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What is TCFD Reporting?

Navigating climate-related financial disclosures? Let us guide you through the TCFD reporting process.
29/01/24
TL;DR Embed
TL;DR: The Task Force on Climate-related Financial Disclosures (TCFD) framework assists companies in disclosing financial risks and opportunities linked to climate change, focusing on governance, strategy, risk management, and metrics and targets. TCFD reporting aims to improve investor understanding of climate-related financial exposure and encourage transparent, consistent disclosures. Implementing TCFD recommendations can help businesses identify risks, boost investor confidence, and drive strategic planning for long-term sustainability.

The Task Force on Climate-related Financial Disclosures (TCFD) reporting is a framework established to guide companies in disclosing financial risks and opportunities related to climate change. It was launched by the Financial Stability Board at the Paris COP21 in 2015. TCFD reporting helps investors understand their financial exposure to climate risk and encourages companies to disclose this information in a clear, consistent manner. The framework covers areas such as governance, strategy, risk management, and metrics and targets related to climate change.

How TCFD Reporting Works

TCFD reporting revolves around four main themes: Governance, Strategy, Risk Management, and Metrics and Targets, each offering a unique perspective on a company's approach to climate-related challenges:

Governance

This aspect of TCFD reporting focuses on the company’s leadership and how it oversees climate-related risks and opportunities. To comply with this recommendation, companies need to describe the structures and processes they've established to address climate-related risks and opportunities from a board and management perspective. By disclosing this information, businesses can offer stakeholders, including investors, a clearer understanding of the company's commitment and strategy towards managing the financial impacts of climate change.

Strategy

For strategy, companies are encouraged to assess and describe the potential impact of climate-related risks and opportunities on their business models, strategies, and financial planning. By presenting this information, stakeholders, including investors, can gauge the resilience and adaptability of a company's business model and strategies in the face of a shifting climate landscape.

Risk Management

The risk management recommendation of TCFD reporting focuses on the processes an organisation uses to identify, assess, prioritise, and mitigate climate-related risks. Companies need to disclose how these risks are integrated into their overall risk management framework, how they prioritise these risks in relation to other risks, and what actions or strategies are employed to manage them.

Metrics and Targets

Companies should quantify their performance and pledges concerning climate-related risks and opportunities. They need to disclose the specific metrics utilised to measure and manage climate-related impacts and progress towards set objectives. This can cover data points such as emissions, water use, and energy consumption.

The Importance of TCFD Reporting

Engaging with TCFD reporting is more than a compliance exercise; it's about building resilience and strategic insight. It enables companies to:

Identify Risks and Opportunities: Recognising the financial implications of climate change helps businesses better anticipate and mitigate risks.

Enhance Investor Confidence: Clear and transparent reporting can strengthen investor trust by showing that a company is prepared for climate-related challenges.

Drive Strategic Planning: Insights from TCFD reporting can guide strategic decisions, supporting long-term sustainability and profitability.

Getting Started with TCFD Reporting

For businesses looking to start or refine their TCFD reporting journey, FutureTracker offers a specialised tool designed to simplify and guide the process. FutureTracker’s TCFD reporting tool breaks down the complexities of TCFD reporting into manageable steps, providing users with clear guidance on addressing each of the four main themes. It's tailored to help companies of all sizes and sectors to not only comply with reporting requirements but also to leverage this process for strategic advantage.

By using FutureTracker's TCFD tool, businesses can efficiently navigate the nuances of climate-related disclosures, ensuring that their reporting is both comprehensive and aligned with global standards. This tool not only facilitates compliance but also empowers companies to integrate climate considerations into their core business strategies

If you’d like to learn more about our TCFD reporting tool, book a demo here.

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