Carbon

Task Force on Climate-related
Financial Disclosures (TCFD)

Climate change presents a uniquely complex challenge for economic decision-making. Many organisations believe that the implications of climate change are purely long-term and fail to take vital action today.

What is TCFD?

The Task Force on Climate-related Financial Disclosures (TCFD), established in 2015 by the Financial Stability Board (FSB), was created to develop recommendations on the types of information that companies should disclose to support investors, lenders, and insurance underwriters in appropriately assessing and pricing a specific set of risks related to climate change. 

The TCFD framework consists of four main themes:

  • Metrics and targets
  • Governance
  • Risk management
  • Strategy

and is supported by 11 disclosure recommendations for reporting the financial impact of climate change. 

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TCFD Recommendations

Since the 6th of April 2022, it has been mandatory for over 1,300 of the largest UK-registered companies and financial institutions to disclose their climate-related financial information using recommendations from the TCFD. This includes many of the UK’s largest trading companies, banks, and insurers, as well as private companies with over 500 employees and £500 million in turnover. 

The success of the TCFD recommendations depends on widespread adoption by companies in the financial and non-financial sectors.

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TCFD Recommendations

Since the 6th of April 2022, it has been mandatory for over 1,300 of the largest UK-registered companies and financial institutions to disclose their climate-related financial information using recommendations from the TCFD. This includes many of the UK’s largest trading companies, banks, and insurers, as well as private companies with over 500 employees and £500 million in turnover. 

The success of the TCFD recommendations depends on widespread adoption by companies in the financial and non-financial sectors.

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TCFD Reporting

Expert management of the financial risks and opportunities related to climate change must become a natural part of your company’s strategic planning processes. 

Complying with the TCFD will benefit your company through:

  • improved access to capital by increasing investors’ and lenders’ confidence that the company’s climate-related risks are appropriately assessed and managed.
  • increased awareness and understanding of climate-related risks and opportunities within the company, resulting in better asrisk management and more informed strategic planning.
  • more effectively meeting existing disclosure requirements to report material information in financial filings.  

McGrady Clarke works closely with organisations that are mandated to carry out TCFD reporting as well as those who are integrating TCFD on a voluntary basis as part of their annual reporting. Through bespoke consulting solutions and the adoption of integrated software platforms, we’ll guide you through the TCFD process and work continually to meet and exceed the requirements of the framework.

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FAQ's

Which organisations should implement the TCFD recommendations?

The Task Force recommends that all organisations with public debt or equity implement TCFD recommendations. However, because climate-related issues affect every aspect of our world, all organisations are encouraged to implement these recommendations. 

The implementation of TCFD, particularly by asset managers and asset owners – including private and public sector pension plans, endowments, and foundations – will help their clients and beneficiaries better understand the performance of their assets, consider the risks of their investments, and make more informed investment choices.

What are the potential financial implications of climate change?

  • Business disruption
  • Lower productivity
  • Reconstruction, reinvestment, and replacement
  • Higher commodity and energy prices
  • Lower property values and asset devaluations
  • Lower corporate profits and household wealth
  • Financial markets losses (equities, bonds, commodities)
  • Credit market losses (residential and corporate loans)

Why choose McGrady Clarke for your TCFD recommendations?

At McGrady Clarke, we are committed to supporting our clients through the implementation of the TCFD recommendations. By taking time now to evaluate and assess the climate-related financial risk associated with your organisation and investing in risk management protocols, you’ll benefit from long-term risk reductions related to climate change. 

Our consultants will provide you with the technical expertise and practical tools and methods needed to successfully implement the TCFD recommendations. 

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