The TCFD is a recommendations led framework that can be used by any organisation, which seeks to develop recommendations for voluntary climate-related financial disclosures that are consistent and reliable and provide decision-useful information to investors, lenders and insurers in allocating capital and underwriting risk. This overarching goal is that better disclosure will lead to more informed decision, facilitating a smoother transition to a low carbon economy.

This guidance is primarily focused on disclosure. However, before meaningful climate-related information can be reported, an organisation must first integrate climate assessment, monitoring, and management into its routine business activities. For example, this may involve establishing or refining priorities, policies, processes, and practices related to measuring, assessing, managing, and reporting climate-related financial information—from strategic planning and enterprise-level risk management (ERM) to internal performance assessments and external reporting cycles.

Overview of the 11 TCFD-aligned disclosure, organised around 4 core themes:

1. Governance	2. Strategy	3. Risk Management	4. Metrics & Targets
Disclose the organisation’s governance around climate related risk and opportunities.	Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning where which information is material.	Disclose how the organisation identifies, assesses and manages climate-related risks.	Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
Recommended Disclosure	Recommended Disclosure	Recommended Disclosure	Recommended Disclosure
(a) Describe the board’s oversight of climate related risks and opportunities.   (b) Describe management’s role in assessing and managing climate-related risks and opportunities.	(a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term.   (b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning.   (c) Describe the resilience of the organisation’s strategy taking into consideration different climate-related scenarios, including a 2-degree or lower scenario.	(a) Describe the organisation’s processes for identifying and assessing climate-related risks.   (b) Describe the organisation’s processes for managing climate-related risks.   (c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management.	(a) Disclose the metrics used by the organisation to assess climate related-risks and opportunities in line with its strategy and risk management process .   (b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and related risks.*   (c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.

*GHG emissions should be calculated in line with the GHG Protocol methodology. The GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.

Key features of TCFD

• TCFD is organisation orientated and is focused on the risks, opportunities, and resilience of the organisation to climate change.
• The recommendations have a strong focus on the risks and opportunities related to the transition to a low carbon economy and the physical risks associated with a changing climate, including the potential financial impact on the organisation.
• TCFD recommends that organisations consider the resilience of their strategies against climate-related impacts. To help organisations develop their understanding, scenario analysis is highlighted as a strategic tool for companies to use to consider the potential future outcomes and climate scenarios that are different from business as usual, and how these might affect their ability to enact their strategy.

TCFD UK Roadmap

In 2020, the UK government announced that it would be the first country in the world to roll out mandatory TCFD-aligned climate disclosures across the economy by 2025, with a significant portion of mandatory requirements in place by 2023.

2021	Occupational pension schemes (>£5bn) Banks, building societies and insurance companies (deadline for supervisory expectations) Premium listed companies
2022	Occupational pension schemes (>£1bn) Largest UK-authorised asset managers, life insurers and FCA-regulated pension providers UK-registered companies Wider scope of listed companies
2023	Other UK-authorised asset managers, life insurers and FCA-regulated pension providers
2024-25	Other occupational pension schemes (subject to review) Potential further refinements to measure across categories, including in response to evolving best practice.

Publicly Quoted Companies, Large Private Companies and Limited Liability Partnerships (LLPs)

Regulations are to be made at the end of 2021 requiring mandatory climate-related financial disclosures in the UK, with regulations coming into force on 6 April 2022 and to be applicable for accounting periods starting on or after that date.

Scope

• All UK companies that are currently required to produce a non-financial information statement, being UK companies that have more than 500 employees and have transferable securities admitted to trading on a UK regulated market, banking companies or insurance companies (Relevant Public Interest Entities (PIEs));
• UK registered companies with securities admitted to Alternative Investment Market (AIM) with more than 500 employees;
• UK registered companies which are not included in the categories above, which have more than 500 employees and a turnover of more than £500m.
• LLPs which have more than 500 employees and a turnover of more than £500m.

These changes are to be implemented using powers under the Companies Act 2006 and the Limited Liability Partnership Act 2000.

BEIS will review the case for expanding the scope of the regulations in 2023.

GUIDANCE

• Further detailed information is available in the TCFD Final Report 2017
• For examples and guidelines of good practice in TCFD reporting, see the TCFD Good Practice Handbook
• Guidance on Scenario Analysis can be found in ‘Guidance on Scenario Analysis for Non-Financial Companies (October 2020)’
• Supplementary guidance for both financial and non-financial sectors can be found here.