Following our initial introduction to TCFD’s last week, this post aims to provide more detail about the four pillars at the core of the disclosure framework and form the basis for the 11 TCFD recommendations:
Pillar 1: Governance: Requires organisations to disclose their governance around climate related risk and opportunities.
- Describe the board’s oversight of climate related risks and opportunities
- Describe management’s role in assessing and managing risks and opportunities
Pillar 2: Strategy: Requires organisations to disclose the actual and potential impacts of climate related risks and opportunities on the organisation’s business, strategy, and financial planning where such information is material.
- Describe the climate related risks and opportunities the organisation has identified over the short, medium, and long term
- Describe the impact of climate related risks and opportunities on the organisation’s businesses, strategy, and financial planning
- Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2ºC or lower scenario
Pillar 3: Risk Management: Disclosure on how the organisation identifies assesses and manages climate related risks.
- Describe the organisation’s processes for identifying and assessing climate related risks
- Describe the organisation’s processes for managing climate related risks
- Describe how processes for identifying, assessing, and managing climate related risks are integrated into the organisation’s overall risk management
Pillar 4: Metrics and Targets: Requires disclosure of the metrics and targets used to assess and manage relevant climate related risks and opportunities where such information is material.
- Disclose the metrics used by the organisation to assess climate related risks and opportunities in line with its strategy and risk management process
- Disclose Scope 1, Scope 2 and, if appropriate Scope 3 greenhouse gas (GHG) emissions, and the related risks
- Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets