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New TCFD status report, additional and updated guidance

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Oct 14, 2021

On October 14, 2021, the Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to lenders, insurers, investors and other stakeholders published a fourth status report providing an overview of the extent to which companies in their 2020 reports included information aligned with the core TCFD recommendations published in June 2017.

The TCFD found that:

  • Disclosure increased more between 2019 and 2020 than in any previous year assessed, consistent with global momentum around climate-related reporting. However, significant progress is still needed as an average of only one in three companies reviewed disclosed climate-related information aligned with the TCFD recommendations.
  • Companies remain more likely to disclose information on their climate-related risks and opportunities than on any other recommended disclosure, with over half of the companies reviewed including such information in their 2020 reports.
  • Disclosure of the resilience of companies’ strategies under different climate-related scenarios is still the least reported recommended disclosure, however, disclosure increased from 5% of companies in 2018 to 13% in 2020.
  • Although the TCFD recommends disclosure of governance regardless of materiality, the Governance recommendation remains the least disclosed recommendation with the two Governance recommended disclosures the second and third least disclosed.
  • Materials and buildings companies now lead on disclosure. The average level of disclosure across the 11 recommended disclosures for fiscal year 2020 was 38% for materials and buildings companies.
  • The insurance industry significantly increased its average level of disclosure by 11 percentage points between 2019 and 2020, and now leads all groups by at least 15 percentage points in disclosure of risk management processes.
  • Europe remains the leading region for disclosures, with average level of reporting across the 11 recommended disclosures from fiscal year 2020 now at half of European companies assessed. European companies have increased their average disclosure by 15 percentage points since 2019, and now disclose 16 percentage points more than the next closest region.

The TCFD has also published two additional documents: Guidance on Metrics, Targets, and Transition Plans to support preparers in disclosing decision-useful information and linking those disclosures with estimates of financial impacts and Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, which updates and replaces Implementing the Recommendations of the TCFD initially published in 2017.

Review the following additional information on the FSB's website:

 

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