What is TCFD?
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information.

Task Force on Climate-related Financial Disclosures (TCFD)

The Financial Stability Board (FSB) created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information and to develop recommendations on the types of information that companies should disclose to support investors, lenders, and insurance underwriters in appropriately assessing and pricing a specific set of risks related to climate change.

The TCFD’s focus is reporting on the impact an organisation has on the global climate.

The disclosure recommendations are structured around four thematic areas that represent core elements of how companies operate:

  • governance
  • strategy
  • risk management
  • metrics and targets

The four recommendations are interrelated and supported by 11 recommended disclosures that build out the framework with information that should help investors and others understand how reporting organizations think about and assess climate-related risks and opportunities.

What’s the goal?

The TCFD released climate-related financial disclosure recommendations designed to help companies provide better information to support informed capital allocation.

It seeks to make firms’ climate-related disclosures more consistent and therefore more comparable.

It believes that better information will allow companies to incorporate climate-related risks and opportunities into their risk management, strategic planning and decision-making processes.

As both companies and investors increase their understanding of the financial implications of climate change, markets will be better able to channel investment to sustainable and resilient solutions, opportunities, and business models.

Who does it apply to? / When does TCFD come into effect?

It is not a regulation so it doesn’t come into effect and it is not mandatory, but it is widely adopted as a disclosure framework by many companies.

Some governments are making TCFD-aligned disclosure mandatory (the UK and New Zealand, maybe Switzerland and Hong Kong in the near future).

Is it mandatory?

No. The TCFDs are important for businesses to improve their own understanding of their long-term climate-related risks and opportunities. Further, they matter because of the growing pressure on companies from governments, consumers and investors to respond to climate change.

More governments will shift from recommending the TCFDs as guidance to enacting laws and policies to embed the recommendations into mandatory legislation and regulation.

How do you become compliant with TCFD?

Following the 4 pillars for disclosure (and sub-indicators):

1. Governance
2. Strategy
3. Risks Management
4. Metrics and Targets

How we can help

We have experience and expertise around TCFD disclosure and we have the structure in place to support you as you report your data.

It is not the most complex set of requirements but it can be very intimidating since it’s heavily focused on governance and governance practices.

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