The Task Force Climate-Related Financial Disclosures or TCFD was developed in 2015 with the aim to develop climate-related financial disclosures for companies to adopt. This will provide transparency on the wellness of these companies as they face the risks of climate change. With voluntary reporting, investors, insurers, lenders, and other active participants in the market will be informed. As a consequence, they will can have truthful assessment of the company they have interest in.
Coming up with the TCFD reporting may be new to some companies. Honestly. I had no idea where to begin with TCFD reporting when I started my business. But with advanced strategies that were formulated by some experts, TCFD reporting is made easier to accomplish. But how does climate change affect businesses? Here are a few of the many ways why businesses should be wary of the effects of climate change.
Disruption of the Supply Chain
All businesses rely on a particular supply of raw materials or processed material to ensure the continuity of their operation, climate change is slowly changing the cultivation, production, and processing of these materials. In some cases, disruption may take more time before it gets normalized. That is when raw materials are completely swept by natural phenomena like typhoons, wildfires, and flooding. When this happens, a business may consider other options.
Changing Demands
The changing weather patterns are affecting consumer preferences. If your business is into production of raincoats, you will not be so sure if it will rain during the rainy months. The same is true with other seasonal products. Services are also affected. For sure, a tour agency with an area of operation in Southeast Asia had a hard time after the tsunami of 2004.
Capital Expenditure
Because of state laws and regulations, companies may be compelled to spend on expensive emission equipment. And with the Paris Agreement, even American companies with branches overseas, are affected with regulatory laws that will be legislated in consonance with the Agreement.
Public Pressure
With an informed public, reputation of companies on how they persevere to achieve their environmental responsibilities is now very important. Consumers patronize businesses that are seen as protectors of the environment.
Indeed, weather disturbance alone can affect a company. It may mean less production, employees getting absent, or a roof of the warehouse can be flown by strong winds. These risks will always be here and businesses should always be ready for them.