TCFD

The Task Force on Climate-related Financial Disclosures (TCFD) recommends voluntary climate-related financial disclosures that are consistent, comparable, and reliable. The key focus is on governance, strategy, risk management, and metrics and targets. Find out more from our introductory blog post on TCFD.

As Emmanuel Faber, Chair of ISSB, comments,

Over the past five years, the TCFD has been the leading voluntary framework for climate disclosures. As a result, many published reports on climate disclosure or climate change have used the TCFD's recommendations.

As at COP28 in December 2023, TCFD has officially concluded its work, passing their responsibilities to monitor the progress of companies' climate-related disclosures to ISSB. (source)

Learn more about the ISSB Standards here.

The TCFD framework is designed for all organisations, regardless of their size, sector, or location. However, it is particularly relevant for publicly traded companies and financial institutions.

Although the TCFD framework itself is voluntary, many jurisdictions are using the TCFD framework as the basis for their reporting requirements, meaning that reporting in accordance with the TCFD could still be mandatory for some organisations.

As of June 2023, the following countries have mandated or are planning to mandate climate related disclosures that are in line with the TCFD framework:

However, even in countries where TCFD reporting is not mandated, many companies voluntarily disclose TCFD-aligned information in their sustainability reports or financial filings.

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The TCFD framework recommends that companies disclose information on their governance, strategy, risk management, and metrics and targets related to climate-related risks and opportunities, which includes disclosing their climate impact in terms of the Greenhouse Gas inventory.

The most relevant section for carbon accounting is the recommended disclosure b) under the metrics and targets pillar. This section recommends that organisations disclose their Scope 1, 2, and 3 GHG emissions, calculated in accordance with the GHG Protocol methodology.

The framework also recommends that where appropriate organisations should report on GHG efficiency ratios. For most organisations this will include revenue based emissions intensity as well as production metrics relevant to their specific industry (e.g. tonnes of product produced or billable client hours).

The TCFD also includes sector specific GHG reporting guidance. For insurance, investing, and asset management, the TCFD recommends that organisations align their reporting with the specific methodology outlined under Partnership for Carbon Accounting Financials (PCAF). Currently there is no specific supplementary GHG reporting guidance for Non-Financial Groups.

Extract from TCFD Framework

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The TCFD framework has three remaining pillars, which recommend that companies disclose information about their governance, strategy, and risk management related to climate-related risks and opportunities. These sections build on carbon accounting as a foundation.

The recommendations cover how the company identifies and assesses climate-related risks, the resilience of the company's strategy to different climate-related scenarios, including a 2°C or lower scenario, as well as the measures it is taking to manage and mitigate those risks.

Extract from TCFD Framework