TCFD is live! Now what?
TCFD is live on DiginexESG ! Here is what you need to know…
What is TCFD?
The Task Force on Climate-Related Financial Disclosures (TCFD) was set up by the Financial Stability Board to improve and increase corporate reporting on climate-related financial information.
“TCFD” is a term commonly used to refer to the recommendations of the TCFD, which form a guiding framework for what and how organizations should report on the climate-related risks and opportunities.
The TCFD was designed to help organisations disclose climate-related risks and opportunities which are set to affect the resilience of their business.
As a result, these disclosures enable investors, lenders, insurance underwriters, and other organisational stakeholders to make more informed decisions based on forecasted climate-related scenarios.
What are the TCFD recommendations?
The recommendations are structured around four thematic areas that represent core elements of how organizations operate: governance, strategy, risk management, and metrics and targets.
- Governance: Your organisation’s management of climate-related risks and opportunities. E.g. Describe the board’s oversight of climate-related risks and opportunities.
- Strategy: Your approach to both the actual and potential impacts of climate-related risks and opportunities on your business. E.g. Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.
- Risk management: How your organisation identifies, assesses, and manages climate-related risks. E.g. Describe the organisation’s processes for identifying and assessing climate-related risks. Do you know the science based targets initiative?
- Metrics and targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks or opportunities where such information is material. E.g. Scope one, two and, if appropriate, Scope three greenhouse gas (GHG) emissions, and the related risks.
These recommendations are widely adoptable and applicable to organizations across sectors and jurisdictions, with TCFD providing cross-sector and industry-specific guidance, particularly for financial services, energy, transportation, materials & buildings, and Agri-Food-Forest products.
Access the final report on the Recommendations of the Task Force on Climate-related Financial Disclosures along with the Implementing Annex for further guidance.
Why should you care?
While the TCFD recommendations are voluntary by nature, governments and other regulatory bodies are introducing TCFD-aligned legislation requiring companies to comply.
Today, more than eight countries are already in the process of making TCFD aligned disclosure mandatory, and it’s been endorsed by more than 100 governments globally. For example:
- New Zealand, which was the first country to introduce mandatory TCFD aligned climate-related disclosure in 2021
- The UK, which will require firms, including over 1,300 of the largest UK-registered companies and financial institutions, to disclose TCFD-aligned information from April 2022
- Switzerland, which is expected to introduce mandatory TCFD requirements from 2024
Additionally, 27 stock exchanges around the world already require ESG reporting as a listing rule.
The trend is clear. Countries and regulatory bodies will increasingly require companies to disclose on climate-related financial risk and opportunities. While regulation tends to apply first to large and publicly listed companies, this will inevitably trickle down to SMEs in the years to come. So… better start now!
For more details on the progress on climate-related disclosure and TCFD implementation efforts, insights, and challenges, see the 2021 status report here
How does Diginex help?
Using software tools to manage ESG data and report against common ESG frameworks such as TCFD is essential in accelerating progress against key targets, legislation, and trajectories such as Net Zero Carbon.
Dedicated sustainability software like diginexESG can streamline the process of data collection, analysis and reporting based on TCFD and other popular frameworks so that you can respond to these reporting demands efficiently.
With TCFD now integrated into DiginexESG, you can now:
- Understand TCFD reporting requirements directly on the platform
- Collaborate on data collection and reporting across your organization
- Report against TCFD disclosures with a step-by-step, guided approach
- Generate, download and share TCFD reports and data in a matter of clicks
- Automate your TCFD reports going forward
Need additional support or guidance around TCFD reporting? Want to start reporting against TCFD? Join a Free trial or Contact us for a Personal Demo.
The primary benefit of ESG accounting is that it helps to identify the risks and opportunities facing your company.
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