Task Force on Climate-related Financial Disclosures (TCFD)
Financial markets need clear, comprehensive, high-quality information on the impacts of climate change. This includes the risks and opportunities presented by rising temperatures, climate-related policy, and emerging technologies in our changing world.
The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information.
Within the framework of the TCFD Recommendations centered on climate, it is advised to report under four main topics:
1- Governance
2- Strategy
3- Risk Management
4- Metrics and Goals
Recommended Disclosures
1.Governance
a) Describe the board’s oversight of climate-related risks and opportunities.
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
2.Strategy
a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.
b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
3.Risk Management
a) Describe the organization’s processes for identifying and assessing climate-related risks.
b) Describe the organization’s processes for managing climate-related risks.
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.
4.Metrics and Targets
a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets
The TCFD recommends the adoption of 7 criteria for understanding the institutional impacts of climate change and providing reporting effectively. These reporting criteria are as follows:
1- Contain relevant information.
2- Must be specific and complete.
3- Be clear, balanced, and understandable.
4- Be consistent over time.
5- Must be comparable within a specific industry or portfolio.
6- Must be reliable, verifiable, and objective.
7- Must be at specified times.