From the Executive Summary: The Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD) developed four widely adoptable recommendations on climate-related financial disclosures that are applicable to organizations across sectors and jurisdictions. Importantly, the Task Force’s recommendations apply to financial-sector organizations, including banks, insurance companies, asset managers, and asset owners. Large asset owners and asset managers sit at the top of the investment chain and, therefore, have an important role to play in influencing the organizations in which they invest to provide better climate-related financial disclosures.
The Task Force structured its recommendations around four thematic areas that represent core elements of how organizations operate: governance, strategy, risk management, and metrics and targets.
The four overarching recommendations are supported by recommended disclosures that build out the framework with information that will help investors and others understand how reporting organizations think about and assess climate-related risks and opportunities. In addition, there is guidance to support all organizations in developing climate-related financial disclosures consistent with the recommendations and recommended disclosures. The guidance assists preparers by providing context and suggestions for implementing the recommended disclosures.
For the financial sector and certain non-financial sectors, supplemental guidance was developed to highlight important sector-specific considerations and provide a fuller picture of potential climate-related financial impacts in those sectors.
One of the Task Force’s key recommended disclosures is related to the disclosure of potential impacts of climate-related risks and opportunities on an organization’s businesses, strategies, and financial planning under different potential future states (scenarios), including a 2°Celsius scenario. Disclosure of how organizations analyze different climate-related scenarios and the considerations associated with the individual scenarios is a key step to better understanding the potential financial implications of climate change on an organization.