A Guide to TCFD
TCFD stands for Task Force on Climate-related Financial Disclosures. It is not a regulation itself but rather a set of recommendations developed by an international task force established by the Financial Stability Board (FSB) in 2015. The TCFD was formed to address the need for consistent and comparable information on climate-related risks and opportunities that could affect financial markets.
The TCFD recommendations provide a framework for organizations to voluntarily disclose climate-related financial information in their mainstream financial filings. The goal is to enable investors, lenders, insurers, and other stakeholders to make informed decisions by understanding the climate-related risks and opportunities faced by businesses.
The TCFD recommendations focus on four key areas:
Governance: Organisations are encouraged to disclose how they integrate climate-related risks and opportunities into their governance processes.
Strategy: Organisations should disclose their climate-related risks and opportunities, including how they identify, assess, and manage them. This includes describing their short- and long-term climate-related goals and how they consider different climate scenarios.
Risk management: Organisations should disclose the processes they use to assess and manage climate-related risks. This includes describing how they integrate climate-related risks into their overall risk management framework.
Metrics and targets: Organisations are encouraged to disclose the metrics and targets they use to assess and manage climate-related risks and opportunities. This can include emissions data, energy consumption, and other relevant indicators.
While TCFD recommendations are voluntary, they have gained significant traction globally. Many investors, regulators, and financial institutions are adopting the TCFD framework and incorporating it into their reporting and decision-making processes. Some countries and stock exchanges have also started considering mandatory TCFD reporting requirements to ensure consistent and transparent disclosure of climate-related financial information.
It's important to note that regulatory requirements may vary by country and jurisdiction, so it's always advisable to consult local regulations and guidelines specific to your region.Back to Blog