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Understanding the TCFD

The Task Force on Climate Related Financial Disclosures (TCFD) is focused on supporting climate change progress through the use of disclosure and analysis of climate risks for companies.

What is the TCFD?

The TCFD is a task-force focused on supporting informed, efficient capital-allocation decisions. The group mainly focuses on developing recommendations on how companies should disclosure activity and information to help support better investment decisions in relation to specific risks.

In 2017, the TCFD came out with a specific set of recommendations around climate-related financial disclosures to help companies provide better data and transparency around how their actions affect climate change

What are the TCFD recommendations?

The recommendations set forth by the TCFD are focused around four themes:

1. Governance
Disclosure focused on an organizations governance around climate-related risks and opportunities.
2. Strategy
Disclosure of the actual and potential impacts of climate-related risks and opportunities on an organizations strategy, financial planning (when material) and overall business.
3. Risk Management
Disclosure on how an organization identifies, assesses, and manages climate-related risks.
4. Metrics and Targets
Disclosure on the metrics and targets used to assess and manage relevant climate-releated risks and opportunities where such information is material.

Along with these 4 main themes, the TCFD aids in helping companies navigate these disclosures by providing seven principles for effective disclosure. These principles cover topics of disclosure that is relevant, specific, transparent, balanced, consistent, comparable between sector, verifiable, and most importantly, timely.

The TCFD recommendations are meant to help inform investors on relevant climate risk but also help provide companies with methods and a process to incorporate climate change into business plans.

Who supports the TCFD?

Though initially the TCFD recommendations were voluntary, many countries have adopted these as guides for established or proposed disclosures in the U.K, Switzerland, Singapore, Hong Kong, New Zealand, Japan, and even the United States.

As of October 2022, there are over 4,000 supporters of TCFD globally.

YourStake can support climate data and implementation of TCFD recommendations.

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