Does your organization qualify for TCFD reporting? Do you have questions about this framework and what it could mean for your business?
It can be hard to wrap your head around the requirements and the purpose of the TCFD. To help simplify this first step, we’ve got the answers to all your TCFD reporting questions, including:
- What does TCFD stand for?
- What is the purpose of the TCFD?
- What is TCFD reporting?
- What are TCFD reporting requirements?
- What are TCFD reports?
- Is TCFD reporting mandatory?
Let’s dive in!
What does TCFD stand for?
TCFD stands for Task Force on Climate-related Financial Disclosures. It's a reporting framework which was created in 2015 by the Financial Stability Board (FSB).
What is the purpose of the TCFD?
The purpose of this framework is to help businesses get a better understanding of how their organization is affecting the environment in terms of climate-related risks and opportunities, so they can strengthen their sustainability strategy going forward. It also offers a standardized method of reporting which makes it easier for investors or other key stakeholders to compare organizations, in terms of their effects on the planet.
What is TCFD reporting?
TCFD reporting is a framework which provides organizations with recommendations to follow to properly disclose their climate-related risks and opportunities. In total, there are 11 recommendations under four elements which must be followed. These four elements are Governance, Strategy, Risk management, and Metrics and Targets (more on this later!).
Organizations must use these guidelines to report and disclose the climate-related risks and opportunities they’re experiencing and how they plan to mitigate them. This helps show their commitment and dedication to making more sustainable choices to investors and key stakeholders.
What are TCFD reporting requirements?
Though the TCFD reporting requirements are only mandatory in certain regions, this framework is becoming recognized by organizations around the world, as it is a key focal point for investors and board members.
Ready to explore the TCFD reporting requirements? The following are the four key areas you must disclose within your TCFD reports:
1. Governance: Under Governance, organizations must disclose the role of senior leadership in the company’s sustainability and climate strategy when it comes to uncovering and managing climate-related risks and opportunities.
2. Strategy: This area highlights the organization’s climate-related risks and opportunities and their impact on the company’s strategy.
3. Risk Management: Risk Management requires organizations to reveal the methods used to identify and analyze climate-related risks and opportunities, as well as their approach to manage them.
4. Metrics and Targets: Finally, organizations must disclose their GHG emissions and all metrics used to assess identified climate-related risks and opportunities. They must also reveal their targets and KPIs for reducing their GHG emissions.
What are TCFD reports?
A TCFD report is where you would share all the above information with your investors and key stakeholders. There is no strict format which must be followed, as every organization is different; however, what every TCFD report should have in common is all four key areas discussed above. This will give an accurate view of your organization’s sustainability status and approach in the future.
Is TCFD reporting mandatory?
TCFD reporting is mandatory if you are located in the UK. Many other regions around the world are also adopting the TCFD guidelines into their frameworks, including:
- The European Union
- Switzerland
- New Zealand
- Canada
- Brazil
- Singapore
- Hong Kong
- Japan
In the UK, companies which have more than 500 employees and/or banking, insurance, or traded companies must disclose their TCFD reports. In all other regions of the world, TCFD reporting is voluntary.
What now?
This can be a lot of information to unpack but it’s important to congratulate yourself on getting started! You’re doing what’s right for your organization and the planet.
To get a better understanding of the TCFD recommendations, read our blog, A Closer Look at TCFD Recommendations, to uncover what the 11 guidelines within the four key areas to follow are, as well as information to help you write a more successful TCFD report.