The handbook provides a brief overview of the current state of the Taskforce for Climate-Related Financial Disclosures (TCFD) globally, drawing on the findings of the TCFD’s 2019 Status Report and highlighting investors’ increasing demands for decision-useful climate-related financial information. It offers a selection of good practice examples from many G20 countries, grouped under the four TCFD core elements of governance, strategy, risk management, and metrics and targets.

The handbook is intended to be read alongside the TCFD Implementation Guide: Using the SASB Standards and CDSB Framework to Enhance Climate-Related Financial Disclosures in Mainstream Reporting.

Sectors and companies profiled include:

• Agriculture, food and forest products – Danone, Kellogg Company
• Banks – Commonwealth Bank of Australia, HSBC, Lloyds Banking Group, Royal Bank of Canada
• Consumer goods – Unilever
• Energy – EDF, Eni, Galp, Total
• Information and communication technologies – China Telecom, Fujitsu, Wipro
• Insurance companies – Prudential
• Materials and buildings – Barrick, BASF, CEMEX, Gold Fields
• Transportation – TATA Motors

The handbook also includes a section on lessons learned and key takeaways that were raised through the identification of these good practices that may help TCFD report preparers, including:

• Ensure connectivity of information in disclosures – the 11 TCFD disclosures are mutually supportive and when considered collectively, inform and reinforce one another. Key information does not need to be repeated.
• Adopt the correct lens for viewing climate-related risks and opportunities – focus on risks and opportunities that are likely to arise from climate change impacting the business (not the converse).
• Differentiate the role of the board and management in respect to climate-related risks and opportunities – be clear on the difference between oversight provided by the board compared to management roles and responsibilities.
• Clarify the interrelationship between strategy and risk management core elements – disclose specific risks and opportunities in line with TCFD strategy recommendations and the process for identifying and managing these under TCFD risk recommendations.
• Ensure disclosures adequately link financial and non-financial information in the mainstream report – connect financial planning, performance and strategy to climate-related risks and opportunities. These linkages can be qualitative and quantitative.
•  Clearly address materiality of climate-related impacts – directly explain the process by which risks and materiality are assessed and make sure metrics and targets specifically address material risks.
• Recognise that resilience of organisation strategy to different future climate states is what TCFD is aiming for – scenario analysis is a useful tool but should not be the end focus for disclosures.
• Make complete and authentic disclosures – make as many of the 11 recommended disclosures as possible.
• Utilise comparable metrics wherever possible – lack of comparability limits the effectiveness of the reported data.

1. The TCFD Good Practice Handbook provides a useful resource for investors and companies looking to enhance their understanding and approach to measuring, managing and disclosing climate-related risks and opportunities.
2. The examples given in the handbook cover a range of sectors and geographies and provide a good reference tool when assessing the proficiency of company approaches to managing climate-related risks and opportunities.
3. The key takeaways in the handbook are a useful reference tool for investors when engaging with companies on improving their TCFD related disclosures. They also provide a good guide for investors looking to undertake their own TCFD disclosures.
4. Investors are demanding increased clarity on the financial impacts of climate-related issues. They are calling for an increase in the availability of disclosure, as well as disclosure of standard industry-specific climate-related metrics.
   
   The TCFD estimates that 340 investors with nearly $34 trillion in assets under management are asking companies to report under the TCFD.
5. Effective TCFD disclosures have two purposes: to influence internal decision-making on how to identify, assess and manage climate-related risks and opportunities, thereby strengthening policies and practices; and to ensure that the climate-related financial information disclosed is decision-useful for investors.
   
6. There is evidence that report preparers are moving towards achieving widespread adoption of its recommendations. However, partial disclosure is still the norm.
7. If the picture emerging of how organisations identify and manage climate risks and opportunities is incomplete, this will impair the decision-usefulness of the disclosures for organisations and investors.
8. Users of this handbook may also find value in CDSB, SASB and TCFD materials, as well as many other relevant resources available from the online TCFD Knowledge Hub.