The sixth and final status report from the Taskforce on Climate-related Financial Disclosures (TCFD) has been published before their work comes to a close, highlighting the steady momentum among companies disclosing climate information.
However, the task force called on companies to make progress to improve data and drive investment
On average, companies reported fiscal year 2022 in line with 5.3 of the 11 disclosures recommended by the task force, up from an average of 3.2 in 2020. While this shows that disclosure levels are improving, the TCFD was keen to highlight that there is more progress booked. necessary, as only 4% of companies disclose information in accordance with all eleven.
“This final report makes clear that we have made tremendous progress in bringing greater transparency to financial markets for both climate-related risks and opportunities,” said Michael Bloomberg, chair of the task force and founder of Bloomberg and Bloomberg Philanthropies.
“While there is still much more work to do, this progress provides the forward momentum needed to more fully integrate climate data into the global economy and spur greater private investment in clean energy.”
Among other key findings in the status report, 97 of the world’s 100 largest companies were found to have expressed support for the TCFD, reporting in accordance with the TCFD recommendations, or both. In addition, more than 80% of the largest asset managers and 50% of the largest asset owners reported compliance with at least one of the eleven recommended disclosures.
However, disclosure of climate-related financial information in financial files appeared to be limited. On average for 2022, information consistent with the eleven recommended disclosures was four times more likely to be disclosed in sustainability and annual reports than in financial filings. That’s despite the fact that the majority of jurisdictions with final or proposed climate-related disclosure requirements specify that such disclosures must be reported in financial filings or annual reports.
Future of climate-related disclosures
Following the publication of the 2023 status report, the task force will now be disbanded, with the International Sustainability Standards Board (ISSB) taking responsibility for monitoring climate-related disclosures and reporting to the Financial Stability Board through its own disclosure standards.
In June, the ISSB published its first standards – IFRS S1 and IFRS S2 – which will serve as a global basis for sustainability information for the capital markets. Given that the two standards fully encompassed the recommendations for the TCFD, the FSB concluded that the task force’s work therefore ‘culminated’.
In a closing statement, the TCFD said it believed it was especially important to recognize the dynamic nature of climate-related and broader sustainability issues, and the need for continued assessment and adaptation, where necessary, as practices continue to evolve.
Disclosing the resilience of the strategy under different climate scenarios, interoperability of the ISSB standards with regional frameworks and developing implementation guidelines for physical risk assessments, adaptation planning and Scope 3 greenhouse gas emissions at sector or industry level were some of the areas where the TCFD encouraged appropriate agencies to continue making progress.
“The TCFD has helped make tremendous progress on climate-related financial disclosures, and this year’s Status Report shows how far we’ve come,” said Mary Schapiro, head of the TCFD Secretariat and vice president for global public policy at Bloomberg .
“It has been an honor to lead this work and I am proud to conclude a remarkable eight years with this report. I look forward to continued efforts to make further progress on transparency, particularly to support the development of net-zero transition plans.”