What is TCFD?
In December 2015, the Financial Stability Board (FSB) established the industry-led Task Force on Climate-related Financial Disclosures (TCFD or Task Force) to develop climate-related disclosures that “could promote more informed investment, credit [or lending], and insurance underwriting decisions” and, in turn, “would enable stakeholders to understand better the concentrations of carbon-related assets in the financial sector and the financial system’s exposures to climate-related risks.”
To fulfill its remit, the Task Force developed a framework with four widely adoptable recommendations on climate-related financial disclosures applicable to organizations across sectors and industries.
What are the requirements & recommendations?
They are divided into 4 sections:
Governance --> out of Greenly scope
Strategy --> out of Greenly scope
Risk management --> out of Greenly scope
Metrics & targets --> Greenly can help you
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.
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
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.
Metrics & 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.
For all sectors:
Scope 1 emissions
Scope 2 emissions
Scope 3 emissions : OPTIONAL but encouraged
Emissions intensity ratios. Ex: emissions per unit of economic output (e.g., unit of production, number of employees, or value-added)
GHG emissions and associated metrics should be provided for historical periods to allow for trend analysis
Where not apparent, organizations should provide a description of the methodologies used to calculate or estimate the metrics.
Banks - Additional guidance
Banks should disclose GHG emissions for their lending and other financial intermediary business activities where data and methodologies allow
Insurance Companies - Additional guidance
Disclose weighted average carbon intensity or GHG emissions associated with commercial property and specialty lines of business where data and methodologies allow.
Assets owners - Additional guidance
Disclose GHG emissions for assets they own and the weighted average carbon intensity (WACI) for each fund or investment strategy, where data and methodologies allow
Provide other carbon footprinting metrics they believe are useful for decision-making --> OPTIONAL
Assets managers - Additional guidance
Disclose GHG emissions for their assets under management and the weighted average carbon intensity (WACI) for each product or investment strategy, where data and methodologies allow
Provide other carbon footprinting metrics they believe are useful for decision-making --> OPTIONAL
For non-financial groups
No additional guidance
c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets
Official guidelines can be found here