has revised its guide for investors, the Green Investment Guidance. It has also conducted roundtables to enhance dialogue among the financial, business, and government sectors and progressed international cooperation.
Keynote Speech 1
Message from Mr. Miyazono Masataka, President, Government Pension Investment Fund (GPIF)
The GPIF considers climate change as one of the most important themes of its ESG activities and discloses climate-related financial information in line with the TCFD recommendations. In the TCFD disclosures for fiscal year 2020, the GPIF expanded the analysis of greenhouse gas emissions to include the entire supply chain and newly analyzed inter-industry transfer of opportunities and risks accompanying the transition to a low-carbon society. The analysis found that the opportunities associated with the transition to a decarbonized society greatly outweigh the risks in Japan’s energy and chemical industries, and that Japan possesses promising technologies in these industries. We will continue to work head on to improve our analysis so that we can properly identify the impact of climate change on corporate value and industrial structure, while also striving to improve the sustainability of the market as a whole.
Message from Mr. Ronald O’Hanley, Chairman and Chief Executive Officer, State Street Corporation
TCFD disclosures are an urgent issue for all parts of the financial system, including pension funds, banks, and insurers, and mandatory disclosure is making progress. State Street is encouraging portfolio companies to make TCFD disclosures. The next step will be implementing the TCFD recommendations. We expect more companies to adopt and endorse the TCFD recommendations, and we will assist in sharing industry best practices rather than taking a one-size-fits-all approach.
Panel Discussion 1
Asset owner’s role in today’s TCFD disclosure landscape
Asset owners and asset managers reviewed the new initiatives and progress over the past year, and discussed the role of asset owners in achieving decarbonization. The TCFD framework has become indispensable, and actions are under way to make disclosure mandatory. In this past year, disclosures gained further in importance.
Asset owners need to allocate capital based on reliable data. This has given importance to the establishment of metrics and targets and to the materialization of long-term benefits based on quantitative analysis. It is hoped that disclosures will become standardized for this analysis. In the financial industry, commitments are needed not only from asset owners but also from banks whose investments and loans are illiquid. Net zero commitments by investors will not be achieved by divestment; engagement is the solution. Asset owners will practice engagement not only individually but also collectively. Asset managers will use the results of quantitative scenario analysis to discuss a clear approach with asset owners.
Since the realization of the Paris Agreement requires cooperation between the public and private sectors, it is important for governments to present concrete plans in addition to their commitments.
Keynote Speech 2
Message from Mr. Tokura Masakazu, Chairman, Keidanren (Japan Business Federation)
Keidanren released its New Growth Strategy last year, which calls for the establishment of sustainable capitalism through green transformation. Keidanren is taking proactive measures to address climate change, promoting "Challenge Zero" that encourages companies to take on innovative challenges, and expects companies to take advantage of the Japanese Government’s “Zero-Emission Challenge” that is linked to this. We will work to further expand the number of TCFD supporters and deepen dialogue with financial institutions and investors, alongside participating in discussions and disseminating information on transition finance. In addition, Keidanren will make efforts to reduce emissions across the entire value chain.
Message from Mr. Yamaji Hiromi, President & CEO, Tokyo Stock Exchange, Inc.
The year 2021 marks a milestone for Japan in pushing forward initiatives and disclosures based on the TCFD recommendations. The Corporate Governance Code, which was revised this year, stresses the importance of listed companies’ actions to address sustainability issues, and requires companies listed on the new prime market that will be launched next year to enhance the quality and quantity of their disclosures based on the TCFD or an equivalent framework. To help resolve practical issues, we are actively providing information to promote understanding and adoption of the TCFD recommendations. It is essential that TCFD disclosures make progress and that disclosure information is used for corporate valuation. It is also critical that funding is provided for companies that proactively address climate change, for transition to a low-carbon economy, and for innovative technologies.
Panel Discussion 2
Efforts to improve the quality of TCFD disclosure
Company, financial institution, government authority, and TCFD representatives exchanged views on the leading issues of TCFD disclosures. Mandatory TCFD disclosure and the establishment of international standards are making headway around the world. Dialogue between investors and companies is important for companies to exercise creativity, and disclosures must not merely become a tick-box-type exercise.
Guides have been created for assisting more enhanced disclosures. Presentations were made on the TCFD proposed guidance on metrics, targets, and transition plans and the associated portfolio alignment, as well as on the revisions made to Japan’s Green Investment Guidance. The TCFD expressed appreciation for the comments submitted to the public consultation on the proposed guidance, and explained that it attaches great importance to the responses received during the public consultation.
With regard to TCFD disclosures, panelists shared the view that it is important, albeit difficult, to identify and reduce Scope 3 emissions, and elaborated on efforts to reduce emissions throughout the value chain. Companies said it gives them motivation when they are recognized for their contribution to society-wide CO2 emissions reductions through new products and technologies. Investors expressed the opinion that investee companies’ disclosure of strategies in line with the TCFD recommendations is useful for portfolio management, and that investors should evaluate the value created by corporate strategies.
Keynote Speech 3
Mr. Nasuno Futoshi, Director-General, Industrial Science and Technology Policy and Environment Bureau, METI presented on the transition finance measures of the Government of Japan.
Panel Discussion 3
TCFD disclosures and transition strategy
Discussions were held with Japanese and overseas energy companies on the affinity between the disclosures required in transition finance and the disclosures of transition plans required by TCFD disclosures.
Investors, banks, and insurance companies must support the transitions of companies, and companies must seize business opportunities created by climate change in their transition planning. Climate-related metrics and targets must form the basis of transition plans, and the plans need to be given credibility through supervision and accountability. This is also in line with the transition finance approach promoted by ICMA.
Transition finance is essential for companies around the world aiming to become carbon neutral, and the disclosure of transition plans is especially important for energy companies that also need to shift their business portfolio. Energy companies shared their experiences with transition finance and their expectations for finance going forward.
Keynote Speech 4
Message from Mr. Takashima Makoto, Chairman, Japanese Bankers Association (President and CEO, Sumitomo Mitsui Banking Corporation)
The Japanese banking industry will work with customers to achieve the transition to a decarbonized society by engaging with them, rather than by simply divesting. Customer disclosures in line with the TCFD recommendations form the foundation of engagement. In addition, information on customers’ transition strategies and greenhouse gas emissions data is particularly important for banks to provide support to companies.
Panel Discussion 4
TCFD disclosures in Trans-Pacific region
Members of Asian financial institutions, companies, and a consortium launched in Mexico held wide-ranging discussions on the promotion of global TCFD disclosures. They shared their understanding of the need for decarbonization in Asia and the Trans-Pacific region and the usefulness of disclosures to this end, and presented on their experience of structuring transition loans based on disclosure.
Much of the Asian region is an emerging market, making rapid decarbonization difficult. Given the large number of companies that need to transition to a low-carbon economy, it was suggested that it is important for financial institutions to disclose corporate information in order to implement credible transition financing and support their customers’ strategies, and that such disclosure should be in line with the TCFD recommendations. It was also advised that companies embarking on disclosures should understand the future benefits and create a cross-company disclosure system, and that they should make use of external experts.
Mexico presented on the trend of establishing TCFD consortiums and its use of Japan’s TCFD Consortium as a model case.
Closing remarks by Mr. Mizuno Hiromichi, Special Envoy of UN Secretary-General on Innovative Finance and Sustainable Investments
On behalf of the United Nations Secretary-General, I congratulate METI and the co-organizers, the Japan TCFD Consortium and WBCSD, on the success of this summit. COP26 is anticipated to be the most important COP as world leaders, including the Government of Japan, declare to reach carbon neutrality by 2050. It is meaningful that this summit was held prior to COP26, and that a number of important points were made and the importance of the TCFD was reaffirmed. I expect that many initiatives will be announced in the lead-up to COP, and that Japan will continue to exercise leadership in promoting the TCFD.
Panel Discussion 1 pointed out the need for asset owners to play a key role, the use of collective engagement, and the importance of responsible ownership through engagement rather than divestment.
Panel Discussion 2 discussed improving the quality of disclosures. Reducing life-cycle emissions is critical but faces practical challenges. Methods for calculating emissions must be established for Scope 3 disclosures. We also need to recognize the principle of why Scope 3 is necessary and not let metrics standardization become a tick-box exercise.
In Panel Discussion 3, the importance of transition for shifting to sustainable businesses was discussed. At this time, it is unrealistic for everyone to turn completely green. We must gradually change to a lower emission business model, and unless we invest capital to do so, we will be left with stranded assets. A roadmap or pathway is needed in order to keep transition finance from turning into greenwashing, and such roadmaps and pathways will be announced by governments and industries.
It has become clear that countries must help each other to this end. It is striking that Mexico in particular is promoting disclosures by getting ideas from the Japanese consortium.
The ultimate goal of the TCFD is to use it as a framework to advance the discussion on climate change, induce business and capital shifts, and create a better future. The participants of this summit should become cheerleaders for promoting the TCFD recommendations.