Overview
TISFD is a global initiative, hosted by the United Nations Development Programme, to develop recommendations and guidance for businesses and financial institutions to understand and report on impacts, dependencies, risks, and opportunities related to people.
Investors have a critical role to play in mitigating system-level risks, reducing the accumulation of inequalities and improving outcomes for all people. They could be a driving force to ensure that financial markets do not encourage companies to externalise negative impacts, building stronger, more resilient societies and economies.
Several barriers hinder investors' ability to understand, assess, and manage system-level risks related to inequality:
- There is insufficient understanding of how company and investor actions contribute to socio-economic inequalities and how extreme inequalities impact investors.
- The lack of available data to measure social and inequality impacts across industries and jurisdictions.
- Existing indicators are often inconsistent and not decision-useful to investors.
- Standard setters are unclear on the materiality of systemic social issues beyond the aggregation of entity-level risks.
TISFD aims to formulate disclosure recommendations for businesses and financial institutions to contribute to the global harmonisation of reporting on inequality and social-related issues. It will leverage the experience of the TCFD and TNFD to meet the distinct needs of investors, companies, regulators, and civil society organizations in assessing material impacts and financial risks to enterprises and system-level risks posed by inequality.
Specifically, TISFD will build a body of evidence that documents research on social-related impacts and financial risks, and system-level risks of inequality for businesses and financial institutions. This will include evidence of how organisations’ impacts can accumulate and exacerbate inequalities that hurt overall financial stability.
TISFD aims to work closely with the ISSB and other standard setters. It will publish guidance and recommendations for businesses and financial institutions on disclosure to support the effective identification, assessment, and reporting of inequality and social-related issues.
Read more about TISFD on their website: tisfd.org.