Implementing the
Recommendationsof the Task Forceon Climate-related
Financial Disclosures
December 14, 2016

Contents

A Introduction

1

1. Background2

2. Structure of Recommendations

3

3. Application of Recommendations

5

B Recommendations

6

C Guidance for All Sectors

9

1. Governance10

2. Strategy

11

3. Risk Management12

4. Metrics and Targets

13

5. Alignment of Recommended Disclosures with Other Frameworks

14

D Supplemental Guidance for the Financial Sector

16

1. Banks

18

2. Insurance Companies

24

3. Asset Owners

30

4. Asset Managers

37

E Supplemental Guidance for Non-Financial Sectors

43

1. Energy46

2. Transportation

59

3. Materials and Buildings

71

4. Agriculture, Food, and Forest Products

83

F Fundamental Principles for Effective Disclosure
Appendices
Appendix 1: Climate-Related Risks and Opportunities

95
99
100

Appendix 2: Glossary and Abbreviations

102

Appendix 3: References

105

Recommendations of the Task Force on Climate-related Financial Disclosures

B

A	Introduction

A Introduction
1. Background
In December 2015, the Financial Stability Board (FSB) established an industry-led Task Forceon Climate-related Financial Disclosures (TCFD or Task Force) to develop climate-related
disclosures that “could promote more informed investment, credit [or lending], and insurance
underwriting decisions” and, in turn, “would enable stakeholders to understand better theconcentrations of carbon-related assets in the financial sector and the financial system’s
exposures to climate-related risks.”1,2
To fulfill its remit, the Task Force developed a framework with four widely adoptable
recommendations on climate-related financial disclosures applicable to organizations acrosssectors, as described in the Task Force’s report—Recommendations of the Task Force on
Climate-related Financial Disclosures.

The Task Force developed this Annex for use by organizations
in developing climate-related financial disclosures consistent with
its recommendations.

A
Introduction
B
Recommendations

The Annex contains the following information:C

directions on the application of the recommendations;

Guidance for All Sectors

■■

D

■■

recommendations and supporting recommended disclosures that describe information

Supplemental Guidance
for the Financial Sector

that investors, lenders, and insurance underwriters need to make economic decisions;guidance to assist preparers by providing context and suggestions for implementing the■■E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendicesrecommended disclosures;
supplemental guidance that highlights important sector-specific considerations for the■■financial sector and non-financial sectors potentially most affected by climate change; andalignment of the recommended disclosures with other frameworks.

■■

The Task Force’s recommended disclosures solicit information that is primarily forwardlooking, which reflects the Task Force’s desire to improve climate-related financial disclosures
where appropriate and further develop the limited disclosure of financial risks posed byclimate-related impacts. In addition, the Task Force recommends that preparers of climaterelated financial disclosures provide such disclosures in their mainstream (i.e., public)
financial filings. The Task Force believes publication of climate-related financial informationin mainstream financial filings will create a wider user base of such disclosures and, in turn, awider understanding of organizations’ climate-related risks and opportunities, including acrossthe financial sector.
The Task Force believes its work provides a foundation for climate-related financial disclosuresthat is flexible enough to accommodate evolving practices. The Task Force’s recommendations
aim to be ambitious, but also practical for near-term adoption.

1

2

FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks.” November 9, 2015.
www.fsb.org/wp-content/uploads/Disclosure-task-force-on-climate-related-risks.pdf.
The term carbon-related assets is not well-defined, but is generally considered to refer to assets or organizations with relatively highdirect or indirect GHG emissions. The Task Force believes further work is needed on defining carbon-related assets and their potential
financial impacts.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

22. Structure of Recommendations
The Task Force developed four widely adoptable recommendations that are supported by key
climate-related financial disclosures—referred to as recommended disclosures. In addition,
there is guidance to support all organizations in developing disclosures consistent with therecommendations as well as supplemental guidance for specific sectors. This structure is
depicted in Figure 1 below.

Figure 1

Recommendations and Guidance

Recommendations

A

Guidance for
All Sectors

Introduction
B
Recommendations

Recommended
Disclosures

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E

Supplemental
Guidance for
Certain Sectors

Recommendations
Four widely adoptable recommendations tied
to: governance, strategy, risk management, andmetrics and targets
Recommended Disclosures
Specific recommended disclosures organizations
should include in their financial filings to provide
decision-useful information
Guidance for All Sectors
Guidance providing context and suggestions for
implementing the recommended disclosures forall organizations
Supplemental Guidance for Certain Sectors
Guidance that highlights importantconsiderations for certain sectors and provides
a fuller picture of potential climate-­related
financial impacts in those sectors
Supplemental guidance is provided for thefinancial sector and for non-financial sectors
potentially most affected by climate change

Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

3

The Task Force developed supplemental guidance to assist preparers in the financial sector andother sectors potentially most affected by climate change and the transition to a low-carbon
economy. Figure 2 provides a mapping of the recommendations (governance, strategy, etc.)
and recommended disclosures (a, b, c) for which supplemental guidance was developed to therelevant industries and groups in the financial and non-financial sectors.

Figure 2

Supplemental Guidance for Financial and Non-financial Sectors
GovernanceIndustries and Groups

A

B

Strategy

A

B

C

n

Banks

Risk
Management

Metrics andTargets

A

A

B

n

C

B

n

n n n nn

Asset Owners

n n n nn nIntroduction

Asset Managers

n

n n

n n

B

Energynnn nFinancial

Insurance
Companies

Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Non-Financial

A

n

C

Transportation

n n

n n n

Materials andBuildings

n n

n n n

Agriculture, Food,and Forest Products

n n

n n n

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

4

3. Application of Recommendations
a. Who should disclose?
To promote more informed investing, lending, and insurance underwriting decisions, theTask Force recommends all financial and non-financial organizations with public debt orequity implement its recommendations. Because climate-related risks and opportunities are
relevant for organizations across all sectors, the Task Force encourages all other organizations
to implement these recommendations as well. In addition, the Task Force believes that asset
managers and asset owners, including public- and private-sector pension plans, insurancecompanies, endowments, and foundations, should implement its recommendations.
b. Where should preparers disclose?
Preparers of climate-related financial disclosures should provide such disclosures in theirmainstream (i.e., public) financial filings. The Task Force recognizes that organizations may
want more experience with scenario analysis before including such information in financial
filings. While disclosure in mainstream financial filings should be the ultimate goal of preparers,
disclosure related to scenario analysis via other forms (e.g., website, sustainability report) may
be an interim step on the path to disclosure in mainstream financial filings.
A
Introduction

Asset owners and asset managers should report to their beneficiaries and clients, respectively,Bthrough their existing means of financial reporting, where relevant and where feasible. Assetowners and asset managers are also encouraged to disclose publicly via their websites or other

Recommendations

public avenues of disclosure (e.g., sustainability or annual reports).

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendicesc. Who should review climate-related financial disclosures?
Because these disclosures should be included in mainstream financial reports or other public
documents, the governance processes should be similar to those used for existing publicfinancial disclosures and would likely involve review by the chief financial officer and audit
committee as appropriate. For those organizations that do not have publicly traded debt orequity securities, including some asset managers and asset owners, these climate-related
financial disclosures should follow similar review and approval protocols currently used bythose organizations for similar communications.
d. What should preparers do if they choose to omit a recommended disclosure?
In the case a recommended disclosure is not made, preparers should provide their rationale
for omitting the disclosure.
e. What reporting period should preparers use?
Preparers should report information for the same period covered by their mainstream financial
reports.
f. How should preparers define short, medium, and long term?
The Task Force is not specifying time frames for short, medium, and long term given that thetiming of climate-related impacts on businesses will vary. Instead, the Task Force recommends
that preparers define the time frames according to the life of their assets, the profile ofthe climate-related risks they face, and the sectors and geographies in which they operate.
For non-financial organizations, this is likely the useful life of the asset. For financial sector
organizations, this is likely the tenor of financial assets, taking into consideration that tenor
may be affected by potential liquidity risks.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures5

B Recommendations

B Recommendations
The Task Force’s recommendations are structured around four thematic areas that are coreelements of how organizations operate—governance, strategy, risk management, and metrics
and targets (Figure 3). The four overarching recommendations are supported by key climaterelated financial disclosures—referred to as recommended disclosures—that build out theframework with information that will help investors and others understand how reportingorganizations think about and assess climate-related risks and opportunities as described in
Figure 4 (p. 8).
To underpin its recommendations and help guide current and future developments in climaterelated financial reporting, the Task Force developed seven principles for effective disclosure,which are included in Section F. When used by organizations in preparing their climate-related
financial disclosures, these principles can help achieve high-quality and decision-useful
disclosures that enable users to understand the impact of climate change on organizations.
The Task Force encourages organizations adopting its recommendations to consider theseprinciples as they develop their climate-related financial disclosures.
A
Introduction

Figure 3

Core Elements of Recommended Climate-Related Financial Disclosures

B
Recommendations
C
Guidance for All Sectors

GovernanceD
Supplemental Guidance
for the Financial Sector

StrategyE
Supplemental Guidancefor Non-Financial Sectors

RiskManagementF undamental Principles
F
for Effective Disclosure
Appendices

Metrics
and Targets

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

An important aspect of the Task Force’s recommended disclosures is their inclusion inorganizations’ mainstream (i.e., public) financial filings. Publication of climate-related financial
information in mainstream financial filings will help to ensure that appropriate controls govern
the production and disclosure of the required information. Further, users of climate-related
financial disclosures will be able to access current information in a timely way, as mainstream
financial filings require publication at least annually.
Some of the Task Force’s recommended disclosures are line item disclosures and some involvean assessment of materiality. The Task Force believes it is important to an understandingof an organization’s financial and operating results to have insight into the governance andrisk management context in which such results are achieved. The recommended disclosuresrelated to governance and risk management directly address this need for context. For therecommended disclosures that involve an assessment of materiality, organizations should
determine materiality for climate-related issues consistent with how they determine themateriality of other risks affecting their business and consistent with their financial filing
requirements. The Task Force cautions organizations against prematurely concluding thatclimate-related risks and opportunities are not material based on perceptions of the longerterm nature of some climate-related risks.
Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

7

Figure 4

Recommendations and Supporting Recommended Disclosures
Governance

Strategy

Risk Management

Metrics and Targets

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

Disclose the actual andpotential impacts of climate-­
related risks and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Disclose how the organization
identifies, assesses, andmanages climate-­related risks

Disclose the metrics andtargets used to assess andmanage relevant climate-­
related risks and opportunities.

Recommended Disclosures

Recommended Disclosures

Recommended Disclosures

Recommended Disclosuresa)	Describe the board’s oversightof climate-­related risks andopportunities.

a)	Describe the climate-­related risks
and opportunities the organization
has identified over the short,medium, and long term.

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

a)	Disclose the metrics used by theorganization to assess climate-­
related risks and opportunities
in line with its strategy and risk
management process.

b)	Describe management’s role inassessing and managing climate-­
related risks and opportunities.

b)	Describe the impact of climate-­
related risks and opportunities
on the organization’s businesses,
strategy, and financial planning.

b)	Describe the organization’s
processes for managing climate-­
related risks.

b)	Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhousegas (GHG) emissions, and the relatedrisks.

c)	Describe the potential impact ofdifferent scenarios, including a
2°C scenario, on the organization’s
businesses, strategy, and financial
planning.

c)	Describe how processes for
identifying, assessing, and managing
climate-­related risks are integrated
into the organization’s overall risk
management.

c)	Describe the targets used by theorganization to manage climate-­
related risks and opportunities andperformance against targets.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

8C	Guidance for
All Sectors

C Guidance for All Sectors
The Task Force developed guidance to support all organizations in developing climate-related
financial disclosures consistent with its recommendations and recommended disclosures.
The guidance assists preparers by providing context and suggestions for implementing therecommended disclosures.

1. Governance
Investors, lenders, insurance underwriters, and other users of climate-related financial
disclosures (collectively referred to as investors and other stakeholders) are often interested
in understanding the role an organization’s board plays in overseeing climate-related risks
and opportunities (also referred to as climate-related issues) as well as management’s role inassessing and managing climate-related issues. 3 Such information supports users’ evaluationsof whether material climate-related issues receive appropriate board and management
attention.
A

GovernanceIntroduction

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

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, andE
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related
issues, and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

3

Climate-related risks can be divided into two major categories: transition risks and physical risks. See Tables A1 and A2 (pp. 100-101)
for more information.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

10

2. Strategy
Investors and other stakeholders need to understand how climate-related issues may affect anorganization’s businesses, strategy, and financial planning over the short, medium, and longterm. Such information is used to inform expectations about the future performance of anorganization.

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

A

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium, andlong term) that could have a material financial impact on the organizationand distinguish whether the climate-­related risks are physical ortransition risks, and–– a description of the process(es) used to determine which risks andopportunities could have a material financial impact on the organization.

Introduction

Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose
how identified climate-­related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:–– Products and services

F–– Supply chain and/or value chain

 undamental Principles
F
for Effective Disclosure–– Adaptation and mitigation activities

Appendices–– Operations (including types of operations and location of facilities)–– Investment in research and development
Organizations should describe how climate-­related issues serve as an
input to their financial planning process, the time period(s) used, and how
these risks and opportunities are prioritized. Organizations’ disclosures
should reflect a holistic picture of the interdependencies among thefactors that affect their ability to create value over time. Organizations
should also consider including in their disclosures the impact on financial
planning in the following areas:–– Operating costs and revenues–– Capital expenditures and capital allocation–– Acquisitions or divestments–– Access to capital
If climate-­related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described.

Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

11

3. Risk Management
Investors and other stakeholders need to understand how an organization’s climate-relatedrisks are identified, assessed, and managed and whether those processes are integrated inexisting risk management processes. Such information supports users of climate-related
financial disclosures in evaluating the organization’s overall risk profile and risk management
activities.

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks andA
Introduction–– definitions of risk terminology used or references to existing risk
classification frameworks used.

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

12

4. Metrics and Targets
Investors and other stakeholders need to understand how an organization measures andmonitors its climate-related risks and opportunities. Access to the metrics and targets usedby an organization allows investors and other stakeholders to better assess the organization’s
potential risk-adjusted returns, ability to meet financial obligations, general exposure toclimate-related issues, and progress in managing or adapting to those issues.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.
A

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E

Recommended
Disclosure b)
Disclose Scope 1, Scope 2,
and, if appropriate,
Scope 3 greenhouse gas(GHG) emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks.4

Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.

Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions. 5
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios.6

In describing their targets, organizations should consider including thefollowing:–– whether the target is absolute or intensity based,–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.
Where not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted moresignificantly by transition risk than other organizations. In addition, current or future constraints on emissions, either directly byemission restrictions or indirectly through carbon budgets, may impact organizations financially.
5
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
6
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used. See sector-specificsupplemental guidance for more information.
4

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

13

5. Alignment of Recommended Disclosures with Other Frameworks
Governance Recommended Disclosures with Other Frameworksa)b)

G20/OECD Principles of Corporate Governance5.a.4, 5.a.9, 6.a, 6.d.1, 6.d.4, 6.d.7, 6.e.2, 6.f

CDP Climate Change Questionnaire 2016

CC1.1/CC1.1a, CC1.2/CC1.2a, CC2.2/CC2.2a,CC2.2.b

GRI G4 Sustainability Reporting Guidelines

G4-34a, G4-35a, G4-36, G4-42a, G4-43a,
G4-45a, G4-47a, G4.48a

CDSB Climate Change Reporting Framework

REQ-03

IIRC <Integrated Reporting> Framework

3.10, 4.8

GRI G4 Sustainability Reporting Guidelines
QuestionsG4-45a, G4-47a, G4.48a

Strategy Recommended Disclosuresa)G20/OECD Principles of Corporate Governance5.a.7, 5.a.8

CDSB Climate Change Reporting Framework
Requirements

REQ-2, REQ-4.6, REQ-4.9, REQ-4.10,
REQ-4.11, REQ-4.14

IIRC <Integrated Reporting> Framework

3.3, 3.17, 4.23

G20/OECD Principles of Corporate Governance5.a.2, 5.a.7, 5.a.8

CDP Climate Change Questionnaire 2016

CC2.2/CC2.2a, CC2.2b, CC5.1, CC6.1

GRI G4 Sustainability Reporting Guidelines

G4-EC2a

Supplemental Guidance
for the Financial Sector

CDSB Climate Change Reporting Framework
Requirements

REQ-01, REQ-2, REQ-06, REQ-2.8, REQ-4.3,
REQ- 4.6, REQ-4.9, REQ-4.10, REQ-4.11

E

IIRC <Integrated Reporting> Framework
Questions3.3, 3.39, 4.23, 4.34

A
Introduction
B
Recommendationsb)

C
Guidance for All Sectors
D

Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Risk Management Recommended Disclosuresa)G20/OECD Principles of Corporate Governance5.a.2, 5.a.7, 6.f

GRI G4 Sustainability Reporting Guidelines

G4-EC2a

CDSB Climate Change Reporting Framework
Requirements

REQ-06b)

G20/OECD Principles of Corporate Governance5.a.2, 5.a.7

c)

G20/OECD Principles of Corporate Governance5.a.2, 5.a.7 6.d.1, 6.f

CDSB Climate Change Reporting Framework
Requirements

REQ-01, REQ-06, REQ-2.36, REQ-4.12,
REQ- 4.14

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

14

Metrics and Targets Recommended Disclosures
a)

b)

c)

G20/OECD Principles of Corporate Governance6.d.1, 6.d.7

CDP Climate Change Questionnaire 2016

CC2.1c/CC2.1d

GRI G4 Sustainability Reporting Guidelines

G4-46aCDSB Climate Change Reporting Framework
Requirements

REQ-4.6

G20/OECD Principles of Corporate Governance5.a.2, 5.a.7

CDP Climate Change Questionnaire 2016

CC2.1c/CC2.1d, CC5.1, CC6.1

GRI G4 Sustainability Reporting Guidelines

G4-45a, G4-46a, G4-EC2a

CDSB Climate Change Reporting Framework
Requirements

REQ-02, REQ-2.36, REQ-4.3, REQ-4.6,
REQ-4.12, REQ-4.16, REQ-06

IIRC <Integrated Reporting> Framework
Questions3.3, 3.6, 3.17, 3.39, 4.23

CDP Climate Change Questionnaire 2016

CC2.1/CC2.1a

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

15

D	Supplemental
Guidance for the
Financial Sector

D Supplemental Guidance for the Financial Sector
A key element of the FSB’s proposal for the Task Force was the development of climaterelated disclosures that “would enable stakeholders to understand better the concentrationsof carbon-related assets in the financial sector and the financial system’s exposures to climaterelated risks.” 7 The FSB’s proposal also noted that disclosures by the financial sector would:“foster an early assessment of [climate-related] risks” and “facilitate market discipline” and■■“provide a source of data that can be analyzed at a systemic level, to facilitate authorities’■■assessments of the materiality of any risks posed by climate change to the financial sector,
and the channels through which this is most likely to be transmitted.”
The Task Force organized the financial sector into four major industries largely based on
activities performed. The four industries are banks, insurance companies, asset managers, andasset owners (which include public- and private-sector pension plans, insurance companies,
endowments, and foundations).
Given the important role of the financial sector as preparers of climate-related financial

A

disclosures described in the FSB’s proposal, the Task Force identified certain areas where

Introduction

supplemental guidance was warranted, as shown in Figure 5. This supplemental guidance isB

intended to provide additional context for the financial sector when preparing disclosures

Recommendations

consistent with the Task Force’s recommendations.

C
Guidance for All Sectors

Figure 5

D
Supplemental Guidance
for the Financial Sector

Supplemental Guidance for the Financial Sector

E

GovernanceSupplemental Guidancefor Non-Financial Sectors

Industries

A

B

Strategy

A

B

C

Risk
Management

Metrics andTargets

A

A

B

C

B

C

F

Banks

 undamental Principles
F
for Effective Disclosure

Financial

Appendices

7

n

n

n

Insurance
Companiesn n n nn

Asset Owners

n n n nn nAsset Managers

n

n n

n n

FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks.” November 9, 2015.
www.fsb.org/wp-content/uploads/Disclosure-task-force-on-climate-related-risks.pdf.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

17Supplemental
Guidance for Banks1. Banks
Banks are exposed to climate-related risks and opportunities through their lending andother financial intermediary activities as well as through their own operations. As financial
intermediaries, banks may assume exposure to material climate-related risks through theirborrowers, customers, or counterparties. Banks that provide loans or trade the securities ofcompanies with direct exposure to climate-related risks (e.g., fossil fuel producers, intensive
fossil fuel consumers, real property owners, or agricultural/food companies) may accumulate
climate-related risks via their credit and equity holdings. In particular, asset-specific credit orequity exposure to large fossil fuel producers or users could present risks that merit disclosure
or discussion in a bank’s financial filings. In addition, as the markets for low-carbon andenergy-efficient alternatives grow, banks may assume material exposures in their lending andinvestment businesses. Banks could also become subject to litigation related to their financing
activities or via parties seeking damages or other legal recourse. Investors, lenders, insurance
underwriters, and other stakeholders need to be able to distinguish among banks’ exposuresand risk profiles so that they can make informed financial decisions.

Governance
Disclose the organization’s governance around climate-­related risks and opportunities.

A
Introduction
B
Recommendations
C
Guidance for All Sectors

Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

F

Appendices–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, andD undamental Principles
F
for Effective Disclosure

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:

Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related
issues, and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

19

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium, andlong term) that could have a material financial impact on the organizationand distinguish whether the climate-­related risks are physical ortransition risks, and–– a description of the process(es) used to determine which risks andopportunities could have a material financial impact on the organization.
Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

Supplemental Guidance for Banks
Banks should describe significant concentrations of credit exposure tocarbon-related assets.8 Additionally, banks should consider disclosing their(physical and transition) climate-related risks in their lending and otherfinancial intermediary business activities.

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose how
identified climate-­related issues have affected their businesses, strategy,
and financial planning.
Organizations should consider including the impact on their businesses andstrategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities

F–– Investment in research and development

 undamental Principles
F
for Effective Disclosure–– Operations (including types of operations and location of facilities)
Organizations should describe how climate-­related issues serve as an input
to their financial planning process, the time period(s) used, and how theserisks and opportunities are prioritized. Organizations’ disclosures shouldreflect a holistic picture of the interdependencies among the factors that
affect their ability to create value over time. Organizations should also
consider including in their disclosures the impact on financial planning in
the following areas:

Appendices–– Operating costs and revenues–– Capital expenditures and capital allocation–– Acquisitions or divestments–– Access to capital
If climate-­related scenarios were used to inform the organization’s strategy
and financial planning, such scenarios should be described.

Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.
8

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.

Recognizing that the term carbon-related assets is not well-defined, the Task Force encourages banks to use a consistent definition
to support comparability. For purposes of disclosing information on significant concentrations of credit exposure to carbon-related
assets under this framework, the Task Force suggests banks define carbon-related assets as those assets tied to the energy andutilities sectors under the Global Industry Classification Standard, excluding water utilities and independent power and renewableelectricity producer industries. The Task Force believes further work is needed on defining carbon-related assets and their potential
financial impacts.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

20

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks and–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Supplemental Guidance for Banks
Banks should consider characterizing their climate-related risks in thecontext of traditional banking industry risk categories such as credit risk,
market risk, liquidity risk, and operational risk.
A

Banks should also consider describing any risk classification frameworks
used (e.g., the Enhanced Disclosure Task Force’s framework for defining“Top and Emerging Risks”).9

Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices9

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

The Enhanced Disclosure Task Force was established by the FSB in to make recommendations on financial risk disclosures for banks.
It defined a top risk as “a current, emerged risk which has, across a risk category, business area or geographical area, the potential tohave a material impact on the financial results, reputation or sustainability or the business and which may crystallise within a short,perhaps one year, time horizon.” An emerging risk was defined as “one which has large uncertain outcomes which may become certainin the longer term (perhaps beyond one year) and which could have a material effect on the business strategy if it were to occur.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

21

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Supplemental Guidance for Banks
Banks should provide the metrics used to assess the impact of (physicaland transition) climate-related risks on their lending and other financial
intermediary business activities in the short, medium, and long term.
Metrics provided may relate to credit exposure, equity and debt holdings,
or trading positions, broken down by:A
Introduction
B–– Industry10

Recommendations–– Geography

C–– Credit quality (e.g., investment grade or non-investment grade, internalrating system)

Guidance for All Sectors–– Average tenor

D

Banks should also provide the amount and percentage of carbon-related
assets relative to total assets as well as the amount of lending and otherfinancing connected with climate-related opportunities.11

Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks.12
GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions.13
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios.14

Industry should be based on the Global Industry Classification Standard or national classification systems aligned with financial filing
requirements.
Recognizing the term carbon-related assets is not well-defined, the Task Force encourages banks to use a consistent definition to
support comparability. For purposes of disclosing amounts and percentages of carbon-related assets relative to total assets under
this framework, the Task Force suggests banks define carbon-related assets as those assets tied to the energy and utilities sectors
under the Global Industry Classification Standard, excluding water utilities and independent power and renewable electricity producer
industries. The Task Force believes further work is needed on defining carbon-related assets and their potential financial impacts.
12
Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly byemission restrictions or indirectly through carbon budgets, may impact organizations financially.
13
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
14
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
1011

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

22

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.
In describing their targets, organizations should consider including thefollowing:–– whether the target is absolute or intensity based,–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.

A

Alignment of Recommended Disclosures with Other Frameworks

Introduction

Risk Management Recommended Disclosures

B
Recommendationsa)C
Guidance for All Sectors

EDTF, Enhancing the Risk Disclosures of Banks

Recommendations 18, 22, 23, 24, 25, 26, 30

SASB, Commercial Banks: Sustainability
Accounting Standard

FN0101-16

D
Supplemental Guidance
for the Financial Sector

Metrics and Targets Recommended Disclosures

Ea)

EDTF, Enhancing the Risk Disclosures of Banks

Recommendations 26, 28

Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

23

Supplemental Guidancefor Insurance Companies

2. Insurance Companies15
For insurance companies, climate-related risks and opportunities constitute a key topic
affecting the industry’s core business (e.g., weather-related risk transfer business). The
scientific consensus is that a continued rise in average global temperatures will have asignificant effect on weather-related natural catastrophes and will account for an increasingly
large share of natural catastrophe losses.16
Users of climate-related financial disclosures are specifically interested in how insurancecompanies are evaluating and managing climate-related risks and opportunities in theirunderwriting and investment activities. Such disclosure will support users in understanding
how insurance companies are incorporating climate-related risks into their strategy, risk
management, underwriting processes, and investment decisions. This guidance applies tothe liability (underwriting) side of insurance activities. For insurance companies’ investment
activities, refer to the supplemental guidance for asset owners.

Governance
Disclose the organization’s governance around climate-­related risks and opportunities.
Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

A
Introduction
B
RecommendationsC

D
Supplemental Guidance
for the Financial SectorE–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

Supplemental Guidancefor Non-Financial Sectors

 undamental Principles
F
for Effective Disclosure
Appendices–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, andGuidance for All Sectors

F

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:

Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related
issues, and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

15
16

Insurance companies include both insurers and re-insurers.
Intergovernmental Panel on Climate Change, Fifth Assessment Report (AR5), Cambridge University Press, 2014.
http://www.ipcc.ch/report/ar5/.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

25

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium,and long term) that could have a material financial impact on theorganization and distinguish whether the climate-­related risks are
physical or transition risks, and–– a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on theorganization.
Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose
how identified climate-­related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities–– Investment in research and development

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

–– Operations (including types of operations and location of facilities)
Organizations should describe how climate-­related issues serve as an
input to their financial planning process, the time period(s) used, and how
these risks and opportunities are prioritized. Organizations’ disclosures
should reflect a holistic picture of the interdependencies among thefactors that affect their ability to create value over time. Organizations
should also consider including in their disclosures the impact on financial
planning in the following areas:–– Operating costs and revenues–– Capital expenditures and capital allocation–– Acquisitions or divestments–– Access to capital
If climate-­related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described.

Supplemental Guidance for Insurance Companies
Insurance companies should describe the potential impacts of climaterelated risks and opportunities, as well as provide supporting quantitative
information where available, on their core businesses, products, andservices, including:–– information at the business division, sector, or geography levels;–– how the potential impacts influence client, cedent, or broker selection; and–– whether specific climate-related products or competencies are underdevelopment, such as insurance of green infrastructure, specialty
climate-related risk advisory services, and climate-related client
engagement.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

26

Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.
Supplemental Guidance for Insurance Companies
Insurance companies that perform climate-related scenario analysis on
their underwriting activities should provide the following information:–– description of the climate-related scenarios used, including the critical
input parameters, assumptions and considerations, and analyticalchoices. In addition to a 2°C scenario, insurance companies with
substantial exposure to weather-related perils should consider using
a greater than 2°C scenario to account for physical effects of climatechange and–– time frames used for the climate-related scenarios, including short-,
medium-, and long-term milestones.

A
Introduction
B

Risk Management

Recommendations

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

C

Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks and–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Supplemental Guidance for Insurance Companies
Insurance companies should describe the processes for identifying andassessing climate-related risks on re-/insurance portfolios by geography,
business division, or product segments, including the following risks:–– physical risks from changing frequencies and intensities of weatherrelated perils,–– transition risks resulting from a reduction in insurable interest due toa decline in value, changing energy costs, or implementation of carbon
regulation, and–– liability risks that could intensify due to a possible increase in litigation.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

27

Risk Management (continued)
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.
In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

Supplemental Guidance for Insurance Companies
Insurance companies should describe key tools or instruments, such as
risk models, used to manage climate-related risks in relation to productdevelopment and pricing.
Insurance companies should also describe the range of climate-related
events considered and how the risks generated by the rising propensity
and severity of such events are managed.
A
Introduction
B
Recommendations
C
Guidance for All Sectors

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

D
Supplemental Guidance
for the Financial Sector

Metrics and Targets

E

Disclose the metrics and targets used to assess and manage relevant climate-­related risks

Supplemental Guidancefor Non-Financial Sectors

and opportunities.

F undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Supplemental Guidance for Insurance Companies
Insurance companies should provide aggregated risk exposure to
weather-related catastrophes of their property business (i.e., annual
aggregated expected losses from weather-related catastrophes) byrelevant jurisdictions.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

28

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks.17

Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.

GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions.18
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios.19

In describing their targets, organizations should consider including thefollowing:A
Introduction–– whether the target is absolute or intensity based,B–– time frames over which the target applies,

Recommendations–– base year from which progress is measured, andC–– key performance indicators used to assess progress against targets.

Guidance for All Sectors

Where not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure

Alignment of Recommended Disclosures with Other Frameworks
Strategy Recommended Disclosuresb)

ClimateWise, The ClimateWise Principles

Subprinciples 3.2, 3.4, 4.1, 4.2

Appendices

Risk Management Recommended Disclosuresa)

SASB, Insurance: Sustainability
Accounting Standard

FN0301-17.65

Metrics and Targets Recommended Disclosuresa)

UNEP FI, Principles for Sustainable Insurance

Principle 1

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly byemission restrictions or indirectly through carbon budgets, may impact organizations financially.
18
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
19
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
17

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

29Supplemental
Guidance for
Asset Owners

3. Asset Owners
Asset owners are a diverse group that include public- and private-sector pension plans,
re-/insurance companies, endowments, and foundations and invest assets on their own behalfor on behalf of their beneficiaries. Asset owners invest according to a mandate or investment
strategy set out by their oversight body or their beneficiaries. Asset owners have various
investment horizons that influence their risk tolerance and investment strategies. Many asset
owners have broadly diversified investment portfolios across investment strategies, asset
classes, and regions and portfolios with thousands of underlying individual company andgovernment exposures. Asset owners may hire asset managers to invest on their behalf. 20
Whether asset owners invest directly or through asset managers, asset owners bear the
potential physical and transition climate-related risks to which their investments are exposed.
Similarly, asset owners can benefit from the potential returns on the investment opportunities
associated with climate change.
Asset owners sit at the top of the investment chain and, therefore, have an importantrole to play in influencing the organizations in which they invest to provide better climaterelated financial disclosures. Disclosure of climate-related risks and opportunities by asset
owners allows beneficiaries and other audiences to assess the asset owner’s investment

A
Introduction

considerations and approach to climate change. This may include an assessment of the asset

Bowner’s integration of appropriate climate-related financial information into its investment

Recommendations

activities in various ways, for example, in setting investment strategy, making new investment

C

decisions, and managing its existing portfolio. By encouraging climate-related financial

Guidance for All Sectors

disclosures by asset owners, beneficiaries and other stakeholders will be in a position to betterD

understand exposures to climate-related risks and opportunities. Further, climate-related

Supplemental Guidance
for the Financial Sector

financial disclosures by asset owners may encourage better disclosures across the investment

E

organizations and individuals to make better-informed investment decisions.

chain—from asset owners to asset managers to underlying companies—thus enabling all

Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Governance
Disclose the organization’s governance around climate-­related risks and opportunities.
Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:–– processes and frequency by which the board and/or board committees (e.g.,
audit, risk, or other committees) are informed about climate-­related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, and–– how the board monitors and oversees progress against goals and targets
for addressing climate-­related issues.

20

In this role, asset managers also act as fiduciaries. Asset managers invest within the guidelines specified by the asset owner for a given
mandate set out in the investment management agreement or the product specification.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

31

Governance (continued)
Disclose the organization’s governance around climate-­related risks and opportunities.
Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment and managementof climate-­related issues, organizations should consider including the following
information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether suchmanagement positions or committees report to the board or a committeeof the board and whether those responsibilities include assessing and/or
managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related issues,and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium,and long term) that could have a material financial impact on theorganization and distinguish whether the climate-­related risks are
physical or transition risks, and–– a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on theorganization.
Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

32

Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose
how identified climate-­related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities–– Investment in research and development–– Operations (including types of operations and location of facilities)
Organizations should describe how climate-­related issues serve as an
input to their financial planning process, the time period(s) used, and how
these risks and opportunities are prioritized. Organizations’ disclosures
should reflect a holistic picture of the interdependencies among thefactors that affect their ability to create value over time. Organizations
should also consider including in their disclosures the impact on financial
planning in the following areas:A
Introduction–– Operating costs and revenues

B–– Capital expenditures and capital allocation

Recommendations–– Acquisitions or divestments

C
Guidance for All Sectors–– Access to capitalD

If climate-­related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described.

Supplemental Guidance
for the Financial Sector

Supplemental Guidance for Asset Owners
Asset owners should describe how climate-related risks and opportunities
are factored into relevant investment strategies. This could be describedfrom the perspective of the total fund or investment strategy or individual
investment strategies for various asset classes.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.
Supplemental Guidance for Asset Owners
Asset owners that perform scenario analysis should provide the following:–– a discussion of how climate-related scenarios are used, such as toinform investments in specific assets, and–– description of climate-related scenarios used and associated time frames.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

33

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks and–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Supplemental Guidance for Asset Owners
Asset owners should describe, where appropriate, engagement activity
with investee companies to encourage better disclosure and practices
related to climate-related risks to improve data availability and asset
owners’ ability to assess climate-related risks.

A
Introduction
B
Recommendations
C
Guidance for All Sectors

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

D
Supplemental Guidance
for the Financial Sector
E

Supplemental Guidance for Asset Owners
Asset owners should describe how they consider the positioning of their
total portfolio with respect to the transition to a lower-carbon energy
supply, production, and use. This could include explaining how asset
owners actively manage their portfolios’ positioning in relation to thistransition.

Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

34

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Supplemental Guidance for Asset Owners
Asset owners should describe metrics used to assess climate-related risks
and opportunities in each fund or investment strategy. Where relevant, asset
owners should also describe how these metrics have changed over time.

A

Where appropriate, asset owners should provide metrics considered ininvestment decisions and monitoring.

Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Disclose Scope 1, Scope 2,
and, if appropriate,
Scope 3 greenhouse gas(GHG) emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks. 21
GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions. 22
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios. 23

Supplemental Guidance for Asset Owners
Asset owners should provide GHG emissions, where data are available,
associated with each fund or investment strategy normalized for every
million of the reporting currency invested. 24
Note: The Task Force acknowledges the challenges and limitations of reporting
GHG emissions associated with investments, including that GHG emissions
should not necessarily be interpreted as a risk metric. The Task Force views thereporting of GHG emissions associated with investments as a first step and
expects disclosure of this information to prompt important advancements inthe development of decision-useful, climate-related risk metrics. The Task Forcerecognizes that some asset owners may be able to report such information for only
a portion of their investments given data availability and methodological issues.

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly byemission restrictions or indirectly through carbon budgets, may impact organizations financially.
22
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
23
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
24
Greenhouse Gas Protocol, “Category 15: Investments.” Technical Guidance for Calculating Scope 3 Emissions (version 1.0). 2013.
http://ghgprotocol.org/sites/default/files/ghgp/Scope3_Calculation_Guidance.pdf.
21

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

35

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.
In describing their targets, organizations should consider including thefollowing:–– whether the target is absolute or intensity based,–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.
Where not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

36Supplemental
Guidance for
Asset Managers

4. Asset Managers
Asset managers, also known as investment managers, are hired by clients to invest assets on
their behalf. In this role, asset managers act as fiduciaries. Asset managers invest within theguidelines specified by their clients for a given mandate set out in an investment managementagreement or product specification. Importantly, the investment results, whether positive or
negative, belong to the client. 25
Asset managers’ clients, as owners of the underlying assets, bear the major portion of thepotential physical and transition climate-related risks to which their investments are exposed.
Similarly, asset managers’ clients will benefit from the potential returns on the investment
opportunities associated with the transition to a low-carbon economy. The relevance ofclimate-related risks and opportunities to an asset manager and its asset owner clients will
depend on a number of variables, including its investment styles and objectives, the asset
classes in which it invests, the investment mandates, as well as other factors.
In the case where an asset manager is a public company, it has two distinct audiences for
its climate-related financial disclosures. The first audience is its shareholders, who need tounderstand enterprise-level risks and opportunities and how these are managed. The second
is its clients, for whom product-, investment strategy- or client-specific disclosures are moreA
Introduction

relevant.

B

Asset managers’ clients rely on reporting from asset managers to understand how climate-

Recommendations

related risks and opportunities are managed within each of their portfolios. The guidanceCprovided below addresses considerations for asset managers when reporting to their clients,

Guidance for All Sectors

unless otherwise specified.

D
Supplemental Guidance
for the Financial Sector

Governance
Disclose the organization’s governance around climate-­related risks and opportunities.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, and–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related
issues, and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

25

Introductory language on Asset Managers sourced from: Blackrock. “BlackRock Worldwide Leader in Asset and Risk Management.” 2016.
https://www.blackrock.com/corporate/en-at/literature/whitepaper/viewpoint-blackrock-worldwide-leader-in-asset-management.pdf.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

38

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium,and long term) that could have a material financial impact on theorganization and distinguish whether the climate-­related risks are
physical or transition risks, and–– a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on theorganization.
Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D

Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Supplemental Guidance
for the Financial Sector

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose
how identified climate-­related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities–– Investment in research and development

E–– Operations (including types of operations and location of facilities)

Supplemental Guidancefor Non-Financial Sectors

Organizations should describe how climate-­related issues serve as an
input to their financial planning process, the time period(s) used, and how
these risks and opportunities are prioritized. Organizations’ disclosures
should reflect a holistic picture of the interdependencies among thefactors that affect their ability to create value over time. Organizations
should also consider including in their disclosures the impact on financial
planning in the following areas:F undamental Principles
F
for Effective Disclosure
Appendices–– Operating costs and revenues–– Capital expenditures and capital allocation–– Acquisitions or divestments–– Access to capital
If climate-­related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described.

Supplemental Guidance for Asset Managers
Asset managers should describe how climate-related risks andopportunities are factored into relevant products or investment
strategies.
Asset managers should also describe how each product or investment
strategy might be affected by the transition to a low-carbon economy.

Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

39

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks and–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Supplemental Guidance for Asset Managers
Asset managers should describe, where appropriate, engagement activity
with investee companies to encourage better disclosure and practices
related to climate-related risks in order to improve data availability andasset managers’ ability to assess climate-related risks.

A
Introduction

Asset managers should also describe how they identify and assessmaterial climate-related risks for each product or investment strategy.
This might include a description of the resources and tools used in theprocess.

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

Supplemental Guidancefor Non-Financial Sectors
F

Supplemental Guidance for Asset Managers
Asset managers should describe how they manage material climaterelated risks for each product or investment strategy.

 undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

40

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Supplemental Guidance for Asset Managers
Asset managers should describe metrics used to assess climate-relatedrisks and opportunities in each product or investment strategy. Where
relevant, asset managers should also describe how these metrics havechanged over time.

A
Introduction

Where appropriate, asset managers should provide metrics considered ininvestment decisions and monitoring.

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure

Recommended
Disclosure b)
Disclose Scope 1, Scope 2,
and, if appropriate,
Scope 3 greenhouse gas(GHG) emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks. 26
GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions. 27
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios. 28

Supplemental Guidance for Asset Managers
Asset managers should provide GHG emissions, where data are available,
associated with each product or investment strategy normalized for every
million of the reporting currency invested. 29
Note: The Task Force acknowledges the challenges and limitations of reporting
GHG emissions associated with investments, including that GHG emissions
should not necessarily be interpreted as a risk metric. The Task Force views thereporting of GHG emissions associated with investments as a first step and
expects disclosure of this information to prompt important advancements inthe development of decision-useful, climate-related risk metrics. The Task Forcerecognizes that some asset managers may be able to report such informationfor only portion of the assets they manage given data availability andmethodological issues.

Appendices

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly in emission
restrictions or indirectly through carbon budgets, may impact organizations financially.
27
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
28
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
29
Greenhouse Gas Protocol, “Category 15: Investments.” Technical Guidance for Calculating Scope 3 Emissions (version 1.0). 2013.
http://ghgprotocol.org/sites/default/files/ghgp/Scope3_Calculation_Guidance.pdf.
26

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

41

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.
In describing their targets, organizations should consider including thefollowing:–– whether the target is absolute or intensity based,–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.
Where not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

A
Introduction

Alignment of Guidance with Other Frameworks

B
Recommendations

Strategy Recommended Disclosures

C
Guidance for All Sectorsb)

PRI, Reporting Framework 2016 Strategy andGovernanceSG12.1, SG12.2

D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

Risk Management Recommended Disclosuresa)F undamental Principles
F
for Effective Disclosureb)

Appendices

SASB, Asset Management & Custody Activities:
Sustainability Accounting Standard

FN0103-15

PRI, Reporting Framework 2016 Strategy
and Governanc:SG12.2

PRI, Reporting Framework 2016 Strategy andGovernance

Module Indicator SG12.2

Metrics and Targets Recommended Disclosuresa)b)

AODP Global Climate Risk Survey 2017 for AssetManagers

2.13, 3.01

SASB, Asset Management & Custody Activities:
Sustainability Accounting Standard

FN0103-18

PRI, Reporting Framework 2016 Strategy andGovernanceSG12.3

PRI, Reporting Framework 2016 Strategy andGovernanceSG12.3

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

42

E	Supplemental
Guidance for NonFinancial Sectors

E Supplemental Guidance for Non-Financial Sectors
While every sector and industry could experience potential financial impacts from climaterelated risks and opportunities, the Task Force identified a number of key non-financial sectors
and industries (and their related supply and distribution chains) more likely to be financially
impacted than others due to their material greenhouse gas (GHG) emissions, energy, and/or
water dependencies associated with their operations and/or products. 30 These non-financial
sectors and industries are grouped into four key areas: Energy; Transportation; Materials andBuildings; and Agriculture, Food, and Forest Products. 31
The Task Force developed supplemental guidance for non-financial sectors in specific areas asshown in Figure 6. This supplemental guidance for non-financial sectors is intended to provide
further background for organizations with relevant economic activity in these areas to consider
when formulating their disclosure under the Task Force’s four disclosure recommendations:
governance, strategy, risk management, and metrics and targets.
Figure 6

Supplemental Guidance for Non-Financial Sectors

A
Introduction
B

Governance

Recommendations
C
Guidance for All Sectors

Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure

Non-Financial

DGroupsA

Energyn

B

Strategy

A

B

C

n

Risk
Management

Metrics andTargets

A

A

B

n

C

B

C

n n

Transportation

n n

n n n

Materials andBuildings

n n

n n n

Agriculture, Food,and Forest Products

n n

n n n

Appendices

In line with the risks and opportunities outlined in Tables A1 and A2 (pp. 100-101), organizations
should disclose relevant information related to the financial implications of significant physicalrisks (e.g., reliance on water in areas of high water stress, severe weather events, or flooding),
transition risks (e.g., policy, technology or market changes), and related opportunities.
Climate-related risks can affect several different important aspects of an organization’s
financial position. The future shape of an organization’s balance sheet will be influenced by
its investment and capital expenditure plans and projects. These projects will determine
the nature and amount of long-lived assets, how such assets are funded, including the
proportion of debt/equity needed and the risks associated with the future cash flows fromthose assets and the future revenue and cost trends for the business. Organizations in the four
non-financial groups, therefore, should carefully consider the current and forward-looking
financial implications of transition and physical risks and opportunities in the following areas tohelp them determine their relevance for informing investors:

30
31

SASB, “SASB Technical Bulletin 2016-01—Climate Risk,” working draft. 2016. http://using.sasb.org/sasb-climate-risk-framework.
These four groups and their associated industries are intended to be indicative of the economic activities associated with theseindustries rather than definitive industry categories.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

44

Income Statement
Revenues — As the demand for end products (e.g., energy) evolves due to changes in■■climate-related policies, technology, and market dynamics, organizations should consider
the potential impact on their future revenues and identify potential opportunities
for enhancing current revenues or developing new revenues. In particular, given theemergence and likely growth of carbon pricing as a mechanism to regulate emissions, it isimportant for energy and emission dependent industries to consider the potential impactsof carbon pricing on existing and future business revenues.
Expenditures — An organization’s response to climate-related risks and opportunities■■

depends, in part, on the organization’s cost structure. Lower-cost suppliers are likely
to be more resilient to cost and demand changes in the market as a result of climaterelated risks and opportunities and more flexible in their ability to address such risks
and opportunities. By discussing and providing an indication of their cost structure andflexibility in relation to various climate-related risks and opportunities, organizations
will be better able to inform investors about the investment potential of a particularorganization
Balance Sheet

AAssets and Liabilities — Supply and demand changes due to climate-related policy,■■

Introduction

technological, or market changes also could impact the valuation of an organization’sBassets or cost of its liabilities going forward. On the asset side, utilization of long-lived

Recommendations

assets and, where relevant, reserves may be particularly affected by climate-related risks

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

or opportunities. On the liability side, organizations may face changes in borrowing orother financing costs and various contingent liabilities. It is important for organizations
to provide an indication of the climate-related profile of their assets and liabilities,
particularly long-lived assets and reserves. This should focus on existing and committed
future activities and decisions requiring new investment, restructuring, write-downs, orE
Supplemental Guidancefor Non-Financial Sectors

impairment.
Capital — Organizations may have capital investments that require long periods to pay■■

Fback. Given this longer time period, the likelihood of risk profiles changing is higher. It

 undamental Principles
F
for Effective Disclosure

is important for the organization and stakeholders to have an understanding of capital

Appendicesorganization’s flexibility in shifting its capital allocation in the face of changing climate-

allocation and how this relates to climate-related risks and opportunities as well as therelated risks and opportunities.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures45Supplemental
Guidance for the
Energy Group1. Energy
Energy is an essential ingredient in the economy,
serving as a primary or necessary input inTable 1

Energy Group

most economic activities. This group comprises

Industry/Sub-Industry

organizations extracting, processing, producing,Group

Oil and Gas

and distributing fossil fuels or electric energy to

EnergyCoalother sectors of the economy. It includes, but isElectric Utilities

not limited to, industries listed in Table 1.
While many climate-related issues impact theenergy sector, Energy Group organizations should consider providing disclosures related
to material financial implications of potential physical impacts (e.g., reliance on water inareas of high water stress, severe storm/flood mitigations) and transition impacts (e.g.,internal carbon prices, new technology, changes in market demand) of climate-relatedrisks and opportunities.
As fossil fuel and electricity providers, the organizations in this group generally havesignificant greenhouse gas (GHG) emissions and, in many cases, are dependent on theavailability of water. For example, a majority of the current electricity supply comes fromA
Introduction

non-renewable fossil fuel resources, resulting in a significant contribution to global GHG

Bemissions—either directly through the utility companies’ own energy use for production orRecommendations

indirectly through combustion of fossil fuels. 32 Electric utilities, therefore, face significant

Ctransition risk (i.e., the financial risk arising from the changes in asset valuations caused by

Guidance for All Sectors

the structural shift toward a low-carbon energy system). This is because the utility sector’sDasset valuations are most at risk from the disruptive impact of the policy, technology,

Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendicesand portfolio changes that will occur over the next two to three decades as policies,
technology, and markets shift to a low-carbon energy system.
In addition to GHG emissions, both hydroelectric power generation and cooling for nuclear
and non-nuclear power generation use large quantities of water. 33
Oil, gas, and coal extraction face similar transition risks as key suppliers to electric utilities.
These industries also rely on water to a significant degree. 34,35,36
These characteristics make the Energy Group particularly sensitive to physical, policy,
or technological changes affecting fossil fuel demand, energy production and usage,
emission constraints, and water availability. The regulatory and competitive landscapethat surrounds electric utilities also differs significantly between jurisdictions, thus making
assessment of climate-related risks very challenging.
As a result, both the transition risks and physical risks associated with climate change may
impact the operating costs and asset values of organizations engaged in energy activities.
In particular, organizations within the Energy Group are generally capital intensive,
require major financial investments in fixed assets and supply chain management, andhave longer business strategy/capital allocation planning horizons relative to many otherAccording to International Energy Agency (IEA) data, CO 2 emissions from fuel combustion across all energy sectors andactivities totaled 32.2 Gigatons (Gt) in 2015, thereby accounting for 60 percent of total anthropogenic GHG emissions. The
power-generation sector on its own accounted for 13.6Gt, representing 42 percent of all CO 2 emissions from energy andhence 25 percent of all anthropogenic GHG emissions. To put this into context, the next most important industrial sector
was transportation, which accounted for 7.4Gt (23 percent of all CO 2 emissions from fuel combustion, and 14 percent of total
anthropogenic GHG emissions). IEA, CO 2 Emissions from Fuel Combustion: Highlights. 2015.
www.iea.org/publications/freepublications/publication/CO 2 EmissionsFromFuelCombustionHighlights2015.pdf.
33
Michelle T.H., van Vliet, et al. “Power-generation system vulnerability and adaptation to changes in climate and water resources.”
Nature Climate Change 6 (2016): 375-380. http://www.nature.com/nclimate/journal/v6/n4/full/nclimate2903.html.
34
IPIECA, Water Resource Management in the Petroleum Industry. 2005.
http://www.ipieca.org/sites/default/files/publications/water_mngt.pdf.
35International Council on Mining and Metals (ICCM), In Brief: Water stewardship framework. London: International Council on
Mining and Metals, 2014. http://www.icmm.com/website/publications/pdfs/7024.pdf.
36World Resources Institute (WRI), Water-Energy Nexus: Business Risks and Rewards. Washington, DC: 2016.
http://www.wri.org/sites/default/files/Water-Energy_Nexus_Business_Risks_and_Rewards.pdf.
32

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

47

sectors—horizons that may be particularly affected by climate-related risks and opportunities.
This requires careful assessment of climate-related risks and opportunities to inform decisions
about future sustainability and profitability.
Transparent and decision-useful climate-related disclosures are crucial to fully understandthe impact of climate change on business strategy and financial plans in energy activities.
Consequently, disclosures should focus on qualitative and quantitative assessments andpotential impacts of the following:changes in compliance and operating costs, risks, or opportunities (e.g., older, less-efficient■■facilities or un-exploitable fossil fuel reserves in the ground);exposure to regulatory changes or changing consumer and investor expectations (e.g.,■■

expansion of renewable energy in the mix of energy supply); andchanges in investment strategies (e.g., opportunities for increased investment in■■renewable energy, carbon-capture technologies, and more efficient water usage).
The following guidance provides additional considerations for disclosures by the Energy Group.
A

GovernanceIntroduction

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

B

Recommended
Disclosure a)
Describe theboard’s oversight ofclimate-­related risks
and opportunities.

Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, andE
Supplemental Guidancefor Non-Financial Sectors
F–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

 undamental Principles
F
for Effective Disclosure

Supplemental Guidance for the Energy Group
Energy Group organizations should consider describing whether andhow performance metrics for board and management, including links toremuneration policies, take into consideration climate-related risks andopportunities.

Appendices

Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related
issues, and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

48

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium,and long term) that could have a material financial impact on theorganization and distinguish whether the climate-­related risks are
physical or transition risks, and–– a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on theorganization.
Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose
how identified climate-­related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities–– Investment in research and development–– Operations (including types of operations and location of facilities)
Organizations should describe how climate-­related issues serve as an
input to their financial planning process, the time period(s) used, and how
these risks and opportunities are prioritized. Organizations’ disclosures
should reflect a holistic picture of the interdependencies among thefactors that affect their ability to create value over time. Organizations
should also consider including in their disclosures the impact on financial
planning in the following areas:–– Operating costs and revenues–– Capital expenditures and capital allocation–– Acquisitions or divestments–– Access to capital
If climate-­related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described.

Supplemental Guidance for the Energy Group
Energy Group organizations should consider discussing how climaterelated risks and opportunities are integrated into their strategy
formulation and decision making as well as the key planning assumptions
around:Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

49

Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
(continued)
Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Income Statement–– Revenues — Energy Group organizations should consider providing
carbon-pricing assumptions, including any internal carbon priceapplied, and how it is determined, and an assessment of the potential
impacts on future operational revenues.
–– Expenditures — Energy Group organizations should consider
describing the potential impacts of climate-related risks andopportunities on cost of supply and strategy for managing these
impacts relative to market demand and competition. This may include
discussions of research and development (R&D) expenditures, adoptionof new technology, and costs of key inputs.
Balance Sheet–– Assets/Liabilities — Energy Group organizations should focus on
existing and committed future activities, noting any, if applicable,
expected changes to the balance sheet or reserves (e.g., additional
investments, restructuring, write-downs, or impairment). Energy
Group organizations should consider describing their critical planningassumptions around legacy assets, for example, strategies to lower
carbon-, energy-, and/or water-intensive operations.

A
Introduction–– Capital — Energy Group organizations should consider discussing
whether applicable, and, if so, how GHG emissions, energy, and water
issues are taken into account in capital planning and allocation. This
could include a discussion of major acquisitions and divestments,
joint-venture requirements, and investments in technology, innovation,and new business areas in light of changing climate-related risks
and opportunities. Energy Group organizations should also consider
providing an assessment of flexibility in positioning/repositioning
capital to address emerging climate-related risks and opportunities.

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.
Supplemental Guidance for the Energy Group
Energy Group organizations should consider describing:–– The range and diversity of climate-related scenarios used, including
the 2°C scenario used (e.g., whether climate-related scenarios withmajor disruptions [positive and negative] from business-as-usual[breakthroughs, breakdowns] were considered).
–– For the 2°C scenario used, any adjustments/differences from publicly
available 2°C scenarios.
–– Quantitatively and qualitatively the critical input parameters,
assumptions, and analytical choices for the climate-related scenarios
used. 37–– Time frames used for the climate-related scenarios, including near-,medium- and long-term milestones (e.g., how does the organizationconsider timing of potential future implications under the climaterelated scenarios used).
–– Qualitatively and quantitatively the key implications for theorganization’s performance under the various climate-related scenarios
considered, including implications for the organization’s value chain,capital-allocation decisions, R&D, and other financial implications.

37

These might include internal carbon prices and assumptions of how they develop over time; discount rate used; assumptions
about policy responses and timing; assumptions about technology responses and timing; and assumptions made around potential
differences in input parameters across regions/countries/asset locations/markets.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

50

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks and–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

A
Introduction

In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

B
Recommendations
C

Supplemental Guidance for the Energy Group
With specific consideration of the income statement and balance sheet
implications described earlier and any significant climate-related risks
identified, Energy Group organizations should consider describing actions
taken to prevent and mitigate any relevant climate-related risks or takeadvantage of opportunities (e.g., procurement of low-carbon substitutes
as inputs, development of lower-carbon products and services,
investment in low-emissions technologies, and other activities to reduce
emissions and increase resilience to climate-related impacts).

Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

51

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Supplemental Guidance for the Energy GroupFor all relevant metrics, Energy Group organizations should consider
providing historical trends and forward-looking projections (by relevant
country and/or jurisdiction, business line, or asset type). Organizations
should also consider disclosing metrics that support their scenario
analysis and strategic planning process and that are used to monitor
the organization’s business environment from a strategic and risk
management perspective.

A
Introduction
B
Recommendations

Energy Group organizations should consider providing key metrics related
to GHG emissions, energy, water, land use and, if relevant, low-carbon
alternatives that address potential financial aspects of shifting demand,
cost of supply, reserves, and capital allocation. This could include examples
such as:C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Revenues–– Investment in low-carbon alternatives (e.g., R&D, equipment, products,
or services).
Expenditures–– Indicative costs of supply for current and committed future projects(e.g., through a cost curve or indicative price range). This could be
broken down by product, asset, or geography.
–– Current internal carbon price or range of prices used in financial
planning and analysis.
–– Measurement of water used/withdrawn in regions with high orextremely high baseline water stress. 38
Assets/Liabilities–– If relevant, a breakdown of reserves and/or long lived assets andan indication of associated emissions factors to provide insight into
potential future emissions.
Capital–– Relevant metrics to indicate flexibility of capital deployment, portfolio
allocation and capital payback. This could include measures such as:–– proportion of capital allocation to long-lived assets versus short-term
assets,–– capital payback periods or return on capital deployed, and/or–– investments in low-carbon alternatives (e.g., R&D, technology,
products and/or services).
For illustrative examples, please see Table 2 (p. 54).

38

Several sources for defining water stress exist. See in particular WRI at http://docs.wri.org/aqueduct/freshwater_sustainability_
analyses.pdf . Other sources include Pacific Institute at http://pacinst.org/water-definitions; World Resources Institute (WRI) Aqueduct
Project at http://www.wri.org/our-work/project/aqueduct; World Business Council for Sustainable Development (WBCSD), Global
Water Tool at http://old.wbcsd.org/work-program/sector-projects/water/global-water-tool.aspx; IPIECA Global Water Tool at
http://www.ipieca.org/o-gwatertool; and CEO Water Mandate at http://ceowatermandate.org/disclosure/resources/driving/.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

52

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks. 39
GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions.40
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios.41

Supplemental Guidance for the Energy Group
Energy Group organizations should consider providing the following
information:
Revenue Changes–– Scope 3 emissions from significant sources, including whereappropriate emissions from the use of the organization’s products.42
Expenditures–– Scope 1 and Scope 2 emissions and fugitive methane (where relevant)emissions by geography to indicate exposure to potential policychanges and any associated implications for expenditures (e.g.,
remediation, emission reduction, mitigation).

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.
In describing their targets, organizations should consider including thefollowing:–– whether the target is absolute or intensity based,F undamental Principles
F
for Effective Disclosure–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.

AppendicesWhere not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly in emission
restrictions or indirectly through carbon budgets, may impact organizations financially.
40
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
41
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
42
For additional information on estimating petroleum industry value chain (Scope 3) GHG emissions please see: WRI GHG Reporting
Protocol www.ghgprotocol.org and IPIECA/API http://www.api.org/~/media/Files/EHS/climate-change/Scope-3-emissions-reportingguidance-2016.pdf?la=en.
39

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

53

Table 2

Energy Metrics — Illustrative Examples
The specific examples of metrics provided below are for illustrative purposes to help organizations consider the types of metrics best suited for their activities andoperations. Organizations should define metrics and targets that are tailored to their particular climate-related risks and opportunities and that address the key financial
disclosure areas in the Task Force’s supplemental guidance. Energy Group organizations should consider providing key GHG emissions, energy, water, land use, andlow-carbon alternative metrics on the financial aspects related to revenue, costs, assets, liabilities, and capital allocation.
In determining the most relevant and useful metrics, organizations are encouraged to engage with their key stakeholders, including investors, and review publicly available
frameworks.43 Again, the examples below are illustrative to assist organizations in thinking about appropriate metrics. The examples are not intended to imply additional or
duplicative metrics for an organization’s existing suite of metrics if existing metrics achieve the intended disclosure objective.

Oil and Gas
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternative

Investment in low-carbon alternatives(e.g., R&D, equipment, products, or services)

Local currency

GRI:
G4-OG2

Investments in new technologies are needed to manage transition
risk. The level of investment provides an indication of the level towhich future earning capacity of core business might be impacted.

CDP: EU4.3
Revenues

GHG Emissions

Estimated Scope 3 emissions, including
methodologies and emission factors used

Metric ton(MT) of carbon
dioxideemissions (CO 2 e)

GRI:
G4-EN17(Relatively) high carbon emissions in the value chain may
accelerate development of alternative technologies ina low-carbon economy. The level of emissions informs
vulnerability to a significant decrease in future earning capacity.

Expenditures

Water

Percent water withdrawn in regions withhigh or extremely high baseline water
stressPercentage

SASB:
IF0101-06

Water stress can result in increased cost of supply, impacts tooperations and increased regulation/reduced access to water
withdrawal. The percent withdrawn in high-water-stress areas
informs the risk of significant costs or limitations to production
capacity.

Expenditures

GHG Emissions

Amount of gross global Scope 1
emissions from: (1) combustion, (2) flaredhydrocarbons, (3) process emissions, (4)directly vented releases, and (5) fugitive
emissions/leaks

MT of CO 2 e

SASB:
NR0101-01(Relatively) significant Scope 1 emissions are expected to drive
regulations (including carbon prices) to require lower emissions
from products. This can result in a significant decrease in future
earning capacity.

Expenditures

Energy Use/
Efficiency

Indicative costs of supply for current andcommitted future projects, e.g., througha cost curve or indicative price range. This
could be broken down by product, asset, or
geography

Local currency

N/A

Cost of supply is important because in a market with fallingdemand, low-cost products will continue to be brought tomarket. Understanding the cost of supply informs investors
about portfolio vulnerability and thus earning capacity.

43

A number of frameworks currently exist that provide a range of metrics that an organization may find useful in disclosing various aspects of climate-related risks and opportunities for the organization. See, for example, GHG
Protocol, Global Reporting Initiative, ISO Standards, Sustainability Accounting Standards Board, Climate Disclosure Standards Board, World Resources Institute, World Business Council for Sustainable Development, CDP, andvarious industry-specific guidance.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

54

Table 2

Energy Metrics — Illustrative Examples (continued)
Oil and Gas Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

GHG Emissions

Describe current carbon price or range ofprices used

Local currency

N/AInternal carbon prices used, impacting the assessment of anorganization’s key assets, provide investors with a proper
understanding of the reasonableness of assumptions made as
input for their risk assessment.

Assets/ Liabilities

Reserves/
AssetsA breakdown of reserves by type and an
indication of associated emissions factors
to provide insight into potential future
emissions

Amount ofreserves
MT of CO 2 e perunit of reserves

SASB:
NR0101-23

Transition to a low-carbon economy may impact the valueof reserves. Providing insight into potential future emissions
can help to inform investors about the potential impacts ofregulatory measures and demand changes on earning capacity.

GHG Emissions
Assets/ Liabilities

Reserves/
AssetsAssets committed in regions with high orextremely high baseline water stress

Number ofassets, value,
percentage of
total assets

N/A

Water stress can result in interruptions to or limitations on
production capacity or early curtailment of operating facilities.
The value of assets in high-water-stress areas informs thepotential implications on asset valuation.

CapitalReserves/
Assets

Proportion of capital allocation to longlived assets versus short-term assets

Percentage

N/A

Climate-related change impacts are subject to uncertainty
in terms of extent and timing. Understanding the allocation
to long- versus short-lived assets informs the potential of anorganization to adapt to emerging climate-related risks andopportunities.

CapitalReserves/
AssetsCapital payback periods or return on
capital deployed

Years;
Percentage
return on
investment (ROI)

N/A

Climate-related change impacts are subject to uncertainty interms of extent and timing. Understanding the capital payback
periods or return on capital deployed informs the vulnerabilityof the organization to emerging climate-related risks andopportunities and the flexibility to continue the current
technology portfolio at lower financial returns in a transition
period to low-carbon technologies.

Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternative

Investment in low-carbon alternatives(e.g., R&D, equipment, products, or services)

Local currency

GRI:
G4-OG2/3

Investments in new technologies are needed to managetransition risk. The level of investments provides an indicationof the level to which future earning capacity of core businesses
might be impacted.

Coal

CDP: EU4.3
Revenues

GHG Emissions

Estimated Scope 3 emissions, including
methodologies and emission factors used

MT of CO 2 e

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

GRI:
G4-EN17Significant supply chain emissions (Scope 3) may accelerate thedevelopment and deployment of low-emissions and alternativetechnologies or products, leading in changes in demand andrevenues.

55

Table 2

Energy Metrics — Illustrative Examples (continued)
Coal Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

Water

Percent water withdrawn in regions withhigh or extremely high baseline water
stressPercentage

SASB:
IF0101-06

Water stress can result in increased cost of supply, impacts tooperations, and increased regulation/reduced access to water
withdrawal. The percent withdrawn in high-water-stress areas
informs the risk of significant costs or limitations to production
capacity.

Expenditures

GHG Emissions

Describe current internal carbon price or
range of prices used

Price in local
currency

N/A

Internal carbon prices used, impacting the assessment of anorganization’s key assets, provide investors with a proper
understanding of the reasonableness of assumptions made as
input for their risk assessment.

Expenditures

Energy Use/

Indicative costs of supply for current andcommitted future projects e.g., through a
cost curve or indicative price range. This
could be broken down by product, asset, or
geography

Local currency

N/A

Cost of supply is important because in a market with fallingdemand, low-cost products will continue to be brought tomarket. Understanding the cost of supply informs investors
about portfolio vulnerability and thus earning capacity.

A breakdown of reserves by type and an
indication of associated emissions factors
to provide insight into potential future
emissions

MT of CO 2 e

SASB:
NR0101-23

Transition to a low-carbon economy may impact the valueof reserves. Providing insight into potential future emissions
can help to inform investors about the potential impacts ofregulatory measures and demand changes on earning capacity.

Amount of assets committed in regionswith high or extremely high baseline water
stressNumber ofassets, value,
percentage of
total assets

N/A

Water stress can result in interruptions to or limitations on
production capacity or early curtailment of operating facilities.
The value of assets in high-water-stress areas informs thepotential implications on asset valuation.

Efficiency

Assets/ Liabilities

Reserves/
AssetsAssets/ Liabilities

Reserves/
Assets
Water

CapitalReserves/
Assets

Proportion of capital allocation to longlived assets versus short-term assets

Percentage

N/A

Climate-related change impacts are subject to uncertainty
in terms of extent and timing. Understanding the allocation
to long- versus short-lived assets informs the potential of anorganization to adapt to emerging climate-related risks andopportunities

CapitalReserves/
AssetsCapital payback periods or return on
capital deployed

Years;
Percentage ROI

N/A

Climate-related change impacts are subject to uncertainty interms of extent and timing. Understanding the capital payback
periods or return on capital deployed informs the vulnerabilityof the organization to emerging climate-related risks andopportunities and the flexibility to continue the current
technology portfolio at lower financial returns in a transition
period to low-carbon technologies.

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56

Table 2

Energy Metrics — Illustrative Examples (continued)
Electric Utilities
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Energy Use/

Percent of electrical generation capacity bysource (e.g., coal, gas, solar, wind, uranium)

Percentage;
Megawatt (MW)GRI:
G4-EU1In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage lockin of these energy sources in current assets informs the level towhich future earning capacity of core business might be impacted
or asset value be impaired.

Total amount invested in renewable energy
by type of technology and as a percentage
of capital expenditures and acquisitions

Local currency,
Percentage

GRI:
G4-OG2

Investments in new technologies are needed in the transition
to a low-carbon economy. The level of investment in renewableenergy provides an indication of the level to which future
earning capacity of core business might be impacted.

Total amount of renewable energy
generated by source

MWh orGigajoules (GJ)GRI:
G4-OG3In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage
generation of renewable energy informs the level to which
future earning capacity of core business might be (positively)
impacted.

Efficiency

Revenues

Energy Use/
Efficiency
Low-Carbon
Alternatives

Revenues

Energy Use/
Efficiency
Low-Carbon
Alternatives

Revenues

Water

Percent of electrical generation capacity
based on hydroelectric generation inregions with high or extremely highbaseline water stress;

Percentage

N/A

Water stress can result in factual inability to produce and/or
legislation that impacts water availability for power generation.
The percent of hydroelectric generation capacity in highwater-stress areas informs the risk of significant limitations tohydroelectric generation capacity.

Expenditures

Energy Use/
Efficiency

Total quantity of energy consumed inoperations or other business activities byenergy sources

MWh or GJ,
Percentage

IPIECA: E2

Cost of energy and energy mix may impact operations andexpenditures.

Expenditures

Water

Percent water withdrawn,(esp. in regionswith high or extremely high baseline water
stress)Percentage

SASB:
IF0101-06

Water stress can result in increased cost of supply and/or
legislation to regulate water withdrawal for production. The
percent withdrawn in high-water-stress areas informs the riskof significant costs or limitations to production capacity.

Expenditures

GHG Emissions

Emissions intensity by asset

MT CO 2 e/MWh
generated

N/A

Regulatory measures such as carbon pricing as well astransition to low-carbon products may impact the financial
viability of existing assets. Understanding the levels of carbon
emissions by asset informs investors about the potential
impacts of regulatory measures and demand changes on
earning capacity.

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57

Table 2

Energy Metrics — Illustrative Examples (continued)
Electric Utilities Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

GHG Emissions

Describe current internal carbon price or
range of prices used

Price in local
currency

N/A

Internal carbon prices used, which impact the assessment ofan organization’s key assets, provide investors with a proper
understanding of the reasonableness of assumptions made as
input for their risk assessment.

Assets/ Liabilities

Water

Assets committed in regions with high orextremely high baseline water stress

Number ofassets, value,
percentage of
total assets

N/A

Water stress can result in limitations to production capacity
or enforced demolition of assets. The level of assets in highwater-stress areas informs the potential implications on asset
valuation.

CapitalReserves/

Proportion of capital allocation to longlived assets versus short-term assets

Percentage

N/A(Relatively) high carbon emissions in the value chain will
drive alternative technologies in a low-carbon economy.
Understanding the allocation to long- versus short-lived assets
informs the possibility of an organization to adapt the portfolio
in a timely manner to new economic realities.

Capital payback periods or return on
capital deployed

Years;
Percentage ROI

N/A(Relatively) high carbon emissions in the value chain will
drive alternative technologies in a low-carbon economy.
Understanding the capital payback periods or return on capital
deployed informs the vulnerability of the portfolio to changes
in cost levels due to regulatory measures and the flexibility tomaintain the current technology portfolio at lower financial
returns in a transition period to low-carbon technologies.

Capital expenditure planned for thedevelopment of renewable electricity
capacity and as a percentage of total
CapEx planned for power generation in thecurrent CapEx plan

Local currency,
Percentage

GRI:
G4-OG2

Investments in new technologies are needed in the transition
to a low-carbon economy. The level of investment in renewableelectricity capacity provides an indication of the level to which
future earning capacity of core business might be (positively)
impacted.

AssetsCapitalReserves/
AssetsCapitalEnergy Use/
Efficiency
Low-Carbon
Alternatives

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

CDP: EU4.3

58

Supplemental
Guidance for theTransportation Group2. Transportation
The Transportation Group includes, but is not
limited to, industries listed in Table 3.

Table 3

Transportation Group
Industry/Sub-Industry

Transportation is critical to the economy and

Air Freight

drives a significant portion of emissions anddemand for energy through the production

Passenger Air
Transportation

and, more important, the use phase. The
industry is under increasing policy andregulatory pressure to achieve emission
targets for the use phase (e.g., by monitoringcarbon emissions relative to the distanceGroup

Maritime
Transportation

Transportation

Rail Transportation

traveled). Increasing constraints on carbon
emissions will continue to impact costs inthis group, particularly around investments
in innovation (new technologies andefficiencies).44

Trucking Services
Automobiles
Related Transportation
Infrasturcture

The Transportation Group, therefore, will

A
Introduction

face challenges from two major drivers. First, policymakers are setting stricter targets forB

carbon emissions from transportation carriers. Second, new technology around low-emission/

Recommendations

fuel-efficient carriers (e.g., electric cars) is creating a shift in the competitive and investment

C

landscape. New technological innovations and new market entrants can weaken companies’

Guidance for All Sectors

market position, resulting in lower revenues, higher costs, and narrower margins. The effects

Dof these two drivers may be compounded by the length of product cycles for transportation

Supplemental Guidance
for the Financial Sector

products, such as cars and trucks, and especially for rail and marine equipment andE(e.g., manufacturing facilities, airplanes, ships, transportation infrastructure) and longer

Supplemental Guidancefor Non-Financial Sectors

planning horizons are relevant factors that must be taken into account when considering thetransportation infrastructure. As with the Energy Group, investments in long-lived assets

climate-related risks and opportunities.

F undamental Principles
F
for Effective Disclosure
Appendices

Consequently, disclosures should focus on qualitative and quantitative assessments andpotential impacts of the following:
financial risks around current plant and equipment, such as potential early write-offs of■■equipment and research and development (R&D) investments or early phasing out ofcurrent products due to policy constraints or shifts or the emergence of new technology;
investments in research and development of new technologies and potential shifts in■■demand for various types of transportation carriers; andopportunities to use new technologies to address lower-emissions standards and■■increased fuel-efficiency requirements (includes vehicles that run on a range of traditional
and alternative fuels).45
The following guidance provides additional considerations for disclosures by the Transportation
Group.

Moody’s Global Credit Research, “Moody’s: Auto sector faces rising credit risks due to carbon transition.” September 20, 2016.
https://www.moodys.com/research/Moodys-Auto-sector-faces-rising-credit-risks-due-to-carbon--PR_354984.
45
Only a small portion of vehicles to date use alternative fuels and/or electrical power.
44

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60

Governance
Disclose the organization’s governance around climate-­related risks and opportunities.
Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, and–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

A
Introduction
B
Recommendations
C

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),Guidance for All Sectors–– processes by which management is informed about climate-­related
issues, andD
Supplemental Guidance
for the Financial Sector–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium,and long term) that could have a material financial impact on theorganization and distinguish whether the climate-­related risks are
physical or transition risks, and–– a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on theorganization.
Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

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61

Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose
how identified climate-­related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities–– Investment in research and development–– Operations (including types of operations and location of facilities)
Organizations should describe how climate-­related issues serve as an input
to their financial planning process, the time period(s) used, and how theserisks and opportunities are prioritized. Organizations’ disclosures shouldreflect a holistic picture of the interdependencies among the factors that
affect their ability to create value over time. Organizations should also
consider including in their disclosures the impact on financial planning in
the following areas:A
Introduction–– Operating costs and revenues

B–– Capital expenditures and capital allocation

Recommendations–– Acquisitions or divestments

C
Guidance for All Sectors–– Access to capitalD

If climate-­related scenarios were used to inform the organization’s strategy
and financial planning, such scenarios should be described.

Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Supplemental Guidance for the Transportation Group
Transportation Group organizations should consider describing thefollowing:
Income Statement–– Revenues — Assumptions around emissions and fuel efficiency,
including any internal carbon price applied, whether this is on an
operational basis (i.e., the short-run marginal cost of carbon) or ona lifecycle basis (i.e., the long-run marginal cost of carbon), and theirassessment of the potential impacts on the demand for their carbonintensive and low-carbon products.
–– Expenditures — The potential impacts of climate-related risks andopportunities on cost of supply and strategy for managing these
impacts relative to market demand and competition. This may include
discussions of R&D expenditures, adoption of new technology, and costsof key inputs.
Balance Sheet–– Assets/Liabilities — Existing and committed future activities, given that
long-lived assets may require additional investments, restructuring, writedowns or impairment. Transportation Group organizations should consider
describing their critical planning assumptions around legacy assets, forexample strategies and timelines for changes to carbon-intensive facilities
or infrastructure, or shifts to lower carbon/fuel intensive assets.
–– Capital — How climate-related risks and opportunities, particularlyin the areas of GHG emissions and energy/fuel usage, are taken
into account in capital planning and allocation. This could include
a discussion of major acquisitions and divestments, joint venture
requirements, and investments in technology, innovation andnew business areas in light of changing climate-related risks andopportunities. Transportation Group organizations should also consider
providing an assessment of their flexibility in positioning/re-positioning
capital to address emerging climate-related risks and opportunities.

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62

Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.
Supplemental Guidance for the Transportation Group
Transportation Group organizations should consider describing:–– The climate-related scenarios used, including the 2°C scenario, and the
key assumptions and considerations underlying each climate-related
scenario.
–– For the 2°C scenario used, any adjustments/differences from publicly
available 2°C scenarios.
–– Whether climate-related scenarios with major disruptions (positive andnegative) from business-as-usual (breakthroughs, breakdowns) wereconsidered.
–– Quantitatively and qualitatively the critical input parameters,
assumptions, and analytical choices for the climate-related scenarios
used.

A
Introduction
B–– Time frames used for the climate-related scenarios, including near-,medium- and long-term milestones (e.g., how does the organizationconsider timing of potential future implications under the climaterelated scenarios used).

Recommendations
C
Guidance for All Sectors

Transportation Group organizations should consider describing
qualitatively and quantitatively the conclusion of the organization’s
climate-related scenario analysis regarding the organization’s likely
strategic performance under the various climate-related scenarios
considered, including implications for the organization’s value chain,capital allocation decisions, R&D, and other financial implications.

D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks and–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.
In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

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63

Risk Management (continued)
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Supplemental Guidance for the Transportation GroupFor all relevant metrics, Transportation Group organizations should
consider providing historical trends and forward-looking projections (byrelevant country and/or jurisdiction and business line).
Transportation Group organizations should consider providing key
metrics related to the implications of GHG emissions and energy/fuel forthe financial aspects related to shifting demand, cost of supply, capital
allocation, and long-lived assets. Such metrics could include the following:
Revenues–– Sales-weighted average fleet fuel economy, by region (miles per gallon(MPG), Liter (L)/Kilometer (Km), g carbon dioxide emissions (CO 2 e)/Km),and weight or number of passengers transported.
Expenditures–– Total fuel consumed and percent renewable for road, rail, airlines,
marine.
Capital–– Relevant metrics to indicate flexibility of capital deployment, portfolio
allocation and capital payback. This could include measures such as:
proportion of capital allocation to long-lived assets versus short-term
assets and capital payback periods or return on capital deployed.
–– Investments in low-carbon alternatives (e.g., R&D, technology, products
and/or services).
For illustrative examples, please see Table 4 (pp. 66).

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64

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks.46
GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions.47
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios.48

Supplemental Guidance for the Transportation Group
Transportation Group organizations should consider providing sectorspecific metrics. For illustrative examples, please see Table 4 (pp. 66).
Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

A
Introduction
B

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.
In describing their targets, organizations should consider including thefollowing:

Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure–– whether the target is absolute or intensity based,–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.
Where not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

Supplemental Guidance for the Transportation GroupFor all relevant metrics identified by organizations under recommended
disclosures a) and b) above, organizations should also report relevanttargets.

Appendices

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly in emission
restrictions or indirectly through carbon budgets, may impact organizations financially.
47
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
48
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
46

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65

Table 4

Transportation Metrics — Illustrative Examples
The specific examples of metrics provided below are for illustrative purposes to help organizations consider the types of metrics best suited for their activities andoperations. Organizations should define metrics and targets that are tailored to their particular climate-related risks and opportunities and that address the key financial
disclosure areas in the Task Force’s sector-specific guidance. Transportation Group organizations should consider providing key metrics related to the implications of GHG
emissions and energy/fuel on the financial aspects related to revenue, costs, assets, liabilities, and capital allocation.
In determining the most relevant and useful metrics, organizations are encouraged to engage with their key stakeholders, including investors, and review publicly available
frameworks.49 Again, the examples below are illustrative to assist organizations in thinking about appropriate metrics. The examples are not intended to imply additional or
duplicative metrics for an organization’s existing suite of metrics if existing metrics achieve the intended disclosure objective.

Air Freight
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternatives

Sales-weighted average fleet fuel economy,
by region and weight transported

MPG, L/Km,
gCO 2 e/Km,
Kilogram (Kg)transported

SASB:
TR0101-09(Auto)

Fuel costs and associated emissions are high-priority issues fortransportation companies. Understanding how an organization
is managing a transition to more efficient equipment will
provide insight into potential cost and regulatory impacts.

Expenditures

Energy Use/
Efficiency

Total fuel consumed and percent renewable
for road, airlines

Gigajoules (GJ),
Percentage

SASB:
TR0202-03

In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage ofthese energy sources embedded in current assets informs thelevel to which future earning capacity of core business might be
impacted or asset value impaired.

CapitalLow-Carbon
Alternatives

Investments in R&D for low-carbon
transportation equipment ortransportation services

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

49

A number of frameworks currently exist that provide a range of metrics that an organization may find useful in disclosing various aspects of climate-related risks and opportunities for the organization. See, for example, GHG
Protocol, Global Reporting Initiative, ISO Standards, Sustainability Accounting Standards Board, Climate Disclosure Standards Board, World Resources Institute, World Business Council for Sustainable Development, CDP, andvarious industry-specific guidance.

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66

Table 4

Transportation Metrics — Illustrative Examples (continued)
Passenger Air Transportation
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternatives

Sales-weighted average fleet fuel economy,
by region and number of passengers
transported

MPG, L/Km,
gCO 2 e/Km, Kg
transported,
number ofpassengers
transported

SASB:
TR0101-09(Auto)

Fuel costs and associated emissions are high-priority issues fortransportation companies. Understanding how an organization
is managing a transition to more efficient equipment will
provide insight into potential cost and regulatory impacts.

Expenditures

Energy Use/
Efficiency

Total fuel consumed and percent renewable
for airlines

GJ, Percentage

SASB:
TR0201-03

In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage ofthese energy sources embedded in current assets informs thelevel to which future earning capacity of core business might be
impacted or asset value impaired.

CapitalLow-Carbon
Alternatives

Investments in R&D for low-carbon
transportation equipment ortransportation services

Local currency

SASB:
TR0201-F(Age offleet)

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Maritime Transportation
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternatives

Sales-weighted average fleet fuel economy
by region and weight or number ofpassengers transported

MPG, L/Km,
gCO 2 e/Km, Kg
transported,
number ofpassengers
transported

SASB:
TR0101-09(Auto)

Fuel costs and associated emissions are high-priority issues fortransportation companies. Understanding how an organization
is managing a transition to more efficient equipment will
provide insight into potential cost and regulatory impacts.

Revenues

Low-Carbon
Alternatives

Energy Efficiency Design Index (EEDI) for
new ships

Grams of CO 2 e
per ton-nautical
mile

SASB:
TR0301-05

Per the IMO, all ships built since January 2013 should becompliant with EEDI efficiency standards. A larger percentageof EEDI equipment within an organization’s fleet (i.e., loweremissions-intensity fleet overall) would indicate better
positioning for transition to a low-carbon economy where
efficiency regulations could be financially impactful.

Expenditures

Energy Use/
Efficiency

Total fuel consumed and percent renewable
for marine

GJ, Percentage

SASB:
TR0301-03

In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage ofthese energy sources embedded in current assets informs thelevel to which future earning capacity of core business might be
impacted or asset value impaired.

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67

Table 4

Transportation Metrics — Illustrative Examples (continued)
Maritime Transportation Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

CapitalLow-Carbon
Alternatives

Investments in R&D for low-carbon
transportation equipment ortransportation services

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternatives

Sales-weighted average fleet fuel economy,
by region and weight or number ofpassengers transported

MPG, L/Km,
gCO 2 e/Km, Kg
transported,
number ofpassengers
transported

SASB:
TR0101-09(Auto)

Fuel costs and associated emissions are high-priority issues fortransportation companies. Understanding how an organization
is managing a transition to more efficient equipment will
provide insight into potential cost and regulatory impacts.

Expenditures

Energy Use/
Efficiency

Total fuel consumed and percent renewable
for rail

GJ, Percentage

SASB:
TR0401-03

In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage ofthese energy sources embedded in current assets informs thelevel to which future earning capacity of core business might be
impacted or asset value impaired.

CapitalLow-Carbon
Alternatives

Investments in R&D for low-carbon
transportation equipment ortransportation services

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Rail Transportation

Trucking Transportation
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternatives

Sales-weighted average fleet fuel economy
by region and weight or number ofpassengers transported

MPG, L/Km,
gCO 2 e/Km, Kg
transported,
number ofpassengers
transported

SASB:
TR0101-09(Auto)

Fuel costs and associated emissions are high-priority issues fortransportation companies. Understanding how an organization
is managing a transition to more efficient equipment will
provide insight into potential cost and regulatory impacts.

Expenditures

Energy Use/
Efficiency

Total fuel consumed and percent renewable
for road

GJ, Percentage

SASB:
TR0402-03

In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage ofthese energy sources embedded in current assets informs thelevel to which future earning capacity of core business might be
impacted or asset value impaired.

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68

Table 4

Transportation Metrics — Illustrative Examples (continued)
Trucking Transportation Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

GHG Emissions

Road vehicles—Geographic breakdown of
GHG emissions: emissions and/or emission
intensity of products for key geographies
against regulatory requirements/targets

Metric ton (MT)of CO 2 e or CO 2 e/Km

CDP: AU2.3(Auto)Part of transition risk is the potential implementation of
product-efficiency regulations by geography. It is importantto understand how organizations are operating withinthese geographies and the potential exposure/impact of
noncompliance.

CapitalLow-Carbon
Alternatives

Investments in Research and Development
for low-carbon transportation equipment
or transportation services

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues

Low-Carbon
Alternatives

Sales-weighted average fleet fuel economy,
by region and weight or number ofpassengers transported

MPG, L/Km,
gCO 2 e/Km, Kg
transported,
number ofpassengers
transported

SASB:
TR0101-09

New technologies are needed to manage transition risk
as demand grows for lower-carbon product alternatives.
Organizations with stronger offerings of low-carbon alternative
products in their core business will be better-positioned forsuccess in the low carbon economy.

Revenues

Low-Carbon
Alternatives

Vehicle sales (historical, current andprojected) by category (e.g., gas vehicles,
diesel vehicles, battery electric Vehicles,
plug-in hybrid electric vehicles, alternativepowered vehicles (LPG, CNG, fuel cells,
compressed air).

Number ofvehicles sold,value of vehicles
sold

SASB:
TR0101-10

New technologies are needed to manage transition risk, anddemand will grow for lower-carbon product alternatives.
Organizations with stronger offerings of low-carbon alternative
products in their core business will be better positioned forsuccess in the low carbon economy.

Expenditures

Energy Use/
Efficiency

Total fuel consumed and percent renewable
for road, rail, marine

GJ, Percentage

Expenditures

GHG Emissions

Road vehicles — Geographical breakdownof GHG emissions: emissions and/or emission intensity of products for
key geographies against regulatory
requirements/targets

MT of CO 2 e or
CO 2 e/Km

Automobiles

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage ofthese energy sources embedded in current assets informs thelevel to which future earning capacity of core business might be
impacted or asset value impaired.
CDP: AU2.3

Part of transition risk is the potential implementation of
product- efficiency regulations by geography. It is importantto understand how organizations are operating withinthese geographies and the potential exposure/impact of
noncompliance.

69

Table 4

Transportation Metrics — Illustrative Examples (continued)
Automobiles Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Assets/ Liabilities

GHG Emissions

Automobiles —- Life cycle reporting of GHG
emissions

MT of CO 2 e

SASB:
TR0101-01/
02/03

How an organization manages its product life cycle emissions
and utilization of raw materials will provide insight into theorganization’s ability to adapt to a low-carbon economy.

TR0102-02/
05/06
CapitalLow-Carbon
Alternatives

Investments in Research and Development
for low-carbon transportation equipment
or transportation services

Local currency

CDP: AU3.4

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Related Transportation Infrastructure
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

Energy Use/
Efficiency

Total fuel consumed and percent renewable

GJ, Percentage

N/A

In the transition to a low-carbon economy, fossil fuels will phaseout whereas renewable energy will phase in. The percentage ofthese energy sources embedded in current assets informs thelevel to which future earning capacity of core business might be
impacted or asset value impaired.

CapitalLow-Carbon
Alternatives

Investments in Research and Development
for low-carbon transportation equipment
or transportation services

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

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70Supplemental
Guidance for the
Materials andBuildings Group3. Materials and Buildings
The Materials and Buildings Group includes,
but is not limited to, industries listed inTable 5Materials and Building Group

Table 5.

Industry/Sub-Industry

Metals and Mining

Materials and Buildings Group organizations
are typically capital intensive, require highinvestments in plants, equipment, andbuildings that are (relatively) fixed in terms oflocation, and dependent on sources of raw
and refined materials. This may reduce theflexibility of organizations in this group toadapt to risks of climate change.

Group

Materials
and Buildings

Chemicals
Construction Materials
Capital Goods
Real Estate Management
and Development

Many of this group’s activities result in highgreenhouse gas (GHG) emissions and high energy consumption. Furthermore, a number ofindustries in this group are dependent on water availability and/or vulnerable to the effects ofacute or chronic physical risks from weather events.
A
Introduction

Since the group is capital intensive and the plants and facilities have a long life span,Baccelerated R&DDD (research, development, demonstration, and deployment) is criticallyimportant. Thus the disclosures relating to R&DDD plans and progress are valuable to see the

Recommendations

current and future situation and risks of the group.

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

potential impacts of the following:
Stricter constraints on emissions and/or pricing carbon emissions and related impact■■

on costs.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Consequently, disclosures should focus on qualitative and quantitative assessments and

The construction materials and real estate sectors should assess risks related to the■■increasing frequency and severity of acute weather events or increasing water scarcity that
impact their operating environment.
Opportunities for products (or services) that improve efficiency, reduce energy use, and■■support closed-loop product solutions.
The following guidance provides additional considerations for disclosures by the Materials andBuildings Group.

Governance
Disclose the organization’s governance around climate-­related risks and opportunities.
Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, and–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

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72

Governance (continued)
Disclose the organization’s governance around climate-­related risks and opportunities.
Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related
issues, and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

E–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium, andlong term) that could have a material financial impact on the organizationand distinguish whether the climate-­related risks are physical ortransition risks, and–– a description of the process(es) used to determine which risks andopportunities could have a material financial impact on the organization.

Supplemental Guidancefor Non-Financial Sectors

Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

F undamental Principles
F
for Effective Disclosure
Appendices

Guidance for All Sectors
Organizations should provide the following information:

Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose how
identified climate-­related issues have affected their businesses, strategy,
and financial planning.
Organizations should consider including the impact on their businesses andstrategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities–– Investment in research and development–– Operations (including types of operations and location of facilities)
Organizations should describe how climate-­related issues serve as an input
to their financial planning process, the time period(s) used, and how theserisks and opportunities are prioritized. Organizations’ disclosures shouldreflect a holistic picture of the interdependencies among the factors that
affect their ability to create value over time. Organizations should also
consider including in their disclosures the impact on financial planning in
the following areas:–– Operating costs and revenues–– Capital expenditures and capital allocation–– Acquisitions or divestments–– Access to capital
If climate-­related scenarios were used to inform the organization’s strategy
and financial planning, such scenarios should be described.

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73

Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
(continued)
Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Income Statement–– Revenues — Carbon pricing assumptions, including any internal carbon
price applied, how it is determined, and an assessment of the potential
impacts on future revenue.
–– Expenditures — The potential impacts of climate-related risks andopportunities on cost of supply and strategy for managing these impacts
relative to their market demand and competition. This may include
discussions of research and development (R&D) expenditures, adoptionof new technology, and costs of key inputs.
Balance Sheet–– Assets/Liabilities — As demand for end products evolves, Materials andBuildings Group organizations should consider providing an indicationof the emissions profile of their long-lived assets. This should focus on
existing and committed future activities, given that reserves may not be
brought to market and long-lived assets may require restructuring, writedowns, or impairment. Materials and Buildings Group organizations
should consider describing their critical planning assumptions aroundlegacy assets, for example, strategies and timelines for carbon-intensive
facilities or shifts to less intensive carbon/energy/water usage.

A
Introduction
B
Recommendations–– Capital — How GHG emissions, energy usage, and water issues aretaken into account in capital planning and allocation. This could include
a discussion of major acquisitions and divestments, joint venture
requirements, and investments in technology, innovation, and new businessareas in light of changing climate-related risks and opportunities. Materials
and Buildings Group organizations should also consider providing anassessment of flexibility in positioning/re-positioning capital to address
emerging climate-related risks and opportunities.

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Supplemental Guidance for the Materials and Buildings Group
Materials and Buildings Group organizations should consider providing thefollowing:

Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.
Supplemental Guidance for the Materials and Buildings Group
Materials and Buildings Group organizations should consider describing:–– The climate-related scenarios used, including the 2°C scenario, and the
key assumptions and considerations underlying each climate-related
scenario.
–– For the 2°C scenario used, any adjustments/differences from publicly
available 2°C scenarios.
–– Whether climate-related scenarios with major disruptions (positive andnegative) from business-as-usual (breakthroughs, breakdowns) wereconsidered.
–– Quantitatively and qualitatively the critical input parameters, assumptions,and analytical choices for the climate-related scenarios used.
–– Time frames used for the climate-related scenarios, including near-,medium- and long-term milestones (e.g., how does the organizationconsider timing of potential future implications under the climate-related
scenarios used).
Materials and Buildings Group organizations should consider describing
qualitatively and quantitatively the conclusion of the organization’s climaterelated scenario analysis regarding the organization’s likely strategic
performance under the various climate-related scenarios considered,including implications for the organization’s value chain, capital allocation
decisions, R&D, and other financial implications.

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74

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.
Organizations should also consider disclosing the following:–– processes for assessing the potential size and scope of identified
climate-­related risks and–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

A
Introduction

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.
In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

F undamental Principles
F
for Effective Disclosure
Appendices

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75

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure andmanage climate-­related risks and opportunities, as described in Tables A1
and A2 (pp. 100-101). Organizations should consider including metrics
on climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices
as well as climate-­related opportunity metrics such as revenue fromproducts and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend
analysis. In addition, where not apparent, organizations should provide a
description of the methodologies used to calculate or estimate climate-­
related metrics.

Supplemental Guidance for the Materials and Buildings GroupFor all relevant metrics, Materials and Buildings Group organizations
should consider providing historical trends and forward-looking
projections (by relevant country and/or jurisdiction and business line).

A

Materials and Buildings Group organizations should consider providing
key metrics related to the implications of GHG emissions, energy, andwater on the financial aspects related to shifting demand, cost of supply,
capital allocation, and reserves. Such metrics could include the following:

Introduction
B
Recommendations

Revenues–– Total energy intensity — by tons of product, amount of sales, numberof products depending on informational value.

C
Guidance for All Sectors
D

Expenditures–– Total energy consumed, broken down by source (e.g., purchased
electricity and renewable sources).

Supplemental Guidance
for the Financial Sector–– Total fuel consumed — percentage from coal, natural gas, oil, andrenewable sources.

E
Supplemental Guidancefor Non-Financial Sectors–– Measurement of water withdrawn in regions with high or extremely
high baseline water stress.

F

Capital–– Relevant metrics to indicate flexibility of capital deployment, portfolio
allocation and capital payback. This could include measures such as:
proportion of capital allocation to long-lived assets versus short-term
assets and capital payback periods or return on capital deployed.

 undamental Principles
F
for Effective Disclosure
Appendices–– Investments in low-carbon alternatives (e.g., R&D, technology,
products, and/or services).

Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks. 50
GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions. 51
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios. 52

Supplemental Guidance for the Materials and Buildings Group
Materials and Buildings Group organizations should consider providing
sector-specific metrics. For illustrative examples, please see Table 6(pp. 78).

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly in emission
restrictions or indirectly through carbon budgets, may impact organizations financially.
51
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
52
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
50

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76

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.
In describing their targets, organizations should consider including thefollowing:–– whether the target is absolute or intensity based,–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.
Where not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

A

Supplemental Guidance for Materials and Buildings GroupFor all relevant metrics identified by Materials and Buildings Group
organizations under recommended disclosures a) and b) above,organizations should also report relevant targets.

Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

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77

Table 6

Materials and Buildings Metrics — Illustrative Examples
The specific examples of metrics provided below are for illustrative purposes to help organizations consider the types of metrics best suited for their activities andoperations. Organizations should define metrics and targets that are tailored to their particular climate-related risks and opportunities and that address the key financial
disclosure areas in the Task Force’s sector-specific guidance. Materials and Buildings Group organizations should consider providing key metrics related to the implications of
GHG emissions, energy, and water on the financial aspects related to revenue, costs, assets, liabilities, and capital allocation.
In determining the most relevant and useful metrics, organizations are encouraged to engage with their key stakeholders, including investors, and review publicly available
frameworks.53 Again, the examples below are illustrative to assist organizations in thinking about appropriate metrics. The examples are not intended to imply additional or
duplicative metrics for an organization’s existing suite of metrics if existing metrics achieve the intended disclosure objective.

Metals and Mining
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues
CapitalLow-Carbon
Alternatives

Investments in low-carbon alternatives(e.g., R&D, technology, products and/or
services)

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which the future earning capacity of the corebusiness might be impacted.

Expenditures

Energy Use/
Efficiency

Total energy consumed, broken down by
source (e.g., purchased electricity andrenewable sources)

Gigajoules (GJ)

N/AExpenditures

Energy Use/
Efficiency

Total fuel consumed—percentage fromcoal, natural gas, oil, and renewablesources

GJ

SASB:
NR0302-04

The metals and mining industries are energy- and emissionintensive industries. Understanding the levels of energy
consumption by source provides an indication of the potential
impact of regulatory measures in relation to the use of certain
energy sources as well as the transition risks in a low-carbon
economy scenario.

Expenditures

Energy Use/
Efficiency

Total energy intensity—by tons of product,amount of sales, number of products
depending on informational value

GJ

N/A

In the transition to a low-carbon economy, the energyefficiency levels achieved in production provide investors withan indication of the vulnerability of the product portfolio totransition risk and thus earning capacity.

Expenditures

Water

Percent of fresh water withdrawn in regionswith high or extremely high baseline water
stressPercentage

SASB:
NR0302-04

Water stress can result in increased cost of supply, impacts tooperations, and increased regulation/reduced access for water
withdrawal. The percent withdrawn in high-water-stress areas
informs the risk of significant costs or limitations to production
capacity.

Assets/ Liabilities

Reserves/

A breakdown of reserves and an indicationof associated emissions factors to provide
insight into potential future emissions

Metric ton(MT) of carbon
dioxideemissions (CO 2 e)

N/A

A transition to a low-carbon economy may impact the valueof reserves. Providing insight into potential future emissions
can help to inform investors about the potential impacts ofregulatory measures and demand changes on earning capacity.

Assets53

A number of frameworks currently exist that provide a range of metrics that an organization may find useful in disclosing various aspects of climate-related risks and opportunities for the organization. See, for example, GHG
Protocol, Global Reporting Initiative, ISO Standards, Sustainability Accounting Standards Board, Climate Disclosure Standards Board, World Resources Institute, World Business Council for Sustainable Development, CDP, andvarious industry-specific guidance.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

78

Table 6

Materials and Buildings Metrics — Illustrative Examples (continued)
Chemicals
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues
CapitalLow-Carbon
Alternatives

Investments in low-carbon alternatives(e.g., R&D, technology, products and/or
services)

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which the future earning capacity of the corebusiness might be impacted.

Expenditures

Energy Use/
Efficiency

Total energy consumed, broken down by
source (e.g., purchased electricity andrenewable sources)

GJ

SASB:
RT0101-05

The chemicals industries are energy- and carbon-intensive
industries. Understanding the levels of energy consumption
by source provides an indication of the potential impacts ofregulatory measures in relation to the use of certain energy
sources and transition risks in a low-carbon economy scenario.

Expenditures

Energy Use/
Efficiency

Total fuel consumed – percentage fromcoal, natural gas, oil, and renewablesources

GJ

N/A

Expenditures

Energy Use/
Efficiency

Total energy intensity – by tons of product,amount of sales, number of products
depending on informational value

GJ

N/A

In the transition to a low-carbon economy, the energy
efficiency levels achieved in production provide investors withan indication of the vulnerability of the product portfolio totransition risk and thus earning capacity.

Expenditures

Water

Percent of fresh water withdrawn in regionswith high or extremely high baseline water
stressPercentage

SASB:
RT0101-07

Water stress can result in increased cost of supply, factual
inability to produce and/or legislation to regulate water
withdrawal for production. The percent withdrawn in highwater-stress areas informs the risk of significant costs orlimitations to production capacity.

Construction Materials
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues/
CapitalLow-Carbon
Alternatives

Investments in low-carbon alternatives(e.g., R&D, technology, products and/or
services)

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which the future earning capacity of the corebusiness might be impacted.

Expenditures

Energy Use/
Efficiency

Total energy consumed, broken down by
source (e.g., purchased electricity andrenewable sources)

GJ

SASB:
NR0401-04

Expenditures

Energy Use/
Efficiency

Total fuel consumed—percentage fromcoal, natural gas, oil, and renewablesources

GJ

N/A

The construction materials industries are energy- and carbonintensive industries. Understanding the levels of energy
consumption by source provides an indication of the potential
impacts of regulatory measures in relation to the use of certain
energy sources and transition risks in a low-carbon economy
scenario.

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79

Table 6

Materials and Buildings Metrics — Illustrative Examples (continued)
Construction Materials Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

Energy Use/
Efficiency

Total energy intensity—by tons of product,amount of sales, number of products
depending on informational value

GJ

N/A

In the transition to a low-carbon economy, the energyefficiency levels achieved in production provide investors withan indication of the vulnerability of the product portfolio totransition risk and thus earning capacity.

Expenditures

Water

Percent of fresh water withdrawn in regionswith high or extremely high baseline water
stressPercentage

SASB:
NR0401-05

Water stress can result in increased cost of supply, factual
inability to produce, and/or legislation to regulate water
withdrawal for production. The percent withdrawn in highwater-stress areas informs the risk of significant costs orlimitations to production capacity.

Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues/
CapitalLow-Carbon
Alternatives

Investments in low-carbon alternatives(e.g., R&D, technology, products and/or
services)

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which the future earning capacity of the corebusiness might be impacted.

Expenditures

Energy Use/
Efficiency

Total energy consumed, broken down by
source (e.g., purchased electricity andrenewable sources)

GJ

SASB:
RT0203-01

The capital goods industries are energy- and carbon-intensive
industries. Understanding the levels of energy consumption
by source provides an indication of the potential impacts ofregulatory measures in relation to the use of certain energy
sources and transition risks in a low-carbon economy scenario.

Expenditures

Energy Use/
Efficiency

Total fuel consumed—percentage fromcoal, natural gas, oil, and renewablesources

GJ

N/A

The capital goods industries are energy- and carbon-intensive
industries. Understanding the levels of fuel consumption
by source provides an indication of the potential impacts ofregulatory measures in relation to the use of certain fuels andtransition risks in a low-carbon economy scenario.

Expenditures

Energy Use/
Efficiency

Total energy intensity—by tons of product,amount of sales, number of products
depending on informational value

GJ

N/A

In the transition to a low-carbon economy, the energyefficiency levels achieved in production provide investors withan indication of the vulnerability of the product portfolio totransition risk and thus earning capacity.

Expenditures

Water

Percent of fresh water withdrawn in regionswith high or extremely high baseline water
stressPercentage

N/A

Water stress can result in increased cost of supply, factual
inability to produce and/or legislation to regulate water
withdrawal for production. The percent withdrawn in highwater-stress areas informs the risk of significant costs orlimitations to production capacity.

Capital Goods

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80

Table 6

Materials and Buildings Metrics — Illustrative Examples (continued)
Real Estate Development and Management
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues
CapitalLow-Carbon
Alternatives

Investments in low-carbon alternatives(e.g., R&D, technology, products and/or
services)

Local currency

GRI: G4-EN7

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which the future earning capacity of the corebusiness might be impacted.

Revenues
Assets/ Liabilities

Energy Use/Efficiency

For each property type, the percentage
certified as sustainable

Percentage

GRESB:
Q17/ Q18

Low-Carbon
Alternatives

SASB:
IF0402-04
GRI:
G4-CRE8GRESB:
NC5.2/
CA2/Q30.1/
Q30.2/Q31

Expenditures

Energy Use/
Efficiency

Total energy consumed, broken down
by source (e.g., purchased electricity,
alternative sources, and renewablesources)

GJ

SASB:
IF0402-02
GRI:G4-EN3
GRESB:
PI3/ Q25.1/
Q25.3

Regulatory measures such as carbon pricing as well astransition to low-carbon properties may impact the financial
viability of existing properties. Understanding the percentage
certified as sustainable (against relevant indices) provides
investors with an indication about the potential impact ofregulatory measures and demand changes on earning capacityof real estate portfolios.

The real estate industries are energy- and carbon-intensive
industries in terms of the use of the properties. Understanding
the levels of energy consumption by source provides anindication of the potential impacts of regulatory measures inrelation to the use of certain energy sources and transition risks
in a low-carbon economy scenario.

Expenditures

Energy Use/
Efficiency

Total fuel consumed—percentage fromcoal, natural gas, oil, and renewablesourcesGJ

GRESB:
Q25.1

Expenditures

Water

Percent of fresh water withdrawn in regionswith high or extremely high baseline water
stressPercentage

SASB:
IF0402-06

Water stress can result in increased cost of supply, inability
to deliver water to real estate tenants, and/or legislation
to regulate water consumption. The percent withdrawn in
high-water-stress areas informs the risk of significant costs orlimitations to this service capacity.

Expenditures

Energy Use/
Efficiency

Building energy intensity (by occupants orsquare area)

GJ

SASB:
IF0402-02

In the transition to a low-carbon economy, the energy efficiency
of properties provides investors with an indication of thevulnerability of the portfolio to transition risk and thus earning
capacity of real estate portfolios.

GRI:
G4-CRE1GRESB:
Q25.2

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81

Table 6

Materials and Buildings Metrics — Illustrative Examples (continued)
Real Estate Development and Management Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

Reserves/
AssetsMetrics on the financial evaluation offlooding risk according to local standards
and/or based on elevation of buildings/
plants, including the definition of highflooding risk used, the probability of eventsoccurring, and the ability or costs to insure
against these risks

Percentage
probability,
costs to insurein local currency

N/A

Flooding risks can result in physical damage to properties,
impacting their serviceability. Understanding the potential
impacts of flooding risks and the related financial implications
informs investors about potential changes to the earning
capacity of real estate portfolios.

Land Use

Expenditures

GHG Emissions

GHG emissions intensity from buildings (byoccupants or square area) and from new
construction and redevelopment

GJ

GRI:
G4-CRE3/
CRE4

In the transition to a low-carbon economy, the carbon efficiencyof the properties provides investors with an indication of thevulnerability of the product portfolio to transition risk and thus
earning capacity of real estate portfolios.

Expenditures

Water

Building water intensity (by occupants orsquare area)

Cubic meters

GRI:
G4-CRE2

Water stress can result in increased cost of supply, factual
inability to deliver water to real estate tenants, and/or
legislation to regulate water withdrawal for consumption.
The building water intensity informs the (transition) risk ofsignificant costs or limitations to this service capacity.

GRESB:
Q27.2

Assets/ Liabilities

Reserves/
AssetsArea of properties located in designatedflood hazard areas by property subsector

Square meters
or acres

Land Use

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

SASB:
IF0402-13

Flooding risks can result in physical damage to properties,
impacting their serviceability. Understanding the relative sizeof properties in high-flood-risk areas by subsector informs
investors about potential changes to the earning capacity ofreal estate portfolios.

82Supplemental
Guidance for the
Agriculture, Food, andForest Products Group4. Agriculture, Food, and Forest Products
The Agriculture, Food, and Forest ProductsGroup includes, but is not limited to,industries listed in Table 7.

Table 7

Agriculture, Food, andForest Products Group

Climate-related risks and opportunities inthis group largely emanate from greenhouse

Industry/Sub-Industrygas (GHG) emissions and water and waste

Beverages

management driven by land use andproduction practices and changing land-use
patterns.

54

Group

Agriculture,
Food, and
Forest Products

The absolute and relative impacts of climaterelated physical and transition risks will vary
between producers and processors of food

Agriculture
Packaged Foods
and Meats
Paper and Forest
Products

and fiber.
Producers, such as agriculture and forestry enterprises, will likely be impacted to aA

somewhat greater degree by GHG and water risks (including extreme weather events andIntroduction

shifts in precipitation patterns) than processors. Agriculture and forest producers generateBsignificant non-point GHG emissions, primarily through land-use practices and changes
to them (e.g., grazing, soil tillage practices, conservation practices, feedlot practices,

Recommendations

deforestation, or afforestation).55

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Processors, such as food, beverage, and fiber processors (e.g., paper), will likely be impacted
relatively less by direct GHG emissions (Scope 1), but more by indirect GHG emissions (Scope 3)
arising from their supply and distribution chains. Processors will also have a similar emphasis
on water and waste risks and opportunities as compared with producers. Beverage production

E
Supplemental Guidancefor Non-Financial Sectors

and paper production, for example, depend on access to significant water resources and,in the case of beverage production, high-quality water resources. Risks and opportunities
around waste include residual materials such as paper and wood waste, waste water, and post-F undamental Principles
F
for Effective Disclosure

processing animal byproducts.
Assessing the impacts of climate-related risks and opportunities for the Agriculture, Food, andAppendices

Forest Products Group involves a number of interactions and trade-offs among the climaterelated aspects of land use, water, waste, carbon sequestration, biodiversity, and conservation,complicated by short-run competing goals around food security (e.g., maintaining production
sufficient to meet the rising demand for food, fiber, fodder, and biofuels).
Policies and regulations around land use and conservation requirements, for example, mayconstrain or preclude certain uses of land and water resources (e.g., deforestation, riparianrights, tillable land). Such policies may lead to significant asset impairment if forest or
agricultural lands cannot be used to produce food or fiber.

According to the IPCC, agriculture and forestry is responsible for “just under a quarter of anthropogenic GHG emissions mainly fromdeforestation and agricultural emissions from livestock, soil, and nutrient management. Anthropogenic forest degradation andbiomass burning (forest fires and agricultural burning) also represent relevant contributions.” (Intergovernmental Panel on Climate
Change (IPCC). “Agriculture, Forestry and Other Land Use (AFOLU),” In: Climate Change 2014: Mitigation of Climate Change, 2014.
Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. https://www.
ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf). Agriculture is also a heavy user of water, primarily for irrigation.
55
For more information see definitions of land use change and indirect land use change on page 1,265 of the IPCC’s Climate Change 2014
Mitigation of Climate Change (IPCC. Climate Change 2014 Mitigation of Climate Change, Cambridge University Press, 2014.
https://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf).
54

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

84

Opportunities in the Agriculture, Food, and Forest Products Group largely fall into three categories:
Increasing efficiency by lowering the level of carbon and water intensity per unit of output■■(e.g., through drought-resistant hybrids, nutrient-efficient genetically modified organisms(GMOs), feed and feed practices that reduce livestock methane emissions)
Reducing inputs and residual waste for a given level of output (e.g., nutrient management■■

practices, tillage practices, conservation practices, biofuels, food waste reduction)
Developing new products and services with lower carbon and water intensity (e.g., bioplastics)■■

Disclosures, therefore, should focus on qualitative and quantitative information related
to both the group’s policy and market risks in the areas of GHG emissions and water, andits opportunities around carbon sequestration, increasing food and fiber production, andreducing waste, including:efforts to reduce GHG emissions and water intensity, including such non-point GHG■■

sources as crop nutrient processes, livestock management processes, erosion, tillage
practices, watershed practices, and forest management,
efforts to improve sustainability through better recycling of outputs and residual waste■■(e.g., wood products, food waste, and animal byproducts),

A

climate-related impacts on food and fiber production (e.g., extreme weather or water events), andIntroduction

■■

B

■■

opportunities that capture shifts in business and consumer trends toward food and fiber

Recommendations

products, processes and services that produce lower emissions and are less water-/waste-

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendicesintensive while maintaining adequate food security (e.g., bioplastics, GMOs, new uses forwood/animal byproducts).
The following guidance provides additional considerations for disclosures by the Agriculture,
Food, and Forest Products Group.

Governance
Disclose the organization’s governance around climate-­related risks and opportunities.
Recommended
Disclosure a)
Describe the board’s
oversight of climate-­
related risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-­related issues, organizations
should consider including a discussion of the following:–– processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-­
related issues,–– whether the board and/or board committees consider climate-­related
issues when reviewing and guiding strategy, major plans of action,risk management policies, annual budgets, and business plans aswell as setting the organization’s performance objectives, monitoring
implementation and performance, and overseeing major capital
expenditures, acquisitions, and divestitures, and–– how the board monitors and oversees progress against goals andtargets for addressing climate-­related issues.

Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climate-­relatedrisks and opportunities.

Guidance for All Sectors
In describing management’s role related to the assessment andmanagement of climate-­related issues, organizations should consider
including the following information:–– whether the organization has assigned climate-­related responsibilities
to management-level positions or committees; and, if so, whether
such management positions or committees report to the board or acommittee of the board and whether those responsibilities include
assessing and/or managing climate-­related issues,–– a description of the associated organizational structure(s),–– processes by which management is informed about climate-­related
issues, and–– how management (through specific positions and/or management
committees) monitors climate-­related issues.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

85

Strategy
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
Recommended
Disclosure a)
Describe theclimate-­related risks
and opportunities
the organization has
identified over the short,medium, and long term.

Guidance for All Sectors
Organizations should provide the following information:–– a description of what they consider to be the relevant short-, medium-,and long-term horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-­related
issues often manifest themselves over the medium and longer terms,–– specific climate-­related issues for each time horizon (short, medium,and long term) that could have a material financial impact on theorganization and distinguish whether the climate-­related risks are
physical or transition risks, and–– a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on theorganization.
Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing
climate-­related issues, organizations should refer to Tables A1 and A2(pp. 100-101).

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Guidance for All Sectors
Building on recommended disclosure (a), organizations should disclose
how identified climate-­related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:–– Products and services–– Supply chain and/or value chain–– Adaptation and mitigation activities–– Investment in research and development

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

–– Operations (including types of operations and location of facilities)
Organizations should describe how climate-­related issues serve as an
input to their financial planning process, the time period(s) used, and how
these risks and opportunities are prioritized. Organizations’ disclosures
should reflect a holistic picture of the interdependencies among thefactors that affect their ability to create value over time. Organizations
should also consider including in their disclosures the impact on financial
planning in the following areas:–– Operating costs and revenues–– Capital expenditures and capital allocation–– Acquisitions or divestments–– Access to capital
If climate-­related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described.

Supplemental Guidance for the Agriculture, Food, and Forest
Products Group
Agriculture, Food, and Forest Products Group organizations should
consider discussing how climate-related risks and opportunities—such as
current and forecasted levels of GHG emissions, energy, and water—are
integrated into their strategy formulation and decision making, and key
planning assumptions around:

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

86Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
(continued)
Recommended
Disclosure b)
Describe the impact ofclimate-­related risks
and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

–– Expenditures — The potential impacts of climate-related risks andopportunities on cost of supply and strategy for managing these
impacts relative to market demand and competition. This may include
discussions of research and development (R&D) expenditures, adoptionof new technology, costs of key inputs (e.g., fuel, water), and losses
from weather events (e.g., severe storms, floods).

Balance Sheet–– Assets/Liabilities — An indication of the emissions/energy/water
intensity (both emissions and absorption of GHG) of long-lived assets(e.g., land) and reserves (e.g., forests), with a focus on existing andcommitted future activities, given that the value of assets and reserves
may require restating, write-downs or impairment. Agriculture, Food,and Forest Products Group organizations should consider describing
critical planning assumptions around legacy assets (e.g., strategies
and timelines for land acquisition or divestment, anticipated land usechanges including afforestation or deforestation).

A
Introduction
B
Recommendations–– Capital — How climate-related risks and opportunities, particularlyin the areas of GHG emissions, energy usage, and water issues, aretaken into account in capital planning and allocation. For example, this
could include a discussion of major acquisitions and divestments, joint
venture requirements, and investments in technology, innovation,and new business areas in light of changing climate-related risks
and opportunities. Organizations should also consider providing anassessment of flexibility in positioning/repositioning capital to address
emerging climate-related risks and opportunities.

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Income Statement–– Revenues — Assumptions about the impact of GHG emissions andwater on revenues and demand, including whether this is on an
operational basis or on a lifecycle basis and their assessment of thepotential impacts on the demand for their products.

Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

Guidance for All Sectors
Organizations should describe how their strategies are likely to perform
under various forward-looking, climate-­related scenarios (e.g., potential
effects under different scenarios) and any resulting changes to theirstrategies and financial plans, risk management activities, or targets/metrics to mitigate risks and take advantage of opportunities.
Supplemental Guidance for the Agriculture, Food, and Forest
Products Group
Agriculture, Food, and Forest Products Group organizations should
describe:–– The climate-related scenarios used, including the 2°C scenario, and the
key assumptions and considerations underlying each climate-related
scenario.
–– For the 2°C scenario used, any adjustments/differences from publicly
available 2°C scenarios.
–– Whether climate-related scenarios with major disruptions (positive andnegative) from business-as-usual (breakthroughs, breakdowns) wereconsidered.
–– Quantitatively and qualitatively the critical input parameters,
assumptions, and analytical choices for the climate-related scenarios
used.

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87Strategy (continued)
Disclose the actual and potential impacts of climate-­related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
(continued)
Recommended
Disclosure c)
Describe the potential
impact of different
scenarios, including
a 2°C scenario, on
the organization’s
businesses, strategy, andfinancial planning.

–– Time frames used for the climate-related scenarios, including near-,medium- and long-term milestones (e.g., how does the organizationconsider timing of potential future implications under the climaterelated scenarios used).
Agriculture, Food, and Forest Products Group organizations should
consider describing qualitatively and quantitatively the conclusion of
the organization’s scenario analysis regarding the organization’s likely
strategic performance under the various scenarios considered, including
implications for the organization’s value chain, capital allocation decisions,
R&D, and other financial implications.

Risk Management
Disclose how the organization identifies, assesses, and manages climate-­related risks.
Recommended
Disclosure a)
Describe theorganization’s processes
for identifying andassessing climate-­relatedrisks.

A
Introduction
B
Recommendations
C

Guidance for All Sectors
Organizations should describe their risk management processes for
identifying and assessing climate-­related risks. An important aspect of
this description is how organizations determine the relative significance ofclimate-­related risks in relation to other risks.
Organizations should describe whether they consider existing andemerging regulatory requirements related to climate change(e.g., limits on emissions) as well as other relevant factors considered.

Guidance for All Sectors

Organizations should also consider disclosing the following:D–– processes for assessing the potential size and scope of identified
climate-­related risks andSupplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure–– definitions of risk terminology used or references to existing risk
classification frameworks used.

Recommended
Disclosure b)
Describe theorganization’s
processes for managing
climate-­related risks.

Guidance for All Sectors
Organizations should describe their processes for managing climate-­
related risks, including how they make decisions to mitigate, transfer,accept, or control those risks. In addition, organizations should describe
their processes for prioritizing climate-­related risks, including how
materiality determinations are made within their organizations.
In describing their processes for managing climate-­related risks,
organizations should address the risks included in Tables A1 and A2(pp. 100-101), as appropriate.

Appendices

Recommended
Disclosure c)
Describe how processes
for identifying, assessing,and managing climate-­
related risks areintegrated into theorganization’s overall risk
management.

Guidance for All Sectors
Organizations should describe how their processes for identifying,assessing, and managing climate-­related risks are integrated into theiroverall risk management.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

88Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure a)
Disclose the metrics usedby the organization toassess climate-­relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage
climate-­related risks and opportunities, as described in Tables A1 and A2(pp. 100-101). Organizations should consider including metrics on
climate-­related risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where relevant, organizations should provide their internal carbon prices aswell as climate-­related opportunity metrics such as revenue from products
and services designed for a low-carbon economy.
Metrics should be provided for historical periods to allow for trend analysis.
In addition, where not apparent, organizations should provide a descriptionof the methodologies used to calculate or estimate climate-­related metrics.

Supplemental Guidance for the Agriculture, Food, and Forest
Products GroupFor all relevant metrics, Agriculture, Food, and Forest Products Group
organizations should provide historical trends and forward-looking
projections (by relevant country and/or jurisdiction and business line).

A

Agriculture, Food, and Forest Products Group organizations should consider
providing key metrics related to the implications of GHG emissions, energy,
and water as well as impacts of climate change on the financial aspects
related to shifting demand, cost of supply, capital allocation, and reserves.
Such metrics could include the following:

Introduction
B
Recommendations
C

Revenues–– Investments in low-emissions/water technology and products.

Guidance for All Sectors
D

Expenditures–– Percent of freshwater withdrawn and consumed in regions with high orextremely high baseline water stress. 56

Supplemental Guidance
for the Financial Sector
E

Assets/Liabilities–– Where applicable, metrics used to measure new land converted toagricultural land.

Supplemental Guidancefor Non-Financial Sectors

Capital–– Relevant metrics to indicate flexibility of capital deployment, portfolio
allocation and capital payback. This could include measures such as
proportion of capital allocation to long-lived assets versus short-term
assets and capital payback periods or return on capital deployed.

F undamental Principles
F
for Effective Disclosure
Appendices–– Investment in low carbon/water alternatives R&D, equipment, products
or services.

Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and therelated risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions
and, if appropriate, Scope 3 GHG emissions and the related risks. 57
GHG emissions should be calculated in line with the GHG Protocol
methodology to allow for aggregation and comparability acrossorganizations and jurisdictions. 58
As appropriate, organizations should consider providing related, generally
accepted industry-specific GHG efficiency ratios. 59

Supplemental Guidance for the Agriculture, Food, and Forest
Products Group
Agriculture, Food, and Forest Products Group organizations should
consider providing sector-specific metrics. For illustrative examples, please
see Table 8 (p. 91).
Information on assessment tools can be found in the Corporate Water Disclosure Guidelines available at
http://ceowatermandate.org/disclosure/.
57
Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, andtechnology responses to limit climate change. As a result, organizations with significant emissions are likely to be more strongly
impacted by transition risk than other organizations. In addition, current or future constraints on emissions, either directly in emission
restrictions or indirectly through carbon budgets, may impact organizations financially.
58
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating
GHG emissions.
59
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions
per unit of economic output (e.g., unit of production, number of employees, or value-added) is widely used.
56

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

89

Metrics and Targets (continued)
Disclose the metrics and targets used to assess and manage relevant climate-­related risks
and opportunities.
Recommended
Disclosure c)
Describe the targets usedby the organization to
manage climate-­relatedrisks and opportunities
and performance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-­related targets such as
those related to GHG emissions, water usage, energy usage, etc., in linewith anticipated regulatory requirements or market constraints or othergoals. Other goals may include efficiency or financial goals, financial loss
tolerances, avoided GHG emissions through the entire product life cycle,
or net revenue goals for products and services designed for a low-carbon
economy.
In describing their targets, organizations should consider including thefollowing:–– whether the target is absolute or intensity based,–– time frames over which the target applies,–– base year from which progress is measured, and–– key performance indicators used to assess progress against targets.
Where not apparent, organizations should provide a description of themethodologies used to calculate targets and measures.

A

Supplemental Guidance for the Agriculture, Food, and Forest
Products GroupFor all relevant metrics identified by Agriculture, Food, and Forest
Products Group organizations under recommended disclosures a) and b)
above, organizations should also report relevant targets.

Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

90

Table 8

Agriculture, Food, And Forest Products — Illustrative Examples
The specific examples of metrics provided below are for illustrative purposes to help organizations consider the types of metrics best suited for their activities andoperations. Organizations should define metrics and targets that are tailored to their particular climate-related risks and opportunities and that address the key financial
disclosure areas in the Task Force’s sector-specific guidance. Agriculture, Food, and Forest Products Group organizations should consider providing key metrics related to theimplications of GHG emissions, energy and water on the financial aspects related to revenue, costs, assets, liabilities, and capital allocation.
In determining the most relevant and useful metrics, organizations are encouraged to engage with their key stakeholders, including investors, and review publicly available
frameworks.60 Again, the examples below are illustrative to assist organizations in thinking about appropriate metrics. The examples are not intended to imply additional or
duplicative metrics for an organization’s existing suite of metrics if existing metrics achieve the intended disclosure objective.

Beverages
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues
CapitalLow-Carbon
Alternatives

Investment in low-carbon/water
alternatives (e.g., R&D, equipment,
products, or services)

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Expenditures

Water

Total water withdrawn and total water
consumed

Cubic meters
(m 3)

SASB:
CN0101-06

Expenditures

Water

Percent of water withdrawn and consumed
in regions with high or extremely highbaseline water stress

Percentage

SASB:
CN0101-06

Water stress can result in increased cost of supply, factual
inability to produce, and/or legislation to regulate water
withdrawal for production. The quantity of water consumed,
and percent withdrawn in high-water-stress areas inform therisk of significant costs or limitations to production capacity.

Assets/ Liabilities

Reserves/
AssetsAmount of assets committed in regionswith high or extremely high baseline water
stressNumber ofassets, value,
percentage of
total assets

N/A

Water

60

Water stress can result in limitations to production capacity
or enforced demolition of assets. The level of assets in highwater-stress areas informs the potential implications on asset
valuation.

A number of frameworks currently exist that provide a range of metrics that an organization may find useful in disclosing various aspects of climate-related risks and opportunities for the organization. See, for example, GHG
Protocol, Global Reporting Initiative, ISO Standards, Sustainability Accounting Standards Board, Climate Disclosure Standards Board, World Resources Institute, World Business Council for Sustainable Development, CDP, andvarious industry-specific guidance.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

91

Table 8

Agriculture, Food, And Forest Products — Illustrative Examples (continued)
Agriculture
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues
CapitalLow-Carbon
Alternatives

Investment in low-carbon/water
alternatives R&D, equipment, products orservices

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Expenditures

Water

Total water withdrawn and total water
consumed

Cubic meters
(m 3)

SASB:
CN0101-06

Water stress can result in increased cost of supply, factual
inability to produce, and/or legislation to regulate water
withdrawal for production. The quantity of water consumed
and percent withdrawn in high-water-stress areas inform therisk of significant costs or limitations to production capacity.

CN0102-04
Expenditures

Expenditures

Water

GHG Emissions

Percent of water withdrawn and consumed
in regions with high or extremely highbaseline water stress

Percentage

SASB:
CN0101-06

Mechanical (Scope 1): Emissions fromequipment or machinery operated on
farms

Metric ton(MT) of carbon
dioxideemissions (CO 2 e)

SASB:
CN0101-01

CN0102-04

CDP: FBT
1.3b

Expenditures

GHG Emissions

Purchased energy (Scope 2): Emissions
from purchased heat, steam, and electricity
consumed on the farm

MT of CO 2 e

CDP: FBT
1.3b

Assets/ Liabilities

GHG Emissions

Non-mechanical (Scope 1): Emissions from
biological processes shaped by climaticand soil conditions or the burning of crop
residues

MT of CO 2 e

CDP: FBT
1.3c

Assets/ Liabilities

GHG Emissions

Land use change (Scope 1): Emissions
from land use change that results in a
reduction in the size of carbon stocks (e.g.,
from the conversion of native habitats into
farmlands)

MT of CO 2 e

CDP: FBT
1.3c

Amount of assets committed in regionswith high or extremely high baseline water
stressNumber ofassets, value,
percentage of
total assets

N/A

Land Use

Assets/ Liabilities

Reserves/
Assets
Water

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures(Relatively) high carbon emissions in the value chain are
expected to result in regulations (including carbon prices)to drive lower emissions from products. This can result in asignificant decrease in future earning capacity.

For agriculture, non-mechanical emissions sources are greaterthan mechanical sources. Reliance on biological systems means
emissions or removals of GHGs generally occur through much
more complex mechanisms than emissions from mechanicalequipment used on farmland. It is important to understand thescope of an organization’s land-related biological emissions, aswell as recent or potential changes due to continuous processes
and/or discrete events, to assess the financial and regulatory
impact on an organization’s production and land use.
Water stress can result in limitations to production capacity
or enforced demolition of assets. The level of assets in highwater-stress areas informs the potential implications on asset
valuation.

92

Table 8

Agriculture, Food, And Forest Products — Illustrative Examples (continued)
Packaged Food and Meats
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues
CapitalLow-Carbon
Alternatives

Investment in low-carbon/water
alternatives (e.g., R&D, equipment,
products, or services)

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Expenditures

Water

Total water withdrawn and total water
consumed

Cubic meters
(m 3)

SASB:
CN0103-03

Expenditures

Water

Percent of water withdrawn and consumed
in regions with high or extremely highbaseline water stress

Percentage

SASB:
CN0103-03

Water stress can result in increased cost of supply, factual
inability to produce, and/or legislation to regulate water
withdrawal for production. The quantity of water consumed
and percent withdrawn in high-water-stress areas inform therisk of significant costs or limitations to production capacity.

Assets/ Liabilities

Reserves/Assets

Amount of assets committed in regionswith high or extremely high baseline water
stressNumber ofassets, value,
percentage of
total assets

N/A

Water stress can result in limitations to production capacity
or enforced demolition of assets. The level of assets in highwater-stress areas informs the potential implications on asset
valuation.

Water

Paper and Forest Products
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Revenues
CapitalLow-Carbon
Alternatives

Investment in low-carbon/water
alternatives (e.g., R&D, equipment,
products, or services)

Local currency

N/A

Investments in new technologies are needed to managetransition risk. The level of investment provides an indicationof the level to which future earning capacity of core businessmight be impacted.

Expenditures

Water

Total water withdrawn and total water
consumed

Cubic meters
(m 3)

SASB:
RR0202-05

Expenditures

Water

Percent of water withdrawn and consumed
in regions with high or extremely highbaseline water stress

Percentage

SASB:
RR0202-05

Water stress can result in increased cost of supply, factual
inability to produce, and/or legislation to regulate water
withdrawal for production. The quantity of water consumed
and percent withdrawn in high-water-stress areas inform therisk of significant costs or limitations to production capacity.

Expenditures

GHG Emissions

Mechanical (Scope 1): Emissions fromequipment or machinery operated on
farms

MT of CO 2 e

SASB:
RR0202-01

Purchased energy (Scope 2): Emissions
from purchased heat, steam, and electricity
consumed on the farm

MT of CO 2 e

Expenditures

GHG Emissions

CDP: FBT
1.3b

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures(Relatively) high carbon emissions in the value chain are
expected to result in regulations (including carbon prices)to drive lower emissions from products. This can result in asignificant decrease in future earning capacity.

CDP: FBT
1.3b

93

Table 8

Agriculture, Food, And Forest Products — Illustrative Examples (continued)
Paper and Forest Products Continued
Financial Category

Climate-Related
Category

Example Metric

Unit ofMeasureAlignment

Rationale for Inclusion

Expenditures

GHG Emissions

Non-mechanical (Scope 1): Emissions from
biological processes shaped by climaticand soil conditions or the burning of crop
residues

MT of CO 2 e

CDP: FBT
1.3c

Assets/ Liabilities

GHG Emissions/Land Use

Land use change (Scope 1): Emissions
from land-use change that results in a
reduction in the size of carbon stocks, e.g.,
from the conversion of native habitats into
farmlands

MT of CO 2 e

CDP: FBT
1.3c

For agriculture, non-mechanical emissions sources are greaterthan mechanical sources. Reliance on biological systems means
emissions or removals of GHGs generally occur through much
more complex mechanisms than emissions from mechanicalequipment used on farmland. It is important to understand thescope of an organization’s land-related biological emissions, aswell as recent or potential changes due to continuous processes
and/or discrete events, to assess the financial and regulatory
impact on an organization’s production and land use.

Assets/ Liabilities

Reserves/
AssetsAmount of assets committed in regionswith high or extremely high baseline water
stressNumber ofassets, value,
percentage of
total assets

N/A

Water

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

Water stress can result in limitations to production capacity
or enforced demolition of assets. The level of assets in highwater-stress areas informs the potential implications on asset
valuation.

94

F	Fundamental
Principles for
Effective Disclosure

F Fundamental Principles for Effective Disclosure
To underpin its recommendations and help guide current and future developments inclimate-­related financial reporting, the Task Force developed a set of principles for effective
disclosure.61 As understanding of, and approaches to, climate-­related issues evolve over time,
so too will climate-­related financial reporting. These principles can help achieve high-qualityand decision-useful disclosures that enable users to understand the impact of climate change
on organizations. The Task Force encourages organizations adopting its recommendations to
consider these principles as they develop climate-­related financial disclosures.
The Task Force’s disclosure principles are largely consistent with other mainstream,internationally accepted frameworks for financial reporting and are generally applicable tomost providers of financial disclosures. They are informed by the qualitative and quantitative
characteristics of financial information and further the overall goals of producing disclosuresthat are consistent, comparable, reliable, clear, and efficient, as highlighted by the FSB inestablishing the Task Force. The principles, taken together, are designed to assist organizations
in making clear the linkages and connections between climate-­related issues and theirgovernance, strategy, risk management, and metrics and targets.

A
Introduction

Principle 1: Disclosures should present relevant information
The organization should provide information specific to the potential impact of climate-­relatedrisks and opportunities on its markets, businesses, corporate or investment strategy, financial
statements, and future cash flows.

B
Recommendations
C
Guidance for All Sectors

Disclosures should be eliminated if they are immaterial or redundant to avoid obscuringD■■

Supplemental Guidance
for the Financial Sector

relevant information. However, when a particular risk or issue attracts investor and market

Erisk or issue is not significant. This shows that the risk or issue has been considered andinterest or attention, it may be helpful for the organization to include a statement that theSupplemental Guidancefor Non-Financial Sectors

has not been overlooked.
Disclosures should be presented in sufficient detail to enable users to assess theF■■ undamental Principles
F
for Effective Disclosureorganization’s exposure and approach to addressing climate-­related issues, while

Appendicesaccompanying notes will differ between organizations and will be subject to change overunderstanding that the type of information, the way in which it is presented, and thetime.
Climate-related impacts can occur over the short, medium, and long term. Organizations■■

can experience chronic, gradual impacts (such as impacts due to shifting temperaturepatterns), as well as acute, abrupt disruptive impacts (such as impacts from flooding,drought, or sudden regulatory actions). An organization should provide information fromthe perspective of the potential impact of climate-­related issues on value creation, taking
into account and addressing the different time frames and types of impacts.
Organizations should avoid generic or boilerplate disclosures that do not add value to■■users’ understanding of issues. Furthermore, any proposed metrics should adequately
describe or serve as a proxy for risk or performance and reflect how an organization
manages the risk and opportunities.

61

These principles are adapted from those included in the Enhanced Disclosure Task Force’s “Enhancing the Risk
Disclosures of Banks.”

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

96Principle 2: Disclosures should be specific and complete■■An organization’s reporting should provide a thorough overview of its exposure topotential climate-­related impacts; the potential nature and size of such impacts; theorganization’s governance, strategy, processes for managing climate-­related risks, andperformance with respect to managing climate-­related risks and opportunities.
To be sufficiently comprehensive, disclosures should contain historical and future-oriented■■

information in order to allow users to evaluate their previous expectations relative toactual performance and assess possible future financial implications.
For quantitative information, the disclosure should include an explanation of the■■definition and scope applied. For future-oriented data, this includes clarification of the key
assumptions used. Forward-looking quantitative disclosure should align with data used by
the organization for investment decision making and risk management.
Any scenario analyses should be based on data or other information used by the■■organization for investment decision making and risk management. Where appropriate,
the organization should also demonstrate the effect on selected risk metrics or exposures
to changes in the key underlying methodologies and assumptions, both in qualitative andquantitative terms.

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Disclosures should show an appropriate balance between qualitative and quantitative■■E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
AppendicesPrinciple 3: Disclosures should be clear, balanced, and understandable■■Disclosures should be written with the objective of communicating financial informationthat serves the needs of a range of financial sector users (e.g., investors, lenders,insurers, and others). This requires reporting at a level beyond compliance with minimum
requirements. The disclosures should be sufficiently granular to inform sophisticatedusers, but should also provide concise information for those who are less specialized. Clear
communication will allow users to identify key information efficiently.
information and use text, numbers, and graphical presentations as appropriate.
Fair and balanced narrative explanations should provide insight into the meaning of■■quantitative disclosures, including the changes or developments they portray over time.
Furthermore, balanced narrative explanations require that risks as well as opportunities
be portrayed in a manner that is free from bias.
Disclosures should provide straightforward explanations of issues. Terms used in the■■disclosures should be explained or defined for a proper understanding by the users.

Principle 4: Disclosures should be consistent over time■■Disclosures should be consistent over time to enable users to understand thedevelopment and/or evolution of the impact of climate-­related issues on the organization’s
business. Disclosures should be presented using consistent formats, language, and metrics
from period to period to allow for inter-period comparisons. Presenting comparative
information is preferred; however, in some situations it may be preferable to include a new
disclosure even if comparative information cannot be prepared or restated.
Changes in disclosures and related approaches or formats (e.g., due to shifting climate-­■■

related issues and evolution of risk practices, governance, measurement methodologies,
or accounting practices) can be expected due to the relative immaturity of climate-­related
disclosures. Any such changes should be explained.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

97Principle 5: Disclosures should be comparable among organizations within a sector,
industry, or portfolio■■Disclosures should allow for meaningful comparisons of strategy, business activities, risks,and performance across organizations and within sectors and jurisdictions.
The level of detail provided in disclosures should enable comparison and benchmarking of■■risks across sectors and at the portfolio level, where appropriate.
The placement of reporting would ideally be consistent across organizations—i.e., in■■financial filings—in order to facilitate easy access to the relevant information.

Principle 6: Disclosures should be reliable, verifiable, and objective■■Disclosures should provide high-quality reliable information. They should be accurate andneutral—i.e., free from bias.
Future-oriented disclosures will inherently involve the organization’s judgment (which■■should be adequately explained). To the extent possible, disclosures should be based on
objective data and use best-in-class measurement methodologies, which would include
common industry practice as it evolves.
Disclosures should be defined, collected, recorded, and analyzed in such a way that the■■A

information reported is verifiable to ensure it is high quality. For future-oriented

Introduction

information, this means assumptions used can be traced back to their sources. This doesB

not imply a requirement for independent external assurance; however, disclosures should

Recommendations

be subject to internal governance processes that are the same or substantially similar toC
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

Principle 7: Disclosures should be provided on a timely basis■■Information should be delivered to users or updated in a timely manner using appropriate
media on, at least, an annual basis within the mainstream financial report.
Climate-related risks can result in disruptive events. In case of such events with a material■■

financial impact, the organization should provide a timely update of climate-­related
disclosures as appropriate.

F undamental Principles
F
for Effective Disclosure
Appendicesthose used for financial reporting.

Reporters may encounter tension in the application of the fundamental principles set out
above. For example, an organization may update a methodology to meet the comparability
principle, which could then result in a conflict with the principle of consistency. Tension canalso arise within a single principle. For example, Principle 6 states that disclosures should beverifiable, but assumptions made about future-oriented disclosures often require significant
judgment by management that is difficult to verify. Such tensions are inevitable given the
wide-ranging and sometimes competing needs of users and preparers of disclosures.
Organizations should aim to find an appropriate balance of disclosures that reasonably
satisfy the recommendations and principles while avoiding overwhelming users with
unnecessary information

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

98AppendicesAppendix 1: Climate-Related Risks and Opportunities
Table A1

Examples of Climate-Related Risks and Potential Financial Impacts
Type

Climate-Related Risks

Potential Financial Impact

Policy and Legal–– Increased pricing of GHG emissions–– Increased operating costs (e.g., compliance costs)–– Enhanced emissions-reporting
obligations–– Write-offs and early retirement of existing assets
due to policy change–– Mandates on and regulation ofexisting products and services–– Impaired assets–– Exposure to litigation–– Fines and judgments–– Increased insurance premiums

Technology–– Substitution of existing products
and services with lower emissions
options–– Unsuccessful investment in newtechnologies

A–– Upfront costs to transition to lower
emissions technology

B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Transition Risks

Introduction–– Write-offs and early retirement of existing assets–– Reduced demand for products and services–– Upfront research and development (R&D)
expenditures in new and alternative technologies–– Upfront capital investments in technology
development–– Upfront costs to adopt/deploy new practices
and processes1

Markets–– Changing customer behavior–– Uncertainty in market signals–– Increased cost of raw materials

E–– Reduced demand for goods and services due
to shift in consumer preferences–– Increased production costs due to changing
input prices (e.g., energy, water) and output
requirements (e.g., waste treatment)–– Abrupt and unexpected shifts in energy costs

Supplemental Guidancefor Non-Financial Sectors–– Changing revenue mix and sources–– Re-pricing of assets and speed of re-pricing (e.g.,fossil fuel reserves, land valuations, securities
valuations)F undamental Principles
F
for Effective Disclosure

Reputation

Appendices–– Shift in consumer preferences–– Reduced demand for goods/services–– Stigmatization of sector–– Reduction or disruption in production capacity(e.g., shutdowns, delayed planning approvals,
interruptions to supply chain)–– Increased stakeholder concern or
negative stakeholder feedback–– Impacts on workforce management and planning(e.g., employee attraction and retention)–– Reduction in capital availability

Acute

Physical Risks–– Increased severity of extreme
weather events such as cyclones
and floods

Chronic–– Changes in precipitation patterns
and extreme variability in weather
patterns–– Rising mean temperatures–– Rising sea levels–– Reduction or disruption in production capacity(e.g., shutdowns,transport difficulties, supply chaininterruptions)–– Impacts to workforce management and planning(e.g., health,safety, absenteeism)–– Write-offs and early retirement of existing assets(e.g., damage to property and assets in “high-risk”
locations)–– Increased operating costs (e.g., inadequate watersupply for hydroelectric plants or to cool nuclear
and fossil fuel plants)–– Increased capital costs (e.g., damage to facilities)–– Reduced revenues from lower sales/output–– Increased insurance premiums and potential for
reduced availability of insurance on assets in“high-risk” locations

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

100

Table A2

	Examples of Climate-Related Opportunities and Potential Financial Impacts

Resource Efficiency

Type

Climate-Related Opportunities

Potential Financial Impact–– Use of more efficient modes oftransport–– Reduced operational costs(e.g., through efficiency gains and cost reductions)–– More efficient production anddistribution processes–– Increased production capacity–– Use of recycling–– More efficient buildings–– Reduced water usage andconsumption–– Lower-emission sources of energy

Energy Source–– Supportive policy incentives

A
Introduction
B–– Emergence of new technologies–– Participating in carbon market–– Energy security and shift toward
decentralization–– Increased value of fixed assets(e.g., highly rated energy-efficient buildings)–– Benefits to workforce management and planning(e.g., improved health and safety, employee
satisfaction)–– Better prepared for changes in or additions togovernment policies and regulations–– Reduced operational costs(e.g., through use of lowest cost abatement)–– Reduced exposure to future energy price increases–– Reduced exposure to GHG emissions and therefore
less sensitivity to changes in cost of carbon–– Generate return on investment in low-emission
technology–– Increase in capital availability (e.g., as moreinvestors favor lower-emissions producers)

Recommendations–– Reputational benefits and increased demand forgoods/services

C

D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors
F

Products and Services

Guidance for All Sectors

 undamental Principles
F
for Effective Disclosure–– Develop and/or expand low emission –– Increased revenue through demand for lower
goods and services
emissions products and services–– Climate adaptation and insurance
risk solutions–– R&D and innovation–– Diversify business activities–– Shifting consumer preferences–– New markets–– Public-sector incentives

Markets

Appendices–– Community needs and initiatives–– Development banks–– Increased revenue through new solutions toadaptation needs (e.g., insurance risk transfer
products and services)–– Increased resilience to changes in government
policies and regulations–– Better competitive position to reflect shifting
consumer preferences–– Increased access to new and emerging markets(e.g., partnerships with governments,
development banks)–– Increased diversification (e.g., green bonds andinfrastructure)–– Increased resilience in existing supply chain
relationships

Resilience–– Increased demand for goods/services in newmarkets–– Participate in renewable energy
programs and adopt energyefficiency measures–– Increased market valuation through resilienceplanning (e.g., infrastructure, land, buildings)–– Resource substitutes/diversification–– Increased reliability of supply chain and ability tooperate under various conditions–– New assets and locations needing
insurance coverage–– Increased revenue through new products andservices related to ensuring resiliency

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

101

Appendix 2: Glossary and Abbreviations
Glossary
BOARD OF DIRECTORS (or BOARD) refers to a body of elected or appointed members who
jointly oversee the activities of a company or organization. Some countries use a two-tiered
system where “board” refers to the “supervisory board” while “key executives” refers to the“management board.”62
CLIMATE-RELATED OPPORTUNITY refers to the potential positive impacts related to climatechange on an organization. Efforts to mitigate and adapt to climate change can produce
opportunities for organizations, such as through resource efficiency and cost savings, theadoption and utilization of low-emission energy sources, the development of new products
and services, and building resilience along the supply chain. Climate-related opportunities
will vary depending on the region, market, and industry in which an organization operates.
CLIMATE-RELATED RISK refers to the potential negative impacts of climate change on anorganization. Physical risks emanating from climate change can be event-driven (acute) suchas increased severity of extreme weather events, e.g., cyclones, droughts, floods, and fires.

A

They can also relate to longer-term shifts (chronic) in precipitation and temperature andIntroduction

increased variability in weather patterns, e.g., sea level rise. Climate-related risks can also beBassociated with the transition to a lower-carbon global economy, the most common of which

Recommendations

relate to policy and legal actions, technology changes, market responses, and reputational

C
Guidance for All Sectors

considerations.

D

FINANCIAL PLANNING refers to an organization’s consideration of how it will achieve andSupplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

fund its objectives and strategic goals. The process of financial planning allows organizations
to assess future financial positions and determine how resources can be utilized in pursuitof short- and long-term objectives. As part of financial planning, organizations often create“financial plans” that outline the specific actions, assets, and resources (including capital)
necessary to achieve these objectives over a 1-5 year period. However, financial planning isF undamental Principles
F
for Effective Disclosure

broader than the development of a financial plan as it includes long-term capital allocationand other considerations that may extend beyond the typical 3-5 year financial plan(e.g., investment, research and development, manufacturing, and markets).

Appendices

GOVERNANCE refers to “the system by which an organization is directed and controlled in theinterests of shareholders and other stakeholders.”63 “Governance involves a set of relationships
between an organization’s management, its board, its shareholders, and other stakeholders.
Governance provides the structure and processes through which the objectives of theorganization are set, progress against performance is monitored, and results are evaluated.”64

OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.
http://dx.doi.org/10.1787/9789264236882-en.
A. Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance. London, 1992.
http://www.ecgi.org/codes/documents/cadbury.pdf.
64
OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.
http://dx.doi.org/10.1787/9789264236882-en.
62

63

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

102

GREENHOUSE GAS (GHG) EMISSIONS SCOPE LEVELS 65
Scope 1 refers to all direct GHG emissions.

■■

Scope 2 refers to indirect GHG emissions from consumption of purchased electricity, heat,■■or steam.
Scope 3 refers to other indirect emissions not covered in Scope 2 that occur in the value■■

chain of the reporting company, including both upstream and downstream emissions.
Scope 3 emissions could include: the extraction and production of purchased materials
and fuels, transport-related activities in vehicles not owned or controlled by the reporting
entity, electricity-related activities (e.g., transmission and distribution losses), outsourced
activities, and waste disposal.66
INTERNAL CARBON PRICE is an internally developed estimated cost of carbon emissions.
Internal carbon pricing can be used as a planning tool to help identify revenue opportunities
and risks, as an incentive to drive energy efficiencies to reduce costs, and to guide capital
investment decisions.
MANAGEMENT refers to those positions an organization views as executive or senior
management positions and that are generally separate from the board.

A
Introduction

PUBLICLY AVAILABLE 2°C SCENARIO refers to a 2°C scenario that is (1) used/referenced

B

and issued by an independent body; (2) wherever possible, supported by publicly available

Recommendations

datasets; (3) updated on a regular basis; and (4) linked to functional tools (e.g., visualizers,C
Guidance for All Sectors

calculators, and mapping tools) that can be applied by organizations. 2°C scenarios that
presently meet these criteria include: IEA 2DS, IEA 450, Deep Decarbonization Pathways

D
Supplemental Guidance
for the Financial Sector

Project, and International Renewable Energy Agency.
RISK MANAGEMENT refers to a set of processes that are carried out by an organization’sE
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosureboard and management to support the achievement of the organization’s objectives byaddressing its risks and managing the combined potential impact of those risks.
STRATEGY refers to an organization’s desired future state. An organization’s strategy
establishes a foundation against which it can monitor and measure its progress in reachingthat desired state. Strategy formulation generally involves establishing the purpose and scope

Appendicesof the organization’s activities and the nature of its businesses, taking into account the risks
and opportunities it faces and the environment in which it operates.

World Resources Institute and World Business Council for Sustainable Development, The Greenhouse Gas Protocol:
A Corporate Accounting and Reporting Standard (Revised Edition). March 2004.
http://www.ghgprotocol.org/standards/corporate-standard.
66
IPCC, Climate Change 2014 Mitigation of Climate Change, Cambridge University Press, 2014.
https://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf.
65

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

103Abbreviations

A
Introduction
B
Recommendations
C
Guidance for All Sectors

AODP

Kg

Asset Owners Disclosure Project

Kilogram

CDSB

KmClimate Disclosure Standards Board

Kilometer

CNG

L

Compressed natural gas

LitersCO 2

LPG

Carbon dioxide

Liquefied petroleum gas

CO 2 eM3

Carbon dioxide equivalent

Cubic meters

EDTF

MPG

Enhanced Disclosure Task Force

Miles per gallon

EEDI

MT

Energy Efficiency Design Index

Metric ton

FSB

MW

Financial Stability Board

Megawatt

G20

OECD

Group of 20

Organization for Economic
Co-operation and Development

D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

GHG

PRI

Greenhouse gas

Principles for Responsible Investment

GICS

R&D

Global Industry Classification Standard

Research and development

GJ

ROI

Gigajoules

Return on investment

GMO

SASB

Genetically modified organism

Sustainability Accounting Standards Board

GRI

TCFD

Global Reporting Initiative

Task Force on Climate-related
Financial Disclosures

IEA

UNEP FIInternational Energy Agency

United Nations Environment
Programme Finance Initiative

IIRC

WBCSD

International Integrated

World Business Council for

Reporting Council

Sustainable Development

IPCC

WRI

Panel on Climate Change

World Resources Institute

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

104Appendix 3: References
Asset Owners Disclosure Project (AODP). “AODP Global Climate Risk Survey 2017 for AssetManagers.” 2016. http://aodproject.net/wp-content/uploads/2016/10/2017-AODP-AssetManager-Climate-Survey-and-Guidance-Notes-V1.pdf.
CDP. “Climate Change Questionnaire.” 2016. https://www.cdp.net/Documents/Guidance/2016/
CDP-2016-Climate-Change-Reporting-Guidance.pdf.
CDP AU. “Guidance for reporting companies: sector module guidance; Auto and Auto
Component Manufacturing Sector Module 2016.” 2016. https://www.cdp.net/Documents/
Guidance/2016/CDP-2016-Auto-Module-Reporting-Guidance.pdf.
CDP EU. “Guidance for responding companies: sector module guidance; Electric Utilities Sector
Module 2016.” 2016. https://www.cdp.net/Documents/Guidance/2016/CDP-2016-ElectricUtility-Module-Reporting-Guidance.pdf.
CDP FBT. “Guidance for responding companies: sector module guidance; Food, beverageand tobacco sector module 2016.” December 2015. https://www.cdp.net/Documents/
Guidance/2016/CDP-2016-FBT-Module-Reporting-Guidance.pdf.

A
Introduction

Climate Disclosure Standards Board (CDSB). “Climate Change Reporting Framework:

B

Advancing and Aligning Disclosure of Climate Change-related Information in Mainstream

Recommendations

Reports.” Report edition 1.1. October 2012. http://www.cdsb.net/sites/cdsbnet/files/

C

cdsb_climate_change_reporting_framework_edition_1.1.pdf.

Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

http://www.cisl.cam.ac.uk/business-action/sustainable-finance/climatewise/principles.
Enhanced Disclosure Task Force (EDTF). Enhancing the Risk Disclosures of Banks. October 2012.
http://www.fsb.org/wp-content/uploads/r_121029.pdf.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

ClimateWise. “The ClimateWise Principles.” Cambridge Institute for Sustainability Leadership. 2013.

Financial Stability Board (FSB). “Proposal for a Disclosure Task Force on Climate-Related Risks.”
November 9, 2015.
www.fsb.org/wp-content/uploads/Disclosure-task-force-on-climate-related-risks.pdf.
Global Reporting Initiative (GRI) G4. “Reporting Principles and Standard Disclosures.” 2013.
https://www.globalreporting.org/information/g4/Pages/default.aspx.
GRI G4-CRE. “G4 Sector Disclosures: Construction and Real Estate.” 2014. https://www.
globalreporting.org/resourcelibrary/GRI-G4-Construction-and-Real-Estate-SectorDisclosures.pdf.
GRI G4-EN. “Reporting Principles and Standard Disclosures.” 2013.
https://www.globalreporting.org/information/g4/Pages/default.aspx.
GRI G4-EU. “G4 Sector Disclosures: Electric Utilities.” 2013. https://www.globalreporting.org/
resourcelibrary/GRI-G4-Electric-Utilities-Sector-Disclosures.pdf.
GRI G4-OG. “G4 Sector Disclosures: Oil and Gas.” 2013. https://www.globalreporting.org/
resourcelibrary/GRI-G4-Oil-and-Gas-Sector-Disclosures.pdf.
Greenhouse Gas Protocol. “Category 15: Investments.” Technical Guidance for Calculating
Scope 3 Emissions (version 1.0). 2013.
http://ghgprotocol.org/sites/default/files/ghgp/Scope3_Calculation_Guidance.pdf.
GRESB CA. “2016 GRESB Infrastructure Asset Assessment.” April 1, 2016. http://gresb-public.
s3.amazonaws.com/2016/content/2016-GRESB-Infra-Asset-Assessment.pdf.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

105

GRESB NC. “2016 GRESB Real Estate Assessment.” April 1, 2016.
https://gresb-public.s3.amazonaws.com/2016/content/2016-GRESB-RE-Assessment.pdf.
GRESB PI. “2016 GRESB Infrastructure Asset Assessment.” April 1, 2016. http://gresb-public.
s3.amazonaws.com/2016/content/2016-GRESB-Infra-Asset-Assessment.pdf.
GRESB Q. “2016 GRESB Real Estate Assessment.” April 1, 2016. https://gresb-public.
s3.amazonaws.com/2016/content/2016-GRESB-RE-Assessment.pdf.
Intergovernmental Panel on Climate Change (IPCC). “Agriculture, Forestry and Other Land Use(AFOLU),” In: Climate Change 2014: Mitigation of Climate Change, 2014. Contribution of Working
Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.
https://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf.
IPCC. Fifth Assessment Report (AR5). Cambridge University Press, 2014.
http://www.ipcc.ch/report/ar5/.
International Council on Mining and Metals (ICCM). In Brief: Water stewardship framework.
London: International Council on Mining and Metals, 2014.
http://www.icmm.com/website/publications/pdfs/7024.pdf.
International Energy Agency (IEA). CO2 Emissions from Fuel Combustion: Highlights.

A

2015. https://www.iea.org/publications/freepublications/publication/

Introduction

CO 2 EmissionsFromFuelCombustionHighlights2015.pdf.

B
Recommendations

International Integrated Reporting Council (IIRC). “International <IR> Framework.” DecemberC

2013. http://integratedreporting.org/wp-content/uploads/2015/03/13-12-08-THE-

Guidance for All Sectors

INTERNATIONAL-IR-FRAMEWORK-2-1.pdf.

D
Supplemental Guidance
for the Financial Sector

http://www.ipieca.org/sites/default/files/publications/water_mngt.pdf.
IPIECA E2. “Oil and gas industry guidance on voluntary sustainability reporting.” 2015.

E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

IPIECA. Water Resource Management in the Petroleum Industry. 2005.

http://www.ipieca.org/media/1404/reporting_guidance_3rd_editn_lr_endorsement.pdf.
Moody’s Global Credit Research. “Moody’s: Auto sector faces rising credit risks due
to carbon transition.” September 20, 2016. https://www.moodys.com/research/
Moodys-Auto-sector-faces-rising-credit-risks-due-to-carbon--PR_354984.
Organization for Economic Co-operation and Development (OECD). G20/OECD Principles ofCorporate Governance, OECD Publishing. Paris, 2015.
http://dx.doi.org/10.1787/9789264236882-en.
Principles for Responsible Investment (PRI). “PRI Reporting Framework 2016 Strategy andGovernance.” November 2015. https://www.unpri.org/download_report/6316.
Sustainability Accounting Standards Board (SASB), “Asset Management & Custody Activities:
Sustainability Accounting Standard.” February 2014. http://www.sasb.org/wp-content/
uploads/2014/02/SASB_PrvStandard_Asset-Management.pdf.
SASB. “Commercial Banks: Sustainability Accounting Standard.” February 2014. http://www.
sasb.org/wpcontent/uploads/2014/02/SASB_PrvStandard_Commercial_Banks.pdf.
SASB. “Insurance: Sustainability Accounting Standard.” February 2014.
http://www.sasb.org/wp-content/uploads/2014/02/SASB_PrvStandard_Insurance.pdf.
SASB. “SASB Technical Bulletin 2016-01—Climate Risk,” working draft. 2016.
http://using.sasb.org/sasb-climate-risk-framework.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

106

SASB CN0101. “Agricultural Products: Sustainability Accounting Standard.” June 2015.
http://www.sasb.org/wp-content/uploads/2015/06/Consumption_I_Standards.pdf.
SASB CN0102. “Meat, Poultry & Dairy: Sustainability Accounting Standard.” June 2015. http://
www.sasb.org/wp-content/uploads/2015/07/CN0102_MeatPoultryDairy_Standard.pdf.
SASB CN0103. “Processed Foods; Sustainability Accounting Standard.” June 2015. http://www.
sasb.org/wp-content/uploads/2015/07/CN0103_Processed_Foods_Standard.pdf.
SASB IF0101. “Electric Utilities: Sustainability Accounting Standard.” March 2016.
http://www.sasb.org/wp-content/uploads/2016/03/IF0101_ElectricUtilities_Standard.pdf.
SASB IF0402. “Real Estate Owners, Developers & Investment Trusts: Sustainability AccountingStandard.” March 2016.
http://www.sasb.org/wp-content/uploads/2016/03/IF0402_REOD_IT_Standard.pdf.
SASB NR0101. “Integrated Oil & Gas: Technical Bulletin.” June 2014. http://www.sasb.org/
wp-content/uploads/2014/06/NR0000_SASB_Bulletin_OG_Integrated.pdf.
SASB NR0302. “Metals & Mining: Sustainability Accounting Standard.” June 2014. http://www.
sasb.org/wp-content/uploads/2014/06/NR0302_ProvisionalStandard_MetalsMining.pdf.
SASB NR0401. “Construction Materials: Sustainability Accounting Standard.” June 2014.

A
Introduction

http://www.sasb.org/wp-content/uploads/2014/06/NR0401_ProvisionalStandard_
ConstructionMaterials.pdf.

B
Recommendations

SASB RR0202. “Pulp & Paper Products: Sustainability Accounting Standard.” December 2015.

C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Sectors

pdf.
SASB RT0101. “Chemicals: Sustainability Accounting Standard.” March 2015.
http://www.sasb.org/wp-content/uploads/2015/03/RT0101_Chemical_Standard2.pdf.
SASB RT0203. “Industrial Machinery & Goods: Sustainability Accounting Standard.” March 2015.
http://www.sasb.org/wp-content/uploads/2015/03/RT0203_Industrial_Standard1.pdf.
SASB TR0101. “Automobiles: Sustainability Accounting Standard.” September 2014. http://www.

F undamental Principles
F
for Effective Disclosure
Appendices

http://www.sasb.org/wp-content/uploads/2015/12/RR0202_Pulp-Paper-Products_Standard.

sasb.org/wp-content/uploads/2014/09/TR0101_ProvisionalStandard_Automobiles.pdf.
SASB TR0102. “Auto Parts: Sustainability Accounting Standard.” September 2014. http://www.
sasb.org/wp-content/uploads/2014/09/TR0102_ProvisionalStandard_AutoParts.pdf.
SASB TR0201. “Airlines: Sustainability Accounting Standard.” September 2014. http://www.sasb.
org/wp-content/uploads/2014/09/TR0201_ProvisionalStandard_Airlines.pdf.
SASB TR0202. “Air Freight & Logistics: Sustainability Accounting Standard.” September
2014. http://www.sasb.org/wp-content/uploads/2014/09/TR0202_ProvisionalStandard_
AirFreightLogistics.pdf.
SASB TR0301. “Marine Transportation: Sustainability Accounting Standard.” September 2014.
http://www.sasb.org/wp-content/uploads/2014/09/TR0301_ProvisionalStandard_Marine.
pdf.
SASB TR0401. “Rail Transportation: Sustainability Accounting Standard.” September 2014.
http://www.sasb.org/wp-content/uploads/2014/09/TR0401_ProvisionalStandard_Rail.pdf.
SASB TR0402. “Road Transportation: Sustainability Accounting Standard.” September 2014.
http://www.sasb.org/wp-content/uploads/2014/09/TR0402_ProvisionalStandard_Road.pdf.
Task Force on Climate-related Financial Disclosures. “Phase I Report of the Task Force on
Climate-related Financial Disclosures.” March 31, 2016.
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107

United Nations Environment Programme Finance Initiative (UNEP FI). Principles for Sustainable
Insurance. UNEP FI, Geneva, June 2012.
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van Vliet, Michelle T.H., et al. “Power-generation system vulnerability and adaptation tochanges in climate and water resources.” Nature Climate Change 6 (2016): 375-380.
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World Resources Institute (WRI). Water-Energy Nexus: Business Risks and Rewards. Washington,
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Rewards.pdf.
World Resources Institute and World Business Council for Sustainable Development.
“The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard” (Revised
Edition). March 2004. http://www.ghgprotocol.org/standards/corporate-standard.

A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial SectorsF undamental Principles
F
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures

108

www.fsb-tcfd.org | @FSB_TCFD