What is TCFD?

TCFD stands for Taskforce on Climate-related Financial Disclosures and is a sustainability framework that aims to guide organizations in the work of identifying their climate-related financial risks and opportunities. Through the application of TCFD, organizations gain an expanded understanding of the financial implications of climate change for their operations. At the same time the framework facilitates the work of building robust strategies for managing these climate-related risks. Interestingly, with TCFD, the framework focuses on how climate change affects operations, unlike most other standards related to the climate issue, which instead highlights the operations’ impact on the climate.

TCFD’s recommendations are based on governance, strategy, risk management, goals and metrics. In these areas, questions are raised about how the business manages and evaluates its climate-related financial risks, both physical risks as well as adjustment risks. The basic idea is that reporting in accordance with TCFD’s recommendations should be integrated into existing financial reporting, for example in an annual report.

Which organizations can report according to TCFD?

TCFD is a general framework and can therefore be applied by all types of organizations, from large to small. It is also positive that most other known standards, which concern the climate issue, are partly adapted to TCFD’s recommendations. This simplifies the integration of TCFD into an existing reporting format.

“Organizations that do not take into account the consequences of a rising global average temperature risk are making strategic mistakes.”

Sabina Nordén – Position Green

Why should organizations report according to TCFD’s recommendations?

I believe that organizations that do not take into account the consequences of a rising global average temperature risk are making strategic mistakes. I think TCFD is a good framework because it really puts the climate issue on the agenda and drives a proactive and long-term climate approach, which spreads through the entire organization. The fact that the framework contains requirements for scenario analyzes, metrics and objectives encourages organizations to actively work to constantly evaluate and improve their performance in relation to the climate issue. Due to the long-term nature of the framework, I think that TCFD is a good complement to other standards, which often reflect the sustainability work already carried out and do not have as much focus on the work ahead.

Do you have any recommendations for organizations to initiate reporting according to TCFD?

Start by mapping out what you are already reporting. If you report according to another standard linked to the climate issue, the chances are quite high that you are already reporting according to some of TCFD’s recommendations. Also, learn from others. There are a number of organizations that are skilled at reporting under the TCFD. It can also be good to take part in TCFD’s “Status Report” where lessons about TCFD reporting are compiled every year. TCFD has set up a “Knowledge Hub” where you will find good guidance documents.