Final status report published by the Task Force on Climate-related Financial Disclosures

On 12 October 2023, the sixth and final status report was published by the Task Force on 
Climate-related Financial Disclosures.

Overview

The status report describes the progress which companies have made in publishing climate-related financial disclosures. 

Key takeaways and findings

The key takeaways and findings from the 2023 status report are:

• The percentage of public companies disclosing TCFD-aligned information continues to grow, 
  but more progress is needed. For fiscal year 2022 reporting, 58% of companies disclosed in line with at least five of the 11 recommended disclosures (see below for details of the TCFD recommended disclosures) — up from 18% in 2020; however, only 4% disclosed in line with all 11.
• The percentage of companies reporting on climate-related risks or opportunities, board 
  oversight, and climate-related targets increased significantly — by 26, 25, and 24 percentage points, respectively — between fiscal years 2020 and 2022.
• Disclosure of climate-related financial information in financial filings is limited. On average for fiscal year 2022, information aligned with the 11 recommended disclosures was four times more likely to be disclosed in sustainability and annual reports than in financial filings.
• The majority of jurisdictions with final or proposed climate-related disclosure requirements 
  specify that such disclosures be reported in financial filings or annual reports.
• Over 80% of the largest asset managers and 50% of the largest asset owners reported in line with at least one of the 11 recommended disclosures. Based on a review of publicly available reports, nearly 70% of the top 50 asset managers and 36% of the top 50 asset owners disclosed in line with at least five of the recommended disclosures.
• Based on a 2022 TCFD survey, asset managers and asset owners indicated the top challenge to climate-related reporting is insufficient information from investee companies. Asset managers highlighted information from public companies as most challenging (62%), while asset owners identified information on private investments (84%).

Where can I find the full report?

The full report is available at https://www.fsb.org/2023/10/2023-tcfd-status-report-task-force-on-climate-related-financial-disclosures.

Why is this the final status report being published by the TCFD?

This is because  responsibility for monitoring progress on climate-related disclosures is being assumed by the International Sustainability Standards Board with effect from 2024. See: https://www.ifrs.org/news-and-events/news/2023/07/foundation-welcomes-tcfd-responsibilities-from-2024/

TCFD Recommendations and supporting recommended disclosures: reminder

The 2017 final report by the TCFD contained four recommendations and set out 11 recommended disclosures. By way of reminder these are set out below in full.

TCFD 2017 Recommendations

Governance: Disclose the organization’s governance around climate-related risks and opportunities.

Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material.

Risk Management: Disclose how the organization identifies, assesses, and manages climate-related risks.

Metrics and Targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

TCFD 2017 Recommended Disclosures

1. Governance: Describe the board’s oversight of climate-related risks and opportunities.
2. Governance: Describe management’s role in assessing and managing climate-related risks and opportunities.
3. Strategy: Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.
4. Strategy: Describe the impact of climaterelated risks and opportunities on the organization’s businesses, strategy, and financial planning.
5. Strategy: Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
6. Risk Management: Describe the organization’s processes for identifying and assessing climate-related risks.
7. Risk Management: Describe the organization’s processes for managing climate-related risks.
8. Risk Management: Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.
9. Metrics and Targets: Disclose the metrics used by the organization to assess climaterelated risks and opportunities in line with its strategy and risk management process.
10. Metrics and Targets: Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
11. Metrics and Targets: Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

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Michael R. Bloomberg (TCFD Chair) comments that "..more needs to be done. As this report describes, although companies continue to make progress in their disclosures, significant gaps in data remain. In particular, reporting the impact of climate change on companies’ businesses, strategies, and financial planning is still lagging behind."