The Federation of Finnish Financial Services (FFI) appreciates the consultation of the
FSB’s Task Force on Climate-related Financial Disclosures, and considers it
important that the financial sector provides input and sector-specific insight
to the final report and the recommendations.
We have replied to the consultation through our European industry associations (IE, EBF and Efama), but in this text wish to specifically highlight the FFI’s approach and justify our position.
We consider it important to maintain close contact with the sector even after the consultation period, because the timeline for companies to respond was short, and the busy year-end financial reporting deadline overlapped with the consultation.
We also deem it important for the principle of proportionality to be considered when applying the requirements for disclosure. There are many areas in which more concreteness and specificity are needed before sector operators know what needs to be done or which procedures produce the most cost-effective and informative solutions.
However, despite there being many areas where the sector has not reached agreement on best practices, we do think that the overall goal of creating comparable, harmonized and accurate information about companies’ climate-related financial disclosures should be kept in mind, and that this goal should govern future business development. Therefore, while proportionality must be kept in mind, the principle should be considered in terms of a company’s size and resources, not location.
Climate-related disclosure is most effective and reaches its intended recipient when it is provided in a single document together with other relevant business information. This in mind, we support the approach of aligning climate-related disclosure with other financial disclosure, and think cross-reference to separate CRS reports should be a secondary option only used when the reporting party wants to provide further information on details already mentioned in the main (financial disclosure) report.
Furthermore, regarding the information to be provided, it is true, as already mentioned, that the financial sector does not have a single, practice-proven framework for that yet. Our sector also has not yet fully established what information is most wanted by investors or how to gather and present it.
Nevertheless, there is urgent need to start testing different methods, and the public sector is waiting for private companies to develop and market-test best practices before starting any legislative processes. Best practices cannot be found without trying out different solutions. The financial sector should be ambitious and should commit to the Task Force’s five-year time frame. The result might not be perfect or final at the end of it, but reporting and disclosure practices can always be improved over time, just like with financial reporting and IFRS.
The sector should not wait for regulators to come up with legislative requirements, or that a common framework is created, before committing to disclosure practices. Rather, this is a window of opportunity for the financial sector to be part of creating the framework ‒ and possible future legislative development ‒ by setting the right example and creating market-tested solutions.
We thank the FSB’s Task Force for its work and for consulting us. We look forward to future further exchange of views.