In 2017, The Task Force on Climate-related Financial Disclosures (TCFD) published climate-related financial disclosure recommendations to help inform investors as well as organizations on the financial implications associated with the transition to a lower-carbon economy and rising physical climate change risks.
In November 2022, there were 4,000 TCFD supporters, organizations which publicly declared their support and commitment to work towards TCFD implementation. The 70 TCFD supports coming from Switzerland will most likely be joined by many more large Swiss companies, banks, and insurance companies soon due to the adoption of the “Ordinance on Climate Disclosures” by the Swiss Federal Council in November 2022. This new legislation will apply to organizations that have:
and will require them to publicly disclose their climate-related risks, opportunities, and impacts as well as reduction targets and plans as of January 1st, 2024, covering the financial year 2023.
While the approximately 200 Swiss organizations that will already have to report on the TCFD recommendations next year are now expected to provide deeper insights into their impact on climate and vice versa, smaller organizations are also advised to not simply sit around and wait. To provide guidance to TCFD-starters, Finch & Beak designed a TCFD roadmap to help companies put the four core recommendations (related to governance, strategy, risk management, and metrics and targets) into action whilst at the same time working on the accompanying eleven recommended disclosures.
The roadmap suggests five steps:
Josephin Schulz shared a variety of recommendations with the audience that can assist companies in accelerating TCFD in the most efficient and effective way, the most important one being to engage and involve a variety of stakeholders, including the Board of Directors, to ensure long-term stakeholder buy-in and support. She also advised organizations not to be afraid of this complex task, but to rather see it as an opportunity to make their business “future-fit” by planning for different possible futures and climate projections.
With TCFD reporting already being mandatory in the UK, there is a lot to be learned from companies based there. Peregrine Chard, Head of Risk at Ocado Group, a leading UK-headquartered FTSE100 company, shared valuable implementation insights from the company’s TCFD journey.
According to him, it is crucial to align climate-related risks with the company-wide risk processes and definitions to ensure the integration of the identified climate risks on all levels. He added that working on the TCFD recommendations is a time- and resource-intensive activity. Still, it pays off to work backward from the detailed disclosures to avoid any gaps. It is also worthwhile exploring which relevant resources already exist within an organization but may be labeled differently. He added that TCFD will be complemented by TNFD (nature-related financial disclosures) with a stronger focus on biodiversity and geography-based disclosures.
With more concrete obligations, upcoming regulations, and rising auditor scrutiny, he advised organizations to carefully consider publicly available sources as well as the impact of new data and information to avoid greenwashing and to align climate decisions with strategic priorities to ensure long-term compliance and success.
Finch & Beak’s Nikkie Vinke wrapped up the session by suggesting three helpful ESG Tips for TCFD Acceleration to consider when starting your TCFD journey. Download the tips at the top of this page.
Following the TCFD recommendations will help you to more effectively evaluate climate-related risks and opportunities which enables better-informed decisions on capital allocation and strategic planning over the short, medium and long term. We can support you in that through:
If your organization requires support on its TCFD journey, reach out to Gijs-Jan Groeneveld, at Gijs-Jan@finchandbeak.com or call +31 6 28 02 18 80 to discuss how Finch & Beak can help you.
Photo by Lucas Wesney on Unsplash
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