Excellence in climatechange reporting
A review of leading UK companies

Building Public Trust
November 2022

Excellence in climate change reporting
PwC

November 2022

Foreword from Jon Williams
This year marks the third year in which PwC has reviewed
company reporting on climate change as part of our Building
Public Trust Awards. This year we have extended ouranalysis even further, to cover the full FTSE 350 for the firsttime.

Jon Williams
PwC Partner and UK Chair,
Sustainability & Climate
ChangeMember of the Task Force on
Climate-related Financial
Disclosures (TCFD)

Despite the challenges faced by companies over the last 12
months, corporate action on climate change continues atpace, with TCFD’s 2022 Status Report revealing that over
3,900 companies now officially support the recommendations,up from 2,600 companies last year. Accompanying this, over
120 regulators and government entities and 1,599 financial
institutions responsible for assets of $220 trillion now support
the TCFD. We are pleased to see this support continue toincrease year on year.
The UK Government is increasingly taking action. In April thisyear, TCFD-aligned reporting became mandatory for over
1,300 of the largest UK-registered companies and financial
institutions, making it mandatory for such organisations todisclose climate-related financial information. This was animportant step in bringing transparency and accountability to
how organisations are considering and actively managing
their climate-related risks and opportunities.
While we move towards mandatory transition plans by 2023,
as set out by government last year, we will continue to see
increased transparency within climate-related financial
information. This will include more detailed information on
how companies intend to meet their net zero commitments forinvestors and the government.

Excellence in climate change reporting
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These announcements have been supported by HMT’s recently
published Greening Finance Roadmap, which sets out TCFD’s
position in a rapidly evolving space. We hope that theGovernment’s update of the Green Finance Strategy due later
this year will seek to provide further clarity on the pathway to
mandatory climate-related disclosures across the economy.
In July 2022, the FRC also published a thematic review that setsout examples of better practice reporting to help companies
improve their TCFD-aligned disclosures. Our reportcomplements the findings published by the FCA in its review of
TCFD-aligned disclosures made by premium listed companies.
The reports continue to demonstrate increased regulatory
involvement and scrutiny of TCFD information.
Overall, we are encouraged to see in our analysis that reportingis improving. Companies are continuously advancing theirreporting whilst the sophistication of market leaders continues tofollow ever heightening expectations, which aligns with thefindings of the latest Status Report. However, mirroring theconcerns raised by the TCFD, we also share the view that morework needs to be done to improve climate reporting, including
increasing the level of financial disclosures.
Our review has been categorised, in line with TCFD, into
‘Governance,’ ‘Strategy,’ ‘Risk Management’ and ‘Metrics andTargets.’ In each section we have provided an analysis of thequality of the reporting, tips for how to make your reporting more
effective, and illustrated examples of best practice.
We hope that through this report, we can provide the insights
and expertise which will help your company to progress on thejourney towards better climate change reporting.

November 2022

About this report
This report contains the results of our analysis,
expert guidance to improve your reporting and aselection of leading examples that we at PwC haveidentified following our review of annual reports,
climate reports and sustainability reports of the
FTSE 350. The report is structured as follows:• A summary of what should be reported and why, set in
the framework of the TCFD guidance• Basic, intermediate and advanced tips for improving
your reporting• A quantitative analysis of the performance of thecompanies scored as a part of this review• An in-depth exploration of company performance foreach of the 4 categories, with each sub-divided into
further sections. Each subsection includes:– Key findings and analysis by industry– Results summary including reporting tips
– Annotated best practice examples
If you would like more personalised advice on your own
reporting, do get in touch with us – our contact details
are on the back page. You can also find more examplesof good practice by visiting our website.

Excellence in climate change reporting
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November 2022

Contents
An overview of good practice climate reporting

1

Good practice and advancing climate-related reporting

6

Overview of analysis

8

Progression in the FTSE 100

12

1. Governance3. Risk Management

Key findings

17

Key findings

33

Board-level knowledge and training

18

Risk identification, assessment and management

34

Board oversight on climate change

20

Engagement with stakeholders

36

Management oversight on climate change

22

Integration with current risk management process38

2. Strategy

4. Metrics and targets

Key findings

25

Key findings

41

Identification of material risks and opportunities

26

Disclosing climate-related metrics

42

Disclosure of impacts on and by the business28

Setting climate-related targets and reporting on performance

44

Business resilience to climate-related risks and opportunities

30

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5. Spotlight on meeting the updated TCFD guidance
Metrics and targets

46

Transition plans48

November 2022

Good practice climate reporting based on TCFD guidance
What

Why

Document the governance structure regarding board-level responsibility
for climate change. Where true, disclose that climate change is on theagenda at board meetings and provide examples of how climate-relatedrisks / opportunities have affected strategic decisions.

This enables the reader to understand the “tone at the top”, showing how and by whom
climate change is considered at board-level, ultimately demonstrating how climate is taken
into account when making strategic decisions.

Explain the responsibility for climate change at executive level and if
applicable, disclose that executive remuneration is linked toclimate-related objectives. Provide details on how the executive
management team have been upskilled to undertake this role.

This enables the reader to understand how and by whom climate change is considered at an
executive level and demonstrates to them how seriously the issue is being taken by linking
climate-related objectives to executive remuneration. By providing context on executive
training it allows the reader to understand how the organisation has prepared them to makeinformed decisions.

Identification of material risks andopportunities

Identify and disclose physical and transitional risks and opportunities, anddo so with an associated time horizon.

This provides detail on the specific impacts of climate change on your business andcontextualises them in the short, medium and long-term.

Disclosure of impacts on and by
the business

Aided by scenario analysis, identify the impacts of climate-related risks
and opportunities on the organisation’s business, strategy and financial
planning and furthermore, disclose the impact of the organisation on the
climate. Disclose a credible transition plan to a low carbon economy.

This makes it clear what the impacts of climate-related risks and opportunities could be
across a range of hypothetical futures, and also to what extent the organisation itself is
contributing to climate change. Disclosing a credible transition plan will allow readers tounderstand how the organisation will adapt to the changing climate landscape.

Business resilience toclimate-related risks
and opportunities

Describe the resilience of your business strategy under different
climate-related scenarios, including a 2°C or lower scenario.

Scenario analysis allows an organization to explore and develop an understanding of how
the physical and transition risks of climate change may impact its businesses, strategies, andfinancial performance over time. This in turn allows for more informed strategic decision
making.

Risk identification andassessment

Describe the process for identifying and assessing climate-related risk
and impact.

This allows the reader to understand the process behind the disclosures a company has
made with regards to strategy and risk.

Risk management

Describe the processes for managing climate-related risks and impact
and provide details of the mitigation / management techniques used.

The management techniques enable the reader to understand how the organisation is
mitigating the risks it is presented with, transparently reporting tools used and thestakeholders they have engaged with.

Integration with current
risk process

Disclose how the climate-related risk (CRR) management process is
integrated into the overall risk management process.

This illustrates how the issue of climate risk is considered an integral part of the overall risk
management process.

Disclosing climate-related metrics

Disclose the key metrics used to measure and manage climate-relatedrisks and opportunities including core cross-industry metrics listed by the
TCFD.

This will provide the reader with the quantitative detail of the company’s impact on the
climate and climate-related impacts on the company, as well as showing how this haschanged through time.

Disclosing scope 1, 2 and 3
greenhouse gas emissions

Report scope 1, 2 and 3 greenhouse gas emissions (GHG).

This will enable the reader to understand the current climate-related impact of theorganisation and allow them to compare this against their peers.

Setting climate-related targets andreporting on performance

Disclose the targets (and related progress) the company uses to manage
climate-related risks and opportunities.

This will provide the reader with information on how proactive the company is being withregards to reducing its climate-related impact, and whether they are on track to achieve theirinterim and long-term targets.

Board oversight on
climate change

GovernanceManagement oversight on climatechangeStrategy

RiskManagement

Metrics andTargets

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November 2022

Tips to make your reporting more effective
G

S

RM

M&T

Basic reporting tips

Intermediate reporting tips

Advanced reporting tips

Briefly mention board member climate-related competencies,
and state that future training is required.

Outline a more detailed training plan with a timeline and, if applicable, discussprevious training completed.

Provide a detailed narrative concerning all board members’ climate
competencies and their wider skills/experience.

Mention board-level responsibility for climate change and statethat it is included as an agenda item in board meetings.

Provide detail on the individual/committee responsible for climate change atboard level. Disclose the number and frequency of board meetings with climatechange on the agenda, and exemplify how this has affected strategic decisions.

Provide detailed examples of how the assessment of climate-relatedrisks/opportunities have affected strategic decisions at board level.

Document how climate-related responsibilities have been
assigned to executive-level committees or individuals.

Explain the associated organisational structure and how management reports toProvide detailed disclosure on how executive remuneration is linked tothe board on these matters. Mention that executive remuneration is linked toclimate-related objectives e.g. carbon emissions targets, KPIs, time
climate-related objectives. Disclose the climate-related competency of theframes etc.
executive management team.

Disclose the physical and transition risks and opportunities andassociate them with different time horizons.

Provide a materiality assessment of the risks and opportunities identified andDetail the financial impact (i.e. in terms of cost) and align the time horizons
ensure that the associated time frames align with the long-term nature of climate
considered with the Paris Agreement i.e. 2030 and 2050.
change (i.e. short term, medium term and long term).

Identify climate-related impacts on the organisation and provide
a brief discussion over the impact of the organisation on the
climate.

Provide a detailed discussion on climate-related impacts on the organisation,and on the impact of the organisation on the climate. Disclose a transition plan
covering each of the TCFD pillars.

Link the climate-related impacts identified to financial performanceindicators e.g. costs, revenue, liabilities, assets. Provide a detailedtransition plan, anchored in quantitative elements, including actionable andspecific initiatives.

Disclose the results of your scenario analysis qualitatively.

Disclose the consideration of, and the resilience of the organisation to, one
possible scenario.

Disclose the consideration of, and the resilience of the organisation to, atleast 2 different scenarios, one being <2 degrees C and one being a
stressed scenario.

Disclose how the identification and assessment of risks andimpacts is conducted for your direct operations.

Ensure that the discussion over identification, assessment and management ofrisks and impacts covers the entire value chain.

Discuss how addressing the financial impact of climate-related risks andopportunities is built into your impact assessment process.

Provide details on how risks are managed and mitigated,
including information on engagement with at least one type of
stakeholder.

Provide a more detailed narrative on risk management tools and processes anddisplay engagement with multiple stakeholders.

Provide a detailed narrative on risk management, including the outcomesof stakeholder engagement. Ensure that the financial impacts of the
mitigation methods are captured.

Disclose the operational linkage of climate-related risk
management into the overall risk management process.

Provide a detailed description of how climate risk was integrated into overall risk Ensure that it is detailed that there is full integration into the overall risk
management.
management process, including on a financial level.

Report predominantly straightforward metrics such as scope 1
and 2 emissions and those relating to the direct operations of
the company.

Increase the sophistication of the metrics reported by providing comparatives,normalised metrics (e.g. GHG emissions intensity) and scope 3 emissions data.

Incorporate metrics concerning the value chain which are sophisticatedand forward looking, such as Implied Temperature Rise and provide afinancial context.

Produce targets accompanied by a qualitative description ofprogress.

Include targets set over different timeframes, provide quantitative progress andadd accompanying analysis.

Ensure that any GHG emissions reduction targets are science-based andwhether they have been approved by the Science-based Targets Initiative.

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November 2022

Overview of analysis
Governance: analysis of the FTSE 350 companies we reviewed
Our analysis of FTSE 350 companies yielded the following statistics across the range of criteria considered by the Climate Change
Reporting award.
Company disclosure against the governance of climate change has improved since last year, with 94% of companies now allocatingboard-level responsibility for climate change. However, board-level expertise on climate-related issues is still lacking across the
FTSE 350, with less than a quarter of companies identifying the climate-related competencies of board members or referencing any
plan for training on climate change. At the executive level, over three quarters of companies now have assigned responsibility forclimate change, doubling from last year’s analysis, and half of companies link climate-related objectives with executive
remuneration.

49%

75%

Disclose board climate
governance structure,and link this to overall
governance structure.

Describe management’s
climate change
competencies.

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information on board oversight of climate-related issues1

22% disclose information on the role of managementon such issues1

9%Disclose how often the board
discusses climate change
and how information is put
forward for consideration.

7%

Snapshot on global TCD reporting
29% of companies reviewed by the TCFD disclose

19%

Disclose past or future
management climatechange, training plans.

25%

58%
Disclose past or futureboard climate change
training plans.

52%

Describetheboard’s
climatechange competencies.

Describemanagement’s
climate governancestructure, and link thisto overall governancestructure.

Provide at least one
example of how
climate-related
issues have affectedstrategic decisions.

50%
Describe how executive
remuneration is linked toclimate-related objectives.

1 TCFD Status Report 2022

November 2022
7

Overview of analysis (continued)
Strategy: analysis of the FTSE 350 companies we reviewed
Our analysis of FTSE 350 companies yielded the following statistics across the range of criteria considered by the Climate Change
Reporting award.
In keeping with the findings of the TCFD 2022 Status Report, there is widespread compliance with the recommendation to disclose information
on climate-related risks and opportunities, with over 90% of companies identifying multiple examples. However, under 20% of companies aregoing the step further and linking these risks to quantified financial impacts. More than half of companies now disclose that they have
performed quantitative climate scenario analysis. On net zero, Post COP26 in Glasgow, there has been renewed attention and demand forcorporate commitment to reaching net zero emissions in a timeframe that is aligned with the Paris Agreement. This year we have seen that
90% of the FTSE 350 companies included in our analysis have made a commitment to net zero, which is an increase from 70% last year. Outof 90%, over 50% have set science-based targets approved by the Science-Based Targets initiative, and 84% explain their strategy forachieving this target.

49%

55%

Identify physicalrisks and
describe impact.

37%

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Outline atransition plan for
mitigating risks andcapitalising on
opportunities, withcredible targets
set.

74%

Identifytransition risks
anddescribe impact.

47%

60% of the companies reviewed by the TCFD
included information on climate-related issues 1

42%Disclose theorganisation’s
impact on the
climate.

Performed
quantitative
analysis for atleast two scenarios
includinga <2°C scenario.

Snapshot on global TCD reporting

59%

Identify
opportunities
anddescribe impact.

31%

Describe climate
impacts onfinancialperformance andbusiness strategy.

Link risks andopportunities totime horizons.

84%

Have committed to
net zero andexplicitly explain
their strategy forachieving this.

1 TCFD Status Report 2022

November 20228

Overview of analysis (continued)
Risk management: analysis of the FTSE 350 companies we reviewed
Our analysis of FTSE 350 companies yielded the following statistics across the range of criteria considered by the Climate Change
Reporting award.
The risk management of climate change remains a challenging area for companies. 85% of companies
now report that climate change is recognised as a current or emerging risk, and encouragingly, over halfdemonstrate that the management of climate risk is integrated into their risk management processes.
However, less than 20% of companies provide disclosure on the assessment and management of thefinancial implications of climate risk. Climate risk is also increasingly being brought into strategic decision
making. At the board level, over half of companies disclose decisions made by their board in response to
climate-related risks.

50%
Outline in detail their risk
identification process.

26%
Describe engagement andoutcomes with multiple
stakeholders on climate change.

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Snapshot on global TCD reporting
33% of companies disclosed processes for identifying and assessing climate-relatedrisks 1
34% of companies disclosed processes for managing climate-related risks 1
37% of companies disclosed, where relevant, that climate-related risks are integrated
into overall risk management 1

33%
Describe the risk assessment
process, including how themateriality assessment forclimate risk compares to otherrisks.

47%
Identify climate as a current or
emerging risk and also explain
why.

35%
Disclose the process of
mitigation of risks,
including examples.

52%
Integrate climate-related risk into
the overall risk management
processes and explain how.

1 TCFD Status Report 2022

November 2022
9

Overview of analysis (continued)
Metrics and targets: analysis of the FTSE 350 companies we reviewed
Our analysis of FTSE 350 companies yielded the following statistics across the range of criteria considered by the Climate Change
Reporting award.
The metrics and targets section has seen an advancement in disclosure. The vast majority of companies are reporting on
their scope 1, 2 and 3 emissions, including financed emissions for financial institutions. There is still a persistent tendency
to report on simple climate-related metrics, such as GHG emissions, with just under a third of companies reporting
sophisticated metrics (i.e. implied temperature rise) that assess the full scope of their value chain and link metrics tofinancial performance. Encouragingly, over half of companies now report science-based emissions reduction targets
approved by the Science-Based targets Initiative.

37%

45% of companies disclose climate-related targets
47% disclose metrics used to manage climate-relatedrisks and opportunities

44% of companies disclose GHG emissions

24%
Report sophisticatedclimate-related risk
metrics, including
supply-chain, comparatives
and financial metrics.

57%
Disclose science-based net
zero targets, including interim
and long term targets.

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Snapshot on global TCD reporting

60%
Report climate-related
opportunity metrics, including
supply-chain, comparative and,financial metrics.

Disclose scope 1, 2 andupstream scope 3
emissions.

65%
Disclose performanceagainst targets using
quantitative comparatives.

1 TCFD Status Report 2022

November 2022
10

Progression in the FTSE 100
The below selection of this year’s results offers a snapshot of how progress is being made in each area of TCFD.

GovernanceOf the FTSE 100 companies we reviewed:
2022
2021

2022
2021

88%
86%

76%
66%

2022
2021

28%
22%

Have a board-levelcommittee with climatechange oversight.

Describe how management reports to theboard on climate-related responsibilities.

Disclose that board training has taken place.

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November 202211

Progression in the FTSE 100 (continued)
The below selection of this year’s results offers a snapshot of how progress is being made in each area of TCFD.

Strategy
Of the FTSE 100 companies we reviewed:
2022
2021

2022
2021

91%
90%

74%
64%

2022
2021

89%

Identify physical risks and / or opportunities.

Perform climate scenario analysis.

88%

Identify transition risks and / or opportunities.

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November 2022
12

Progression in the FTSE 100 (continued)
The below selection of this year’s results offers a snapshot of how progress is being made in each area of TCFD.

Risk management
Of the FTSE 100 companies we reviewed:
2022
2022
2021

2021

85%

77%
50%

48%

2022
2021

62%
Outline a process for identifying and assessing
climate-related risks across the entire value chain.

48%

Integrate climate-related risk into the overallrisk-management process.

Engage with multiple stakeholders on climate-related issues.
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November 2022
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Progression in the FTSE 100 (continued)
The below selection of this year’s results offers a snapshot of how progress is being made in each area of TCFD.

Metrics and targets
Of the FTSE 100 companies we reviewed:
2022
2021

2022
2021

78%
78%

64%
54%

2022
2021
Disclose scope 1, 2 and 3 emissions

40%

57%
Disclose performance against targets
qualitatively and quantitatively

Disclose science-based net zero targets, includinginterim and long term targets

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1 GovernanceRisk management

Key findings from governance scoring

In 2017, the TCFD recommended that companies disclose the organisation’s governance around climate-related risks and opportunities.
Of the FTSE 350 companies that we assessed, the vast majority of companies allocate board-level responsibility for climate change, however only a quarter referenced the climate-relatedcompetencies of board members or any plan that training on climate change has taken or will take place. Over three quarters of companies indicate responsibility for climate change at
executive level, but fewer include details on how remuneration is linked to climate-related objectives.

Board-level knowledge and training

Board oversight on climate changeManagement oversight on climatechangeOf the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:• 19% described the competencies of one or more board
members in relation to climate change.

• Almost 94% mentioned a board-level committee with climatechange oversight.

• 82% described management’s climate-related
responsibilities and how management reports to the board.

• 25% carried out training for board members on climatechange and related issues.

• 49% disclosed the frequency of board meetings whereclimate change is on the agenda.

• 50% mentioned executive remuneration linked toclimate-related objectives.

• Best performing industry group: financial services*.

• 68% gave multiple examples of how climate-related risks
and opportunities affect strategic decisions made atboard level.

• Best performing industry group: financial services.

• Worst performing industry group: technology
and media.
*Financial services top position is likely due to PRA regulation
strengthening accountability under the senior manager regime.

Excellence in climate change reporting
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and media.

• Best performing industry group: financial services.
• Worst performing industry group: consumer goods.

November 2022
16

Board and management’s knowledge and training

Organisations are expected to provide details of the current competencies of board and management in relation toclimate change, and any past or future training on the subject matter.
This allows the reader to understand the level of climate-related expertise at the highest levels of an organisation, andhow proactive those charged with governance are in upskilling themselves.

Tips to make your reporting
more effective:
Basic
Briefly mention board member
climate-related competencies, and statethat future training is required.

Phoenix Climate Report 2021, pg. 13
We liked how Phoenix describe in detail the
climate training provided to the board,
including details on what was covered ineach session.

Of the FTSE 350 companies we reviewed:

25%

19%
Board

Intermediate
Outline a more detailed training plan witha timeline and, if applicable, discussprevious training completed.

Advanced
Provide a detailed narrative concerning all
board members climate competencies
and their wider skills / experience.

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Briefly describe climatechange competencies.

Disclose past or future climatechange training plans.

9%

7%Management

November 2022
17

Standard Chartered TCFD Report 2021, pg. 15

Standard Chartered’s disclosure
demonstrates their board and executive
team’s climate-related competencies byreporting the initiatives chaired, external
appointments and engagement activities.
For example, their Group Chairman has
been appointment as the Co-Chair of theUnited Nations’ Global Investors for
Sustainable Development Alliance.

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18

Board oversight of climate change

Organisations should document their board’s climate change governance structure. Further, they should disclose thatclimate change is on the agenda at board meetings and provide examples of how climate-related risks / opportunities
have affected strategic decisions.
This enables the reader to understand how climate change is being considered at the board level, and shows how it
affects strategic decision making

Tips to make your reporting
more effective:

NatWest group plc TCFD Report, pg. 13
We liked how NatWest clearly outline howoften the board considered climate-related
matters and provided key insights into thedecisions made on climate-related issues.

Of the FTSE 350 companies we reviewed:

Basic
Mention board-level responsibility for climatechange and state that it is included as anagenda item in board meetings.
Intermediate
Provide detail on the individual / committee
responsible for climate change at board level.
Disclose the number and frequency of board
meetings with climate change on the agenda,
and exemplify how this has affectedstrategic decisions.
Advanced
Provide detailed examples of how theassessment of climate-related risks /opportunities have affected strategic
decisions at board level.
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75%

Disclose board climate
governance structure,and link this to overall
governance structure

49%

Disclose how often theboard discusses climatechange and how
information is put forward
for consideration

52%

Provide at least one
example of how
climate-related issues
have affected strategic
decisionsNovember 2022
19

Aviva plc TCFD Report 2021, pg. 14-15

We liked how Aviva clearly outline that theboard is responsible for climate change, with
examples of actions taken that year. This is
supported by outlining board-levelcommittees and a description of their
responsibilities in relation to climate change.

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November 2022
20

Management oversight of climate change

Organisations should explain which executives are responsible for climate change, and how executive
remuneration is aligned to climate-related objectives.

Mondi Group Integrated Report 2021, pg. 61

This enables the reader to understand who is responsible for climate change at the executive level anddemonstrates whether actions are taken to align management incentives to climate-related objectives.

Tips to make your reporting
more effective:
Basic
Document how climate-related responsibilities
have been assigned to executive-level committees
or individuals.
Intermediate
Explain the associated organisational structure and how
management reports to the board on these matters.
Mention that executive remuneration is linked toclimate-related objectives. Disclose the climate-relatedcompetency of the executive management team.
Advanced
Provide detailed disclosure on how executive
remuneration is linked to climate-related objectives e.g.
carbon emissions targets, KPIs, time frames etc.

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We liked how Mondi disclosed which
management groups are responsible forclimate change and how they report into
board-level committees.

Of the FTSE 350 companies we reviewed:

58%

Describemanagement’s climate
governance structure,and link this to overall
governance structure.

50%

Describe how executive
remuneration is linked
to climate-related
objectives.

November 2022
21

Shell plc Annual Report and Accounts 2021, pg. 172-175

We liked how Shell clearly outline how
executive remuneration (including both annual
bonus and the long-term incentive) is
calculated, clearly explaining how thedecisions are made and how they link toclimate-related objectives.

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November 2022
22

2 Strategy
Risk management

Key findings from strategy scoring

In 2017, the TCFD recommended that companies disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial
planning where such information is material over the short, medium and long-term.
Of the FTSE 350 companies that we assessed, the vast majority identified multiple material climate-related risks and opportunities and categorised them as physical and transition risk-related.
Most companies aligned these risks and opportunities with time horizons associated with global climate goals, however few linked them to quantified financial impacts. The vast majority (90%)
have now made a net zero commitment, with over half of these having been approved by the Science Based Targets Initiative. Encouragingly over half are now undertaking quantitative
scenario analysis.

Identification of material risks
and opportunities

Disclosure of impacts on andby the businessBusiness resilience to climaterelated risks and opportunities

Of the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:• 49% and 55% of companies identified physical andtransition risks, respectively, and their associated impacts.

• 16% of companies link climate impacts to financial
performance in some way.

• 90% have disclosed commitments to reaching net zero.

• 59% of companies are associating risk and opportunities
with different time horizons.

• 74% of companies discussed the impact of the organisationon the climate.

• Best performing industry group – energy.

• Best performing industry group – energy.

• Worst performing industry group – technology
and media.

• Worst performing industry group – technology
and media.

Excellence in climate change reporting
PwC• 55% have performed quantitative scenario analysis anddescribed the resilience of strategy in each scenario.
• Best performing industry group – energy.
• Worst performing industry group – transportation.

November 2022
24

Identification and impact of material risks and opportunities

Organisations should identify and disclose physical and transition risks and opportunities and link these todifferent time horizons.

Rio Tinto Annual Report 2021, p.79, 82

This provides detail on the specific impacts of climate change on a business and contextualises them in the
short, medium and long-term.

Tips to make your reporting
more effective:
Basic
Disclose the physical and transition risks
and opportunities and associate them withdifferent time horizons.
Intermediate
Provide a materiality assessment of therisks and opportunities identified andensure that the associated time framesalign with the long-term nature of climatechange (i.e. short term, medium term andlong term).
Advanced
Detail the financial impact (i.e. in terms ofcost) and align the time horizons
considered with the Paris Agreement i.e.
2030 and 2050.
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We liked how Rio Tinto clearly outline theirrationale for using different time horizons,
however this could be strengthened byaligning them to Paris-aligned milestones
e.g. 2030 and 2050.

Of the FTSE 350 companies we reviewed:

49%

Identify
opportunities
and describe
impactIdentify
physical risks
and describe
impact42%

55%

Link risks
andopportunities
to timehorizons

Identifytransition
risks and
describe
impact59%

November 2022
25

Vesuvius Annual Report 2021, pg. 62-63

We liked how Vesuvius clearly outline theirtime horizons, explaining their reason forchoosing them, and how they quantitatively
and qualitatively present the impacts ofclimate-related risks and opportunities.

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26

Double materiality, net zero and transition plans

Organisations should identify the impacts of climate-related risks and opportunities on their business, strategy andfinancial planning. Moving beyond TCFD, leading practice touches on also disclosing the impact of the organisation on
climate.
This makes it clear what the impact of climate-related risks and opportunities could be, and also to what extent theorganisation itself is contributing to climate change.

Tips to make your reporting
more effective:
Basic
Identify climate-related impacts on theorganisation and provide a brief
discussion over the impact of theorganisation on the climate.
Intermediate
Provide a detailed discussion on climaterelated impacts on the organisation, andon the impact of the organisation on the
climate. Disclose a transition plan
covering each of the TCFD pillars
Advanced
Link the climate-related impacts identified
to financial performance indicators e.g.
costs, revenue, liabilities, assets. Provide
a detailed transition plan, anchored inquantitative elements, including
actionable and specific initiatives.
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Rio Tinto Annual Report 2021, p.79, 82
We like how Rio Tinto recognise that theiractivities have the potential to cause harm,and disclose their emissions by productgroup and source.

Of the FTSE 350 companies we reviewed:

74%

84%

37%

Disclose theorganisation’s impact
on the climate.

Have committed to
net zero and briefly
explain theirstrategy forachieving this.

Outline a transition
plan for mitigating
risks andcapitalising on
opportunities, withcredible targets set.

November 2022
27

Legal & General Group Plc 2021 Climate Report, pg. 9, 37

We liked how Legal & General clearly outline
their net zero commitment across theiroperational and financed emissions, andprovide a roadmap with milestones to 2050
across their three strategic pillars 'Invest','Influence' and 'Operate'.

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28

Business resilience to climate-related risks and opportunities

Organisations should disclose whether they have performed climate scenario analysis, how they performed it, and how
their resilience is impacted under various scenarios.
This illustrates the organisation’s preparedness in considering its resilience under multiple future scenarios.

Tips to make your reporting more effective:
Basic
Disclose the results of your scenario analysis
qualitatively.

Landsec Annual Report 2022, pg. 68-69
We liked how Landsec succinctly
address the impact of climate issues
on financial planning and on the resilienceof their strategy and business model,
providing more detail throughout theirannual report.

Of the FTSE 350 companies we reviewed:

47%

31%

Performed quantitative
analysis for atleast two scenarios
including a<2°C scenario.

Describe how climate
impacts financial
performance andbusiness strategy.

Intermediate
Disclose the consideration of, and the resilience ofthe organisation to, one possible scenario.

Advanced
Disclose the consideration of, and the resilience ofthe organisation to, at least 2 different scenarios,
one being <2 degrees C and one being a stressed
scenario.

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29

Schroders TCFD Report 2021, pg. 17-21

We liked how Schroders use a variety ofmethods to quantitatively illustrate theresults from scenario analysis. Some
examples on this page include aggregatedvalue at risk by sector and geography,transition risk exposure by sector, value atrisk by investment strategy under multiple
scenarios, and modelled impact of physicalrisk on the market value of financial assets.

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3 Risk management
Risk management

Key findings from risk management scoring

In 2017, the TCFD recommended that companies disclose how they identify, assess and manage climate-related risks as well as how they integrate climate-related risks into wider enterprisemanagement frameworks.
Of the FTSE 350 companies that we assessed, 85% of companies recognised climate change as a current and / or emerging risk, but only 47% of them clearly explain why. Over half
integrated climate-related risks into high-level assessment of other risks. However, few companies go on to identify the potential financial impacts of climate-related risks and disclose mitigation
measures around these.

Risk identification, assessmentand management

Engagement with stakeholders

Integration with current risk process

Of the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:• 40% provided a good narrative on the processes for
identifying, assessing and managing climate-related risks
across the entire value chain.

• 60% described engagement with multiple stakeholders(including suppliers, customers, industry groups or policy
makers).

• 52% demonstrate that the management of climate risk isfully integrated into their risk management process.

• 85% classified climate as a current or emerging risk.

• Best performing industry group: energy.

• Best performing industry group: energy.

• Worst performing industry group: consumer goods.

• Best performing industry group: energy.
• Worst performing industry group: technology and media.

• Worst performing industry group: technology and media.

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Risk identification, assessment and management

Organisations should describe the process for identifying, assessing and managing climate-related risks and impacts.
This allows the reader to understand the process behind the disclosures made by organisations with regards to strategy
and risk. The management techniques enable the reader to understand how the organisation is mitigating the risks it ispresented with.

Tips to make your reporting
more effective:
Basic
Disclose how the identification andassessment of risks and impacts is
conducted for your direct operations.
Intermediate
Ensure that the discussion overidentification, assessment andmanagement of risks and impacts
covers the entire value chain.
Advanced
Discuss how addressing the financial
impact of climate-related risks andopportunities is built into your impact
assessment process.
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Standard Chartered TCFD Report 2021, pg. 37
We liked how Standard Chartered outline
and describe the tools they use to identify
and assess climate-related risks andopportunities.

Of the FTSE 350 companies we reviewed:

50%

33%

Outline in detail their risk Describe the risk
identification process.
assessment process,including how themateriality assessment
for climate risk
compares to other risks.

35%

Disclose the processof mitigation ofrisks, including
examples.

November 2022
33

Abrdn TCFD Report 2021, pg. 20-21 and Abrdn Sustainability Report
2021 pg. 79

We liked how Abrdn visualise its assessmentof the importance of climate change for thecompany and its stakeholders, and how they
provide examples for how they manage
climate-related risks and opportunities.

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34

Engagement with stakeholders

Organisations should describe how they are engaging with stakeholders on climate change.

ITV plc Annual Report and Accounts 2021, pg. 107-113

For many organisations, a large proportion of their environmental impact will be through their value chain and financing
activities. Engaging with stakeholders demonstrates the importance of climate action to an organisation, as it shows they
are going above and beyond to influence activities outside of their own operations.

Tips to make your reporting more effective:

Basic
Provide details on how risks are managed andmitigated, including information on engagementwith at least one type of stakeholder.

Of the FTSE 350 companies we reviewed:

60%

26%

Describe engagementwith multiple
stakeholders on
climate change.

Describe engagement
and outcomes withmultiple stakeholders
on climate change.

We liked how ITV incorporate their climate
engagement with stakeholders through theirusual stakeholder engagement channels. We
also liked the clarity with which they report,
including how they engage with stakeholders,
what is important to them, and what actions
have been taken off the back of this.

Intermediate
Provide a more detailed narrative on risk
management tools and processes and display
engagement with multiple stakeholders.

Advanced
Provide a detailed narrative on risk management,
including the outcomes of stakeholder engagement.
Ensure that the financial impacts of the mitigation
methods are captured.

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35

Countryside Properties Sustainability Report 2021, pg. 34-36

We liked how Countryside Properties clearly
describe how they engaged with various
stakeholders and what the outcomes andactions were following engagement.

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November 2022
36

Integration with current risk management process

Organisations should disclose how climate-related risk management is integrated into the overall risk management
process.
This illustrates how the issue of climate risk is now considered an integral part of the overall risk management process.

Tips to make your reporting more effective:

Basic
If applicable, disclose the operational linkage ofclimate-related risk management into the overall risk
management process.

Intermediate
Provide a detailed description of how climate risk was
integrated into overall risk management.

Advanced
If applicable, ensure that it is detailed that there is full
integration into the overall risk management process,including on a financial level.

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Of the FTSE 350 companies we reviewed:

47%

Identify climate as acurrent or emerging
risk and explain why.

BT Group plc Annual Report 2021, pg. 58
We liked how BT clearly explain how climate
considerations impact some of their otherrisks. For example, they describe how climate
is an element of stakeholder management risk,
and that climate needs to be addressed toeffectively manage stakeholder management
risk.

52%

Integrate climate-related
risk into the overall risk
management processes
and explain how.

November 2022
37

Unilever Annual Report and Accounts 2021, pg. 46-47, 57

Unilever clearly articulate thatclimate-related risks are treated as any otherprincipal risk. This means thatclimate-related risks are reviewed andassessed formally at least annually, and thatthe board is accountable for the
management of these in the same way asother risks. We also liked the detailed
description of why Unilever considers
climate change to be a principal risk.

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November 2022
38

4 Metrics and targets

Key findings from metrics and targets scoring

In 2017, the TCFD recommended that companies disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information ismaterial. Updated metrics and targets guidance was released in 2021 and explored further in section 5 of this report.
Of the FTSE 350 companies that we assessed, the majority reported on their scope 1, 2 and 3 greenhouse gas emissions. Corporates more commonly disclosed scope 3 emissions, withfinancial institutions falling behind all other industries apart from transportation. Most companies also report performance against targets they have set. However, only 37% of companies reportsophisticated climate-related metrics, such as implied temperature rise, assessing the full scope of their value chain or linking metrics to financial performance.

Disclosing climate-related metrics

Setting climate-related targets

Reporting on performance

Of the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:

Of the FTSE 350 companies we assessed:• 80% reported scope 1,2 and 3 emissions.

• 57% disclosed science-based targets linked
to broader goals such as net zero or thecompany’s strategy.

• 65% described the performance of the company
on climate, using comparatives.

• 37% identified and reported on sophisticatedclimate-related metrics that were not straightforward
greenhouse gas emissions.
• Best performing industry group: agriculture, food,and forest products.

• Best performing industry group: agriculture, food, andforest products.

• Best performing industry group: financial services.
• Worst performing industry group: materials and buildings.

• Worst performing industry group: transportation.

• Worst performing industry group: transportation.

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Disclosing climate-related metrics

Disclose a range of climate and sustainability-related metrics, including GHG emissions. This will provide the reader with
the quantitative detail of the company’s impact on the environment and climate, as well as showing how this has changed
through time.

Tips to make your reporting more effective:

Basic
Report predominantly straightforward metrics such as
scope 1 and 2 emissions and those relating to the direct
operations of the company.
Intermediate
Increase the sophistication of the metrics reported byproviding comparatives, normalised metrics (e.g. GHG
emissions intensity) and scope 3 emissions data.

Advanced
Incorporate metrics concerning the value chain which
are sophisticated and forward looking, such as implied
temperature rise and provide a financial context.

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Of the FTSE 350 companies we reviewed:

37%

Report sophisticatedclimate-related risk
metrics, including
supply-chain,comparatives andfinancial metrics.

Legal & General TCFD Report, pg. 37-42
We liked how Legal & General provide
definitions of the metrics they have selected intheir reporting. Also, Legal & Generaltransparently disclose their portfolios’ implied
temperature rise to provide a comparative of
their current performance to industry
expectations.

60%

Disclose scope
1, 2 and upstream
scope 3 emissions.

November 2022
41

United Utilities Annual Report 2021 and Sustainability Report 2021,
pg. 92-99

United Utilities’ disclosure clearly breaks
down scope 3 emissions across a variety ofsources. We liked how they display current
emissions next to their Science-based
Targets Initiative baseline and how theyshow the breakdown of these sources
visually. They also use sophisticated metrics
in their reporting.

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Setting climate-related targets and reporting on performance

Disclose the targets (and related progress) the company uses to manage climate-related risks and opportunities. This will
provide the reader with information on how proactive the company is being with regards to reducing its climate impact,
and whether they are set to reach their targets.

Tips to make your reporting more effective:

Basic
Produce targets accompanied by a qualitativedescription of progress.

Intermediate
Include targets set over different timeframes, provide
quantitative progress and add accompanying analysis.

Advanced
Ensure that any GHG emissions reduction targets are
science-based and whether they have been approvedby the Science-based Targets Initiative. Extend theaccompanying narrative.
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Shell Strategic Report, pg. 88 - 96
We liked how Shell visually display theircarbon-related targets. Their reporting also
displays actions and progress for each of thetargets included in their report.

Of the FTSE 350 companies we reviewed:

57%

Disclose science-based
net zero targets,
approved by the
Science-based Targets
Initiative including interim
and long term targets.

65%

Disclose performanceagainst targets using
quantitative comparatives.

November 2022
43

Unilever Annual Report and Accounts 2021, pg. 52-53

Unilever’s TCFD report includes
comprehensive climate targets for GHG acrossscope 1, 2 and 3 for short, medium andlong-term horizons. Targets are centred on thegoal to reach operational net zero by 2030
and net zero across the full value chain by
2039. The goal has been approved by the
Science Based Targets Initiative. Disclosure
also clearly displays improvements inperformance and demonstrates that theactions Unilever are taking are leading to real
reductions in their carbon emissions.

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44

5Spotlight on meeting the
updated TCFD guidanceMeeting the TCFD’s expectations on transition plans

This section explores what a transition plan is, the characteristics of a good transition plan, and leading practice examples from the FTSE 350.
In October 2021, the TCFD released detailed guidance on the disclosure of transition plans. This was followed by the UK Government announcing a roadmap
towards mandatory transition plan disclosure for asset managers, regulated asset owners and UK-listed companies from 2023. The Glasgow Financial Alliancefor net zero has also released draft guidance on what a credible transition plan looks like for both financial institutions and real economy firms. Out of the FTSE
350, only 37% disclosed a transition plan including metrics and targets within their reporting. This highlights that greater focus is needed in this area to meetrequirements.

37%

Disclosed a transition
plan which included
metrics and targets.

What are transition plans?

What makes a good transition plan?

• A transition plan is part of an organisation’s overallbusiness strategy that explains how the organisation
will achieve their climate-related targets.
• A transition plan should include specific actions,such as reducing GHG emissions to make it
actionable and accountable.
• Transition plans can also help to underline thecredibility of an organisation’s commitments,
by including interim targets on the organisation’s
pathway towards achieving them.

The transition plan should:• Display that the board has oversight of the transition plan, including the approval process and oversight
responsibilities within the organisation.
• Cover each TCFD pillar (governance, strategy, risk management and metrics and targets).
• Include quantitative metrics and targets, designed to display progress, as well as actionable initiatives to keep theorganisation accountable for their annual progress.
• Have enough detail to enhance the credibility of the organisation, for example describing current capabilities andtechnologies, as well as outlining current limitations such as scope 3 GHG emissions data, where relevant.
• Show consideration and integration of physical and transition risks and opportunities and provide narrative on how
these will be addressed.
• Include a description of the reporting framework and the review and update processes.
• Show consideration around the organisation’s wider influence e.g. with suppliers and stakeholders.

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Standard Chartered Bank, TCFD report, pg. 22 - 24, and Net Zero
Approach – Methodological White Paper pg. allStandard Chartered’s disclosure shows theirpathway to net zero by 2050 for theirportfolio, including 2030 interim targets forkey sectors. Their disclosure also displays
how they will transition key high carbon
sectors through their Transition Finance
Framework. In addition, Standard
Chartered’s Methodological white paper
provides further narrative, including
quantitative targets for reducing financed
emissions for key sectors including oil andgas, metals and mining and power.

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Advancing metrics and targets disclosures

In October 2021, the TCFD released detailed guidance on
advancing expectations on disclosing metrics and targets. This
included a deep dive on metrics and targets for financial
services groups as well as cross-sectoral metrics and targets
to allow effective economy-wide and sectoral comparison.

Expectations are advancing in the financial sector for metrics disclosure

Metrics

GHG emissions

Banks• Metrics used to assess the impact of climate-related risks
on their lending and intermediary business activities e.g.
climate value-at-risk or probability of default.
• Percentage of carbon-related assets relative to total assets.
• Lending and financing connected with climate-related
opportunities.
• Describe 2 degree alignment of their lending and otherfinancial intermediary business activities, through metrics
such as implied temperature rise.

• Banks should disclose GHG emissions fortheir lending and other financial
intermediary business activities where data
and methodologies allow.

Insurance• Provide aggregated risk exposure to weather-related
catastrophes.
• Describe 2 degree alignment of their underwriting businessthrough metrics such as implied temperature rise.

• Disclose weighted average carbon intensity
or GHG emissions associated withcommercial property and speciality lines ofbusiness where methodology anddata allows.

Asset owners
and asset
managers• Metrics used to assess risks and opportunities for each fund • GHG for assets they own and weighted
or investment strategy e.g. investments in green assets.
average carbon intensity for each fund orinvestment strategy where methodologies• Metrics considered in investment decisions and monitoring.
and data allows.
• Describe 2 degree alignment of their funds and investment•
Carbonfootprinting metrics they consider
strategies through metrics such as implied temperature rise.
useful for decision making.

What are the cross-sectoral
metrics expected by the TCFD?
Example metrics are focused on the following areas:• GHG Emissions Absolute scope 1, scope 2,
and scope 3, emissions intensity.
• Transition risks.
• Physical risks.
• Climate-related opportunities.
• Capital deployment.
• Internal carbon prices.
• Remuneration.

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Aviva, TCFD Report pg. 57-63

Aviva include metrics which are
sophisticated and forward looking. They use
weighted average carbon intensity wheredata and methodologies allow and also
provide details on the alignment of theirportfolio to 2 degrees. Furthermore, they
provide metrics associated withclimate-related opportunities, and also
provide comparatives for the metrics they
disclose to display progress over time.

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For more information contact…

…and refer to other relevant
reporting and analysis,
available online

PwC Net Zero
EconomyIndex 2022
Jon Williams

Leanne Bouvet

Debora Rexho

E: jon.d.williams@pwc.com

E: leanne.bouvet@pwc.com

E: debora.rexho@pwc.com

M: +44 (0) 7595 609 666

M: +44 (0) 7483 440 137

M: +44 (0) 7843 331 255

TCFD 2022
Status Report

Excellence in sustainability reporting
2022 – A review of leading UK
companies

David Fuhrmann

Katie Turnbull

E: david.fuhrmann@pwc.com

E: katie.turnbull@pwc.com

M: +44 (0) 7483 400 541

M: +44 (0) 7483 944 116

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November 2022
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Thank you

pwc.co.uk

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