The Task Force on Climate-related Financial Disclosures (TCFD) has its origins in 2015, when the G20 Finance Ministers and Central Bank Governors asked the Financial Stability Board (FSB) to review how the financial sector can account for climate-related issues.
TCFD was established to develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders.
The FSB chose the 31 members of the TCFD. These members include users and preparers of disclosures from across the G20’s constituency covering a range of economic sectors and financial markets.
TCFD considers the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries. It develops recommendations for voluntary climate-related financial disclosures that are consistent, comparable, reliable, clear, and efficient, and provide decision-useful information to lenders, insurers, and investors.
TCFD’s work aims to help companies understand what financial markets want from disclosure in order to measure and respond to climate change risks. It encourages firms to align their disclosures with investors’ needs.
Its reason for being is based on the notion that better access to data will enhance how climate-related risks are assessed, priced, and managed. In turn:
- Companies can more effectively measure and evaluate their own risks and those of their suppliers and competitors.
- Investors will make better informed decisions on where and how they want to allocate their capital.
- Lenders, insurers and underwriters will be better able to evaluate their risks and exposures over the short, medium, and long-term.
As an industry-led initiative, TCFD aims to bring climate-related financial reporting to a mainstream audience. It engages with key stakeholders to ensure that it builds on existing work and produces recommendations that can be used by the private sector, globally.
The Task Force on Climate-related Financial Disclosures (TCFD) will develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders.
The Task Force will consider the physical, liability and transition risks associated with climate change and what constitutes effective financial disclosures across industries.
The work and recommendations of the Task Force will help firms understand what financial markets want from disclosure in order to measure and respond to climate change risks, and encourage firms to align their disclosures with investors’ needs.
