Physically fit? how financial institutions can better disclose climate-related physical risks in line with the recommendations of the TCFD

This paper discusses physical climate-related risk disclosure practices by financial institutions and provides a resource for developing such disclosures. Current practices and guidance often leave physical risk blind spots as they focus primarily on the potential transition risks of a shift toward a low-carbon economy. The Financial Stability Board’s Taskforce on Climate related Financial Disclosures (TCFD) updated its implementation guidance in 2021. Financial regulators have also identified the gap in disclosures of physical climate risks.