On June 29, 2017 the Task Force on Climate Financial Disclosure (TCFD) released its Final Report with recommendations for what climate-related financial information businesses should publicly disclose.  The Final Report is the culmination of several years of work to synthesize a global recommendation for the financial and non-financial sectors with the greatest climate-related risks and opportunities.  The disclosure recommendations are organized around four thematic areas:

  • Governance,
  • Strategy,
  • Risk management, and
  • Metrics and targets.

The report provides supporting disclosure recommendations for each core area, with a variety of metrics provided for illustration in the Appendix. Supplemental sector guidance is provided for eight key sectors with the greatest likelihood of climate-related financial impacts, explaining in more detail the type of information that these companies should disclose.  These sectors are grouped as follows:

Financial:

  • Banks,
  • Insurance Companies,
  • Asset Owners, and
  • Asset Managers .

Non-financial:

  • Energy,
  • Transportation,
  • Materials and Buildings, and
  • Agriculture, Food, and Forest Products

The disclosure recommendations are not meant to create a new standard, but rather to unify the basic requirements of a variety of frameworks and achieve commonality.  Below are the central and supporting recommendations in each of the four core areas, quoted from the Final Report, which can be accessed here:

Recommendation 1: Governance – Disclose the organization’s governance around climate-related risks and opportunities.

·         Describe the board’s oversight of climate-related risks and opportunities.

·         Describe management’s role in assessing and managing climate-related risks and opportunities.

Recommendation 2: Strategy* – Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material.

·         Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.

·         Describe the impact of climate-related risks and opportunities on the organization’s businesses, 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.

Recommendation 3: Risk management – Disclose how the organization identifies, assesses, and manages climate-related risks.

·         Describe the organization’s processes for identifying and assessing climate-related risks.

·         Describe the organization’s processes 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.

Recommendation 4 : Metrics and targets* - Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities, where such information is material.

·         Disclose the metrics used by the organization 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.

* These disclosures should be subject to an assessment of materiality.

The TCFD also released an Annex, detailing implementation suggestions for financial disclosures in line with the Final Report, and a Technical Supplement, explaining the use of scenario analysis.

Sustrana is in the process of incorporating the TCFD disclosure recommendations into its online platform education and metrics database.  For more information about the TCFD Final Report and sustainability reporting, contact ncleveland@sustrana.com.  To see how Sustrana’s online sustainability management platform can help you build a program and report effectively, sign up for a demo.