The TCFD recommendations are suitable for all organisations and will help focus them on
Disclosure across the lenses of governance, strategy and risk management.
Establishing consistent and comparable metrics and targets that are applicable across all sectors, as well as specific metrics for most carbon-intense industries.
Using scenario analysis to access the potential impact of the risks and opportunities of the transition to a low carbon economy on strategy and financial planning.
Consistent adoption leading to effective measurement and improved organisational resilience.
The FSB created the TCFD to improve climate-risk disclosures that could promote more informed investment and underwriting decisions and facilitate the effective allocation of capital in the financial markets. As more information becomes available about the widespread risks and effects of climate-change, the need for a robust and internationally consistent climate framework has become increasingly important. Demand for this information from asset owners and managers is critical to the assessment of risk in their portfolios, and public sector leaders have also begun to become more attuned to the importance of transparency, mandating disclosure requirements for the coming years.
On the public sector front, in November 2020, the U.K. Government announced that it will mandate the implementation of climate risk disclosure using TCFD recommendations across major sections of the U.K. economy by 2025. The New Zealand Cabinet has also proposed a mandatory reporting regime that would require disclosures by certain entities beginning in 2023. With the increasing sense of urgency and expanded awareness, coupled with the recent actions taken to create a comprehensive global approach to business reporting, other jurisdictions may well follow suit.
