Scientific Beta

This note reviews the background and architecture of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and presents the updated guidance with a focus on new or updated disclosures requirements and advice.

The Task Force on Climate-related Financial Disclosures (hereafter TCFD or the taskforce) was established in December 2015 by the Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system by coordinating national financial authorities and international standard-setting organisations. The creation of the TCFD was prompted by the recognition that financial market participants had insufficient information about climate risks and opportunities faced by companies, with obvious negative implications for efficient asset pricing and capital allocation, and possible risks to financial stability.

In 2017, the TCFD released climate-related financial disclosure recommendations designed to help companies provide better information to support better financial-decision making amongst stakeholders.

These recommendations have rapidly become a central reference for reporting of financially material climate-related risks and opportunities. This is primarily due to voluntary updates by corporates and the financial sector and regulatory initiatives requiring or encouraging reporting according to TCFD recommendations.

On 14 October 2021, the TCFD published a status report highlighting the accelerated uptake of its recommendations (TCFD, 2021c) along with a new Guidance on Metrics, Targets, and Transition Plans (TCFD, 2021d) and the first update to the implementation guidance on its June 2017 recommendations (TCFD, 2021e).

This note reviews the background and architecture of the TCFD recommendations and presents the updated guidance with a focus on new or updated disclosures requirements and advice.