TCFD Status Report Shows Steady Progress
The Task Force on Climate-related Financial Disclosures (TCFD) have published their second Status Report, analysing the extent to which companies have aligned their disclosures with the TCFD’s core recommendations.
The Status Report has found an encouraging steady increase in the support for TCFD recommendations – with more than 800 organizations expressing support – and has seen an increase in disclosure of climate-related financial information since 2016. Despite some improvement, however, disclosure of decision-useful information is still insufficient for investors.
An AI review of reports from 1,100 companies across sectors in 142 countries found the number of recommended disclosures had increased from 2.8 in 2016 to 3.6 in 2018, while the percentage of companies that disclosed information aligned with at least one of the TCFD’s recommendations grew from 70% to 78% in the same period.
However, the survey also found that preparers find disclosing scenario analysis assumptions difficult, due to a lack of standardised metrics and targets. Users of climate-related disclosures also wanted more clarity on the financial impact of climate-related issues on companies for the information to be more useful. Overall, a vastly greater uptake is needed for climate-related disclosure to become mainstream and for comparison between a wider range of companies to be effective. Of course, developing a (single) TCFD taxonomy would make this process significantly simpler for preparers and users alike.
Read more and access the Status Report here.