TCFD sees greatest increase in climate disclosure to date

The report, which was released late last week, notes that for the first time, more than half of the companies the TCFD reviewed had disclosed their climate-related risks, with levels disclosure increasing by nine per cent between 2019 to 2020, more than double the increase seen in the year prior.

Since 2019, over 1,000 new organisations have pledged to support the TCFD’s recommendations, bringing the total to over 2,600 firms that together span 89 countries and boast a combined market capitalisation of over $25.1tr.

The report also confirmed that over the past year, “official entities in eight jurisdictions have referenced the TCFD in announcements to require climate-related reporting”, while international regulators such as the European Commission have expressed support for aligning their disclosure rules with TCFD recommendations.

The TCFD also released new guidance for companies to disclose their plans for a net zero transition, such as encouraging disclosure of cross-industry metrics like internal carbon prices, and information on climate-related metrics and targets.

“The Task Force has had an exceptional year in rallying global support for climate risk reporting – but we still have a long way to go” said Michael Bloomberg, chair of the TCFD. “As governments and businesses around the world work to accelerate the transition to a clean energy economy, they should continue to draw on the TCFD recommendations as a critical tool in their efforts.”

Mary Schapiro, head of the TCFD Secretariat added that “there is clear and growing consensus among investors and regulators on the importance of climate-related disclosure and the need for standardised, transparent data to support capital allocation decisions”.

“As countries and companies around the world set net zero targets, the TCFD framework is increasingly becoming the foundation for standards and requirements needed to chart the transition to the low-carbon economy,” she added. “That’s why today we are also publishing guidance to help companies disclose their plans and progress for the transition to a low-carbon economy, more consistent cross-sector metrics, and, for financial firms, how aligned their portfolios are with a well-below 2C scenario.”

The TCFD calls on listed companies to provide investors with detailed information on the risks and opportunities they face as a result of climate change and the transition to a net zero emissions economy. It also recommends that companies undertake comprehensive scenario planning to demonstrate how they would cope with differing levels of climate impacts and a range of different clean tech deployment scenarios.

Investors with trillions of dollars of assets under management have stepped up calls for corporate boards to provide them with data based on the recommendations of the TCFD and a growing number of governments, including in the UK, are working to embed TCFD standards into corporate reporting rules.

A version of this article first appeared at Investment Week.