FAQ: What is the purpose of the TCFD?
TCFD or Task Force on Climate-related Financial Disclosure, was designed as a voluntary framework for organisations to follow to disclose consistent climate-related financial information to investors, lenders and insurance underwriters, about their potential impacts on climate change as well as financial performance. TCFD was established by the Financial Stability Board (FSB) as an industry-led initiative to help organisations understand, manage and communicate their climate-related risks and opportunities. The TCFD aims to provide companies with a standardised framework to follow, helping to improve the quality and comparability of climate-related financial disclosures, as well as supporting the financial industry in making informed decisions about the allocation of capital. The TCFD framework includes 11 recommendations covering four key areas, governance, strategy, risk management and metrics and targets. The 11 TCFD recommendations are designed to help companies assess and disclose the physical, transition and liability risks posed by climate change, as well as their efforts to mitigate these risks and take advantage of any opportunities to implement improvements. Although the TCFD framework is mainly voluntary (with the exception of companies headquartered in the UK with over 500 employees), it is becoming increasingly important for organisations to adopt it, with more investors and stakeholders placing an emphasis on the role of companies to address the impacts of climate change. Organisations that undertake TCFD reporting are able to provide valuable information to investors and stakeholders, demonstrating their commitment to moving towards a more sustainable and low-carbon economy in the future. Ecometrica are the only software company that combines location specific data to analyse climate related risks, and powerful GHG accounting (including scope 1, scope 2 and scope 3) to comply with mandatory TCFD disclosure.