Your guide to TCFD reporting best practices

The EU Taxonomy entered into force in July 2020, imposing new sustainability disclosures for large European corporations and asset managers from 2022. On 26 January Bloomberg held a webinar to shed some light on this new regulation.
Featured Speaker(s): Maia Godemer, Nadia Humphreys, Isabelle Lambert

TCFD is a voluntary framework for climate reporting. The status report on TCFD implementation from late October includes four widely-adoptable recommendations for more effective climate-related disclosures:

  • Governance
  • Strategy
  • Risk Management
  • Metrics and targets

Providing useful information to all stakeholders.

Significant momentum in support for TCFD among which The European Commission incorporated the TCFD recommendations into its Guidelines on Reporting and Climate-Related Information. In total the initiatives have 1,615 supporters (providers of useful frameworks encouraging the implementation of TCFD recommendations, companies signing up for the programme), 77 countries and 110+ governments and agencies.

Key findings:

  • Overview of disclosure practices over a three-year period (1,700 company disclosures)
  • Most useful for making financial decisions
  • Information on the resilience of strategies
  • Export users’ insights on decision-making on most useful climate-related information provided
  • Disclosure progress over time within the four key areas -> but disclosures need to go faster

Asset Manager and Asset Owner Reporting – portfolio companies are asking for more disclosures

Effective climate-related financial disclosures:

  • Affected business and strategy
  • Key metrics on climate-related issues (generally lacking)

Implementation of TCFD reporting is moving fast forward and much progress is made in support of the framework and a strong foundation has been established. More coherence and less fragmented reporting globally on the four key issues. Better alignment of the work by IR and impact management in corporate reporting underpinning the convergence towards more guidance and equal framework for TCDF reports.

Risk Management Integration and Disclosure

Forward-looking financial sector metrics for asset managers and portfolio managers to use in their work.

Next steps – 2021 work plan

  • Determine whether guidance is needed
  • Disclosure practices by company size (market capitalization)
  • Disclosure practices by industry