Only two days before the COP26 climate summit, the UK government made it official: from April 2022 it will be mandatory for large companies to disclose information in alignment with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Our previous posts briefly explored the four pillars that represent organisations core operational elements: Governance, Strategy, Risk management and Metrics and targets.
However, the TCFD framework is not just about how to disclose but rather what to disclose against and acts as a guide to a more effective reporting regime. To implement TCFDs efficiently and effectively, starting early and tracking progress against a dynamic roadmap are key elements of success. The TCFD also recommend that companies consider seven principles for effective and robust disclosure:
- Disclosure should represent relevant information
- Disclosure should be specific and complete
- Disclosure should be clear, balanced, and understandable
- Disclosure should be consistent over time
- Disclosure should be comparable among companies within a sector industry or portfolio
- Disclosure should be reliable, verifiable, and objective
- Disclosure should be provided on a timely basis
Climate-related risks and the transition to a low-carbon economy will affect all sectors. The question is ‘when?’; which is why it is crucial that organisations gather and analyse quality information to enable transparent communication and messaging of climate risks to investors, insurance underwriters and lenders.
In our final post next week we intend to highlight how you can actually start your TCFD journey.
Couple of videos here – not specifically about what to disclose but rather reinforcing TCFD messaging
Climate Change & Financial Disclosure – Overview of TCFD Recommendations – YouTube