If you’re a publicly-traded company, you’ve probably heard the phrase ‘TCFD’ mentioned. What exactly does it mean, and more importantly, what does it mean for your business?

TCFD stands for the Task Force on Climate-related Financial Disclosures. It is a framework that organizations can use to publicly disclose the climate-related risks and opportunities to their businesses.

More than 1,700 businesses and governments around the world have publicly committed to reporting in alignment with the TCFD. In addition, regulators are increasingly moving towards making TCFD reporting mandatory for publicly traded companies.


The TCFD was launched in 2015 by the Financial Stability Board (FSB), which was led by the then Bank of England (and former Bank of Canada) Governor Mark Carney. Chaired by Mike Bloomberg and including representatives from some of the world’s largest banks, investors, and issuers, in 2017, it released its final report complete with a proposed framework for climate-related disclosure.

The TCFD framework consists of four themes—governance, risk management, strategy, and metrics and targets—with 11 TCFD disclosure recommendations for reporting the financial impact of climate change. To help businesses get up to speed, the TCFD also produced a guide for implementing the TCFD recommendations and established a TCFD Knowledge Hub stocked full of helpful case studies.

What Does the TCFD Do?

The idea behind the TCFD recommendations is to increase consistency in reporting of climate-related financial information, guide companies on how to inform stakeholders on their climate action plans, and enhance market transparency. The TCFD’s founders also hoped that over time, this reporting would lead to a better understanding of where climate-related risks lurk within the financial system, and help financial markets optimize capital allocation.

There was (and is) no shortage of sustainability reporting taking place, but too little was of high-quality, and too much was shared that was not relevant to investors. In addition, there was confusion among preparers of financial filings on how to embed climate-related information into mainstream reports. The TCFD framework was designed to remedy these shortcomings and thereby promote investors’ and companies’ understanding of the financial impacts of climate change.

We recommend that you explain that the TCFD is meant to guide companies on how to inform stakeholders of a company’s climate action plan for risk assessment as well as its plan to minimize climate-related risks.

Global Support

Since 2017, the adoption of the TCFD recommendations has been gaining momentum. The UK’s Financial Conduct Authority has made it mandatory for premium listed companies to disclose in alignment with TCFD for the fiscal year 2021, requiring a statement in their annual financial report. New Zealand has adopted mandatory TCFD requirements for lenders, insurers and asset managers. The Bank of Canada has urged companies to adopt and increase the use of TCFD-aligned disclosure, as have Canada’s eight largest pension funds. Larry Fink, the CEO of Blackrock, issued a letter to their portfolio CEOs in 2020 laying out Blackrock’s expectations that all companies it invests in are expected to produce TCFD-aligned reports. And in June, the G7 countries committed to mandatory climate-related financial disclosures for public companies based on TCFD recommendations.

In addition, other sustainability reporting frameworks used by businesses have embraced TCFD, including CDP, the Climate Disclosure Standards Board (CDSB) and the International Financial Reporting Standards Foundation. 

Voluntary take-up of TCFD recommendations by public companies has also proceeded at a rapid clip. In its 2020 status report, the Task Force said that nearly 60% of the world’s 100 largest public companies either support the recommendations, have reported in line with the recommendations, or both.

How to Start with the TCFD

Businesses that have traditionally not thought much about climate change risks are now expected to discuss their climate risk plans in detail. As a business, where should you start?

At Manifest, we regularly work with clients who are either looking to start disclosing in alignment with the TCFD or enhance what they’re already doing. If you are thinking about the next steps your business should take on TCFD, there are a few important pieces of information to keep in mind:

  1. The TCFD is meant to provide decision-useful information for financial institutions and investors. It’s not meant to be a clearinghouse for every sustainability initiative your business undertakes. The information you disclose is meant to connect to the question ‘how are climate-related financial risks and opportunities impacting my business now, and how will they impact us in the future?’ This means details on how climate change will affect financial planning and strategic decision-making.
  2. The TCFD is meant to be forward-looking. It is a tool to communicate how your business intends to navigate climate change and climate related risks—both the physical risks and the transition risks threatened by the move to a low-carbon economy. It’s not solely about what your emissions were over the past decade, it’s about where you’re headed, and what metrics you’re using to gauge progress. TCFD supporters are also encouraged to use, and disclose the results of, forward-looking scenario analysis to inform stakeholders of what the future may look like for them under different climate pathways, and help investors make smarter financial decisions.
  3. It starts with governance. The foundations of corporate climate disclosure start with governance. How does the Board stay informed on the impacts of climate change? Does your Board have a committee with responsibility for climate change issues? What part does the Board and management play in climate-related risk management? Strong climate governance tells investors you have the structures in place to recognize and adapt to climate change.
  4. Even if you don’t intend to disclose publicly, going through the exercise of looking at your business through the TCFD lens can be extremely useful. It is designed in a way to explore and unpack the various ways your business will be impacted by climate-related issues. If your business is struggling with trying to understand what climate change means for it and doesn’t know where to begin, the TCFD is a good place to start.

The recommendations of the Task Force, and supplemental guidance for specific industries, such as the financial sector, are publicly available on its website. Whether your business is looking to produce or enhance a TCFD report in response to regulatory, investor or stakeholder pressure, Manifest can help you navigate the TCFD process and get you to where you want to go.