The Task Force on Climate-related Financial Disclosures (TCFD) is a globally recognized framework that allows businesses to identify, manage, and respond to their climate-related risks and opportunities. The framework has broad buy-in from policymakers, world leaders, investors, and activists.
Endorsed by the G20, many jurisdictions — including Canada, the US, and the European Union — are in the process of developing regulations that would mandate TCFD-aligned reporting for companies and financial institutions. Meanwhile, the UK, Japan, and New Zealand already passed laws that will require businesses to report in line with the TCFD.
As of January 2022, the number of TCFD supporters surpassed 3,000 organizations from 92 countries that had a combined market capitalization of USD$27.2trn. If companies want to meet investor, market, and regulatory demands, they should start disclosing their climate risks and opportunities in line with the TCFD.
How can companies start reporting in line with the TCFD if they have no experience with the framework? In this blog, we outline three key steps that companies can take to begin a fruitful and effective TCFD journey.
1. Refine your company’s climate governance processes
The TCFD’s first pillar is governance, which includes recommendations for top-down climate-related management from companies’ board members and senior leaders. This is where businesses should begin their TCFD journeys. If companies want to successfully implement and disclose their climate-related governance processes, they will need broad buy-in from their senior leadership. Employees should think about how to approach senior leaders to discuss reporting in line with the TCFD.
When disclosing in line with the TCFD, it’s also important for companies to clearly identify employees’ roles in the process and indicate who does what. If businesses do this early on, reporting in line with the TCFD won’t be difficult.
2. Understand that TCFD reporting is a journey
The TCFD is not a pass/fail exercise or a rating system. It’s a set of recommendations that allows companies to improve their approaches to managing climate risks and opportunities.
The TCFD also gives companies the tools they need to optimize their climate journeys.
However, when it comes to the TCFD, the process matters more than the results. Business leaders typically don’t want to begin a process unless they’ve determined an end goal, but this isn’t applicable to the TCFD framework. Companies can get started with their current TCFD-aligned disclosures and improve as they go. The TCFD recommendations suggest how businesses can optimize climate-related processes and establish new ones if needed.
3. Ensure effective TCFD disclosures
The TCFD lays out ground rules for how organizations should complete their climate-related disclosures. The framework says companies’ disclosures should be:
- Comparable among companies within the same sector
- Specific and complete
- Consistent over time
- Reliable, verifiable, and objective
- Clear, balanced, and understandable
- Provided on a timely basis
If disclosing in line with the TCFD is making your company overwhelmed, Manifest Climate can help. Our SaaS+ platform combines cutting-edge technology, an industry-leading database of climate disclosures, and ongoing support from climate experts to deliver best-in-class TCFD climate guidance. We can produce quick and effective results for your business and make your TCFD journey a positive and fruitful experience. Request a demo today.