The Task Force on Climate-related Financial Disclosures (TCFD) announced today the publication of its 2021 Status Report, indicating a significant jump in the number of companies reporting on climate-related risk. Spelling out the next steps in sustainability disclosure, the TCFD also published updates to its climate risk reporting recommendations, along with guidance for companies to disclose their plans and progress relating to their climate transition strategies.

The TCFD was established by the Financial Stability Board in 2015, with the goal of developing consistent disclosure standards for companies, in order to enable investors and other stakeholders to assess the companies’ climate-related financial risk. The recommendations were published in June 2017, and have become the industry standard for climate-related disclosure, requested by many investors, and even being recommended or mandated by a number of countries.

According to the status report, the number of companies disclosing in line with TCFD recommendations increased by 9% in 2020, reaching over 50% of companies reviewed for the first time. According to the TCFD, more than 2,600 organizations across 89 countries now support the recommendations.

Michael R. Bloomberg, Chair of the Task Force, said:

“The Task Force has had an exceptional year in rallying global support for climate risk reporting – but we still have a long way to go. As governments and businesses around the world work to accelerate the transition to a clean energy economy, they should continue to draw on the TCFD recommendations as a critical tool in their efforts.”

The TCFD’s update includes new guidance on the application of the recommendations, including disclosure on companies’ plans to transition to a net zero economy. The updated guidance also elevates seven categories of metrics as “particularly important” for assessing financial impact. The categories include Scope 1, Scope 2, and Scope 3 GHG emissions, metrics on climate-related transition and physical risks and opportunities, capital deployment, internal carbon price, and remuneration.

The TCFD also published “Guidance on Metrics, Targets, and Transition Plans,” aimed at helping financial statement preparers to provide information aimed at helping users assess the financial impacts affecting their investment, lending, and underwriting activities and measure progress towards net zero goals.

Mary Schapiro, Head of the TCFD Secretariat, said:

“As countries and companies around the world set net zero targets, the TCFD framework is increasingly becoming the foundation for standards and requirements needed to chart the transition to the low-carbon economy. That’s why today we are also publishing guidance to help companies disclose their plans and progress for the transition to a low-carbon economy, more consistent cross-sector metrics, and, for financial firms, how aligned their portfolios are with a well-below 2°C scenario.”

Click here to access the TCFD status report, guidance update annex, and  Guidance on Metrics, Targets, and Transition Plans.