Michael R. Bloomberg (click here) is Chair of the Task Force, which includes users and providers of disclosures from a wide range of backgrounds. The members of the Task Force, who are drawn from a wide range of industries and countries from around the globe, finalised the recommendations after extensive public engagement and consultation, including public consultation on a draft of the recommendations in December 2016. Once implemented the recommendations will facilitate consistent, comparable, reliable, clear and efficient climate-related disclosures by companies. The recommendations apply broadly to financial and non-financial firms.
The TCFD developed four recommendations on climate-related financial disclosures that are applicable to organisations. The recommendations are structured around four thematic areas:
- Governance: The organisation’s governance around climate-related risks and opportunities.
- Strategy: The actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning.
- Risk Management: The processes used by the organisation to identify, assess, and manage climate-related risks.
- Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities.
In September 2018 the TCFD published a survey of disclosures by over 1,700 firms from diverse sectors with broad geographical representation. It found that:
- The majority of the firms surveyed disclose information aligned with at least one of the TCFD recommended disclosures.
- While many companies describe climate-related risks and opportunities, few disclose the financial impact of climate change on the company.
- A minority of companies disclose forward-looking climate targets or the resilience of their strategies under different climate-related scenarios, including a 2°C or lower scenario, which is a key area of focus for the Task Force.
- Disclosures vary widely across industries. For example, more non-financial companies reported their climate-related metrics and targets; than did financial companies. However, financial companies were more likely to disclose how they had embedded climate risk into overall risk management.
- Disclosures are often made in sustainability reports or spread across financial filings, annual and sustainability reports.
