Federal LEEFF program ties in climate – what you need to get started on disclosing your climate risk and opportunity

Federal LEEFF program ties in climate – what you need to get started on disclosing your climate risk and opportunity 1024 683 Mantle314

We’ve put together some tips for businesses looking to commit to publishing climate-related financial disclosure reports as part of a new federal COVID-19 economic stimulus program providing bridge loans to big businesses.

The Large Employer Emergency Financing Facility (LEEFF) program will “provide bridge financing to Canada’s largest employers, whose needs during the pandemic are not being met through conventional financing, in order to keep their operations going,” according to the May 11, 2020 news release posted on the Prime Minister’s website.

The funding will be available to Canadian businesses with annual revenues greater than $300 million. As part of accessing the funding, companies will be required to commit to publishing an annual climate-related disclosure report aligned with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) framework. This disclosure must include how a business’s “future operations will support environmental sustainability and national climate goals,” the press release said.

Mantle314 is pleased to see this TCFD requirement being advanced by the federal government. TCFD reporting has become the global standard for corporate reporting on climate change. Last year, the federal government’s Expert Panel on Sustainable Finance, chaired by the incoming governor of the Bank of Canada, Tiff Macklem, recommended that businesses adopt a “comply or explain” approach to TCFD, and included a timeline for implementation. With the tie-in to LEEFF, the government is showing that they are willing to connect climate goals to Canada’s COVID-19 economic recovery.

Decision-useful information may already be available for TCFD-aligned reports

Most companies already have information for TCFD-aligned disclosures and may need a more dedicated focus on climate change to package it into decision-useful reports. Overall, all industries need to do more work to report to the 11 TCFD disclosure recommendations. During our research for the CPA Canada report State of Play: Study of Climate-Related Disclosures by Canadian Public Companies – a review of 40 leading Canadian companies’ climate disclosures – we found that on average, companies disclosed in 4.2 of the 11 TCFD sub-categories and only one company, a utility, disclosed to all 11 sub categories.

As Canada’s largest consulting firm dedicated to climate change, Mantle314 regularly works with companies in a variety of sectors. Mantle helps these companies understand what TCFD means for them, assess their readiness for reporting, and guide the development of their TCFD-aligned reporting. We see the challenges that companies face because TCFD-aligned reporting requires them to go beyond the anecdotal sustainability stories often found in corporate reporting and dig into internal processes and strategies.

Three tips to get started with TCFD

For companies considering applying to LEEFF for loans and wondering how they can get up to speed with the TCFD recommendations, here are three tips to jump-start this work:

1. Assign climate responsibility

Climate change, and by extension the creation of a TCFD-aligned report, cannot be dealt with off the side of someone’s desk. Corporate best practices include assigning explicit responsibility for climate risk at the C-suite management level. Explicit responsibility is key: it’s not just sustainability. Climate change needs to be specifically referenced. Consider which role this should be attached to and the message it sends: is climate change a real financial concern for your company?

2. You’re probably doing more than you realize

In our work with clients, we often find that companies have a number of policies and practices under way that are related to climate change—they just don’t call it that. As part of preparing a TCFD-aligned report, take stock of not just your environmental initiatives, but your board governance, risk management and strategic operations as well. These are all areas that TCFD asks you to report on. Where should climate be integrated in your company?

3. Disclosures are not going to be 100% aligned

TCFD-aligned reporting is a process and a company is not expected to meet every single reporting requirement in its first year. Don’t be afraid to say what you will do in the future; the value of TCFD to investors and regulators is that it is meant to be forward looking. The key is to back up forward-looking statements with tangible actions: seeking out credible expertise, receiving training, and putting timelines to your next steps. While everyone is still learning about climate-related financial disclosures, now is the time for imperfection, honesty, and discussing the future. Do you know what your next steps are?

Contact us for support with TCFD reporting for LEEFF

We’ll be sure to follow the federal government closely as they roll out the details of LEEFF, including how they’ll determine if a company has met the TCFD requirement in its reporting. If you’re considering a TCFD-aligned report or want to learn more about what it entails, reach out to Mantle314 today and we’ll connect you to one of our experts.