The Task Force on Climate-related Financial Disclosures (TCFD) released its 2021 Status Report, updated Implementation Guidance, and new guidance on metrics, targets, and transition plans.
More than 1,000 additional organizations reportedly pledged support for the recommendations since last year’s status report, which now totals 2,600+ supporters globally consisting of regulators and governmental entities, financial institutions, companies, and others.
Among the key takeaways:
Disclosure continues to rise - Based on a review of 1,651 companies that reported in all three years (2018, 2019, and 2020), disclosure of TCFD-aligned information averaged 32% in 2020 across all 11 recommended disclosures, compared to 19% in 2018.
Most common disclosures consistent year-over-year - Consistent with prior years, of the 11 TCFD recommendations, companies most commonly disclosed information about climate-related risks and opportunities in their 2020 reports. The jurisdictional breakdown is here:
Disclosure varies by industry - Disclosures varied in frequency and focus across the eight industries reviewed, with Materials & Buildings companies having the highest disclosure rate across all 11 recommendations. However, looking at discrete disclosure topics, Insurance companies, for example, led in disclosure on Risk Management Processes (47% compared to 31% for Materials & Buildings). The report notes that the insurance industry’s focus on risk management processes is consistent with feedback given to the Task Force on the criticality of climate-related impact assessments to many insurance companies.
Disclosure varies by company size - Not surprisingly, the rate of TCFD-aligned reporting corresponds with company size, with 44% of companies with market caps greater than $12.2B making TCFD-aligned disclosure compared to 31% of companies with market caps of $3.4B–$12.2B and 20% of companies with market caps below $3.4B.
Sample disclosures reflecting all of the TCFD recommendations are set forth on pages 38 – 49 of the report.
See the TCFD's release; these posts from PracticalESG.com and ESG Investor; these articles from ESG Today, ESG Investor, and Pensions & Investments; and additional resources on our Climate Risk & Disclosure page.
This post first appeared in the weekly Society Alert!