The Task Force on Climate-related Financial Disclosures (TCFD) published its sixth and final status report on Oct 12, noting a steady momentum in companies disclosing TCFD-aligned information though more progress is needed.
On average for 2022, companies reported in line with 5.3 of the TCFD’s 11 recommended disclosures, up from an average of 3.2 in 2020.
However, while levels of disclosure are increasing, they still fall short of the 11 recommended disclosures, says TCFD. Some 58% of companies disclosed in line with at least five of the 11 recommended disclosures, up from 18% in 2020 — but only 4% disclosed in line with all 11.
According to the TCFD, 97 of the 100 largest companies in the world have declared support for the TCFD, report in line with the TCFD recommendations, or both.
Over 80% of the largest asset managers and 50% of the largest asset owners reported in line with at least one of the 11 recommended disclosures. Based on a review of publicly available reports, nearly 70% of the top 50 asset managers and 36% of the top 50 asset owners disclosed in line with at least five of the recommended disclosures.
Established by the Financial Stability Board (FSB) in 2015, the TCFD’s work is coming to a close; the Task Force will be disbanded after the release of its 2023 status report.
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Starting 2024, the International Sustainability Standards Board (ISSB) will monitor progress on climate-related financial disclosures by companies and report to the FSB.
“This final report makes clear that we’ve made tremendous strides in bringing greater transparency to financial markets for both climate related-risks and opportunities,” says Michael Bloomberg, chair of the task force and founder of Bloomberg and Bloomberg Philanthropies. “While there is still much more work to do, this progress provides the forward momentum necessary to more fully integrate climate data into the global economy and spur more private investment in clean energy.”
Yeo Lian Sim, TCFD vice-chair and special adviser, diversity at Singapore Exchange S68 (SGX), says transparency is the “currency of trust”, which provides the accountability demanded by investors, customers and stakeholders. “By shining a light on the risks and opportunities posed by climate change, these disclosures empower companies and their stakeholders to make informed decisions that safeguard their future. The TCFD has served as a catalyst for transformative action, and we look forward to continued progress on climate-related financial disclosures under the ISSB.”
See also: SGX RegCo to seek feedback by year-end on mandating ISSB-aligned climate reporting
The TCFD published a transition guide in October 2021. Several governments, regulators and standards-setters have incorporated or drawn from the TCFD recommendations in developing climate-related reporting requirements and standards, including the US Securities and Exchange Commission, the UK Parliament, the European Commission and the ISSB.
The ISSB standards — IFRS S1 and S2 — ask for information about a company’s climate transition plan as part of its strategy, and are consistent with TCFD’s recommendations. Together, they create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects.
SGX introduced a phased approach to mandatory climate reporting based on TCFD recommendations following a public consultation in 2021. Climate reporting is mandatory for Singapore-listed companies in the financial, energy, agriculture, food and forestry industries from FY2023.
Singapore Exchange Regulation (SGX RegCo) will likely announce ISSB adoption in 2024. The bourse regulator said in September that it would consult on any possible changes to current listing rules by the end of the year.
