Task Force on Climate-related Financial Disclosures and IFRS S2

Navigating TCFD requirements to support compliance through transparent and responsible reporting

Satellite perspective of cloud formations over Earth, denoting global climate considerations as part of Task Force on Climate-related Financial Disclosures (TCFD)

Who must comply with TCFD reporting?

The Task Force on Climate-related Financial Disclosures (TCFD) is a reporting framework established by the Financial Stability Board (FSB) and endorsed by the UK Government to enhance transparency on the financial and operational implications of climate-related risks and opportunities on qualifying organisations. The UK Government has also published the UK Sustainability Reporting Standards (UK SRS), aligned with International Sustainability Standards Board (ISSB) frameworks, which build on the climate-related disclosure principles established by TCFD.

Companies should check the FCA Climate-related Disclosure Rules. Relevant types of entities include:

- Asset Managers
- UK registered standard and premium listed companies
- Life Insurers (including pure insurers)
- Non-insurer FCA-regulated pension providers, including platform firms and Self-invested Personal Pension (SIPP) operators
- FCA-regulated pension providers

The UK CFD is a similar reporting framework for publicly quoted companies, large UK companies including AIM-listed companies, large private companies and LLPs. Please refer to our UK CFD page for more information.

The four key pillars of the TCFD framework

Governance

Details the organisation’s governance of climate-related risks and opportunities.

Strategy

Outlines an organisation’s climate-related risks and opportunities over short-, medium-, and long-term, explaining their actual and potential impacts on business operations, strategy and financial planning. Also assesses strategic resilience to climate impacts by utilising a range of climate scenarios.

Risk Management

Outlines the processes for identifying, assessing and managing climate-related risks and how they are integrated into an organisation’s overall risk management.

Metrics & Targets

Discloses the metrics and targets used to assess, monitor and manage climate-related risks and opportunities in alignment with strategy and risk management processes, including the disclosure of Scope 1 to 3 emissions.

Meeting TCFD reporting requirements

The TCFD’s goal is to encourage transparency when reporting on the financial and operational effects of climate-related risks and opportunities on an organisation. To meet requirements, organisations must disclose against these recommendations within their annual report.

To support compliance we work with you to identify and report on risks and opportunities. Our services include conducting gap analyses against the TCFD recommendations, performing scenario analyses and helping to integrate climate considerations into your existing governance and risk management frameworks. After your initial submission, we conduct annual reviews to highlight new sources of climate risk or opportunity, refine disclosures and enhance climate risk governance within your organisation.

TCFDs transition to IFRS S2

IFRS S1 and S2 were introduced in mid-2023. Building upon the TCFD framework, these standards promote greater transparency, comparability and accountability in corporate sustainability disclosures.

The IFRS S2 Climate-related Disclosures, developed by the International Sustainability Standards Board (ISSB), fully encompasses and builds upon the four key pillars and eleven recommended disclosures set out by TCFD. Variations between IFRS S2 and TCFD reflect expanded guidance and standardisation to improve the consistency and detail of disclosures, rather than reflecting a change in the core principles.

In the UK, the Government has also published UK Sustainability Reporting Standards (UK SRS), which are aligned with the ISSB framework and based on IFRS S1 and IFRS S2. These standards are expected to form the foundation of future UK sustainability disclosure requirements.

Our methodology for TCFD’s climate scenario analysis

We conduct your organisation’s qualitative or quantitative climate-scenario analysis to support the assessment and quantification of both physical and transition risks and opportunities. Integrating into your current risk management framework where possible, we provide a science-backed evaluation of potential climate-related risks.

Our scenario analysis methodology allows us to Interpret the potential financial and operational impacts of key climate factors, which then informs the development of company-wide risk mitigation strategies.