On 14 October 2021, the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD) issued a status report for 2021.
The status report provides an update on key TCFD-related developments and initiatives as well as the results of the TCFD’s annual review of climate-related reporting. The status report also contains key findings from an analysis of disclosures on the financial impact of climate-related risks and opportunities on companies’ businesses and strategies.
Since its last status report, public and private-sector support for the TCFD recommendations has accelerated rapidly. More than 2,600 organisations have pledged support for the TFCD recommendations and are integrating climate risk into their financial risk frameworks, and governing bodies are incorporating TCFD recommendations into official disclosure requirements. TCFD supporters now span 89 countries and nearly all sectors of the economy, with a combined market capitalization of over $25 trillion, which is a 99% increase since last year.
Other key findings in the status report include:
- Disclosure increased more between 2019 and 2020 than in any previous year assessed, consistent with global momentum around climate-related reporting. However, progress is still needed, with only 50% of companies reviewed disclosing in alignment with at least three recommended disclosures.
- Companies remain more likely to disclose information on their climate-related risks and opportunities, as opposed to any other recommended disclosure. Disclosure of the resilience of companies’ strategies under different climate-related scenarios, although still the least reported recommended disclosure, encouragingly increased from 5% of companies in 2018 to 13% in 2020.
- Although the TCFD recommends disclosure of governance regardless of materiality, the governance recommendation remains the least disclosed recommendation with the two governance recommended disclosures the second and third least disclosed.
- Materials and buildings companies now lead on disclosure. The average level of disclosure across the 11 recommended disclosures for fiscal year 2020 was 38% for materials and buildings companies.
- Europe remains the leading region for disclosures.
The TCFD has also published, Guidance on Metrics, Targets, and Transition Plans and Updates to the implementation guidance on its Recommendations alongside its status report.
A further status report has been requested by the FSB to be published in September 2022