We are committed to supporting the implementation of the TCFD recommendations, which aim to help companies understand and disclose the financial impacts of climate change on their bottom-line.
We believe the TCFD recommendations have a key role to play in enabling the transition to a zero-carbon economy. Now is the time for companies to be aligning their business activities and reporting to the recommendations.
Growing momentum behind the recommendations
The drivers for companies to implement the recommendations is increasing, with pressure to adopt the TCFD coming from a variety of stakeholders:
Policy-Makers: The UK Department for Business Energy and Industrial Strategy (BEIS) set out its expectation for all listed companies and large asset owners to adopt the recommendations by 2022 in itsGreen Finance Strategy. BEIS outlined the key role that a green finance system, which incorporates the financialrisks and opportunities presented by climate change, must play in achieving the Paris Agreement. UN Principles for Responsible Investment (PRI) signatories will be required to report from 2020.
Investors: 340 investors with $34 trillion in assets under management have set out their expectations for companies to adopt the recommendations and are engaging investees both collectively and individually to push for greater disclosure.
Regulators: 35 regulators and government organisations support the TCFD. The European Commission is currently considering how the recommendations could be integrated into the EU Non-Financial Reporting Directive and Belgium, France, Sweden, Canada and the UK have all formally endorsed them. In the UK a joint taskforce between regulators and government is being established to consider whether mandatory TCFD reporting should be introduced.
ESG Ratings Providers: Many existing ESG benchmarks such as CDP and the Dow Jones Sustainability Index (DJSI) have already aligned their climate questionnaire to the recommendations; companies seeking to achieve leadership status in these rankings will increasingly be required to prepare and disclose TCFD-aligned information. The Global Real Estate Sustainability Benchmark (GRESB) has also introduced a Resilience Module, which addresses both the physical and transition risk dimensions of the TCFD.
How to adopt the recommendations
For companies starting out on their TCFD disclosure journey, knowing where to begin can be a daunting task. Disclosure of climate-related financial information requires integration of climate change issues into key business and financial processes, which for many companies will first require engagement with wider business functions such as risk, finance and audit.
The recommendations recognise that organisations will face challenges in disclosing against them. In acknowledgement of this, TCFD have set out a five-year implementation path over the period 2017-2022 for organisations to follow.
Figure 1: Five Year TCFD Implementation Path. Source: Recommendations of the Task Force on Climate-related Financial Disclosures (2017)
How we can help
We support our clients at all stages on the TCFD implementation journey, helping them to better understand, address and disclose climate-related financial information and its implications for their organisations. If you’d like to know more, take a look at ourrecent case study of supporting the Global e-sustainability Initiative (GeSI)to develop a climate scenario analysis framework for its members in the ICT sector.
If you’d like to explore how we can support your business in adopting the recommendations, please get in touch with the team firstname.lastname@example.org.
Released in June 2017 by the G20’s Financial Stability Board (FSB), theTask Force on Climate-related Financial Disclosures (TCFD) recommendationsset out voluntary, consistent climate-related financial risk disclosures for use by companies and investors in providing information to their stakeholders. The recommendations are structured around four key themes aligned to the core elements of an organisations’ operations; Governance, Strategy, Risk, and Metrics and Targets. Since their release in 2017, the recommendations have received support from 833 organisations (as of July 2019).