The Financial Stability Board (FSB) created the Task Force on Climate-related Financial Disclosures (TCFD) in 2015 to improve and increase reporting of climate-related financial information. Its aim was to produce a common global framework for reporting this information that can be reproduced around the world. By taking a financial focus, the TCFD is designed to support more effective decision-making by both investors and companies. At Gemserv, we recognise the importance of TCFD reporting as one of the many positive steps towards the UK’s net zero ambitions.
What is the TCFD reporting framework?
The TCFD requires annual reporting on four framework pillars:
- Risk management
- Metrics & targets
We recognise that the ‘risk management’ element of this reporting is particularly difficult for companies, specifically relating risk disclosure to climate change. Reporting on climate risk is often a new area for companies to report on, making it more challenging to disclose this aspect accurately.
The TCFD also released eleven recommended disclosures structured around these pillars that cover the key elements of an organisation’s operations and aids with the clarity of this reporting.
Currently there is no third-party assurance or verification process required by companies following this process, but scrutiny will come from auditors and through investors looking at business’s climate change reporting.
This structure aims to create more effective disclosure by aligning with current reporting processes that a business would normally undertake. This reporting is not only beneficial for investors to observe climate change reporting processes as an attractive investment, but also allows companies to make better decisions, impact financing facilities and build confidence with stakeholders.
What does this mean for UK sectors?
The UK Government formally endorsed the TCFD framework in 2021 and has mandated TCFD-aligned disclosure for large private sector companies in the UK in 2022. This makes TCFD reporting mandatory for large, listed companies in the UK. The framework is recommended, or best practice, for other companies.
Recently announced in July 2023, HM Treasury published the UK’s application guidance for all government departments and the wider public sector for reporting period 2023-24. The Phase 1 guidance has been published that covers the first year of disclosure, with Phases 2 and 3 to be released in due course. When mandated for large UK-registered companies in 2021, TCFD reporting applied to over 1,300 institutions. With this recent announcement, the TCFD is now beginning to apply to the public sector as well as the private sector, expanding the mandatory reporting requirements. This will therefore impact the 44 ministerial and non-ministerial government departments in the UK, alongside a portion of the 422 other public agencies and bodies that meet certain criteria.
What does this mean for Gemserv?
Gemserv is currently able to offer support with TCFD reporting through our Circular Economy & ESG key sector and specialist knowledge. With TCFD reporting being expanded out to the public sector, we can widen our offering to new public sector clients looking to implement this framework.
We can support with quality assurance for carbon accounting, preparing companies for disclosure and identifying areas to improve. Further ESG aspects we can support with include:
- Policy insight & industry benchmarking – We can provide insight on how you are positioned in the industry, best practice, and what is required to comply or compete.
- Scope 3 reporting – We can support with Scope 3 emissions screening, data acquisition, improving reporting and developing a strategy.
- Tracking performance – We can develop bespoke digital tools that can help you track performance, understand data and incentivise action.
- Supply chain emission reduction – We can help your team and your approved installers decarbonise (e.g., electrifying fleets, minimising waste).
Contact us here to find out more.