In December 2021, the Singapore Exchange (SGX) unveiled its roadmap for issuers to provide climate-related disclosures based on recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The TCFD recommendations provide guidance to all market participants on the disclosure of information on the financial implications of climate-related risks and opportunities so that they can be integrated into business and investment decisions. 

In the press release from SGX,^[1] the CEO of SGX RegCo, Mr. Tan Boon Gin also, mentioned that the market recognizes that climate reporting is important as a first step towards efforts to mitigate the effects of climate change. Decision-makers also want climate information when they allocate assets, extend financing, and price risks. These factors make climate reporting most urgent for industries with the biggest impact. Climate reporting will subsequently be mandatory for issuers in the (i) financial, (ii) agriculture, food and forest products, and (iii) energy industries from FY 2023, and the (iv) materials and buildings, and (v) transportation industries from FY 2024. 

As such, the approach to TCFD typically includes five steps:

1. Quantify your baseline carbon footprint
2. Apply scenario analysis
3. Identify opportunities
4. Set targets
5. Engage and report

One of the key challenges issuers face in this process is the use of forward-looking scenario analysis to assess climate-related risks and opportunities and the issues posed by inconsistent or lack of data.  At S&P Global Market Intelligence, we have developed a variety of solutions to help issuers mitigate this. 

One of our off-the-shelf solutions enables a bottoms-up counterparty- and portfolio-level analysis of climate-related financial and credit risks and opportunities for thousands of public and private companies across multiple sectors globally. This includes Climate Credit Analytics, in collaboration with Oliver Wyman, a bottoms-up analysis using scenarios aligned to the Network for Greening the Financial System (NGFS), that enables comprehensive and consistent sector-specific modelling, including an evaluation of key high carbon-emitting sectors.  This is complemented by a top down market valuation approach, Climate Risk Gauge, that evaluates the impact of carbon prices on select financials and future market capitalization of each company in the chosen sector, scenario, and year along with its credit risk score.^[2]  The two tools essentially allow an issuer to ‘own’ the scenario analysis and provide a consistent message to investors, lenders and insurers to inform their investment, credit and underwriting decisions, respectively. 

Besides, we also offer end-to-end TCFD reporting services as may be needed by issuers. Our in-depth climate analytics and specialist support services inform every step of your TCFD reporting journey, from quantifying climate-related financial risks and opportunities to engaging with company stakeholders to turn metrics into action.