Only 4% of companies disclosing in line with full TCFD recommendations

Taskforce highlights progress in final TCFD report but more needs to be done

The sixth and final status report from the Taskforce on Climate-related Financial Disclosures (TCFD) has been published ahead of their work coming to a close, highlighting steady momentum in companies disclosing climate information.

However, the taskforce called on companies to advance their progress to improve data and spur on investment

On average for the 2022 fiscal year, companies reported in line with 5.3 of the taskforce’s 11 recommended disclosures, up from an average of 3.2 in 2020. While this shows that levels of disclosure are improving, the TCFD were keen to emphasise that more progress is needed, given that only 4% of companies disclosed in line with all 11.

“This final report makes clear that we have made tremendous strides in bringing greater transparency to financial markets for both climate related-risks and opportunities,” said Michael Bloomberg, chair of the taskforce 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.”

Among other key findings in the status report, 97 of the 100 largest companies in the world were found to have declared support for the TCFD, report in line with the TCFD recommendations, or both. Also, 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.

However, disclosure of climate-related financial information in financial filings was found to be limited. On average for 2022, information aligned with the 11 recommended disclosures was four times more likely to be disclosed in sustainability and annual reports than in financial filings. That is despite the majority of jurisdictions with final or proposed climate-related disclosure requirements specifying that such disclosures be reported in financial filings or annual reports.

Future of climate-related disclosures

Having released its 2023 status report, the taskforce will now be disbanded, with the International Sustainability Standards Board (ISSB) assuming responsibility of monitoring climate-related disclosures and reporting to the Financial Stability Board via its own disclosure standards.

Back in June, the ISSB published its first standards – IFRS S1 and IFRS S2 – which will serve as a global baseline of sustainability disclosures for capital markets. Given that the two standards fully incorporate the recommendations for the TCFD, the FSB were led to conclude that the taskforce’s work had therefore ‘culminated’.

In a closing statement, the TCFD said that it believed it was especially important to recognise the dynamic nature of climate related as well as broader sustainability issues, and the need for ongoing assessment and adjustment, as appropriate, as practices continue to evolve.

Disclosure of strategy resilience under different climate scenarios, interoperability of the ISSB standards with regional frameworks and developing implementation guidance on physical risk assessments, adaptation planning and Scope 3 greenhouse gas emissions at a sector or industry level were among several areas the TCFD encouraged appropriate bodies to continue to make progress on.

“The TCFD has helped to drive immense progress on climate-related financial disclosures, and this year’s Status Report shows how far we have come,” said Mary Schapiro, head of the TCFD secretariat and vice chair for global public policy at Bloomberg.

“It has been an honour to lead this work and I am proud to cap off a remarkable eight years with this report. I look forward to continued efforts to further progress on transparency, particularly in support of the development of net zero transition plans.”