The Task Force on Climate-related Financial Disclosures (TCFD) released its 2023 (and final) Status Report.
More than 900 additional organizations reportedly pledged support for the recommendations since last year’s status report, which now totals 4,800+ supporters globally, consisting of regulators and governmental entities, financial institutions, companies, and others.
Among the key takeaways for fiscal year 2022:
Disclosure prevalence—Based on a review of 1,365 companies that reported in each of 2020, 2021, and 2022, only 4% disclosed across all 11 recommended disclosures. However, 58% disclosed in line with at least five, and 90% disclosed in line with at least one, of the recommended disclosures.
On average, companies overall addressed 5.3 of the recommended disclosures. North American companies averaged 4.6 of the recommended disclosures.
Most common disclosures—Companies most commonly disclosed information about climate-related metrics in their 2022 reports (71%); however, North American companies most commonly disclosed information about board oversight (65%). The jurisdictional breakdown is here:
On par with prior years, the resilience of companies’ strategies under different climate-related scenarios remained the least prevalent disclosure worldwide and in North America specifically.
Disclosure varies by industry—Disclosures varied in frequency and focus across the eight industries reviewed, with Energy companies having the highest disclosure rate across all 11 recommendations.
Disclosure varies by company size—Not surprisingly, there is a correlation between TCFD-aligned reporting and company size:
The largest companies (>$12.3B) most commonly reported on climate-related targets (85%), while the smallest companies (<$3.2B) most commonly reported on climate-related metrics (59%). This compares to 48% of the smallest companies reporting on climate-related targets and 83% of the largest companies reporting on climate-related metrics.
In addition to the foregoing, a larger sampling of companies was reviewed for fiscal 2022 to provide more data on a regional basis. The analysis of that expanded data set for North American companies (85% US) is on pages 18-19 of the report.
Sample disclosures reflecting all of the 11 TCFD recommendations are set forth on pages 20 – 26 of the report.
As previously reported (see “IFRS”), the IFRS will assume responsibility for tracking and reporting on companies’ progress of disclosure in alignment with the TCFD recommendations going forward.