Task Force on Climate-related
Financial Disclosures
Overview of Recommendations

April 2018

BACKGROUND
G20 Finance Ministers and Central Bank
Governors asked the Financial Stability
Board (FSB) to review how the financial
sector can take account of climate-related
issues.
The FSB established the Task Force on
Climate-related Financial Disclosures (TCFD)
to develop recommendations for more
effective climate-related disclosures that:

Industry Led and Geographically Diverse
Task ForceThe Task Force’s 31 international members, led byMichael Bloomberg, include providers of capital,
insurers, large non-financial companies, accounting
and consulting firms, and credit rating agencies.

‒ could “promote more informed investment,
credit, and insurance underwriting
decisions” and,‒ in turn, “would enable stakeholders tounderstand better the concentrations ofcarbon-related assets in the financial sector
and the financial system’s exposures toclimate-related risks.”

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BACKGROUND (CONTINUED)
The Task Force’s report and supporting materials were published in June 2017.

The report provides context,
background, and the generalframework for climate-related
financial disclosures—it isintended for broad audiences.

The annex provides the next levelof detail to help companies
implement therecommendations.

The technical supplement is afurther level of detail that can be
helpful for companies inconsidering scenario analysis.

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FOCUS ON FINANCIAL IMPACTOPPORTUNITIESRISKSTransition

Policy and Legal‒ Carbon pricing and reporting obligations‒ Mandates on and regulation of existingproducts and services‒ Exposure to litigation

Resource
Efficiency‒ Use of more efficient modes of transportand production and distribution processes‒ Use of recycling‒ Move to more efficient buildings‒ Reduced water usage and consumption

Technology‒ Substitution of existing products andservices with lower emissions options‒ Unsuccessful investment in newtechnologies

EnergySource‒‒‒‒Products& Services‒ Development and/or expansion of low
emission goods and services‒ Development of climate adaptation andinsurance risk solutions‒ Development of new products or services
through R&D and innovation

Markets‒ Access to new markets‒ Use of public-sector incentives‒ Access to new assets and locations needing
insurance coverage

Resilience‒ Participation in renewable energy programs
and adoption of energy-efficiency measures‒ Resource substitutes/diversification

Market‒ Changing customer behavior‒ Uncertainty in market signals‒ Increased cost of raw materials
Reputation‒ Shift in consumer preferences‒ Increased stakeholder concern/negative
feedback‒ Stigmatization of sector

Physical‒ Acute: Extreme weather events‒ Chronic: Changing weather patterns andrising mean temperature and sea levels

Revenues
Expenditures

IncomeStatement

Strategic Planning
Risk Management
Financial Impact

Cash Flow
Statement

BalanceSheet

Use of lower-emission sources of energy
Use of supportive policy incentives
Use of new technologies
Participation in carbon market

Assets & Liabilities
Capital & Financing

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DISCLOSURE RECOMMENDATIONSThe Task Force developed four widely-adoptable recommendations on climaterelated financial disclosures that are applicable to organizations across sectors andjurisdictions.
The recommendations are structured around four thematic areas that represent
core elements of how organizations operate:
Governance
Strategy
RiskManagement
Metrics
andTargets

Governance
The organization’s governance around climate-related risks andopportunities
Strategy
The actual and potential impacts of climate-related risks andopportunities on the organization’s businesses, strategy, andfinancial planning
Risk Management
The processes used by the organization to identify, assess, andmanage climate-related risks
Metrics and Targets
The metrics and targets used to assess and manage relevant
climate-related risks and opportunities

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DISCLOSURE RECOMMENDATIONS (CONTINUED)
The four recommendations are supported by specific disclosures organizations should
include in financial filings or other reports to provide decision-useful information toinvestors and others.
Governance

Strategy

Risk Management

Metrics and Targets

Disclose the organization’s
governance around climate-relatedrisks and opportunities.

Disclose the actual and potential
impacts of climate-related risks andopportunities on the organization’s
businesses, strategy, and financial
planning where such information ismaterial.

Disclose how the organization
identifies, assesses, and manages
climate-related risks.

Disclose the metrics and targets
used to assess and manage relevant
climate-related risks andopportunities where suchinformation is material.

Recommended Disclosures

Recommended Disclosures

Recommended Disclosures

Recommended Disclosuresa) Describe the board’s oversight ofa) Describe the climate-related risks
and opportunities theorganization has identified overthe short, medium, and longterm.

a) Describe the organization’s
processes for identifying andassessing climate-related risks.

a) Disclose the metrics used by theorganization to assess climaterelated risks and opportunities inline with its strategy and risk
management process.

b) Describe management’s role inb) Describe the impact of climaterelated risks and opportunities on
the organization’s businesses,
strategy, and financial planning.

b) Describe the organization’s
processes for managing climaterelated risks.

b) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhousegas (GHG) emissions, and therelated risks.

c) Describe the resilience of theorganization’s strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower scenario.

c) Describe how processes for
identifying, assessing, andmanaging climate-related risks
are integrated into theorganization’s overall risk
management.

c) Describe the targets used by theorganization to manage climaterelated risks and opportunities
and performance against targets.

climate-related risks andopportunities.

assessing and managing climaterelated risks and opportunities.

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SUPPLEMENTAL GUIDANCEIn addition to guidance for all sectors, the Task Force developed supplemental guidance
for the financial sector and non-financial groups to assist those organizations in
implementing the recommended disclosures.
Financial Sector Industries

Non-Financial Groups– Banks– Energy– Insurance Companies– Transportation– Asset Managers– Materials and Buildings– Asset Owners– Agriculture, Food, and Forest Products

The financial sector was organized into four
major industries largely based on activities
performed. The activities are lending (banks),
underwriting (insurance companies), asset
management (asset managers), and investing(asset owners).

The non-financial groups identified by the Task
Force account for the largest proportion of
GHG emissions, energy usage, and water
usage.

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KEY ELEMENTS OF DISCLOSURE RECOMMENDATIONS
Location of Disclosure– The Task Force recommends that organizations provide climate-related financial disclosures intheir mainstream (i.e., public) annual financial filings.
– The recommendations were developed to apply broadly
across sectors and jurisdictions and do not supersede
national disclosure requirements for financial filings.
– If certain elements are incompatible with national disclosure
requirements, the Task Force encourages organizations todisclose those elements in other official company reports.
– Organizations in the four non-financial groups that havemore than one billion U.S. dollar equivalent (USDE) in annual
revenue should consider disclosing strategy and metrics andtargets information in other reports when the information is
not deemed material and not included in financial filings.

Financial Filings
Required annual reporting
packages in which organizationsdeliver their audited financial
results under the laws of thejurisdictions in which they operate.
Other Official Company Reports
Should be issued at least annually,
widely distributed and available toinvestors and others, and subject tointernal governance processes thatare the same or substantiallysimilar to those used for financial
reporting.

8KEY ELEMENTS OF DISCLOSURE RECOMMENDATIONS (CONTINUED)
Principle of Materiality– The disclosures related to the Strategy and Metrics and Targets recommendations are subject toan assessment of materiality.
– The disclosures related to the Governance and Risk Management recommendations are notsubject to an assessment of materiality and should be provided because many investors wantinsight into the governance and risk management context in which organizations’ financial andoperating results are achieved.

Scenario Analysis– The Task Force encourages forward-looking information
through scenario analysis—a useful tool for considering andenhancing resiliency and flexibility of strategic plans.
– Many investors want to understand how resilientorganizations’ strategies are to climate-related risks.
– Recommended disclosure (c) under Strategy and the related
guidance asks organizations to describe the resilience of
their strategies, taking into consideration different climaterelated scenarios, including a 2°C or lower scenario.

2°C Scenario

Provides a common reference pointthat is generally aligned with theobjectives of the Paris Agreement.
Scenario Analysis Threshold
The Task Force established a thresholdfor organizations that should consider
conducting more robust scenario
analysis to assess the resilience of theirstrategies (those in the four nonfinancial groups with more than 1B
USDE in annual revenue).

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SCENARIO ANALYSIS
Scenario analysis is an important and useful tool for understanding the strategic
implications of climate-related risks and opportunities.
The Task Force recommends that organizations describe the resilience of their strategy,
taking into consideration different climate-related scenarios, including a 2°C or lower
scenario.
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, andfinancial planning.

Recommended
Disclosurec) Describe theresilience of theorganization’s
strategy, taking into
consideration different
climate-related scenarios,
including a 2°C or lower
scenario.

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-related risks andopportunities, taking into consideration a transition to a lower-carbon economy consistent with a
2°C or lower scenario and, where relevant to the organization, scenarios consistent withincreased physical climate-related risks.
Organizations should consider discussing:‒ where they believe their strategies may be affected by climate-related risks and opportunities;‒ how their strategies might change to address such potential risks and opportunities; and‒ the climate-related scenarios and associated time horizon(s) considered.

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BENEFITS OF IMPLEMENTING THE RECOMMENDATIONS
Some of the potential benefits associated with implementing the Task Force’s
recommendations include:‒ easier or better access to capital by increasing investors’ and lenders’ confidence thatthe company’s climate-related risks are appropriately assessed and managed‒ more effectively meeting existing disclosure requirements to report material
information in financial filings‒ increased awareness and understanding of climate-related risks and opportunities
within the company resulting in better risk management and more informed strategicplanning‒ proactively addressing investors’ demand for climate-related information in aframework that investors are increasingly asking for, which could ultimately reduce
the number of climate-related information requests received

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ILLUSTRATIVE IMPLEMENTATION PATH

The TCFD expects that reporting of climate-related risks and opportunities will evolve over time asorganizations, investors, and others contribute to the quality and consistency of the information
disclosed.

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SUPPORTING ORGANIZATIONSAs of April 2018, over 270 organizations have expressed their support for the TCFD,
including over 150 financial firms responsible for assets of more than $81.7 trillion.

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BEGINNING THE JOURNEY – ILLUSTRATIVE ROADMAPFor organizations in early stages of assessing climate-related risks and opportunities, it
may be helpful to develop a roadmap for implementing the recommendations.
Year 1

Year 2

Year 3• Compare current disclosures to therecommendations, especially
Governance and Risk Management,
and identify alignment and gaps

• Implement new processes for
information and data collection andreporting• Calculate and use metrics forassessing climate-related risks andopportunities• Identify metrics useful for assessing
climate-related risks andopportunities• Integrate scenario analysis into
strategic planning and/or risk
management frameworks• Adjust data collection to support
metrics• Disclose information related toGovernance and Risk Management
recommendations• Determine information and dataneeds and process changes• Begin evaluating metrics forassessing climate-related risks andopportunities• Incorporate climate-related risks
into risk identification andassessment process as needed• Assign oversight to board
committees and management asneeded• Disclose information related toGovernance and Risk Management
recommendations or disclose
intention to implement the TCFD
recommendations• Identify climate-related risks andopportunities and assess whether
they are material• Identify relevant climate-related
scenarios and consider how thosescenarios might affect theorganization• Disclose information related toStrategy and Metrics and Targets
recommendations, where theinformation is material• Disclose information related toGovernance and Risk Management
recommendations and item (a) of
the Strategy recommendation,
where the information is material

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EXTENSION OF TCFD REMITIn February 2017, the FSB welcomed a proposal by the Task Force to continue its
work until at least September 2018 with a focus on the following:‒ promoting and monitoring adoption of the TCFD’s recommendations by companies‒ evaluating the extent to which the recommended disclosures are meeting the needsof users

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TIMELINE FOR THE TASK FORCE’S WORKThe Task Force is working with industry associations and other organizations to promoteand monitor adoption of the TCFD recommendations and will submit a report to the FSB
in September 2018.

Timeline
Third Quarter
2017

Fourth Quarter
2017

First Quarter
2018

Second Quarter2018

Jul 7-8: TCFD reportpresented at G20 Summit

Third Quarter2018
Q3 2018: Submission ofmonitoring report

Q4 2017-Q3 2018: Implementation monitoringQ3 2017-Q3 2018: Outreach and engagement
Jun 29: Issuance of final report

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CURRENT AND PLANNED ACTIVITIES
Since its report was issued, the Task Force has been focused on promoting adoption of
the recommendations through the activities described below.

Current and Planned Activities
Held a two-day conference in 2017 incollaboration with the Bank of England on
scenario analysis and will hold a conference on
the TCFD and scenario analysis in NYC in May.
Conducting preparer workshops to support
implementation.
Speaking at conferences to build awarenessand understanding of the TCFD
recommendations.
Engaging with companies working on
implementation of the recommendations toclarify expectations.
Promoting availability of tools and resources.

Supporting formation of “preparer forums” forcompanies address implementation issues andimprove their disclosure inline with the TCFD.
Engaging with industry associations and NGOs
to identify areas of common interest andpossible collaboration.
Engaging with financial and non-financial
companies, investors, industry associations,NGOs, and others to gain additional support
for the recommendations.
Supporting integration of the TCFD
recommendations into existing climate-related
reporting frameworks.

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APPENDIXTASK FORCE MEMBERS
Koushik ChatterjeeGroup Executive Director,
Finance and Corporate
Tata Group

Chair and Vice-Chairs
Michael Bloomberg
ChairmanFounder and President
Bloomberg L.P.
Yeo Lian Sim
Vice-Chair
Special Adviser
Singapore Exchange

Denise Pavarina
Vice-ChairManaging Officer
Banco Bradesco

Graeme Pitkethly
Vice-Chair
Chief Financial Officer
Unilever

Christian Thimann
Vice-ChairGroup Head of Strategy,
Sustainability and Public
Affairs
AXA

Members
Jane Ambachtsheer
Partner, Chair –Responsible Investment
MercerMatt Arnold
Managing Director andGlobal Head of Sustainable
Finance
JPMorgan Chase & Co.

Wim Bartels
Partner Corporate
Reporting
KPMG

Bruno Bertocci
Managing Director, Head of
Sustainable Investors
UBS Asset Management

David Blood
Senior Partner
Generation Investment
Management

Richard Cantor
Chief Risk Officer
Moody’s
Chief Credit Officer
Moody’s Investor Service

Brian Deese
Global Head of
Sustainable Investing
BlackRock

Eric Dugelay
Liliana Franco
Global Leader, Sustainability Director, Accounting
Services
Organization andDeloitte
Methods
Air Liquide Group
Takehiro Fujimura
General Manager
Corporate Sustainability
Department
Mitsubishi Corporation

Udo Hartmann
Senior Manager, Group
Environmental Protection& Energy Management
Daimler

Neil Hawkins
Corporate Vice President
and Chief Sustainability
Officer
The Dow Chemical
Company

Thomas Kusterer
Chief Financial Officer
EnBW

Diane Larsen
Audit Partner, Global
Professional Practice
EY

Stephanie Leaist
Managing Director, Headof Sustainable Investing
Canada Pension Plan
Investment Board

Eloy Lindeijer
Chief, Investment
Management
PGGM

Ruixia Liu
General Manager, Risk
Department
Industrial and Commercial
Bank of China

Giuseppe Ricci
Chief Refining & Marketing
Officer
ENI

Martin Skancke
Chair, Risk Committee
Storebrand

Steve Waygood
Chief Responsible Investment
OfficerAviva Investors

Martin Weymann
Head Sustainability,
Political & Emerging Risk
Management
Swiss Re

Fiona Wild
Vice President, Sustainability
and Climate Change
BHP Billiton

Michael Wilkins
Managing Director,
Environment & Climate
Risk Research
S&P Global Ratings

Jon Williams
Partner, Sustainability andClimate Change
PwC
Special Adviser
Russell Picot
Chair, Audit and Risk Committee, LifeSight
Board Chair, HSBC Bank (UK) Pension Scheme Trustee
Former Group Chief Accounting Officer
HSBC

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DEVELOPMENT OF RECOMMENDATIONSIn developing its recommendations, the Task Force:‒ Considered the challenges for preparers of disclosures as well as the benefits of suchdisclosures to investors, lenders, and insurance underwriters‒ Engaged in significant outreach and consultation with users and preparers of
disclosures and other stakeholders, including two public consultations, individual
discussions and focus groups with industry, webinars, and outreach events in multiple
countries‒ Drew from existing climate-related disclosure regimes and sought to develop adecision-useful framework to align and supplement existing disclosure frameworks‒ Created guidance for all sectors and supplemental guidance for specific sectors
The Task Force expects that reporting of climate-related information will evolve overtime as organizations, investors, and others contribute to the quality and consistency of
the information disclosed.

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