TCFD

Since its inception in 2015, almost 3,000 organisations globally have expressed public support for the Financial Stability Board (FSB)’s Task Force on Climate-related Financial Disclosures (TCFD) and its eleven recommendations.

In the push to harmonise the alphabet soup of ESG standards and frameworks, the TCFD has established itself as the frontrunner of frameworks. With the United Kingdom being the first G20 nation to require compulsory TCFD disclosures for companies and many more following or soon to. The newly formed International Sustainability Standards Board (ISSB) has also confirmed its sustainability reporting standards will follow the same four-pillar approach.

What’s certain is the sustainability world is behind TCFD, is your organisation ready to be as well?

Speak to a member of the team to discuss your TCFD requirements

Beyond the issue of mandatory compliance, aligning your reporting to the TCFD satisfies investor and wider stakeholders demands for greater transparency on climate-related risks and opportunities. Some investors are already expecting TCFD aligned disclosures regardless. For example, BlackRock is making it mandatory for all investee companies and its CEO, Larry Fink, wrote in his 2022 letter that he believes the TCFD’s recommendations are “essential tools for understanding a company’s ability to adapt for the future”.

Avieco Answers: TCFD - watch the video
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Become a part of the climate change solution

The Task Force’s recommendations were originally focussed on financial sector organisations – but only 50% of organisations now overtly supporting the TCFD’s recommendations are in banking, insurance and asset management.

Instead, leaders across energy, manufacturing, property, logistics and agricultural products are storming ahead to demonstrate the seriousness their businesses attach to climate-related risks and the wider financial threat it presents to the global economy. No matter what sector your business is in, aligning with TCFD could and should be the next step for you.

The TCFD comprises eleven specific recommendations, which are ordered under four pillars: Governance, Strategy, Risk management and Metrics & targets. Within each of these pillars sits a set of recommendations. For a disclosure to be regarded as TCFD-aligned, it is required that it must satisfy each of the eleven recommendations.

The TCFD recommendations are as follows:

Governance Describe the board’s oversight of climate-related risks and opportunities.
Describe management’s role in assessing and managing climate-related risks and opportunities.
Strategy Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.
Describe the impact of climate-related risks and opportunities on the organization’s business, strategy, and financial planning.
Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Risk management Describe the organisation’s processes for identifying and assessing climate-related risks.
Describe the organization’s process for managing climate-related risks.
Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.
Metrics & targets Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

Organisations aligning to TCFD can expect to benefit through:

  • Better understanding of climate change risks and impacts
  • Identification of potential climate-related opportunities
  • Ability to manage their risks in a strategic manner
  • Increased access to capital due to improve investor and lender confidence
  • Reduction in volume of bespoke enquiries for climate-related information
  • Demonstrate excellence in corporate governance and score maximum points in disclosure indices such as CDP
  • Closer alignment to other existing ESG frameworks such the Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI)

A strong set of TCFD-aligned disclosures must be company-specific and as a result, our offering to assist in your TCFD alignment is bespoke to your individual needs. Here are some of the ways we could assist with your TCFD requirements:

  • Gap analysis - We’ll assess your current disclosures against the TCFD’s four pillars (governance, strategy, risk management and metrics & targets) and provide a clear roadmap to transform your organisational approach to climate change risk and disclosures. We can help you achieve your desired level of TCFD disclosure, be it compliance or industry-leading.
  • Climate scenario analysis - We will help your organisation identify key climate-related risks and opportunities, as well as support the measurement of their potential impacts on your strategy and financial planning. This will help you assess your resilience against different climate scenarios and integrate climate-related risk into your existing risk processes.
  • Governance - We can assist you in integrating climate-related issues into your governance structure through a variety of means. This could be through designing a risk management framework or engaging with your board to build their understanding of climate-related risks and opportunities.
  • Author your TCFD report - If the majority of the TCFD’s recommendation are already in place in your business, but you’re struggling to find the right way to communicate this – hand the authorship challenge to us.
  • Full TCFD alignment - We can carry out a comprehensive disclosure by utilising all of the previous offerings and the other necessary steps to disclose against all of the eleven recommendations to ensure full compliance against the TCFD.

We can find the solution you need, get in touch to discuss TCFD and your requirements.

Contact us

To know more about TCFD's recommendations, download our guide here.

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SUCCESS STORIES

To fully understand the risks and opportunities climate change may have on the business, Avieco supported SThree in developing climate scenarios, allowing SThree to identify climate risks and opportunities within individual regions.

It highlighted the effects of climate change and the potential consequences within their specific markets and STEM sectors they operate within. And more importantly, the developed scenarios then informed strategic decisions around how SThree would respond to those risks and opportunities at any point in the future.

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