Recently, more and more countries are exploring climate disclosures and have published relevant policies to encourage listed companies to disclose climate-related financial disclosures. On 27th September, Rankins Ratings (RKS), Noah Holdings, Yicai Research Institute and Sino Carbon Innovation & Investment (SCII) co-organized the First 2022 China Listed Companies TCFD Climate-related Financial Disclosures Rating Release and Conference.
Noah Holdings' founding investor and director Jiayu Zhang said in her opening speech that climate is the most significant global challenge in this century and climate governance has become a common global issue. The TCFD is a well-recognized framework for climate-related financial disclosures on the NYSE and HKEX and has become an important reference for financial institutions and companies globally to develop high-quality climate-related financial disclosures. The framework can help investors and decision-makers understand the financial risks of climate change, including the risks to companies, investors and even the overall financial system.
Figure: Jiayu Zhang, the Founding Investor and Director of Noah Holdings
Jin Li, Vice-General Manager of Shanghai Environmental Energy Exchange, gave a speech at the event and said that developing a unified climate-related disclosure framework, will help investors and financial institutions to reasonably assess climate-related risks and opportunities to make more informed financial decisions. She said she was looking forward to further deepening the cooperation with more professional institutions, assessment institutions and investment institutions in the capital market in the context of the Chinese carbon strategy, to better serve the capital market for carbon emission peaking, carbon neutrality and sustainable development.
Figure: Jin Li, Vice-General Manager of Shanghai Environmental Energy Exchange
In addition, many experts within the field also discussed multi-dimensional aspects of environmental disclosures and climate risk analysis. Jian Yu, the Executive Vice President of the Yicai Research Institute, presented a special report from the perspective of the climate and the world we live in, explaining in depth the value of climate risk to companies' future guidance. Wei Kong, the Deputy Director-general of Lujiazui Finance City Green Finance Development Centre, promotes companies to understand the access points to improve the quality of climate-related disclosures by sorting out international disclosure standards and policies and regulations. Tianyin Sun, the Deputy Director of The PBC School of Finance (PBCSF) from Tsinghua University, reviewed the latest international and domestic progress and highlighted two important elements in environmental and climate disclosures, namely climate risk analysis and biodiversity loss. And he explained the concept of "planetary boundaries" and emphasized the high dependence of economic activities and financial stability on a sound ecological system with the importance of disclosures, and called on companies and financial institutions to pay more attention to biodiversity loss in the future.
Xuezhu Wang, Executive Director of Rankins Ratings (RKS), published the RKS TCFD Rating Standard, which aims to promote the quality and effectiveness of TCFD disclosures of China Listed Companies. This Standard provides the information platform for accessing international and domestic funds and aligns with the requirements of TCFD to find the gaps by evaluating and analyzing the TCFD disclosures of related Industries and Listed Companies. RKS Rating Standard will also be a reference for listed companies to enhance the quality of climate-related financial disclosures.
The rating standard upholds the four principles of integrity, validity, fairness and compatibility, and establishes 9 primary metrics, 24 secondary metrics and 184 tertiary metrics following the four key recommendations of TCFD (Governance, Strategy, Risk Management, Metrics and Targets), and the weighting of the metrics is based on the Analytic Hierarchy Process (AHP) method. There were several experts in the industry to evaluate the metrics, and the final weighting of the metrics is the average of the evaluation results of the experts.
As the deputy general manager of SCII, Mr Guoqiang Qian officially released the "2022 TCFD Climate-Related Financial Disclosures Rating Analysis Report" to the public. This is the first authoritative assessment of TCFD climate-related financial disclosures in the industry, which is a great pioneering significance to promote listed companies to join the climate-related financial disclosures. In total, 92 companies are included in this rating, and 4 companies have published a separate Climate-Related Financial Disclosures (TCFD) report. The more active sectors include Capital Markets, Real Estate, Electric Utilities, Insurance and Commercial Banks, all of which have more than 5 companies that have made TCFD disclosures. When publishing and analyzing the rating results, Qian also said, "TCFD climate-related financial disclosures are not only in their beginning stages in China, but also in the world where only the leading head companies are just getting started, and the average quality of disclosure is equally low. The 92 companies disclosed this time should be encouraged and acknowledged regardless of their scores. "
Figure: Guoqiang Qian, the deputy general manager of SCII
Figure: TCFD Rating Results
Figure: 2022 TCFD Climate-related Financial Disclosures Rating Analysis Report and Rating Results
In the rating results, Universal Scientific Industrial (Shanghai) Co., Ltd. (USI) received the highest rating result. Jinpeng Shi, Senior Vice President of Strategic Investment and Secretary of the Board of Directors of USI, together with Ruohai Zhang, Chief Analyst of Data Technology Research Department of CITIC Securities, and Yanjie Wang, General Manager of UBS SDIC, shared their cases of ESG governance activities and the design of ESG research system framework of financial companies in the field of sustainable development investment with the practical value of TCFD from the financial perspective and discussed the climate sustainability strategy in the context of global investment with financial integration and the importance of TCFD for company sustainable development.
When the TCFD Climate-related Financial Disclosures Rating Release and Conference, the China TCFD Promotion Alliance Committee was officially established, which is composed of companies from various fields, such as Noah Holdings, RKS, SCII, CITIC, UBS SDIC, Yicai Research Institute, Lujiazui Financial City Green Finance Development Center, Miao Ying Technology and other board institutions. Noah Holdings' founding investor and director Jiayu Zhang was elected chairman of the first committee. The China TCFD Promotion Alliance Committee introduced its future planning, including organizing TCFD Climate-related Financial Disclosures and carbon-related training courses, holding the China TCFD Climate-related Risk Management/Disclosures and Companies Transition Practice Summit and other objectives.
The conference was hosted by Zhou Yu, Marketing Director of RKS, and live streamed simultaneously on SCII, Noah Holdings, China Financial Information Center Video and Micro Noah App. The rating release and conference also received the attention of several media.
Figure: Zhou Yu, Marketing Director of RKS
Figure: Conference Site