Task force on climate related Financial Disclosure (TCFD)
Reporting on the impacts of climate change is increasingly demanded by the market and investors. The Task Force on Climate-related Financial Disclosures (TCFD) provides useful guidelines for understanding the impact climate change has on corporate business, with the goal of helping companies communicate and disclose their choices with respect to climate-related risks and opportunities.
The TCFD recommendations are aligned with the issues analysed by the CDP questionnaire (formerly the Carbon Disclosure Project). Together, both tools provide insight into how the company’s business impacts the climate (CDP) and how the climate impacts the company’s business (TCFD).
Following TCFD guidelines enables the company to identify climate-related risks and new opportunities in the transition to a low-carbon economy, measure the appropriateness of its climate strategy, and structure effective reporting for its stakeholders, particularly investors.
Thematic areas covered by the TCFD guidelines
- GOVERNANCE: defining the role of the Board and Management in overseeing aspects related to climate change.
- STRATEGY: mapping risks and opportunities associated with climate change and their impact on strategy and on the business model.
- RISK MANAGEMENT: defining the process by which the company identifies, classifies and manages risks and opportunities related to climate change.
- METRICS AND OBJECTIVES: defining the indicators, targets and KPIs used by the organisation to quantify and evaluate the impact of climate change in relation to strategy and risk management. Evaluation and description of how the company performs in relation to the targets it has set.
GOVERNANCE
defining the role of the Board and Management in overseeing aspects related to climate change.
STRATEGY
mapping risks and opportunities associated with climate change and their impact on strategy and on the business model.
RISK MANAGEMENT
defining the process by which the company identifies, classifies and manages risks and opportunities related to climate change.
METRICS AND TARGETS
defining the indicators, targets and KPIs used by the organisation to quantify and evaluate the impact of climate change in relation to strategy and risk management. Evaluation and description of how the company performs in relation to the targets it has set.
Why turn to Carbonsink?
In order to align your company’s climate strategy with the recommendations of the TCFD framework, our approach involves analysing the four core elements of climate-related reporting (governance, strategy, risks, metrics and objectives), which have been identified by the Task Force as having a key role in guiding financial decisions and informing investors, lenders and insurance underwriters.
The final result will provide you with the tools to identify risks and opportunities related to climate change and to communicate strategic choices on these issues in a structured and effective way.
