TCFD releases status report on accelerating adoption, plus new guidance for net-zero transition
The Task Force on Climate-related Financial Disclosures (TCFD) has published its 2021 Status Report. It finds that disclosure in line with the TCFD’s recommendations has accelerated significantly, growing by 9% in 2019–20. For the first time, over 50% of companies reviewed disclosed their climate-related risks and opportunities. “This growth was bolstered by official announcements of TCFD-aligned climate reporting requirements from several jurisdictions as well as support for TCFD from investors, international standard setters and regulators,” observes the announcement.
“When companies disclose clear, consistent and accurate information on the risks they face from climate change, investors and business leaders can make more informed and sustainable financial decisions. That strengthens our global economy, improves health, and helps address the climate crisis,” says TCFD Chair Michael R. Bloomberg.
The TCFD has also published two new guidance documents reflecting the evolution in climate reporting and spelling out next steps. For the first time since initial release in 2017, it has released updates to its implementation guidance on the TCFD recommendations. To help drive comparability in reporting, the revised guidance elevates seven categories of cross-industry metrics as particularly important for assessing financial impact. These comprise not only Scope 1 and Scope 2, but also Scope 3 greenhouse gas emissions down the value chain, as well as metrics on climate-related transition and physical risks and opportunities, capital deployment, internal carbon price, and remuneration. The guidance also includes disclosure on companies’ plans to transition to a net-zero economy, among other updates.
Honing in on the net-zero theme, TCFD has published new ‘Guidance on Metrics, Targets, and Transition,’ aimed at further supporting financial-statement preparers in disclosing decision-useful information and linking those disclosures with estimates of financial impacts. “Such information will help users better assess their investment, lending, and underwriting risks – and inform paths and progress toward net zero,” it states.