Task Force on
Climate-related
Financial Disclosures
Implementing the Recommendationsof the Task Force on Climate-related
Financial Disclosures

October 2021

This document updates and supersedes the 2017 Annex "Implementing
the Recommendations of the Task Force on Climate-related Financial Disclosures"

Contents
A. Introduction................................................................................................................................................... 3
1. Background ................................................................................................................................................................... 3
2. Structure of Recommendations .................................................................................................................................. 6
3. Application of Recommendations .............................................................................................................................. 7
4. Assessing Financial Impacts of Climate-Related Risks and Opportunities ............................................................ 9
5. Summary of Additional Supporting Materials ......................................................................................................... 12

B. Recommendations ..................................................................................................................................... 14
C. Guidance for All Sectors ............................................................................................................................ 17
1. Governance ................................................................................................................................................................. 17
2. Strategy ........................................................................................................................................................................ 18
3. Risk Management ....................................................................................................................................................... 20
4. Metrics and Targets .................................................................................................................................................... 21

D. Supplemental Guidance for the Financial Sector .................................................................................. 24
1. Banks ............................................................................................................................................................................ 25
2. Insurance Companies................................................................................................................................................. 31
3. Asset Owners .............................................................................................................................................................. 37
4. Asset Managers ........................................................................................................................................................... 44
5. Carbon Footprinting and Exposure Metrics ............................................................................................................ 50

E. Supplemental Guidance for Non-Financial Groups ............................................................................... 56
1. Energy Group .............................................................................................................................................................. 63
2. Transportation Group ................................................................................................................................................ 65
3. Materials and Buildings Group ................................................................................................................................. 66
4. Agriculture, Food, and Forest Products Group ....................................................................................................... 67

F. Fundamental Principles for Effective Disclosure .................................................................................... 70
Appendix 1: Climate-Related Risks, Opportunities, and Financial Impacts.............................................. 74
Appendix 2: Cross-Industry, Climate-Related Metric Categories .............................................................. 79
Appendix 3: Glossary and Abbreviations...................................................................................................... 82
Appendix 4: References .................................................................................................................................. 85

Implementing the Recommendations of the Task Force on Climate-related Financial DisclosuresiA.
Introduction

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures2

A. Introduction
1. Background
In December 2015, the Financial Stability Board (FSB) established the industry-led Task Force on
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 the concentrations 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 across sectors and industries, as
described in the Task Force’s report—Recommendations of the Task Force on Climate-related Financial
Disclosures (2017 report). The Task Force’s 2017 report reflects its consideration of public feedback
received throughout 2016 and 2017. The Task Force solicited this feedback in several ways, including
two public consultations, resulting in over 500 responses, hundreds of industry interviews, several
focus groups, and multiple webinars.

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

An important aspect of the Task Force’s recommendations is their inclusion in organizations’mainstream (i.e., public) annual financial filings. In most G20 jurisdictions, public companies have alegal obligation to disclose material information in their financial filings—including material climaterelated information. The Task Force believes climate-related risks and opportunities are or could bematerial for many organizations; and its report and this Annex should be useful to organizations incomplying with existing disclosure obligations more effectively. Furthermore, the Task Forceencourages organizations for which climate-related risks and opportunities could be material in the
future to begin disclosing climate-related financial information outside financial filings to facilitate theincorporation of such information into financial filings once climate-related issues are determined tobe material.
This Annex contains the following information:

F.
Fundamental Principles
for Effective Disclosure▪ directions on the application of the recommendations, including materiality assessments andAppendices▪ information on assessing financial impacts of climate-related risks and opportunities

location of disclosures;(collectively referred to as climate-related issues);▪ recommendations and supporting recommended disclosures that describe information
investors, lenders, and insurance underwriters need to make economic decisions;▪ guidance that provides context and suggestions for implementing the recommendations;▪ supplemental guidance that highlights important considerations for the financial sector andnon-financial industries potentially most affected by climate change; and▪ seven principles for effective disclosure developed by the Task Force to help guide current andfuture developments in climate-related financial reporting.3

1

FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.

2

The term “carbon-related assets” is not well defined, but is generally considered to refer to assets or organizations with relatively high direct
or indirect GHG emissions.

3

When used by organizations in preparing their climate-related financial disclosures, these principles can help achieve high-quality anddecision-useful disclosures that enable users to understand the impact of climate-related risks and opportunities on organizations. The Task
Force encourages organizations adopting its recommendations to consider these principles as they develop their climate-related financial
disclosures.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures3

Since the Task Force issued its recommendations on climate-related financial disclosures in 2017, it
has monitored and promoted organizations’ adoption of the recommendations. As part of thoseefforts, it has issued annual status reports describing disclosure practices related to core elements of
the TCFD recommendations along with additional information on specific topics to support
organizations in implementing the recommendations and disclosing decision-useful climate-related
financial information.4
In addition, the Task Force has issued other materials on specific topics intended to support
implementation, as described in Section A.5. Summary of Additional Supporting Materials. The Task
Force updated this Annex to incorporate content from and references to these additional publications
to reflect the evolution of disclosure practices and better support organizations’ implementation
efforts. The substantive updates to the Annex are summarized in Table 1. The Task Force has not
modified its four overarching recommendations on Governance, Strategy, Risk Management, andMetrics and Targets or the 11 associated recommended disclosures; however, it has updated theguidance for all sectors and now asks organizations to disclose their GHG emissions independent of amateriality assessment. Importantly, the Task Force recognizes organizations may need time to
implement some of these changes, especially in areas where methodologies are being developed orrefined and data availability is limited.

A.
Introduction
B.
Recommendations

Table 1C.
Guidance for All Sectors

Summary of Changes to Guidance, October 2021
Recommendation

Location

Summary of ChangeD.

Governance: no changes

Supplemental Guidance
for the Financial Sector

StrategyE.
Supplemental Guidancefor Non-Financial Groupsa) Describe the climate-relatedrisks and opportunities theorganization has identified overthe short, medium, and longterm.

Supplemental
Guidance forBanks

For purposes of reporting on exposure tocarbon-related assets, expanded thesuggested definition of such assets to include
all non-financial groups identified by the
TCFD in its 2017 report.5b) Describe the impact of climaterelated risks and opportunities
on the organization’s
businesses, strategy, andfinancial planning.

Guidance for All
Sectors

Revised to more explicitly address disclosureof actual financial impacts on organizations
as well as key information fromorganizations’ plans for transitioning to a lowcarbon economy (transition plans).

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

Guidance for All
Sectors

Revised to more explicitly address disclosureof potential financial impacts onorganizations.

Guidance for All
Sectors

Revised to more explicitly address disclosure of
metrics consistent with cross-industry, climaterelated metric categories (Appendix 2) for current,
historical, and future periods, where appropriate.

F.
Fundamental Principles
for Effective Disclosure
Appendices

Risk Management: no changes
Metrics and Targetsa) Disclose the metrics used by
the organization to assessclimate-related risks andopportunities in line with its
strategy and risk management
process.

4

For more information, see the Task Force’s annual status reports (2021 Status Report, 2020 Status Report, 2019 Status Report, and 2018
Status Report.

5

In its 2017 report and annex, the Task Force did not specifically define the term carbon-related assets. Instead, in the supplemental guidance
for banks, the Task Force suggested that for purposes of disclosing information on significant concentrations of credit exposure to carbonrelated assets under the TCFD framework, banks should use a consistent definition to support comparability. The Task Force suggested using
assets tied to the energy and utilities sectors.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures4

Table 1

Summary of Changes to Guidance, October 2021 (continued)
Recommendation

Location

Summary of Change

Metrics and Targetsa) Disclose the metrics used by
the organization to assessclimate-related risks andopportunities in line with its
strategy and risk management
process.

A.
Introduction

Supplemental
Guidance for
Banks

C.
Guidance for All Sectorsb) Disclose Scope 1, Scope 2, and,if appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the related risks

Added disclosure of the extent to which lending
and other financial intermediary business activities
are aligned with a well below 2°C scenario.

Supplemental
Guidance for
Insurance
Companies

Added disclosure of the extent to which insurance
underwriting activities are aligned with a well
below 2°C scenario.

Supplemental
Guidance for Asset
OwnersAdded disclosure of the extent to which assets theyown and funds and investment strategies, where
relevant, are aligned with a well below 2°C
scenario.6

Supplemental
Guidance for AssetManagers

Added disclosure of the extent to which assets
under management and products and investment
strategies, where relevant, are aligned with a well
below 2°C scenario.7

Guidance for All
Sectors▪ Revised disclosure of Scope 1 and Scope 2

B.
Recommendations‒

GHG emissions to be independent of amateriality assessment.

▪ Revised to encourage disclosure of Scope
3 GHG emissions.

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendicesc) Describe the targets used by theorganization to manage
climate-related risks andopportunities and performanceagainst targets.

Supplemental
Guidance for
Banks

Added disclosure of GHG emissions for lending
and other financial intermediary business activities,
where data and methodologies allow.

Supplemental
Guidance for
Insurance
Companies

Added disclosure of weighted average carbon
intensity or GHG emissions associated withcommercial property and specialty lines ofbusiness, where data and methodologies allow.

Supplemental
Guidance for
Asset Owners

Added disclosure of GHG emissions for assets theyown, where data and methodologies allow.

Supplemental
Guidance for
AssetManagers

Added disclosure of GHG emissions for assets
under management, where data andmethodologies allow.

Guidance for All
Sectors▪ Added disclosure of targets consistent
with cross-industry, climate-related metriccategories (see Appendix 2), where
relevant.

▪ Added disclosure of interim targets, whereavailable, for organizations disclosing
medium-term or long-term targets.

6

While the Task Force’s supplemental guidance for asset owners addresses considerations when reporting to beneficiaries, the Task Forcebelieves an asset owners’ disclosure of the extent to which the assets they own are aligned with a well below 2°C scenario may also be ofinterest to a wider range of stakeholders. As such, the Task Force encourages asset owners to disclose this information publicly, whereappropriate.

7

While the Task Force’s supplemental guidance for asset managers addresses considerations when reporting to clients, the Task Force believes
an asset managers’ disclosure of the extent to which their assets under management are aligned with a well below 2°C scenario may also beof interest to a wider range of stakeholders. As such, the Task Force encourages asset managers to disclose this information publicly, whereappropriate.

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

5In addition to changes to the guidance, the Task Force made a few additional changes throughout thisdocument including the following:▪ Updated Section A.3. Application of Recommendations to encourage all organizations todisclose Scope 1 and Scope 2 GHG emissions independent of an assessment of materiality.8
The disclosure of Scope 3 GHG emissions is subject to materiality; however, the Task Forceencourages organizations to disclose such emissions.

▪ Removed tables on alignment of the recommendations with other frameworks, as they wereoriginally included primarily to demonstrate the Task Force’s use of existing disclosure
frameworks in developing its recommendations.9 Since 2017, many climate-related disclosure
regimes have aligned with the TCFD recommendations and generally indicate within theirframeworks where such alignment exists.

▪ Removed the illustrative examples of metrics for the four non-financial groups, as work byother frameworks and standard setters provide more detailed guidance on sector-specificmetrics and are updated on a regular basis.
A.

2. Structure of Recommendations

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

The Task Force developed four widely adoptable recommendations that are supported by key climaterelated financial disclosures—referred to as recommended disclosures. In addition, there is guidance
to support all organizations in developing disclosures consistent with the recommendations as well as
supplemental guidance for specific sectors and industries. This structure is depicted in Figure 1.
Figure 1

Recommendations and Guidance

Recommendations

Recommendations
Four widely adoptable recommendations tied togovernance, strategy, risk management, and metrics andtargets
Recommended Disclosures
Specific recommended disclosures organizations should
include in their financial filings to provide decision-useful
information

F.
Fundamental Principles
for Effective Disclosure
Appendices

Guidance for All
Sectors
Recommended
Disclosures
Supplemental
Guidance for
Certain Sectors

Additional Supporting Materials

Guidance for All Sectors
Guidance providing context and suggestions for
implementing the recommended disclosures for allorganizations
Supplemental Guidance for Certain Sectors
Guidance highlighting important considerations for certain
sectors in providing sector- or industry-specific climaterelated financial information
Supplemental guidance is provided for the financial sector
and for non-financial sectors potentially most affected byclimate change
Additional Supporting Materials
Additional information and guidance to help preparers
implement key components of the TCFD recommendations

8

While the Task Force agreed that organizations should disclose Scope 1 and 2 GHG emissions independent of a materiality assessment, a few
Task Force members preferred keeping such disclosures as subject to materiality.

9

When the FSB created the Task Force, it indicated the Task Force “should not add to the already well developed body of existing disclosure
schemes” (FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015). In response, the Task Force drew fromexisting climate-related disclosure and other frameworks where possible and appropriate, including ones developed by the Asset Owner
Disclosure Project, CDP, Climate Disclosure Standards Board, ClimateWise, Enhanced Disclosures Task Force, G20/Organisation for Economic
Co-operation and Development, Global Reporting Initiative, International Integrated Reporting Council, Principles for Responsible Investment,
Sustainability Accounting Standards Board, and United Nations Environment Programme Finance Initiative.

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

6

The Task Force developed supplemental guidance to assist preparers in the financial sector and nonfinancial industries potentially most affected by climate change and the transition to a low-carbon
economy (referred to as non-financial groups). Figure 2 shows the recommendations (Governance,
Strategy, Risk Management, and Metrics and Targets) and recommended disclosures (a, b, c) for which
supplemental guidance was developed for the financial sector and four non-financial groups. In
addition, the Task Force developed additional supporting materials to help preparers implement key
components of the TCFD recommendations. Section A.5. Summary of Additional Supporting Materials
provides more details.
Figure 2

Supplemental Guidance for Financial Sector and Non-Financial Groups
GovernanceIndustries and Groupsa)b)Strategy
a)

b)

c)

Risk
Management

Metrics andTargets

a)

a)

b)

c)

b)

c)

Banks

FinancialA.
Introduction
B.
Recommendations

Insurance Companies
Asset Owners

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Non-Financial

Asset Managers
C.
Guidance for All Sectors

EnergyTransportation
Materials and Buildings
Ag, Food, and Forest
Products

3. Application of Recommendations
a. Who should disclose?
To promote more informed investing, lending, and insurance underwriting decisions, the Task Forcerecommends all financial and non-financial organizations with public debt or equity implement its
recommendations. Because climate-related risks and opportunities are relevant for organizations
across all sectors, the Task Force encourages all organizations to implement these recommendations.
In addition, the Task Force believes that asset managers and asset owners, including public- andprivate-sector pension plans, endowments, and foundations, should implement its recommendations.

Appendicesb. Which recommendations involve an assessment of materiality?
The disclosures related to the Strategy and Metrics and Targets recommendations involve anassessment of materiality, with the exception of Scope 1 and Scope 2 GHG emissions under the Metrics
and Targets recommendation. The Task Force believes all organizations should disclose absolute Scope
1 and Scope 2 GHG emissions independent of a materiality assessment. The disclosure of Scope 3 GHG
emissions is subject to materiality; however, the Task Force encourages organizations to disclose such
emissions.
c. Where should preparers disclose?
Preparers of climate-related financial disclosures should provide such disclosures in their mainstream(i.e., public) annual financial filings.10 Certain organizations—those in the four non-financial groups that10

Financial filings refer to the annual reporting packages in which organizations are required to deliver their audited financial results under the
corporate, compliance, or securities laws of the jurisdictions in which they operate.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures7

have more than one billion U.S. dollar equivalent (USDE) in annual revenue—should consider disclosing
information related to the Strategy and Metrics and Targets recommendations in other reports when
the information is not deemed material and not included in financial filings.11 Other reports include
official company reports that are issued at least annually, widely distributed and available to investors
and others, and subject to internal governance processes that are the same or substantially similar to
those used for financial reporting.
Asset owners and asset managers should report to their beneficiaries and clients, respectively, throughexisting means of financial reporting, when relevant and feasible. Asset owners and asset managers
are also encouraged to disclose publicly via their websites or other public avenues of disclosure.
d. How should material information be determined?
Organizations should determine materiality for climate-related issues consistent with how they
determine the materiality of other information included in their annual financial filings. The Task Forcecautions organizations against prematurely concluding that climate-related risks and opportunities are
not material based on perceptions of the longer-term nature of some climate-related risks.
A.

When providing disclosures outside mainstream financial filings, asset managers and asset owners
should consider materiality in the context of their respective mandates and investment performance forclients and beneficiaries.

Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendicese. Who should review climate-related financial disclosures prior to release?
Because these disclosures should be included in mainstream financial filings, the governanceprocesses should be as rigorous as those used for existing public financial disclosures, including review
by the chief financial officer, audit committee, and Board of Directors, as appropriate. Organizations
that provide climate-related financial disclosures in reports other than financial filings should follow
internal governance processes that are the same or similar to those used for financial reporting.
f. What should preparers do if they choose to omit a recommended disclosure?
If a recommended disclosure is not made, preparers should provide their rationale for omitting thedisclosure.
g. What reporting period should preparers use?
Preparers should report information for the same period covered by their mainstream financial filings.
h. 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 the timing ofclimate-related impacts on businesses will vary. Instead, the Task Force recommends preparers define
time frames according to the life of their assets, the profile of the climate-related risks they face, andthe sectors and geographies in which they operate.12
i. What if certain disclosures are incompatible with national disclosure requirements?
Organizations need to make financial disclosures in accordance with their national disclosure
requirements. If certain elements of the recommendations are incompatible with national disclosure
requirements for financial filings, organizations are encouraged to disclose those elements throughother reports.

11

The Task Force chose a one billion USDE annual revenue threshold because it captures organizations responsible for over 90 percent of Scope
1 and 2 GHG emissions in the industries represented by the four non-financial groups (about 2,250 organizations out of roughly 15,000).

122030 and 2050 have become key target dates for addressing climate change following the publication of the Special Report on Global Warmingof 1.5°C by the Intergovernmental Panel on Climate Change (IPCC). This report noted that to limit global warming to 1.5°C “global net humancaused emissions of carbon dioxide (CO2) would need to fall by about 45 percent from 2010 levels by 2030, reaching ‘net zero’ around 2050.”

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures84. Assessing Financial Impacts of Climate-Related Risks and Opportunities
While climate change affects nearly all economic sectors, the level of exposure and the impact ofclimate-related risks differ by sector, industry, geography, and organization. Furthermore, the financial
impacts of climate-related issues on organizations are not always clear or direct, and, for manyorganizations, identifying the issues, assessing potential impacts, and ensuring the material issues arereflected in financial filings may be challenging. Key reasons for this are likely because of (1) limited
knowledge of climate-related issues within organizations, which may inhibit the identification of suchrisks; (2) the tendency to focus mainly on near-term risks without paying adequate attention to risks
that may arise in the longer term; and (3) the difficulty in quantifying climate-related risks.13
Better disclosure of the financial impacts of climate-related risks and opportunities on an organization
is a key goal of the Task Force’s work. In order to make more informed financial decisions, investors,
lenders, and insurance underwriters need to understand how climate-related issues affect and are likely
to affect an organization’s future financial performance and position as reflected in its income
statement, cash flow statement, and balance sheet.
A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups

Fundamentally, the financial impacts of climate-related issues on an organization are driven by the
specific climate-related risks and opportunities to which the organization is exposed and its strategic
and risk management decisions on seizing those opportunities and managing those risks (i.e., accept,
avoid, pursue, reduce, or share/transfer).14 Once an organization assesses its climate-related issues
and determines its response to those issues, it can then consider actual and potential financial impacts
on revenues, expenditures, assets and liabilities, and capital and financing. Figure 3 outlines the main
climate-related risks (transition and physical) and opportunities organizations should consider as partof their strategic planning or risk management to determine potential financial implications. In
addition, Appendix 1 provides tables with examples of (1) climate-related risks and their potential
financial impacts and (2) climate-related opportunities and their potential financial impacts.

Figure 3

Climate-Related Risks, Opportunities, and Financial Impact

F.
Fundamental Principles
for Effective Disclosure

Transition Risks
Policy and Legal

Opportunities
Resource Efficiency

Technology

Appendices

Energy Source

MarketRisks

Reputation

Opportunities

Products/Services
Markets

Physical Risks
Acute

Strategic Planning
Risk Management

Resilience

Chronic
Financial Impact

Revenues
Expenditures

IncomeStatement

Cash Flow
Statement

Balance
Sheet

Assets & Liabilities
Capital & Financing

Climate-related issues can affect several important aspects of an organization’s financial performanceand position, both now and in the future. For example, climate-related issues may have implications
for an organization’s businesses and capital expenditures. In turn, capital expenditures will determine
the nature and amount of long-lived assets and the proportion of debt and equity to be funded on an
13

World Business Council for Sustainable Development, Sustainability and enterprise risk management: The first step towards integration, January
18, 2017.

14

For more information see TCFD, Guidance on Risk Management Integration and Disclosure, October 2020.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures9

organization’s balance sheet. Climate-related issues may also carry implications for future cash flows(operating, investing, and financing activities). An organization, therefore, should consider how climaterelated issues affect its current financial position and may potentially affect its future financial
positions in terms of four major categories of financial impact, as described in Figure 4.
Figure 4

Major Categories of Financial Impact

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
AppendicesFinancial Performance15

Financial Position16

Revenues. Transition and physical risks may affectdemand for products and services. Organizations
should consider the potential impact on revenues andidentify potential opportunities for enhancing ordeveloping new revenues. In particular, given theemergence and likely growth of carbon pricing as amechanism to regulate emissions, it is important for
affected industries to consider the potential impactsof such pricing on business revenues.

Assets and Liabilities. Supply and demand changes
from changes in policies, technology, and market
dynamics related to climate change could affect thevaluation of organizations’ assets and liabilities. Use oflong-lived assets and, where relevant, reserves may
be affected by climate-related issues. It is importantfor organizations to provide an indication of thepotential impact on their assets and liabilities,
especially long-lived assets. This should focus on
existing and committed future activities and decisions
requiring new investment, restructuring, write-downs,
or impairment.

Expenditures. An organization’s response to climaterelated risks and opportunities may depend, in part,on the organization’s cost structure. Lower-costsuppliers may be more resilient to changes in cost
resulting from climate-related issues and more
flexible in their ability to address such issues. By
providing an indication of their cost structure andflexibility to adapt, organizations can better inform
investors about their investment potential.
It is also helpful for investors to understand capital
expenditure plans and the level of debt or equity
needed to fund these plans. The resilience of suchplans should be considered bearing in mind
organizations’ flexibility to shift capital and thewillingness of capital markets to fund organizations
exposed to significant levels of climate-related risks.
Transparency of these plans may provide greater
access to capital markets or improved financing
terms.

Capital and Financing. Climate-related risks andopportunities may change the profile of anorganization's debt and equity structure, either byincreasing debt levels to compensate for reduced
operating cash flows or for new capital expendituresor research and development (R&D). It may also affectthe ability to raise new debt or refinance existing debt,
or reduce the tenor of borrowing available to theorganization. There could also be changes to capitaland reserves from operating losses, asset writedowns, or the need to raise new equity to meetinvestment.

Whether an individual organization is or may be affected financially by climate-related issues usuallydepends on:▪ the organization’s exposure to, and anticipated effects of, specific climate-related risks andopportunities;▪ the organization’s planned responses to manage (i.e., accept, avoid, pursue, reduce, orshare/transfer) its risks or seize opportunities; and▪ the implications of the organization’s planned responses on its income statement, cash flow
statement, and balance sheet.
a. Exposure to Climate-Related Risks and Opportunities
Exposure, in this context, refers to an organization’s vulnerability to negative impacts or capability ofrealizing positive impacts from the transition to a low-carbon economy and/or the physical aspects of15

Financial performance refers to an organization’s income and expenses as reflected on its income and cashflow statements (actual) or
potential income and expenses under different climate-related scenarios.

16

Financial position refers to an organization’s assets, liabilities, and equity as reflected on its balance sheet (actual) or potential assets,
liabilities, and equity under different climate-related scenarios.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures10

climate change. When considering its exposure to climate-related risks and opportunities, anorganization should consider the exposure of its value chain as well.
The complexity and uncertainty associated with climate change make it difficult to identify the specifictouchpoints and time frames in which climate change may affect an organization. As a starting point,
an organization should assess its value chain over a reasonable time frame as it relates to thefollowing:17▪ climate-related risks including (1) transition risks such as policy constraints on emissions,
imposition of carbon tax, water restrictions, land use restrictions or incentives, and market
demand and supply shifts and (2) physical risks such as the disruption of operations ordestruction of property and▪ climate-related opportunities such as access to new markets and new technology (e.g., carbon
capture and storage technology).

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

Importantly, an organization should assess its climate-related risks and opportunities within thecontext of its businesses, operations, and physical locations in order to determine potential financial
implications. In making such an assessment, an organization should consider (1) current andanticipated policy constraints and incentives in relevant jurisdictions, technology changes andavailability, and market changes and (2) whether an organization’s physical locations or suppliers are
particularly vulnerable to physical impacts from climate change. For example, an organization may
have high emissions, but if anticipated policy in the organization’s jurisdiction fails to constrain
emissions in a binding manner, the organization may determine financial impacts are minimal over its
planning horizon.
b. Responses to Climate-Related Risks and Opportunities
After assessing its exposure to climate-related risks and opportunities, an organization needs tochoose how to respond to the identified risks and opportunities, including the following:▪ the risk management actions it plans to undertake (i.e., accept, avoid, pursue, reduce, orshare/transfer);F.
Fundamental Principles
for Effective Disclosure▪ capital expenditures (CapEx) on or financing towards new technology or facilities that may be

Appendices▪ R&D expenditures that may be necessary.

warranted; andThese are largely strategic and financial planning decisions around the operating and capital
expenditures or financing the organization plans to undertake in response to climate-related risks andopportunities. In some cases, these responses may be directly motivated by specific climate-related
issues, and in other cases, climate-related issues may be an additional, but not exclusive, motivational
factor around other business drivers. It is important for an organization to recognize that accepting
climate-related risks (i.e., “no response”) may also carry potential financial implications, such as a loss
in revenue, reduced asset valuations or write-offs, or increased costs.
c. Effectiveness of Reponses
Financial impacts associated with climate-related risks and opportunities depend on not only anorganization’s level of exposure and planned responses, but also on how effective its responses are in
realizing opportunities and mitigating or otherwise managing risks. An organization, therefore, should
monitor implementation of its responses against both internal targets and external factors to assess
their effectiveness. For example, an organization that has made investments in new products to take17

An important aspect for organizations to consider is the time horizon for assessing exposures. While the common perception is that climaterelated risks are “long term,” arising in 10, 20, or 30 years, this may not be the case. Policies, technology innovation, and markets are likely toadjust and shift in advance of many foreseeable climate trends. Likewise, more frequent and severe storms, floods, and droughts are
occurring today. Organizations, therefore, should carefully consider the time horizon they use to evaluate their exposures and possibly assessthem over a range of time horizons to capture potential exposures arising in the short, medium, and longer term.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures11

advantage of climate-related opportunities may establish an internal target for revenues associatedwith sales of the new products to gauge effectiveness.
d. Linking It All Together
Determining the financial impacts of climate-related risks and opportunities generally involves anorganization assessing (1) its exposures, (2) its planned responses, and (3) its response effectiveness.
Analyses should focus on the following:▪ the exposure and potential financial impact if no action is undertaken and▪ the financial implications of managing risks and maximizing opportunities in the context of anorganization’s overall business strategy and environment.
Forward-looking analyses are especially important, but challenging. Efforts to mitigate and adapt toclimate change are without historical precedent, and many aspects about the timing and magnitude ofclimate change in specific contexts are uncertain. For these reasons, the Task Force believes scenario
analysis is an important tool for organizations to use in their strategic planning processes. Scenario
analysis and other strategic planning tools can help organizations consider a broader range ofassumptions, uncertainties, and potential future states when assessing financial implications of climatechange.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices5. Summary of Additional Supporting Materials
Since the Task Force issued its final recommendations in June 2017, it has monitored climate-related
financial disclosure practices and sought to identify and address implementation challenges raised by
preparers. In this regard, the Task Force has published guidance on specific topics intended to help
address identified challenges and better support implementation, as described below.
The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities (2017) provides
information on types of climate-related scenarios, the application of scenario analysis, and the key
challenges in implementing scenario analysis to support an organization’s disclosure of the resilienceof its strategy, taking into consideration different climate-related scenarios.18
Guidance on Scenario Analysis for Non-Financial Companies (2020) provides practical, processoriented ways for organizations to use climate-related scenario analysis and ideas for disclosing theresilience of their strategies under different climate-related scenarios.19
Guidance on Risk Management Integration and Disclosure (2020) describes considerations fororganizations interested in integrating climate-related risks into their existing risk management
processes and disclosing information on their risk management processes in alignment with the Task
Force’s recommendations.20
Guidance on Metrics, Targets, and Transition Plans (2021) describes recent developments aroundclimate-related metrics and users’ increasing focus on information describing organizations’ plans fortransitioning to a low-carbon economy. The guidance also describes a set of cross-industry, climaterelated metric categories (described in Appendix 2: Cross-Industry, Climate-Related Metric Categories)that the Task Force believes are applicable to all organizations.21

18

TCFD, The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities, June 29, 2017.

19

TCFD, Guidance on Scenario Analysis for Non-Financial Companies, October 29, 2020.

20

TCFD, Guidance on Risk Management Integration and Disclosure, October 29, 2020.

21

TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021.

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

12

B.
Recommendations

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

13B. Recommendations
The Task Force’s recommendations are structured around four thematic areas that are core elementsof how organizations operate—governance, strategy, risk management, and metrics and targets(Figure 5). The four overarching recommendations are supported by key climate-related financial
disclosures—referred to as recommended disclosures—that build out the framework with informationthat will help investors and others understand how reporting organizations assess climate-related
issues (Figure 6, p. 15).
Figure 5

Core Elements of Recommended Climate-Related Financial Disclosures
Governance

Governance
StrategyA.
Introduction

RiskManagement

B.
Recommendations

Metrics
and Targets

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups

Fundamental Principles
for Effective Disclosure
Appendicesand opportunities
Strategy
The actual and potential impacts of climate-related risks andopportunities on the organization’s businesses, strategy, andfinancial planning
Risk Management
The processes used by the organization to identify, assess,C.
Guidance for All Sectors

F.

The organization’s governance around climate-related risks

and manage climate-related risks
Metrics and Targets
The metrics and targets used to assess and manage relevant
climate-related risks and opportunities

The Task Force recommends that organizations provide climate-related financial disclosures in theirmainstream (i.e., public) annual financial filings and recognizes that most information included infinancial filings is subject to a materiality assessment. However, because climate-related risk is a nondiversifiable risk that affects nearly all industries, many investors believe it requires special attention.
For example, in assessing organizations’ financial and operating results, many investors want insight
into the governance and risk management context in which such results are achieved. The Task Forcebelieves disclosures related to its Governance and Risk Management recommendations directly
address this need for context and should be included in financial filings.
For disclosures related to the Strategy and Metrics and Targets recommendations, the Task Forcebelieves organizations should provide such information in annual financial filings when theinformation is deemed material. Certain organizations—those in the four non-financial groups thathave more than one billion U.S. dollar equivalent (USDE) in annual revenue—should consider
disclosing such information in other reports when the information is not deemed material and notincluded in financial filings.22 Because these organizations are more likely than others to be financially
impacted over time, investors are interested in monitoring how these organizations’ strategies evolve.
Importantly, the recommendations were developed to apply broadly across sectors and jurisdictions
and should not be seen as superseding national disclosure requirements. Organizations should makefinancial disclosures in accordance with their national disclosure requirements for financial filings.

22

The Task Force chose a one billion USDE annual revenue threshold because it captures organizations responsible for over 90% of Scope 1 and
2 GHG emissions in the industries represented by the four non-financial groups (about 2,250 organizations out of roughly 15,000).

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

14

Figure 6

Recommendations and Supporting Recommended Disclosures

Governance

Strategy

Risk Management

Metrics and Targets

Disclose the organization’s
governance around climaterelated risks and opportunities.

Disclose the actual and potential
impacts of climate-related risks
and opportunities on theorganization’s businesses,
strategy, and financial planningwhere such information ismaterial.

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

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

Recommended Disclosures

Recommended Disclosures

Recommended Disclosures

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

a) Describe the climate-relatedrisks and opportunities theorganization has identified
over the short, medium, andlong term.

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

a) Disclose the metrics used by
the organization to assessclimate-related risks andopportunities in line with its
strategy and risk management
process.

b) Describe management’s rolein assessing and managing
climate-related risks andopportunities.

b) Describe the impact ofclimate-related risks andopportunities on theorganization’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
greenhouse gas (GHG)
emissions, and the relatedrisks.

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

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

c) Describe the targets used by
the organization to manage
climate-related risks andopportunities andperformance against targets.

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

15

C.
Guidance for
All Sectors

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

16

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 the recommended disclosures.

1. Governance
Investors, lenders, insurance underwriters, and other users of climate-related financial disclosures(collectively referred to as “investors and other stakeholders”) are interested in understanding the rolean organization’s board plays in overseeing climate-related issues as well as management’s role inassessing and managing those issues. Such information supports evaluations of whether material
climate-related issues receive appropriate board and management attention.

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

A.
Introduction
B.
Recommendations

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 whenreviewing and guiding strategy, major plans of action, risk management policies,
annual budgets, and business plans as well as setting the organization’s
performance objectives, monitoring implementation and performance, andoverseeing major capital expenditures, acquisitions, and divestitures; and‒how the board monitors and oversees progress against goals and targets foraddressing climate-related issues.

C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Recommended
Disclosure b)
Describemanagement’s rolein assessing andmanaging climaterelated risks andopportunities.

Guidance for All Sectors
In describing management’s role related to the assessment and management of climaterelated issues, organizations should consider including the following information:‒

whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether such management
positions or committees report to the board or a committee of the board andwhether 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.

Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures17

2. Strategy23
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 long term.
Such information is used to inform expectations about the future performance of an organization.

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Recommended
Disclosure a)
Describe theclimate-relatedrisks andopportunities theorganization has
identified over the
short, medium, andlong term.
A.
Introduction

Guidance for All Sectors
Organizations should provide the following information:‒a description of what they consider to be the relevant short-, medium-, and longterm time horizons, taking into consideration the useful life of the organization’s
assets or infrastructure and the fact that climate-related issues often manifest
themselves over the medium and longer terms;‒

a description of the specific climate-related issues potentially arising in each time
horizon (short, medium, and long term) that could have a material financial impact
on the organization; and‒a description of the process(es) used to determine which risks and opportunities
could have a material financial impact on the organization.

Organizations should consider providing a description of their risks and opportunities bysector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1.1 and A1.2 (pp. 75–76).

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

Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on
the organization’s
businesses,
strategy, andfinancial planning.

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

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities

F.
Fundamental Principles
for Effective Disclosure‒

Investment in research and development‒

Operations (including types of operations and location of facilities)‒

Acquisitions or divestments

Appendices‒

Access to capital

E.
Supplemental Guidancefor Non-Financial Groups

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized. Organizations’ disclosures should reflect a holistic pictureof the interdependencies among the factors that affect their ability to create value overtime.
Organizations should describe the impact of climate-related issues on their financial
performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities).24 Ifclimate-related scenarios were used to inform the organization’s strategy and financial
planning, such scenarios should be described.

23

The Task Force’s Guidance on Scenario Analysis for Non-Financial Companies, The Use of Scenario Analysis in Disclosure of Climate-Related Risks andOpportunities, and Guidance on Metrics, Targets, and Transition Plans may be useful to organizations in disclosing information under thisrecommendation.

24

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

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

18

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Organizations that have made GHG emissions reduction commitments, operate injurisdictions that have made such commitments, or have agreed to meet investor
expectations regarding GHG emissions reductions should describe their plans fortransitioning to a low-carbon economy, which could include GHG emissions targets andspecific activities intended to reduce GHG emissions in their operations and value chain
or to otherwise support the transition.25
Recommended
Disclosure c)
Describe theresilience of theorganization’s
strategy, taking into
considerationdifferent climaterelated scenarios,
including a 2°C or
lower scenario.

A.
Introduction

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-related risks
and opportunities, taking into consideration a transition to a low-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.26
Organizations should consider discussing:‒where they believe their strategies may be affected by climate-related risks andopportunities;‒

how their strategies might change to address such potential risks andopportunities;‒

the potential impact of climate-related issues on financial performance(e.g., revenues, costs) and financial position (e.g., assets, liabilities);27 and‒the climate-related scenarios and associated time horizon(s) considered.

B.
Recommendations
C.
Guidance for All Sectors

Refer to Section D in the Task Force’s report for information on applying scenarios toforward-looking analysis.

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

25

Organizations may agree to meet investor expectations regarding GHG emissions reductions for various reasons, including concerns about
access to or the cost of capital if they fail to do so.

26

In interpreting the phrase “2°C or lower,” organizations should consider aligning their scenario analysis with Article Two of the 2015 Paris
Agreement which commits parties to “holding the increasing in the global average temperature to well below 2°C above pre-industrial levels
and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

27

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures193. Risk Management28
Investors and other stakeholders need to understand how an organization’s climate-related risks are
identified, assessed, and managed and whether those processes are integrated in existing 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 climaterelated risks.

Guidance for All Sectors
Organizations should describe their risk management processes for identifying andassessing climate-related risks. An important aspect of this description is howorganizations determine the relative significance of climate-related risks in relation toother risks.
Organizations should describe whether they consider existing and emerging regulatory
requirements related to climate change (e.g., limits on emissions) as well as otherrelevant factors considered.
Organizations should also consider disclosing the following:A.
Introduction‒

processes for assessing the potential size and scope of identified climate-relatedrisks andB.

‒

definitions of risk terminology used or references to existing risk classification
frameworks used.

Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices28

Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated 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-relatedrisks, including how materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s
overall risk
management.

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

In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1.1 and A1.2 (pp. 75–76), as appropriate.

The Task Force’s Guidance on Risk Management Integration and Disclosure may be useful to organizations in disclosing information under thisrecommendation.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures20

4. Metrics and Targets29
Investors and other stakeholders need to understand how an organization measures and monitors its
climate-related risks and opportunities. Access to the metrics and targets used by an organization
allows investors and other stakeholders to better assess the organization’s potential risk-adjusted
returns, ability to meet financial obligations, general exposure to climate-related issues, and progressin managing or adapting to those issues.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities inline with its strategy
and riskmanagement
process.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

Supplemental Guidance
for the Financial Sector

F.
Fundamental Principles
for Effective Disclosure
AppendicesWhere climate-related issues are material, organizations should consider describing
whether and how related performance metrics are incorporated into remuneration
policies.
Where relevant, organizations should provide their internal carbon prices as well asclimate-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. Where
appropriate, organizations should consider providing forward-looking metrics for the
cross-industry, climate-related metric categories described in Table A2.1 (p. 79),
consistent with their business or strategic planning time horizons. In addition, where notapparent, organizations should provide a description of the methodologies used to
calculate or estimate climate-related metrics.

D.

E.
Supplemental Guidancefor Non-Financial Groups

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage climaterelated risks and opportunities, as described in Tables A1.1 and A1.2 (pp. 75–76), as wellas metrics consistent with the cross-industry, climate-related metric categories describedin Table A2.1 (p. 79).30 Organizations should consider including metrics on climate-relatedrisks associated with water, energy, land use, and waste management where relevant
and applicable.

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions independent ofa materiality assessment, and, if appropriate, Scope 3 GHG emissions and the relatedrisks.31 All organizations should consider disclosing Scope 3 GHG emissions.32, 33
GHG emissions should be calculated in line with the GHG Protocol methodology to allow
for aggregation and comparability across organizations and jurisdictions.34 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.35

29

The Task Force’s Guidance on Metrics, Targets, and Transition Plans should be reviewed by organizations disclosing information under thisrecommendation.

30

Financial organizations may find it more difficult to quantify exposure to climate-related risks because of challenges related to portfolio
aggregation and data availability. The Task Force suggests financial organizations provide qualitative and quantitative information, where data
and methodologies allow.

31

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, and technology
responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted more significantly bytransition risk than other organizations. In addition, current or future constraints on emissions, either directly by emission restrictions or
indirectly through carbon budgets, may impact organizations financially.

32

The Task Force strongly encourages all organizations to disclose Scope 3 GHG emissions. While the Task Force recognizes the data andmethodological challenges associated with calculating Scope 3 GHG emissions, it believes such emissions are an important metric reflecting
an organization’s exposure to climate-related risks and opportunities. For guidance on reporting Scope 3 GHG emissions, see the GHG
Protocol’s The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

33

When considering whether to disclose Scope 3 GHG emissions, organizations should consider whether such emissions are a significant
portion of their total GHG emissions. For example, see discussion of 40% threshold in the Science Based Targets initiative’s (SBTi’s) paper SBTi
Criteria and Recommendations, Version 4.2, April 2021, Section V, p. 10.

34

While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG
emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.

35

For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions per unitof economic output (e.g., unit of production, number of employees, or value-added) is widely used.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures21

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
GHG emissions and associated 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 the metrics.
Recommended
Disclosure c)
Describe thetargets used by theorganization to
manage climaterelated risks andopportunities andperformanceagainst targets.

A.
Introduction

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 line with the cross-industry, climaterelated metric categories in Table A2.1 (p. 79), where relevant, and in line with anticipatedregulatory requirements or market constraints or other goals. Other goals may include
efficiency or financial goals, financial loss tolerances, avoided GHG emissions throughthe entire product life cycle, or net revenue goals for products and services designed fora low-carbon economy.
In describing their targets, organizations should consider including the following:‒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.

Organizations disclosing medium-term or long-term targets should also disclose
associated interim targets in aggregate or by business line, where available.

B.
Recommendations
C.
Guidance for All Sectors

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

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

22

D.
Supplemental
Guidance for the
Financial Sector
A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

23

D. Supplemental Guidance for the Financial Sector
A key element of the FSB’s proposal for the Task Force was the development of climate-related
disclosures that “would enable stakeholders to understand better the concentrations of carbon-related
assets in the financial sector and the financial system’s exposures to climate-related risks.”36 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, andthe 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, as follows: banks (lending), insurance companies (underwriting), asset managers (asset
management), and asset owners, which include public- and private-sector pension plans, endowments,and foundations (investing). Given the important role of the financial sector as preparers of climaterelated financial disclosures described in the FSB’s proposal, the Task Force identified certain areas
where supplemental guidance was warranted, as shown in Figure 7. This supplemental guidance isintended to provide additional context for the financial sector when preparing disclosures consistent
with the Task Force’s recommendations.

A.
Introduction
B.

Figure 7

Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Supplemental Guidance for the Financial Sector
GovernanceIndustries

a)b)Strategy
a)

b)

c)

Risk
Management

Metrics andTargets

a)

a)

b)

c)

b)

c)

Banks
Insurance Companies
Asset Owners
Asset Managers

Appendices

36

FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures24

1. Banks
Banks are exposed to climate-related risks and opportunities through their lending and other financial
intermediary activities as well as through their own operations. As financial intermediaries, banks may
assume exposure to material climate-related risks through their borrowers, customers, orcounterparties. Banks that provide loans or trade the securities of companies with direct exposure toclimate-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 or equity 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 themarkets for lower-carbon and energy-efficient alternatives grow, banks may assume material
exposures in their lending and investment 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’
exposures and 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 theboard’s oversight ofclimate-relatedrisks 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 whenreviewing and guiding strategy, major plans of action, risk management policies,
annual budgets, and business plans as well as setting the organization’s
performance objectives, monitoring implementation and performance, andoverseeing major capital expenditures, acquisitions, and divestitures; and‒how the board monitors and oversees progress against goals and targets foraddressing climate-related issues.

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describemanagement’s rolein assessing andmanaging climaterelated risks andopportunities.

Guidance for All Sectors
In describing management’s role related to the assessment and management of climaterelated issues, organizations should consider including the following information:‒

whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether such management
positions or committees report to the board or a committee of the board andwhether 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

25Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Recommended
Disclosure a)
Describe theclimate-relatedrisks andopportunities theorganization has
identified over the
short, medium, andlong term.

Guidance for All Sectors
Organizations should provide the following information:‒a description of what they consider to be the relevant short-, medium-, and longterm time horizons, taking into consideration the useful life of the organization’s
assets or infrastructure and the fact that climate-related issues often manifest
themselves over the medium and longer terms;‒

a description of the specific climate-related issues potentially arising in each time
horizon (short, medium, and long term) that could have a material financial impact
on the organization; and‒a description of the process(es) used to determine which risks and opportunities
could have a material financial impact on the organization.

Organizations should consider providing a description of their risks and opportunities bysector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1.1 and A1.2 (pp. 75–76).
A.
Introduction

Supplemental Guidance for Banks
Banks should describe significant concentrations of credit exposure to carbon-related
assets.37 Additionally, banks should consider disclosing their climate-related risks(transition and physical) in their lending and other financial intermediary businessactivities.

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

Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on
the organization’s
businesses,
strategy, andfinancial planning.

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

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities

F.
Fundamental Principles
for Effective Disclosure‒

Investment in research and development‒

Operations (including types of operations and location of facilities)‒

Acquisitions or divestments

Appendices‒

Access to capital

E.
Supplemental Guidancefor Non-Financial Groups

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized. Organizations’ disclosures should reflect a holistic pictureof the interdependencies among the factors that affect their ability to create value overtime.
Organizations should describe the impact of climate-related issues on their financial
performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities).38
If climate-related scenarios were used to inform the organization’s strategy and financial
planning, such scenarios should be described.

37

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 four non-financial groups identified by
the Task Force in its 2017 report (see Table 4, p. 56). There may be industries or sub-industries that are appropriate to exclude, such as water
utilities and independent power and renewable electricity producer industries. Banks should describe which industries they include.

38

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

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

26

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Organizations that have made GHG emissions reduction commitments, operate injurisdictions that have made such commitments, or have agreed to meet investor
expectations regarding GHG emissions reductions should describe their plans fortransitioning to a low-carbon economy, which could include GHG emissions targets andspecific activities intended to reduce GHG emissions in their operations and value chain
or to otherwise support the transition.39
Recommended
Disclosure c)
Describe theresilience of theorganization’s
strategy, taking into
considerationdifferent climaterelated scenarios,
including a 2°C or
lower scenario.

A.
Introduction

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-related risks
and opportunities, taking into consideration a transition to a low-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.40
Organizations should consider discussing:‒where they believe their strategies may be affected by climate-related risks andopportunities;‒

how their strategies might change to address such potential risks andopportunities;‒

the potential impact of climate-related issues on financial performance(e.g., revenues, costs) and financial position (e.g., assets, liabilities);41 and‒the climate-related scenarios and associated time horizon(s) considered.

B.
Recommendations

Refer to Section D in the Task Force’s report for information on applying scenarios toforward-looking analysis.

C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
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 climaterelated risks.

Guidance for All Sectors
Organizations should describe their risk management processes for identifying andassessing climate-related risks. An important aspect of this description is howorganizations determine the relative significance of climate-related risks in relation toother risks.
Organizations should describe whether they consider existing and emerging regulatory
requirements related to climate change (e.g., limits on emissions) as well as otherrelevant factors considered.
Organizations should also consider disclosing the following:‒processes for assessing the potential size and scope of identified climate-relatedrisks 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 the context of
traditional banking industry risk categories such as credit risk, market risk, liquidity risk,
and operational risk.

39

Organizations may agree to meet investor expectations regarding GHG emissions reductions for various reasons, including concerns
about access to or the cost of capital if they fail to do so.

40

In interpreting the phrase “2°C or lower,” organizations should consider aligning their scenario analysis with Article Two of the 2015
Paris Agreement which commits parties to “holding the increasing in the global average temperature to well below 2°C above pre-industrial
levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

41

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

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

27

Risk Management
Disclose how the organization identifies, assesses, and manages climate-related risks.
Banks should also consider describing any risk classification frameworks used (e.g., theEnhanced Disclosure Task Force’s framework for defining “Top and Emerging Risks”).42

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated 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-relatedrisks, including how materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s
overall risk
management.

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

In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1.1 and A1.2 (pp. 75–76), as appropriate.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities inline with its strategy
and riskmanagement
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage climaterelated risks and opportunities, as described in Tables A1.1 and A1.2 (pp. 75–76), as wellas metrics consistent with the cross-industry, climate-related metric categories
described in Table A2.1 (p. 79).43
Organizations should consider including metrics on climate-related risks associated withwater, energy, land use, and waste management where relevant and applicable.
Where climate-related issues are material, organizations should consider describing
whether and how related performance metrics are incorporated into remuneration
policies.
Where relevant, organizations should provide their internal carbon prices as well asclimate-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. Where
appropriate, organizations should consider providing forward-looking metrics for the
cross-industry, climate-related metric categories described in Table A2.1 (p. 79),
consistent with their business or strategic planning time horizons. In addition, where notapparent, organizations should provide a description of the methodologies used to
calculate or estimate climate-related metrics.

42

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 to have amaterial 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 certain in the longer term
(perhaps beyond one year) and which could have a material effect on the business strategy if it were to occur.”

43

Financial organizations may find it more difficult to quantify exposure to climate-related risks because of challenges related to portfolio
aggregation and data availability. The Task Force suggests financial organizations provide qualitative and quantitative information, where data
and methodologies allow.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures28

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Supplemental Guidance for Banks
Banks should provide the metrics used to assess the impact of (transition and physical)
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:‒

Industry44‒

Geography‒

Credit quality (e.g., investment grade or non-investment grade, internal rating
system)‒Average tenor

Banks should also provide the amount and percentage of carbon-related assets relative
to total assets as well as the amount of lending and other financing connected withclimate-related opportunities.45
Banks should describe the extent to which their lending and other financial intermediarybusiness activities, where relevant, are aligned with a well below 2°C scenario, using
whichever approach or metrics best suit their organizational context or capabilities.46
Banks should also indicate which financial intermediary business activities (e.g., loans to
specific sectors or industries) are included.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions independent ofa materiality assessment, and, if appropriate, Scope 3 GHG emissions and the relatedrisks.47 All organizations should consider disclosing Scope 3 GHG emissions.48, 49
GHG emissions should be calculated in line with the GHG Protocol methodology to allow
for aggregation and comparability across organizations and jurisdictions.50 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.51
GHG emissions and associated 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 the metrics.
Supplemental Guidance for Banks
Banks should disclose GHG emissions for their lending and other financial intermediarybusiness activities where data and methodologies allow. These emissions should be
calculated in line with the Global GHG Accounting and Reporting Standard for the Financial
Industry developed by the Partnership for Carbon Accounting Financials (PCAF Standard)
or a comparable methodology (See Table 2, p. 50).52

44

Industry should be based on the Global Industry Classification Standard or national classification systems aligned with financial filing
requirements.

45

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 four non-financial groups identified by the
Task Force in its 2017 report (see Table 4, p. 56). There may be industries or sub-industries that are appropriate to exclude, such as water
utilities and independent power and renewable electricity producer industries. Banks should describe which industries they include.

46

This could include forward-looking metrics, GHG emissions targets and progress against them, reducing emissions in their operations andvalue chains, and working with customers to support their transition to a low-carbon economy. The Task Force acknowledges that there arechallenges to implementing portfolio alignment methodologies, including the resources involved, and encourages organizations to disclosequalitative and quantitative information given existing data and methodologies. The Portfolio Alignment Team’s, Measuring Portfolio Alignment,
October 2021 outlines potential approaches and associated design decisions for portfolio alignment tools.

47

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, and technology
responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted more significantly bytransition risk than other organizations. In addition, current or future constraints on emissions, either directly by emission restrictions or
indirectly through carbon budgets, may impact organizations financially.

48

The Task Force strongly encourages all organizations to disclose Scope 3 GHG emissions. While the Task Force recognizes the data andmethodological challenges associated with calculating Scope 3 GHG emissions, it believes such emissions are an important metric reflecting

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures29

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure c)
Describe thetargets used by theorganization to
manage climaterelated risks andopportunities andperformanceagainst 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., consistent with the cross-industry,
climate-related metric categories in Table A2.1 (p. 79), where relevant, and in line with
anticipated regulatory requirements or market constraints or other goals. 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 andservices designed for a low-carbon economy.
In describing their targets, organizations should consider including the following:‒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.

Organizations disclosing medium-term or long-term targets should also disclose
associated interim targets in aggregate or by business line, where available.

A.
Introduction

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

B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendicesan organization’s exposure to climate-related risks and opportunities. For guidance on reporting Scope 3 GHG emissions, see the GHG
Protocol’s The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
49

When considering whether to disclose Scope 3 GHG emissions, organizations should consider whether such emissions are a significant
portion of their total GHG emissions. For example, see discussion of 40% threshold in the Science Based Targets initiative’s (SBTi’s) paper SBTi
Criteria and Recommendations, Version 4.2, April 2021, Section V, p. 10.

50

While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG
emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.

51

For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions per unitof economic output (e.g., unit of production, number of employees, or value-added) is widely used.

52

The Task Force recognizes the PCAF Standard currently does not provide explicit guidance on calculating GHG emissions for certain financial
products including private equity that refers to investment funds, green bonds, sovereign bonds, loans for securitization, exchange tradedfunds, derivatives, and initial public offering (IPO) underwriting. The PCAF notes “guidance on such financial products will be considered andpublished in later editions of the Standard” (PCAF Standard, p. 44). The Task Force encourages banks to disclose GHG emissions for additional
financial products, where data are available or can be reasonably estimated, as methodologies are published.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures30

2. Insurance Companies53
For insurance companies, climate-related risks and opportunities constitute a key topic affecting theindustry’s core business (e.g., weather-related risk transfer business). The scientific consensus is that acontinued rise in average global temperatures will have a significant effect on weather-related natural
catastrophes and will account for an increasingly large share of natural catastrophe losses.54
Users of climate-related financial disclosures are specifically interested in how insurance companies
are evaluating and managing climate-related risks and opportunities in their underwriting andinvestment 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 to the liability (underwriting) side of insurance
activities. For insurance companies’ investment activities, refer to the supplemental guidance forasset owners.

GovernanceA.
Introduction

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 theboard’s oversight ofclimate-relatedrisks andopportunities.

E.
Supplemental Guidancefor Non-Financial Groups

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 whenreviewing and guiding strategy, major plans of action, risk management policies,
annual budgets, and business plans as well as setting the organization’s
performance objectives, monitoring implementation and performance, andoverseeing major capital expenditures, acquisitions, and divestitures; and‒how the board monitors and oversees progress against goals and targets foraddressing climate-related issues.

F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describemanagement’s rolein assessing andmanaging climaterelated risks andopportunities.

Guidance for All Sectors
In describing management’s role related to the assessment and management of climaterelated issues, organizations should consider including the following information:‒

whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether such management
positions or committees report to the board or a committee of the board andwhether 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.

53

Insurance companies include both insurers and re-insurers.

54

Intergovernmental Panel on Climate Change, Fifth Assessment Report (AR5), Cambridge University Press, 2014.

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

31

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Recommended
Disclosure a)
Describe theclimate-relatedrisks andopportunities theorganization has
identified over the
short, medium, andlong term.

Guidance for All Sectors
Organizations should provide the following information:‒a description of what they consider to be the relevant short-, medium-, and longterm horizons, taking into consideration the useful life of the organization’s assets
or infrastructure and the fact that climate-related issues often manifest
themselves over the medium and longer terms;‒

a description of the specific climate-related issues potentially arising in each time
horizon (short, medium, and long term) that could have a material financial impact
on the organization; and‒a description of the process(es) used to determine which risks and opportunities
could have a material financial impact on the organization.

Organizations should consider providing a description of their risks and opportunities bysector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1.1 and A1.2 (pp. 75–76).

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on
the organization’s
businesses,
strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should discuss how identified
climate-related issues have affected their businesses, strategy, and financial planning.
Organizations should consider including the impact on their businesses, strategy, andfinancial planning 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)‒

Acquisitions or divestments‒

Access to capital

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized. Organizations’ disclosures should reflect a holistic pictureof the interdependencies among the factors that affect their ability to create value overtime.
Organizations should describe the impact of climate-related issues on their financial
performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities).55
If climate-related scenarios were used to inform the organization’s strategy and financial
planning, such scenarios should be described.
Organizations that have made GHG emissions reduction commitments, operate injurisdictions that have made such commitments, or have agreed to meet investor
expectations regarding GHG emissions reductions should describe their plans fortransitioning to a low-carbon economy, which could include GHG emissions targets andspecific activities intended to reduce GHG emissions in their operations and value chain
or to otherwise support the transition.56
Supplemental Guidance for Insurance Companies
Insurance companies should describe the potential impacts of climate-related risks andopportunities as well as provide supporting quantitative information where available, on
their core businesses, products, and services, including:

55

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

56

Organizations may agree to meet investor expectations regarding GHG emissions reductions for various reasons, including concerns about
access to or the cost of capital if they fail to do so.

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

32

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

Recommended
Disclosure c)
Describe theresilience of theorganization’s
strategy, taking into
considerationdifferent climaterelated scenarios,
including a 2°C or
lower scenario.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors‒

information at the business division, sector, or geography levels;‒

how the potential impacts influence client 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.

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-related risks
and opportunities, taking into consideration a transition to a low-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.57
Organizations should consider discussing:‒where they believe their strategies may be affected by climate-related risks andopportunities;‒

how their strategies might change to address such potential risks andopportunities;‒

the potential impact of climate-related issues on financial performance(e.g., revenues, costs) and financial position (e.g., assets, liabilities);58 and‒the climate-related scenarios and associated time horizon(s) considered.

Refer to Section D in the Task Force’s report for information on applying scenarios toforward-looking analysis.

D.
Supplemental Guidance
for the Financial Sector

Supplemental Guidance for Insurance Companies
Insurance companies that perform climate-related scenario analysis on theirunderwriting activities should provide the following information:

E.
Supplemental Guidancefor Non-Financial Groups‒

description of the climate-related scenarios used, including the critical input
parameters, assumptions and considerations, and analytical choices. In addition toa 2°C scenario, insurance companies with substantial exposure to weather-related
perils should consider using a greater than 2°C scenario to account for physicaleffects of climate change and‒time frames used for the climate-related scenarios, including short-, medium-, andlong-term milestones.

F.
Fundamental Principles
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 climaterelated risks.

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

57

In interpreting the phrase “2°C or lower,” organizations should consider aligning their scenario analysis with Article Two of the 2015 Paris
Agreement which commits parties to “holding the increasing in the global average temperature to well below 2°C above pre-industrial levels
and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

58

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

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.
Organizations should also consider disclosing the following:‒processes for assessing the potential size and scope of identified climate-relatedrisks 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 and assessing
climate-related risks on re-/insurance portfolios by geography, business division, or
product segments, including the following risks:A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated risks.

D.

‒physical risks from changing frequencies and intensities of weather-related perils;‒

transition risks resulting from a reduction in insurable interest due to a decline invalue, changing energy costs, or implementation of carbon regulation; and‒liability risks that could intensify due to a possible increase in litigation.

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-relatedrisks, 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 A1.1 and A1.2 (pp. 75–76), as appropriate.

Supplemental Guidance
for the Financial Sector

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 product development and pricing.

E.
Supplemental Guidancefor Non-Financial Groups

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.

F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure c)
Describe how
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s
overall risk
management.

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

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climate-

59

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage climaterelated risks and opportunities, as described in Tables A1.1 and A1.2 (pp. 75–76), as wellas metrics consistent with the cross-industry, climate-related metric categories
described in Table A2.1 (p. 79).59 Organizations should consider including metrics on
climate-related risks associated with water, energy, land use, and waste management

Financial organizations may find it more difficult to quantify exposure to climate-related risks because of challenges related to portfolio
aggregation and data availability. The Task Force suggests financial organizations provide qualitative and quantitative information, where data
and methodologies allow.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures34

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
related risks andopportunities inline with its strategy
and riskmanagement
process.

where relevant and applicable.
Where climate-related issues are material, organizations should consider describing
whether and how related performance metrics are incorporated into remuneration
policies.
Where relevant, organizations should provide their internal carbon prices as well asclimate-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. Where
appropriate, organizations should consider providing forward-looking metrics for the
cross-industry, climate-related metric categories described in Table A2.1 (p. 79),
consistent with their business or strategic planning time horizons. In addition, where notapparent, organizations should provide a description of the methodologies used to
calculate or estimate climate-related metrics.

A.

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 fromweather-related catastrophes) by relevant jurisdiction.

Introduction
B.
Recommendations

Insurance companies should describe the extent to which their insurance underwriting
activities, where relevant, are aligned with a well below 2°C scenario, using whichever
approach or metrics best suit their organizational context or capabilities. 60 Insurancecompanies should also indicate which insurance underwriting activities (e.g., lines ofbusiness) are included.

C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions independent ofa materiality assessment, and, if appropriate, Scope 3 GHG emissions and the relatedrisks.61 All organizations should consider disclosing Scope 3 GHG emissions.62, 63
GHG emissions should be calculated in line with the GHG Protocol methodology to allow
for aggregation and comparability across organizations and jurisdictions.64 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.65
GHG emissions and associated 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 the metrics.

60

This could include forward-looking metrics, GHG emissions targets and progress against them, reducing emissions in their operations andvalue chains, or working with clients and brokers to support their transition to a low-carbon economy. The Task Force acknowledges that
there are challenges to implementing portfolio alignment methodologies, including the resources involved, and encourages organizations todisclose qualitative and quantitative information given existing data and methodologies. The Portfolio Alignment Team’s, Measuring Portfolio
Alignment, October 2021 outlines potential approaches and associated design decisions for portfolio alignment tools.

61

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, and technology
responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted more significantly bytransition risk than other organizations. In addition, current or future constraints on emissions, either directly by emission restrictions or
indirectly through carbon budgets, may impact organizations financially.

62

The Task Force strongly encourages all organizations to disclose Scope 3 GHG emissions. While the Task Force recognizes the data andmethodological challenges associated with calculating Scope 3 GHG emissions, it believes such emissions are an important metric reflecting
an organization’s exposure to climate-related risks and opportunities. For guidance on reporting Scope 3 GHG emissions, see the GHG
Protocol’s The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

63

When considering whether to disclose Scope 3 GHG emissions, organizations should consider whether such emissions are a significant
portion of their total GHG emissions. For example, see discussion of 40% threshold in the Science Based Targets initiative’s (SBTi’s) paper SBTi
Criteria and Recommendations, Version 4.2, April 2021, Section V, p. 10.

64

While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG
emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.

65

For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions per unitof economic output (e.g., unit of production, number of employees, or value-added) is widely used.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures35

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Supplemental Guidance for Insurance Companies
Insurance companies should disclose weighted average carbon intensity or GHG
emissions associated with commercial property and specialty lines of business wheredata and methodologies allow.66
Recommended
Disclosure c)
Describe thetargets used by theorganization to
manage climaterelated risks andopportunities andperformanceagainst targets.

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

Guidance for All Sectors
Organizations should describe their key climate-related targets such as those related to
GHG emissions, water usage, energy usage, etc., consistent with the cross-industry,
climate-related metric categories in Table A2.1 (p. 79), where relevant, and in line with
anticipated regulatory requirements or market constraints or other goals. 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 andservices designed for a low-carbon economy.
In describing their targets, organizations should consider including the following:‒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.

Organizations disclosing medium-term or long-term targets should also disclose
associated interim targets in aggregate or by business line, where available.
Where not apparent, organizations should provide a description of the methodologies
used to calculate targets and measures.

E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

66

The CRO Forum’s 2020 Carbon Footprinting Methodology for Underwriting Portfolios provides a methodology for adapting WACI for insurance
underwriting activities (See Table 3 (p. 52) for a description of the methodology). The Partnership for Carbon Accounting Financials (PCAF) is
working in collaboration with members of the Net-Zero Insurance Alliance as well as other insurance companies to develop a methodology formeasuring GHG emissions associated with underwriting activities. Insurance companies should follow these or other comparable industry
guidance as they become available.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures36

3. Asset Owners
Asset owners are a diverse group that include public- and private-sector pension plans, re-/insurancecompanies, endowments, and foundations and invest assets on their own behalf or on behalf of theirbeneficiaries. Asset owners invest according to a mandate or investment strategy set out by theiroversight 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 ofunderlying individual company and government exposures. Asset owners may hire asset managers toinvest on their behalf.67
Whether asset owners invest directly or through asset managers, asset owners bear the potential
transition and physical risks to which their investments are exposed. Similarly, asset owners canbenefit from the potential returns on the investment opportunities associated with climate change.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Asset owners sit at the top of the investment chain and, therefore, have an important role to play ininfluencing the organizations in which they invest to provide better climate-related financial disclosures.
Disclosure of climate-related risks and opportunities by asset owners—to the extent possible given
existing data and methodology constraints—allows beneficiaries and other audiences to assess theasset owner’s investment considerations and approach to climate change. This may include anassessment of the asset owner’s integration of appropriate climate-related financial information into its
investment activities in various ways, for example, in setting investment strategy, making newinvestment decisions, and managing its existing portfolio. By encouraging climate-related financial
disclosures by asset owners, beneficiaries and other stakeholders will be in a position to better
understand exposures to climate-related risks and opportunities. Further, climate-related financial
disclosures by asset owners may encourage better disclosures across the investment chain—from asset
owners to asset managers to underlying companies—thus enabling all organizations and individuals to
make better-informed investment decisions.
Asset owners have contributed to the success of the TCFD in many ways, including by voluntarily
publishing their own “TCFD reports.” In these reports, asset owners have highlighted GHG emissions
data from their respective portfolios and how their governance structures have developed to manage
climate-related risk. Governance structures have developed to collect and analyze GHG emissions data
as a proxy for climate-related risk from investee companies, either directly or via third party asset
managers and data analytics specialists. The Task Force recognizes asset owners often issue reports,
including ones containing climate-related information, directly to their beneficiaries or members rather
than making them available publicly as would generally be the case with public companies. As aresult, some of the cross-industry, climate-related metrics described in Appendix 2 may be lessrelevant for asset owners than for other organizations, particularly where flexibility is needed on thespecific metrics and methodologies used.68 Nevertheless, the Task Force believes the cross-industry,
climate-related metrics have some applicability to asset owners because, by asking for thisstandardized information, asset owners encourage all organizations to publish TCFD-aligned
information.

67

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.

68

The Task Force also understands asset owners may need several years to implement relevant cross-industry, climate-related metrics,
particularly where assets are held through third party mandates such as pooled funds. The data and methodologies for some of these
metrics, such as the impact of climate change on investment income or asset valuations, are very much in the early stages of development;
and it may take time before methodologies have been developed and can be applied in practice. The Task Force also recognizes themethodological challenges of calculating GHG emissions associated with certain asset classes (e.g., sovereign bonds) and accepts research is
ongoing. In determining whether a particular category of metric is relevant, asset owners should consider whether the information is used aspart of the management of climate-related risks or investment decision-making processes.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures37

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

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

Recommended
Disclosure b)
Describemanagement’s rolein assessing andmanaging climaterelated risks andopportunities.

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
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:‒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 whenreviewing and guiding strategy, major plans of action, risk management policies,
annual budgets, and business plans as well as setting the organization’s
performance objectives, monitoring implementation and performance, andoverseeing major capital expenditures, acquisitions, and divestitures; and‒how the board monitors and oversees progress against goals and targets foraddressing climate-related issues.

Guidance for All Sectors
In describing management’s role related to the assessment and management of climaterelated issues, organizations should consider including the following information:‒

whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether such management
positions or committees report to the board or a committee of the board andwhether 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 where such information is material.
Recommended
Disclosure a)
Describe theclimate-relatedrisks andopportunities theorganization has
identified over the
short, medium, andlong term.

Guidance for All Sectors
Organizations should provide the following information:‒a description of what they consider to be the relevant short-, medium-, and longterm horizons, taking into consideration the useful life of the organization’s assets
or infrastructure and the fact that climate-related issues often manifest
themselves over the medium and longer terms;‒

a description of the specific climate-related issues potentially arising in each time
horizon (short, medium, and long term) that could have a material financial impact
on the organization; and‒a description of the process(es) used to determine which risks and opportunities
could have a material financial impact on the organization.

Organizations should consider providing a description of their risks and opportunities bysector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1.1 and A1.2 (pp. 75–76).
Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on
the organization’s
businesses,

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

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities

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 where such information is material.
strategy, andfinancial planning.

‒

Investment in research and development‒

Operations (including types of operations and location of facilities)‒

Acquisitions or divestments‒

Access to capital

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized. Organizations’ disclosures should reflect a holistic pictureof the interdependencies among the factors that affect their ability to create value overtime.
Organizations should describe the impact of climate-related issues on their financial
performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities).69
If climate-related scenarios were used to inform the organization’s strategy and financial
planning, such scenarios should be described.

A.
Introduction

Organizations that have made GHG emissions reduction commitments, operate injurisdictions that have made such commitments, or have agreed to meet investor
expectations regarding GHG emissions reductions should describe their plans fortransitioning to a low-carbon economy, which could include GHG emissions targets andspecific activities intended to reduce GHG emissions in their operations and value chain
or to otherwise support the transition.70

B.
Recommendations
C.
Guidance for All Sectors

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

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure c)
Describe theresilience of theorganization’s
strategy, taking into
considerationdifferent climaterelated scenarios,
including a 2°C or
lower scenario.

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-related risks
and opportunities, taking into consideration a transition to a low-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.71
Organizations should consider discussing:‒where they believe their strategies may be affected by climate-related risks andopportunities;‒

how their strategies might change to address such potential risks andopportunities;‒

the potential impact of climate-related issues on financial performance(e.g., revenues, costs) and financial position (e.g., assets, liabilities);72 and‒the climate-related scenarios and associated time horizon(s) considered.

Refer to Section D in the Task Force’s report for information on applying scenarios toforward-looking analysis.
Supplemental Guidance for Asset Owners
Asset owners that perform scenario analysis should consider providing a discussion of
how climate-related scenarios are used, such as to inform investments in specific assets.

69

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

70

Organizations may agree to meet investor expectations regarding GHG emissions reductions for various reasons, including concerns about
access to or the cost of capital if they fail to do so.

71

In interpreting the phrase “2°C or lower,” organizations should consider aligning their scenario analysis with Article Two of the 2015 Paris
Agreement which commits parties to “holding the increasing in the global average temperature to well below 2°C above pre-industrial levels
and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

72

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

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 climaterelated risks.

Guidance for All Sectors
Organizations should describe their risk management processes for identifying andassessing climate-related risks. An important aspect of this description is howorganizations determine the relative significance of climate-related risks in relation toother risks.
Organizations should describe whether they consider existing and emerging regulatory
requirements related to climate change (e.g., limits on emissions) as well as otherrelevant factors considered.
Organizations should also consider disclosing the following:A.

processes for assessing the potential size and scope of identified climate-relatedrisks 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.

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

Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated 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-relatedrisks, 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 A.1 and A.2 (pp. 75–76), as appropriate.
Supplemental Guidance for Asset Owners
Asset owners should describe how they consider the positioning of their total portfoliowith respect to the transition to a low-carbon energy supply, production, and use. This
could include explaining how asset owners actively manage their portfolios’ positioning
in relation to this transition.

F.
Fundamental Principles
for Effective Disclosure
Appendices‒

Recommended
Disclosure c)
Describe how
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s
overall risk
management.

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

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures40

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities inline with its strategy
and riskmanagement
process.
A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage climaterelated risks and opportunities, as described in Tables A1.1 and A1.2 (pp. 75–76), as wellas metrics consistent with the cross-industry, climate-related metric categories
described in Table A2.1 (p. 79).73 Organizations should consider including metrics on
climate-related risks associated with water, energy, land use, and waste management
where relevant and applicable.
Where climate-related issues are material, organizations should consider describing
whether and how related performance metrics are incorporated into remuneration
policies.
Where relevant, organizations should provide their internal carbon prices as well asclimate-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. Where
appropriate, organizations should consider providing forward-looking metrics for the
cross-industry, climate-related metric categories described in Table A2.1 (p. 79),
consistent with their business or strategic planning time horizons. In addition, where notapparent, 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 andopportunities in each fund or investment strategy. Where relevant, asset owners should
also describe how these metrics have changed over time.
Where appropriate, asset owners should provide metrics considered in investment
decisions and monitoring.
Asset owners should describe the extent to which assets they own and their funds andinvestment strategies, where relevant, are aligned with a well below 2°C scenario, using
whichever approach or metrics best suit their organizational context or capabilities. 74, 75
Asset owners should also indicate which asset classes are included.

Appendices73

Financial organizations may find it more difficult to quantify exposure to climate-related risks because of challenges related to portfolio
aggregation and data availability. The Task Force suggests financial organizations provide qualitative and quantitative information, where data
and methodologies allow.

74

This could include forward-looking metrics, GHG emissions targets and progress against them, reducing emissions in their operations andvalue chains, oversight of asset managers, and engagement with investee companies on their transition to a low-carbon economy. The Task
Force acknowledges that there are challenges to implementing portfolio alignment methodologies, including the resources involved, andencourages organizations to disclose qualitative and quantitative information given existing data and methodologies. The Portfolio Alignment
Team’s, Measuring Portfolio Alignment, October 2021 outlines potential approaches and associated design decisions for portfolio alignment
tools.

75

While the Task Force’s supplemental guidance for asset owners addresses considerations when reporting to beneficiaries, the Task Forcebelieves an asset owners’ disclosure of the extent to which their assets are aligned with a well below 2°C scenario may also be of interest to awider range of stakeholders. As such, the Task Force encourages asset owners to disclose this information publicly, where appropriate.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures41

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope
3 greenhouse gas(GHG) emissions,and the relatedrisks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions independent ofa materiality assessment, and, if appropriate, Scope 3 GHG emissions and the relatedrisks.76 All organizations should consider disclosing Scope 3 GHG emissions.77, 78
GHG emissions should be calculated in line with the GHG Protocol methodology to allow
for aggregation and comparability across organizations and jurisdictions.79 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.80
GHG emissions and associated 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 the metrics.
Supplemental Guidance for Asset Owners
Asset owners should disclose GHG emissions for assets they own and the weighted
average carbon intensity (WACI) for each fund or investment strategy, where data andmethodologies allow. These emissions should be calculated in line with the Global GHG
Accounting and Reporting Standard for the Financial Industry developed by thePartnership for Carbon Accounting Financials (PCAF Standard) or a comparable
methodology (See Table 2, p. 50).81

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

In addition to WACI, asset owners should consider providing other carbon footprinting
metrics they believe are useful for decision-making. See Table 3 (p. 52) for additionalcommon carbon footprinting and exposure metrics.82

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Recommended
Disclosure c)
Describe thetargets used by theorganization to
manage climaterelated risks andopportunities andperformanceagainst 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., consistent with the cross-industry,
climate-related metric categories in Table A2.1 (p. 79), where relevant, and in line with
anticipated regulatory requirements or market constraints or other goals. 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 andservices designed for a low-carbon economy.

Appendices

76

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, and technology
responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted more significantly bytransition risk than other organizations. In addition, current or future constraints on emissions, either directly by emission restrictions or
indirectly through carbon budgets, may impact organizations financially.

77

The Task Force strongly encourages all organizations to disclose Scope 3 GHG emissions. While the Task Force recognizes the data andmethodological challenges associated with calculating Scope 3 GHG emissions, it believes such emissions are an important metric reflecting
an organization’s exposure to climate-related risks and opportunities. For guidance on reporting Scope 3 GHG emissions, see the GHG
Protocol’s The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

78

When considering whether to disclose Scope 3 GHG emissions, organizations should consider whether such emissions are a significant
portion of their total GHG emissions. For example, see discussion of 40% threshold in the Science Based Targets initiative’s (SBTi’s) paper SBTi
Criteria and Recommendations, Version 4.2, April 2021, Section V, p. 10.

79

While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG
emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.

80

For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions per unitof economic output (e.g., unit of production, number of employees, or value-added) is widely used.

81

The Task Force recognizes the PCAF Standard currently does not provide explicit guidance on calculating GHG emissions for certain financial
products including private equity that refers to investment funds, green bonds, sovereign bonds, loans for securitization, exchange tradedfunds, derivatives, and initial public offering (IPO) underwriting. The PCAF notes “guidance on such financial products will be considered andpublished in later editions of the Standard” (PCAF Standard, p. 44). The Task Force encourages asset owners to disclose GHG emissions for
additional financial products, where data are available or can be reasonably estimated, as methodologies are published.

82

The Task Force acknowledges the challenges and limitations of current carbon footprinting metrics, including that such metrics should notnecessarily be interpreted as risk metrics. The Task Force recognizes that some asset owners may be able to report weighted average carbon
intensity or GHG emissions for only a portion of their investments given data availability and methodological issues.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures42

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
In describing their targets, organizations should consider including the following:‒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.

Organizations disclosing medium-term or long-term targets should also disclose
associated interim targets in aggregate or by business line, where available.
Where not apparent, organizations should provide a description of the methodologies
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 Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

43

4. Asset Managers
Asset managers, also known as investment managers, are hired by clients to invest assets on theirbehalf. In this role, asset managers act as fiduciaries. Asset managers invest within the guidelines
specified by their clients for a given mandate set out in an investment management agreement or
product specification. Importantly, the investment results, whether positive or negative, belong to theclient.83
Asset managers’ clients, as owners of the underlying assets, bear the major portion of the potential
transition and physical 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 of climate-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 otherfactors.
In the case where an asset manager is a public company, it has two distinct audiences for its climaterelated financial disclosures. The first audience is its shareholders, who need to understandenterprise-level risks and opportunities and how these are managed. The second is its clients, forwhom product-, investment strategy-, or client-specific disclosures are more relevant.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Asset managers’ clients rely on reporting from asset managers to understand how climate-related risks
and opportunities are managed within each of their portfolios. The guidance provided below
addresses considerations for asset managers when reporting to their clients.

Governance
Disclose the organization’s governance around climate-related risks and opportunities.
Recommended
Disclosure a)
Describe theboard’s oversight ofclimate-relatedrisks 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 whenreviewing and guiding strategy, major plans of action, risk management policies,
annual budgets, and business plans as well as setting the organization’s
performance objectives, monitoring implementation and performance, andoverseeing major capital expenditures, acquisitions, and divestitures; and‒how the board monitors and oversees progress against goals and targets foraddressing climate-related issues.

Appendices

Recommended
Disclosure b)
Describemanagement’s rolein assessing andmanaging climaterelated risks andopportunities.

83

Guidance for All Sectors
In describing management’s role related to the assessment and management of climaterelated issues, organizations should consider including the following information:‒

whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether such management
positions or committees report to the board or a committee of the board andwhether 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.

Introductory language sourced from Blackrock, “BlackRock Worldwide Leader in Asset and Risk Management,” February 2019.

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

44

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Recommended
Disclosure a)
Describe theclimate-relatedrisks andopportunities theorganization has
identified over the
short, medium, andlong term.

Guidance for All Sectors
Organizations should provide the following information:‒a description of what they consider to be the relevant short-, medium-, and longterm horizons, taking into consideration the useful life of the organization’s assets
or infrastructure and the fact that climate-related issues often manifest
themselves over the medium and longer terms;‒

a description of the specific climate-related issues potentially arising in each time
horizon (short, medium, and long term) that could have a material financial impact
on the organization; and‒a description of the process(es) used to determine which risks and opportunities
could have a material financial impact on the organization.

Organizations should consider providing a description of their risks and opportunities bysector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1.1 and A1.2 (pp. 75–76).

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on
the organization’s
businesses,
strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should discuss how identified
climate-related issues have affected their businesses, strategy, and financial planning.
Organizations should consider including the impact on their businesses, strategy, andfinancial planning 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)‒

Acquisitions or divestments‒

Access to capital

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized. Organizations’ disclosures should reflect a holistic pictureof the interdependencies among the factors that affect their ability to create value overtime.
Organizations should describe the impact of climate-related issues on their financial
performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities).84
If climate-related scenarios were used to inform the organization’s strategy and financial
planning, such scenarios should be described.
Organizations that have made GHG emissions reduction commitments, operate injurisdictions that have made such commitments, or have agreed to meet investor
expectations regarding GHG emissions reductions should describe their plans fortransitioning to a low-carbon economy, which could include GHG emissions targets andspecific activities intended to reduce GHG emissions in their operations and value chain
or to otherwise support the transition.85

84

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

85

Organizations may agree to meet investor expectations regarding GHG emissions reductions for various reasons, including concerns about
access to or the cost of capital if they fail to do so.

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

45

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Supplemental Guidance for Asset Managers
Asset managers should describe how climate-related risks and opportunities arefactored into relevant products or investment strategies.
Asset managers should also describe how each product or investment strategy might beaffected by the transition to a low-carbon economy.
Recommended
Disclosure c)
Describe theresilience of theorganization’s
strategy, taking into
considerationdifferent climaterelated scenarios,
including a 2°C or
lower scenario.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Organizations should consider discussing:‒where they believe their strategies may be affected by climate-related risks andopportunities;‒

how their strategies might change to address such potential risks andopportunities;‒

the potential impact of climate-related issues on financial performance(e.g., revenues, costs) and financial position (e.g., assets, liabilities);87 and‒the climate-related scenarios and associated time horizon(s) considered.

Refer to Section D in the Task Force’s report for information on applying scenarios toforward-looking analysis.

D.
Supplemental Guidance
for the Financial Sector

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-related risks
and opportunities, taking into consideration a transition to a low-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.86

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

Guidance for All Sectors
Organizations should describe their risk management processes for identifying andassessing climate-related risks. An important aspect of this description is howorganizations determine the relative significance of climate-related risks in relation toother risks.
Organizations should describe whether they consider existing and emerging regulatory
requirements related to climate change (e.g., limits on emissions) as well as otherrelevant factors considered.
Organizations should also consider disclosing the following:‒processes for assessing the potential size and scope of identified climate-relatedrisks 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 and asset managers’ ability to assess climate-relatedrisks.
Asset managers should also describe how they identify and assess material climaterelated risks for each product or investment strategy. This might include a description of
the resources and tools used in the process.

86

In interpreting the phrase “2°C or lower,” organizations should consider aligning their scenario analysis with Article Two of the 2015 Paris
Agreement which commits parties to “holding the increasing in the global average temperature to well below 2°C above pre-industrial levels
and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

87

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures46

Risk Management
Disclose how the organization identifies, assesses, and manages climate-related risks.
Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated 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-relatedrisks, 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 A1.1 and A1.2 (pp. 75–76), as appropriate.
Supplemental Guidance for Asset Managers
Asset managers should describe how they manage material climate-related risks foreach product or investment strategy.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Recommended
Disclosure c)
Describe how
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s
overall risk
management.

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

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities inline with its strategy
and riskmanagement
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage climaterelated risks and opportunities, as described in Tables A1.1 and A1.2 (pp. 75–76), as wellas metrics consistent with the cross-industry, climate-related metric categories
described in Table A2.1 (p. 79).88 Organizations should consider including metrics on
climate-related risks associated with water, energy, land use, and waste management
where relevant and applicable.
Where climate-related issues are material, organizations should consider describing
whether and how related performance metrics are incorporated into remuneration
policies.
Where relevant, organizations should provide their internal carbon prices as well asclimate-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. Where
appropriate, organizations should consider providing forward-looking metrics for the
cross-industry, climate-related metric categories described in Table A2.1 (p. 79),
consistent with their business or strategic planning time horizons. In addition, where notapparent, 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-related risks andopportunities in each product or investment strategy. Where relevant, asset managers
should also describe how these metrics have changed over time.

88

Financial organizations may find it more difficult to quantify exposure to climate-related risks because of challenges related to portfolio
aggregation and data availability. The Task Force suggests financial organizations provide qualitative and quantitative information, where data
and methodologies allow.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures47

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Where appropriate, asset managers should provide metrics considered in investment
decisions and monitoring.
Asset managers should describe the extent to which their assets under management
and products and investment strategies, where relevant, are aligned with a well below
2°C scenario, using whichever approach or metrics best suit their organizational context
or capabilities.89, 90 Asset managers should also indicate which asset classes are included.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope
3 greenhouse gas(GHG) emissions,and the relatedrisks.

A.
Introduction
B.
Recommendations

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions independent ofa materiality assessment, and, if appropriate, Scope 3 GHG emissions and the relatedrisks.91 All organizations should consider disclosing Scope 3 GHG emissions.92, 93
GHG emissions should be calculated in line with the GHG Protocol methodology to allow
for aggregation and comparability across organizations and jurisdictions.94 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.95
GHG emissions and associated 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 the metrics.

C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices89

This could include forward-looking metrics, GHG emissions targets and progress against them, reducing emissions in their operations andvalue chains, and engagement with investee companies on their transition to a low-carbon economy. The Task Force acknowledges that there
are challenges to implementing portfolio alignment methodologies, including the resources involved, and encourages organizations todisclose qualitative and quantitative information given existing data and methodologies. The Portfolio Alignment Team’s, Measuring Portfolio
Alignment, October 2021 outlines potential approaches and associated design decisions for portfolio alignment tools.

90

While the Task Force’s supplemental guidance for asset managers addresses considerations when reporting to clients, the Task Force believes
an asset managers’ disclosure of the extent to which their assets under management are aligned with a well below 2°C scenario may also beof interest to a wider range of stakeholders. As such, the Task Force encourages asset managers to disclose this information publicly, whereappropriate.

91

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, and technology
responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted more significantly bytransition risk than other organizations. In addition, current or future constraints on emissions, either directly by emission restrictions or
indirectly through carbon budgets, may impact organizations financially.

92

The Task Force strongly encourages all organizations to disclose Scope 3 GHG emissions. While the Task Force recognizes the data andmethodological challenges associated with calculating Scope 3 GHG emissions, it believes such emissions are an important metric reflecting
an organization’s exposure to climate-related risks and opportunities. For guidance on reporting Scope 3 GHG emissions, see the GHG
Protocol’s The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

93

When considering whether to disclose Scope 3 GHG emissions, organizations should consider whether such emissions are a significant
portion of their total GHG emissions. For example, see discussion of 40% threshold in the Science Based Targets initiative’s (SBTi’s) paper SBTi
Criteria and Recommendations, Version 4.2, April 2021, Section V, p. 10.

94

While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG
emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.

95

For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions per unitof economic output (e.g., unit of production, number of employees, or value-added) is widely used.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures48

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Supplemental Guidance for Asset Managers
Asset managers should disclose GHG emissions for their assets under management andthe weighted average carbon intensity (WACI) for each product or investment strategy,
where data and methodologies allow. These emissions should be calculated in line with
the Global GHG Accounting and Reporting Standard for the Financial Industry developed by
the Partnership for Carbon Accounting Financials (PCAF Standard) or a comparable
methodology (See Table 2, p. 50).96
In addition to WACI, asset managers should consider providing other carbon footprinting
metrics they believe are useful for decision-making. See Table 3 (p. 52) for additional
carbon footprinting and exposure metrics.97

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

Recommended
Disclosure c)
Describe thetargets used by theorganization to
manage climaterelated risks andopportunities andperformanceagainst 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., consistent with the cross-industry,
climate-related metric categories in Table A2.1 (p. 79), where relevant, and in line with
anticipated regulatory requirements or market constraints or other goals. 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 andservices designed for a low-carbon economy.
In describing their targets, organizations should consider including the following:‒whether the target is absolute or intensity based;D.

‒time frames over which the target applies;

Supplemental Guidance
for the Financial Sector‒base year from which progress is measured; and‒key performance indicators used to assess progress against targets.

E.
Supplemental Guidancefor Non-Financial Groups
F.

Organizations disclosing medium-term or long-term targets should also disclose
associated interim targets in aggregate or by business line, where available.
Where not apparent, organizations should provide a description of the methodologies
used to calculate targets and measures.

Fundamental Principles
for Effective Disclosure
Appendices

96

The Task Force recognizes the PCAF Standard currently does not provide explicit guidance on calculating GHG emissions for certain financial
products including private equity that refers to investment funds, green bonds, sovereign bonds, loans for securitization, exchange tradedfunds, derivatives, and initial public offering (IPO) underwriting. The PCAF notes “guidance on such financial products will be considered andpublished in later editions of the Standard” (PCAF Standard, p. 44). The Task Force encourages asset managers to disclose GHG emissions for
additional financial products, where data are available or can be reasonably estimated, as methodologies are published.

97

The Task Force acknowledges the challenges and limitations of current carbon footprinting metrics, including that such metrics should notnecessarily be interpreted as risk metrics. The Task Force recognizes that some asset managers may be able to report weighted averagecarbon intensity or GHG emissions for only a portion of the assets they manage given data availability and methodological issues.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures49

5. Carbon Footprinting and Exposure Metrics
The tables below provide descriptions, formulas, and additional information for common carbon
footprinting and exposure metrics. Table 2 provides details on GHG emissions metrics for banks, asset
owners, and asset managers. Table 3 (p. 52) provides carbon footprinting metrics that organizations
may find useful to report, including weighted average carbon intensity for both investing andinsurance underwriting activities.
Table 2GHG Emissions Metrics for Banks, Asset Owners, and Asset Managers
Activities
Asset Class

Description

ListedEquityEquity that is tradedon a stock exchangeor another securities
exchange and is on
the balance sheet ofthe financial
institution.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

ListedCorporate
Bonds

D.
Supplemental Guidance
for the Financial Sector

Listed corporate
bonds that aretraded on a market
and are on thebalance sheet of thefinancial institution.

Formula∑(Outstanding amountc
× Company emissionsc)
EVICc

Lending

Investing

--

✓

--

✓

✓

--

c

EVIC = enterprise value including cash98
c = borrower or investee company
Note: the value of outstanding listed equity isdefined based on its market value (i.e., market
price times number of shares). See page 49 of the
PCAF Standard.
To private companies:

Outstanding amountc∑(
× Company emissionsc)
Total equity + debtccc = borrower or investee company
To listed companies:

E.
Supplemental Guidancefor Non-Financial Groups∑(

Outstanding amountc
× Company emissionsc)
EVICc

c

EVIC = enterprise value including cash
c = borrower or investee company

F.
Fundamental Principles
for Effective Disclosure

Note: the value of outstanding corporate bonds isdefined based on the book value of the debt thatthe borrower owes to the lender. See page 49 of
the PCAF Standard.

AppendicesBusiness
Loans

98

All loans and lines ofcredit for general
corporate purposes
to businesses,
nonprofits, and anyother structure oforganization that are
not traded on amarket and are on
the balance of thefinancial institution.

To listed companies:

Outstanding amountc∑(
× Company emissionsc)
EVICcc

To private companies:∑(

Outstanding amountc
× Company emissionsc)
Total equity + 𝑑𝑒𝑏𝑡𝑐c

EVIC = enterprise value including cash
c = borrower or investee company

PCAF Standard aligns with the definition of EVIC as provided by the EU Technical Expert Group on Sustainable Finance’s Handbook on Climate
Benchmarks and benchmarks’ ESG disclosures, defined as: “The sum of the market capitalization of ordinary shares at fiscal year-end, themarket capitalization of preferred shares at fiscal year-end, and the book values of total debt and minorities’ interests. No deductions of cash
or cash equivalents are made to avoid the possibility of negative enterprise values” (PCAF Standard, p. 62).

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

50

Table 2

GHG Emissions Metrics for Banks, Asset Owners, and Asset Managers (continued)
Activities
Asset Class

Description

Unlisted
EquityAll equity
investments forgeneral corporate
purposes tobusinesses,
nonprofits, and anyother structure oforganization that are
not traded on amarket and are on
the balance sheet ofthe financial
institution.

A.
Introduction

Project
FinanceB.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups

Commercial
Real Estate
(CRE)

F.
Fundamental Principles
for Effective Disclosure

Mortgages

Appendices

Motor
VehicleLoans

All loans or equities
to projects for
specific purposesthat are on thebalance sheet of thefinancial institution.
On-balance sheetloans andinvestments for thepurchase andrefinance ofcommercial realestate (CRE).
On-balance sheetloans for thepurchase andrefinance ofresidential property,
including individual
homes andmultifamily homes
with a small
number of units.
On-balance sheetloans and lines ofcredit to businesses
and consumers thatare used to financeone or several
motor vehicles.

Formula∑(Outstanding amountc
× Company emissionsc)
Total equity + debtc

Lending

Investing

--

✓

✓

✓

✓

✓

✓

--

✓

--

c

c = borrower or investee company
Note: the outstanding amount is the outstanding
value of equity that the financial institution holds inthe private company. It is calculated by multiplying
the relative share of the financial institution in therespective investee by the total equity of therespective investee according to its balance sheet.
See pp. 61-62 of the PCAF Standard.

∑ (pOutstanding amountp
× Project emissionsp)
Total equity + debtp

p = project

Outstanding amountb

× 𝐸𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛𝑏,𝑒∑ (Property value at originationb)
× 𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟𝑒bb = buildinge = energy source

Outstanding amountb

× 𝐸𝑛𝑒𝑟𝑔𝑦 𝑐𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛𝑏,𝑒∑ (Property value at originationb)
× 𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟𝑒bb = buildinge = energy source

Outstanding amountv∑

× 𝐷𝑖𝑠𝑡𝑎𝑛𝑐𝑒 𝑡𝑟𝑎𝑣𝑒𝑙𝑒𝑑𝑣(Total value at originationv)
× 𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦𝑣,𝑓 × 𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛 𝑓𝑎𝑐𝑡𝑜𝑟𝑓
v, fv = vehicle or vehicle fleet
f = fuel type

Note: PCAF continues to add asset classes. Financial organizations (referred to as financial institutions by PCAF) shouldrefer to the PCAF Standard for the latest guidance on measuring GHG emissions. 99

99

For further details on these metrics, see PCAF, The Global GHG Accounting and Reporting Standard for the Financial Industry, November 2020.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures51

Table 3

Common Carbon Footprinting and Exposure Metrics
MetricSupporting Information

Weighted
Average
CarbonIntensity:
Investments

Description
FormulaPortfolio’s exposure to carbon-intensive companies, expressed in tons CO2e/$M
revenue.
icurrent value of investmenti issuer ' s Scope 1 and Scope 2 GHG emissionsi×)current portfolio value
issuer ' s $M revenuein∑ (Methodology

Scope 1 and Scope 2 GHG emissions are allocated based on portfolio weights(the current value of the investment relative to the current portfolio value),rather than the equity ownership approach (as described under methodology
for Total Carbon Emissions). Gross values should be used.

Key Points+/-+ Metric can be more easily applied across asset classes since it does not relyon equity ownership approach.
+ The calculation of this metric is fairly simple and easy to communicate toinvestors.

A.

+ Metric allows for portfolio decomposition and attribution analysis.

Introduction− Metric is sensitive to outliers.
B.
Recommendations− Using revenue (instead of physical or other metrics) to normalize the data
tends to favor companies with higher pricing levels relative to their peers.

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

Weighted
Average
CarbonIntensity:
Insurance
Premiums100

Description
Formulagross written premium of insurance transaction insured' s Scope 1 and Scope 2 GHG emissionsi
×)
total GWP volume of insurance portfolio
insured' s $M revenuein

The methodology measures the intensity of a portfolio of insurance transactions
using carbon intensity information for each legal entity or company (commercial
insurance) or individual insured (personal lines insurance) should be used.
Where GHG emissions on a company level are not available, industry or country
information can be used. Where gross written premium information is notavailable, information on capital required, capacity, or expected loss can beused.

Key Points+/-+ Metric can be more easily applied across asset classes since it does not rely onequity ownership approach.

F.

Appendicesi∑ (Methodology

E.
Supplemental Guidancefor Non-Financial Groups

Fundamental Principles
for Effective Disclosure

Portfolio of insurance transactions’ exposure to carbon-intensive companies,
expressed in tons CO2e/$M revenue.

- Using revenue to normalize the data tends to favor companies with higher
pricing levels relative to their peers.
Total Carbon Description
Emissions
FormulaThe absolute greenhouse gas emissions associated with a portfolio, expressedin tons CO2e.
inMethodology

current value of investmenti∑ (issuer' s market capitalization ×issuer's Scope 1 and Scope 2 GHG emissionsi)
i

Scope 1 and Scope 2 GHG emissions are allocated to investors based on an
equity ownership approach. Under this approach, if an investor owns 5 percent
of a company’s total market capitalization, then the investor owns 5 percent of
the company as well as 5 percent of the company’s GHG (or carbon) emissions.
While this metric is generally used for public equities, it can be used for otherasset classes by allocating GHG emissions across the total capital structure of
the investee (debt and equity).

100

Source: CRO Forum, “Carbon footprinting methodology for underwriting portfolios,” May 1 2020.

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

52

Table 3

Common Carbon Footprinting and Exposure Metrics (continued)
MetricSupporting Information

Total Carbon Key Points
Emissions+ Metric may be used to communicate the carbon footprint of a portfolio
consistent with the GHG protocol.
+ Metric may be used to track changes in GHG emissions in a portfolio.
+ Metric allows for portfolio decomposition and attribution analysis.
− Metric is generally not used to compare portfolios because the data are notnormalized.
− Changes in underlying companies’ market capitalization can bemisinterpreted.

CarbonFootprint

Description
Formula

i

∑ (

A.

n

Introduction

current value of investmenti
×issuer's Scope 1 and Scope 2 GHG emissionsi)
issuer ' s market capitalization icurrent portfolio value ($M)

Methodology

B.
Recommendations
C.
Guidance for All Sectors

Key Points+/-

Supplemental Guidance
for the Financial Sector+ Metric may be used to compare portfolios to one another and/or to abenchmark.
+ Using the portfolio market value to normalize data is fairly intuitive toinvestors.
+ Metric allows for portfolio decomposition and attribution analysis.

E.
Supplemental Guidancefor Non-Financial Groups− Metric does not take into account differences in the size of companies(e.g., does not consider the carbon efficiency of companies).
− Changes in underlying companies’ market capitalization can bemisinterpreted.

F.
Fundamental Principles
for Effective Disclosure

Scope 1 and Scope 2 GHG emissions are allocated to investors based on an
equity ownership approach as described under methodology for Total Carbon
Emissions.
The current portfolio value is used to normalize the data.

D.

AppendicesTotal carbon emissions for a portfolio normalized by the market value of theportfolio, expressed in tons CO2e/$M invested.

CarbonIntensity

Description
FormulaVolume of carbon emissions per million dollars of revenue (carbon efficiency of
a portfolio), expressed in tons CO2e/$M revenue.
i

∑ (
n

current value of investmenti
×issuer's Scope 1 and Scope 2 GHG emissionsi)
issuer ' s market capitalization i
i

∑ (
n

Methodology

current value of investmenti
×issuer's $M revenuei)
issuer ' s market capitalization i

Scope 1 and Scope 2 GHG emissions are allocated to investors based on an
equity ownership approach as described under methodology for Total Carbon
Emissions.
The company’s (or issuer’s) revenue is used to adjust for company size toprovide a measurement of the efficiency of output.

Key Points+/-+ Metric may be used to compare portfolios to one another and/or to abenchmark.
+ Metric takes into account differences in the size of companies (e.g., considers
the carbon efficiency of companies).
+ Metric allows for portfolio decomposition and attribution analysis.
− The calculation of this metric is somewhat complex and may be difficult tocommunicate.
− Changes in underlying companies’ market capitalization can bemisinterpreted.

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

53

Table 3

Common Carbon Footprinting and Exposure Metrics (continued)
MetricSupporting Information

Exposure to
CarbonRelated
AssetsDescription
Formula for AmountThe amount or percentage of carbon-related assets101 in the portfolio,
expressed in $M or percentage of the current portfolio value.
i∑ $M current value of investments in carbon-related assetsnFormula for Percentage ∑ current value of investments in carbon-related assets
current portfolio value

×100

Methodology

This metric focuses on a portfolio’s exposure to sectors and industries
considered the most GHG emissions intensive. Gross values should be used.

Key Points+/-+ Metric can be applied across asset classes and does not rely on underlying
companies’ Scope 1 and Scope 2 GHG emissions.

‒ Metric does not provide information on sectors or industries other than thoseincluded in the definition of carbon-related assets (i.e., energy and utilities
sectors under the Global Industry Classification Standard excluding water
utilities and independent power and renewable electricity producer
industries).

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

Note: The term “portfolio” used in the table above is defined as “fund or investment strategy” for asset owners, “product orinvestment strategy” for asset managers, and “lending and other financial intermediary business activities” for banks.

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices101

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 four non-financial groups identified by
the Task Force in its 2017 report (see Table 4, p. 56). There may be industries or sub-industries that are appropriate to exclude, such as water
utilities and independent power and renewable electricity producer industries. Banks should describe which industries they include.

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

54

E.
Supplemental
Guidance for
Non-Financial
GroupsA.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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

55

E. Supplemental Guidance for Non-Financial Groups
While every industry could experience potential financial impacts from climate-related risks andopportunities, the Task Force developed supplemental guidance for non-financial industries (and theirrelated supply and distribution chains) more likely to be financially impacted than others due to their
exposure to certain transition and physical risks around greenhouse gas (GHG) emissions, energy, or
water dependencies associated with their operations and products.102 These non-financial industries
are grouped into four key areas (referred to as non-financial groups): Energy; Transportation; Materials
and Buildings; and Agriculture, Food, and Forest Products.103 The industries within each group areprovided in Table 4.104
Table 4

Industries Associated with the Four Non-Financial Groups
Energy−−−Oil and Gas
Coal
Electric Utilities

−
−
−

A.
Introduction

−
−
−

B.
Recommendations

Materials andBuildings

Transportation
Air Freight
Passenger Air
Transportation
Maritime
Transportation
Rail Transportation
Trucking Services
Automobiles andComponents

Agriculture, Food, andForest Products

Metals and Mining
Chemicals
Construction
Materials
Capital Goods
Real EstateManagement andDevelopment

−
−
−
−
−

−
−
−
−

Beverages
Agriculture
Packaged Food andMeats
Paper and Forest
ProductsC.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Supplemental guidance for the non-financial groups is provided for select recommended disclosuresrelated to strategy and metrics and targets, as shown in Figure 8.
Figure 8

Supplemental Guidance for Non-Financial Groups
GovernanceGroupsa)b)Strategy
a)

b)

c)

Risk
Management

Metrics andTargets

a)

a)

b)

c)

b)

c)

EnergyTransportation
Materials and Buildings
Ag, Food, and Forest Products

The Task Force developed supplemental guidance for the non-financial groups to provide suchorganizations further background and information to consider when developing disclosures consistent
with the Task Force’s recommendations. This supplemental guidance should be read and applied inconjunction with the guidance for all sectors.

102

SASB, SASB Climate Risk Technical Bulletin #: TB001-10182016, October 2016.

103

These four groups and their associated industries are intended to be indicative of the economic activities associated with these industries
rather than definitive industry categories.

104

Box 2 of the 2017 report provides more details on the selection of these four groups.

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

56

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

Recommended
Disclosure b)
Describemanagement’s rolein assessing andmanaging climaterelated risks andopportunities.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
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:‒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 whenreviewing and guiding strategy, major plans of action, risk management policies,
annual budgets, and business plans as well as setting the organization’s
performance objectives, monitoring implementation and performance, andoverseeing major capital expenditures, acquisitions, and divestitures; and‒how the board monitors and oversees progress against goals and targets foraddressing climate-related issues.

Guidance for All Sectors
In describing management’s role related to the assessment and management of climaterelated issues, organizations should consider including the following information:‒

whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether such management
positions or committees report to the board or a committee of the board andwhether 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 where such information is material.
Recommended
Disclosure a)
Describe theclimate-relatedrisks andopportunities theorganization has
identified over the
short, medium, andlong term.

Guidance for All Sectors
Organizations should provide the following information:‒a description of what they consider to be the relevant short-, medium-, and longterm time horizons, taking into consideration the useful life of the organization’s
assets or infrastructure and the fact that climate-related issues often manifest
themselves over the medium and longer terms;‒

a description of the specific climate-related issues potentially arising in each time
horizon (short, medium, and long term) that could have a material financial impact
on the organization; and‒a description of the process(es) used to determine which risks and opportunities
could have a material financial impact on the organization.

Organizations should consider providing a description of their risks and opportunities bysector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1.1 and A1.2 (pp. 75–76).
Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on
the organization’s
businesses,
strategy, andGuidance for All Sectors
Building on recommended disclosure (a), organizations should discuss how identified
climate-related issues have affected their businesses, strategy, and financial planning.
Organizations should consider including the impact on their businesses, strategy, andfinancial planning in the following areas:‒

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities

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

57

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

‒

Investment in research and development‒

Operations (including types of operations and location of facilities)‒

Acquisitions or divestments‒

Access to capital

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized. Organizations’ disclosures should reflect a holistic pictureof the interdependencies among the factors that affect their ability to create value overtime.
Organizations should describe the impact of climate-related issues on their financial
performance (e.g., revenues, costs) and financial position (e.g., assets, liabilities).105
If climate-related scenarios were used to inform the organization’s strategy and financial
planning, such scenarios should be described.
Organizations that have made GHG emissions reduction commitments, operate injurisdictions that have made such commitments, or have agreed to meet investor
expectations regarding GHG emissions reductions should describe their plans fortransitioning to a low-carbon economy, which could include GHG emissions targets andspecific activities intended to reduce GHG emissions in their operations and value chain
or to otherwise support the transition.106

A.
Introduction
B.
Recommendations

Supplemental Guidance for Non-Financial Groups
Organizations should consider discussing how climate-related risks and opportunities
are integrated into their (1) current decision-making and (2) strategy formulation,
including planning assumptions and objectives around climate change mitigation,
adaptation, or opportunities such as:

C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure‒

Research and development (R&D) and adoption of new technology.

‒

Existing and committed future activities such as investments, restructuring, writedowns, or impairment of assets.

‒

Critical planning assumptions around legacy assets, for example, strategies tolower carbon-, energy-, and/or water-intensive operations.

‒

How GHG emissions, energy, and water and other physical risk exposures, if
applicable, are considered in capital planning and allocation; this could include a
discussion of major acquisitions and divestments, joint-ventures, and investments
in technology, innovation, and new business areas in light of changing climaterelated risks and opportunities.

‒

The organization’s flexibility in positioning/repositioning capital to address
emerging climate-related risks and opportunities.

Appendices

Recommended
Disclosure c)
Describe theresilience of theorganization’s
strategy, taking into
considerationdifferent climaterelated scenarios,

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-related risks
and opportunities, taking into consideration a transition to a low-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.107
Organizations should consider discussing:‒where they believe their strategies may be affected by climate-related risks andopportunities;

105

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

106

Organizations may agree to meet investor expectations regarding GHG emissions reductions for various reasons, including concerns about
access to or the cost of capital if they fail to do so.

107

In interpreting the phrase “2°C or lower,” organizations should consider aligning their scenario analysis with Article Two of the 2015
Paris Agreement which commits parties to “holding the increasing in the global average temperature to well below 2°C above pre-industrial
levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

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

58

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
including a 2°C or
lower scenario.

‒

how their strategies might change to address such potential risks andopportunities;‒

the potential impact of climate-related issues on financial performance(e.g., revenues, costs) and financial position (e.g., assets, liabilities);108 and‒the climate-related scenarios and associated time horizon(s) considered.

Refer to Section D in the Task Force’s report for information on applying scenarios toforward-looking analysis.
Supplemental Guidance for Non-Financial Groups
Organizations with more than one billion U.S. dollar equivalent (USDE) in annual revenue
should consider conducting more robust scenario analysis to assess the resilience of
their strategies against a range of climate-related scenarios, including a 2°C or lower
scenario and, where relevant to the organization, scenarios consistent with increased
physical climate-related risks.109, 110
Organizations should consider discussing the implications of different policy
assumptions, macro-economic trends, energy pathways, and technology assumptions
used in publicly available climate-related scenarios to assess the resilience of theirstrategies.111

A.
Introduction

For the climate-related scenarios used, organizations should consider providing
information on the following factors to allow investors and others to understand how
conclusions were drawn from scenario analysis:

B.
Recommendations
C.

‒

Critical input parameters, assumptions, and analytical choices for the climaterelated scenarios used, particularly as they relate to key areas such as policy
assumptions, energy deployment pathways, technology pathways, and related
timing assumptions.

‒

Potential qualitative or quantitative financial implications of the climate-related
scenarios, if any.112

Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

108

These impacts may be described in qualitative, quantitative, or a combination of both qualitative and quantitative terms. The Task Forceencourages organizations to include quantitative information, where data and methodologies allow.

109

The Task Force expects the application of scenarios as a tool for forward-looking assessments of climate-related risk will evolve over time as
scenarios, tools, and data are further developed and refined.

110

Inclusion of a 2°C or lower scenario is intended to serve as an anchor point for all organizations that aligns with current international climateagreements, recognizing that the Paris Agreement currently says “well below 2 degrees.”

111

This will help identify the key characteristics that are relevant to assessing long-term strategy (e.g., changes in regulation, technology, andphysical impact).

112

In discussing potential qualitative or quantitative financial implications, the Task Force is not asking organizations to provide a financial
forecast (for which scenario analysis is not appropriate). Organizations are asked to provide an indication of direction or ranges of potential
financial implications, for example, directionally where key financial aspects such as CapEx, R&D, supply chains, or revenue might be headed.

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

59

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

Guidance for All Sectors
Organizations should describe their risk management processes for identifying andassessing climate-related risks. An important aspect of this description is howorganizations determine the relative significance of climate-related risks in relation toother risks.
Organizations should describe whether they consider existing and emerging regulatory
requirements related to climate change (e.g., limits on emissions) as well as otherrelevant factors considered.
Organizations should also consider disclosing the following:A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices‒processes for assessing the potential size and scope of identified climate-relatedrisks and‒definitions of risk terminology used or references to existing risk classification
frameworks used.

Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated 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-relatedrisks, including how materiality determinations are made within their organizations.

Recommended
Disclosure c)
Describe how
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s
overall risk
management.

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

In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1.1 and A1.2 (pp. 75–76), as appropriate.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities inline with its strategy
and riskmanagement
process.

113

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage climaterelated risks and opportunities, as described in Tables A1.1 and A1.2 (pp. 75–76), as wellas metrics consistent with the cross-industry, climate-related metric categories
described in Table A2.1 (p. 79).113 Organizations should consider including metrics on
climate-related risks associated with water, energy, land use, and waste management
where relevant and applicable.
Where climate-related issues are material, organizations should consider describing
whether and how related performance metrics are incorporated into remuneration
policies.
Where relevant, organizations should provide their internal carbon prices as well asclimate-related opportunity metrics such as revenue from products and services
designed for a low-carbon economy.

Financial organizations may find it more difficult to quantify exposure to climate-related risks because of challenges related to portfolio
aggregation and data availability. The Task Force suggests financial organizations provide qualitative and quantitative information, wheredata and methodologies allow.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures60

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Metrics should be provided for historical periods to allow for trend analysis. Where
appropriate, organizations should consider providing forward-looking metrics for the
cross-industry, climate-related metric categories described in Table A2.1 (p. 79),
consistent with their business or strategic planning time horizons. In addition, where notapparent, organizations should provide a description of the methodologies used to
calculate or estimate climate-related metrics.
Supplemental Guidance for Non-Financial Groups
For all relevant metrics, organizations should consider providing historical trends andforward-looking projections (by relevant country and/or jurisdiction, business line, orasset type). Organizations should also consider disclosing metrics that support theirscenario analysis and strategic planning process and that are used to monitor theorganization’s business environment from a strategic and risk management perspective.
Organizations should consider providing key metrics related to GHG emissions, energy,
water and other physical risk exposures, land use, and, if relevant, investments inclimate adaptation and mitigation that address potential financial aspects of shifting
demand, expenditures, asset valuation, and cost of financing.
A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions independent ofa materiality assessment, and, if appropriate, Scope 3 GHG emissions and the relatedrisks.114 All organizations should consider disclosing Scope 3 GHG emissions.115, 116
GHG emissions should be calculated in line with the GHG Protocol methodology to allow
for aggregation and comparability across organizations and jurisdictions.117 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.118
GHG emissions and associated 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 the metrics.

E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

114

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, and technology
responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted more significantly bytransition risk than other organizations. In addition, current or future constraints on emissions, either directly by emission restrictions or
indirectly through carbon budgets, may impact organizations financially.

115

The Task Force strongly encourages all organizations to disclose Scope 3 GHG emissions. While the Task Force recognizes the data andmethodological challenges associated with calculating Scope 3 GHG emissions, it believes such emissions are an important metric reflecting
an organization’s exposure to climate-related risks and opportunities. For guidance on reporting Scope 3 GHG emissions, see the GHG
Protocol’s The Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

116

When considering whether to disclose Scope 3 GHG emissions, organizations should consider whether such emissions are a significant
portion of their total GHG emissions. For example, see discussion of 40% threshold in the Science Based Targets initiative’s (SBTi’s) paper SBTi
Criteria and Recommendations, Version 4.2, April 2021, Section V, p. 10.

117

While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG
emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.

118

For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions per unitof economic output (e.g., unit of production, number of employees, or value-added) is widely used.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures61

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
Recommended
Disclosure c)
Describe thetargets used by theorganization to
manage climaterelated risks andopportunities andperformanceagainst 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., consistent with the cross-industry,
climate-related metric categories in Table A2.1 (p. 79), where relevant, and in line with
anticipated regulatory requirements or market constraints or other goals. 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 andservices designed for a low-carbon economy.
In describing their targets, organizations should consider including the following:‒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.

Organizations disclosing medium-term or long-term targets should also disclose
associated interim targets in aggregate or by business line, where available.

A.

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

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

The following sections provide a description of how each of the four key non-financial groups may beaffected by climate-related issues along with a few examples of metrics that may be relevant to thegroup. The Task Force has also identified cross-industry, climate-related metric categories it believes
are relevant for all organizations (Table A2.1, p. 79). In addition, organizations in these groups should
define metrics and targets that are tailored to their particular climate-related risks and opportunities.
In determining the most relevant and useful metrics, organizations are encouraged to engage with
their key stakeholders, including investors, and review publicly available frameworks.119

F.
Fundamental Principles
for Effective Disclosure
Appendices

119

Existing frameworks provide a range of metrics that an organization may find useful in disclosing various aspects of its climate-related risks
and opportunities. 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, and various
industry-specific guidance.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures62

1. Energy Group
Energy is a critical element in the economy, serving as a primary or necessary input in most economic
activities. This group comprises organizations extracting, processing, producing, and distributing fossil
fuels or electric energy to other sectors of the economy. It includes, but is not limited to, industries
listed in Figure 9.
While many climate-related issues impact theEnergy Group, organizations in this group should
consider providing disclosures related to financial
implications of potential physical impacts(e.g., reliance on water in areas of high water
stress, severe storm/flood mitigations) andtransition impacts (e.g., policy requirements,
carbon prices, new technology, changes in market
demand) of climate-related risks andopportunities.

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

Figure 9

Energy Group
Industry/Sub-Industry
Group

EnergyOil and Gas
Coal
Electric Utilities

As fossil fuel and electricity providers, theorganizations in this group generally have significant financial exposure around transition issues
related to GHG emissions and, in many cases, are dependent on the availability of water. For example,
a majority of the current electricity supply comes from non-renewable fossil fuel resources, resulting ina significant exposure to transitions around global GHG emissions—either directly through utility
companies’ own energy use for production or indirectly through combustion of fossil fuels.120 Electricutilities, therefore, face significant transition risk (i.e., the financial risk arising from the changes in
asset valuations caused by the structural shift toward a low-carbon energy system). This is because theutility sector’s asset valuations are at risk from the disruptive impact of the policy, technology, andportfolio changes that will occur over the next two to three decades as policies, technology, andmarkets shift to a low-carbon energy system.

E.
Supplemental Guidancefor Non-Financial Groups

In addition to GHG emissions, both hydroelectric power generation and cooling for nuclear and non
nuclear power generation use large quantities of water.121 Physical risks affecting water supplies
creates a potentially important exposure for this industry.

F.
Fundamental Principles
for Effective Disclosure

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.122, 123, 124These characteristics make the Energy Group particularly sensitive to physical, policy, or technologicalchanges affecting fossil fuel demand, energy production and usage, emissions constraints, and water
availability. The regulatory and competitive landscape that surrounds electric utilities also differs
significantly between jurisdictions, thus making assessment of climate-related risks very challenging.

Appendices

As a result, both the transition risks and physical risks associated with climate change may impact theoperating costs and asset valuation 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, and have longer business strategy/capital
120

According to International Energy Agency (IEA) data, CO2 emissions from fuel combustion across all energy sectors and activities totaled 33.5
Gigatons (Gt) in 2018, thereby accounting for 65 percent of total anthropogenic GHG emissions (51.9 Gt CO2e). Electricity and heat production
on its own accounted for 14Gt, representing 42 percent of all CO2 emissions from fuel combustion and 27 percent of all anthropogenic GHG
emissions. To put this into context, the next highest emitting industrial sector was transportation, which accounted for 8.3Gt (25 percent of all
CO2 emissions from fuel combustion, and 16 percent of total anthropogenic GHG emissions). IEA, CO2 Emissions from Fuel Combustion:
Highlights, 2020; PBL Netherlands Environmental Assessment Agency, Trends in Global CO2 and Total Greenhouse Gas Emissions: 2020 Report,
2020.

121

van Vilet, M., et al., “Power-generation system vulnerability and adaptation to changes in climate and water resources,” 2016.

122

IPIECA, Water Resource Management in the Petroleum Industry, 2005.

123

International Council on Mining and Metals (ICCM), In Brief: Water stewardship framework, 2014.

124

World Resources Institute (WRI), Water-Energy Nexus: Business Risks and Rewards, Washington, DC, 2016.

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

63

allocation planning horizons relative to many other sectors—horizons that may be particularly affectedby 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 understand the impact
of climate change on business strategy and financial plans in energy activities. Consequently,
disclosures should focus on qualitative and quantitative assessments and potential impacts of thefollowing:▪ changes in compliance and operating costs, risks, or opportunities (e.g., older, less-efficientfacilities 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); and▪ changes in investment strategies (e.g., opportunities for increased investment in renewableenergy, carbon-capture technologies, and more efficient water usage).
Energy Group organizations should consider providing additional industry-specific metrics.125 Examplesof potential metrics include percent of water withdrawn in regions with high baseline water stress andamount of gross global Scope 1 emissions from (1) combustion, (2) flared hydrocarbons, (3) process
emissions, (4) directly vented releases, and (5) fugitive emissions/leaks.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices125

For more sector-specific information, see SASB, “Climate Risk Technical Bulletin,” April 12, 2021, WBCSD, “TCFD Oil and Gas Preparer Forum,”
July 18 2018, and WBCSD, “TCFD Electric Utilities Preparer Forum,” July 16, 2019.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures642. Transportation GroupThe Transportation Group includes, but is not limited to, industries listed in Figure 10.
Transportation is critical to the economy anddrives a significant portion of emissions anddemand for energy through the production and,more important, the use phase. The industry isunder increasing policy and regulatory pressure
to achieve emissions targets for the use phase.
Increasing constraints on emissions fuelefficiency will continue to impact costs in thisgroup, particularly around investments ininnovation (new technologies and efficiencies).126

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Figure 10

Transportation Group
Industry/Sub-Industry

Air FreightGroup

Transportation

Passenger Air
Transportation
Maritime Transportation
Rail Transportation

The Transportation Group, therefore, will likely
Trucking Services
face financial challenges from two major drivers.
First, policymakers are setting stricter targets for
Automobiles
emissions and fuel efficiency from transportation
carriers. Second, new technology around lowemission/fuel-efficient carriers (e.g., electric cars) is creating a shift in the competitive and investment
landscape. New technological innovations and new market entrants can weaken companies’ market
position, resulting in lower revenues, higher costs, and narrower margins. The effects of these two
drivers may be compounded by the length of product cycles for transportation products, such as cars
and trucks, and especially for air and rail and marine equipment. As with the Energy Group,
investments in long-lived assets (e.g., manufacturing facilities, airplanes, ships) and longer planninghorizons are relevant factors that must be taken into account when considering the climate-relatedrisks and opportunities.
Consequently, disclosures should focus on qualitative and quantitative assessments and potential
impacts of the following:▪ financial risks around current plant and equipment, such as potential early write-offs ofequipment and R&D investments or early phasing out of current 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

Appendicesfor various types of transportation carriers; and▪ opportunities to use new technologies to address lower-emissions standards and increased
fuel-efficiency requirements, including transport vehicles (cars, ships, planes, rail) that run on a
range of traditional and alternative fuels.
Transportation Group organizations should consider providing additional industry-specific metrics.127
Examples of potential metrics include sales weighted average fleet fuel economy by region andweight/number of people transported, Energy Efficiency Design Index (EEDI) for new ships, life cycle
reporting of GHG emissions of transportation products (air, ship, rail, truck, auto).

126

Moody’s Global Credit Research, “Moody’s: Auto sector faces rising credit risks due to carbon transition,” September 20, 2016.

127

For more sector-specific information, see SASB, “Climate Risk Technical Bulletin,” April 12, 2021 and WBCSD, “TCFD Auto Preparer Forum,”May 26, 2021.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures653. Materials and Buildings Group
The Materials and Buildings Group includes, but is not limited to, industries listed in Figure 11.
Materials and Buildings Group organizations are
typically capital intensive, require highinvestments in plants, equipment, and buildingsthat are (relatively) fixed in terms of location, anddependent on sources of raw and refinedmaterials. This may reduce the flexibility oforganizations in this group to adapt to risks ofclimate change.
Many of this group’s activities result in financial
exposures around high GHG emissions and highenergy 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

Figure 11

Materials and Buildings Group
Industry/Sub-Industry

Metals and Mining
Group

Chemicals

Materials
and Buildings

Construction Materials
Capital Goods
Real Estate Management
and Development

Since the group is capital intensive and the plants and facilities have a long life span, accelerated
R&DDD (research, development, demonstration, and deployment) is critically important. Thus,
disclosures relating to R&DDD plans and progress are valuable to see the current and future situation
and risks of organizations in the group.

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

Consequently, disclosures should focus on qualitative and quantitative assessments and potential
impacts of the following:▪ Stricter constraints on emissions and/or pricing carbon emissions and related impact on costs.
▪ The construction materials and real estate sectors should assess risks related to the increasing

E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

frequency and severity of acute weather events or increasing water scarcity that impact theiroperating environment.

▪ Opportunities for products (or services) that improve efficiency, reduce energy use, andsupport closed-loop product solutions.
Materials and Buildings Group organizations should consider providing additional industry-specificmetrics.128 Examples of potential metrics include building energy intensity by area, building water
intensity (by occupants or square area), percent of fresh water withdrawn in regions with high orextremely high baseline water stress, and area of buildings, plants, or properties located in designatedflood hazard areas.

Appendices128

For more sector-specific information, see SASB, “Climate Risk Technical Bulletin,” April 12, 2021 and WBCSD, “Construction and Building
Materials TCFD Preparer Forum,” July 1, 2020.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures664. Agriculture, Food, and Forest Products GroupThe Agriculture, Food, and Forest Products Group includes, but is not limited to, industries listed in
Figure 12.
Climate-related risks and opportunities inthis group largely emanate from GHG
emissions and water and waste
management driven by land use, production
practices, and changing land-use patterns.129
The absolute and relative impacts ofclimate-related transition and physical risks
will vary between producers and processorsof food and fiber.

Figure 12

Agriculture, Food, and Forest
Products Group
Industry/Sub-Industry

Beverages
Group

Agriculture, Food,and Forest Products

Agriculture
Packaged Foods and Meats

Producers, such as agriculture and forestry
Paper and Forest Products
enterprises, will likely be impacted
financially to a somewhat greater degree by GHG and water risks (including extreme weather eventsand shifts in precipitation patterns) than processors. Agriculture and forest producers generatesignificant non-point GHG emissions, primarily through land-use practices and changes to them(e.g., grazing, soil tillage practices, conservation practices, feedlot practices, deforestation, orafforestation).130

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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 fromtheir supply and distribution chains. Processors will also have a similar emphasis on water and wasterisks and opportunities as compared with producers. Beverage production and paper production, forexample, 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, wastewater, and post-processing animal byproducts.
Assessing the impacts of climate-related risks and opportunities for the Agriculture, Food, and Forest
Products Group involves a number of interactions and trade-offs among the climate-related aspects ofland 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 risingdemand for food, fiber, fodder, and biofuels).
Policies and regulations around land use and conservation requirements, for example, may constrain
or preclude certain uses of land and water resources (e.g., deforestation, riparian rights, tillable land).
Such policies may lead to significant asset impairment if forest or agricultural lands cannot be used to
produce food or fiber.
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).

129

According to the Intergovernmental Panel on Climate Change (IPCC), agriculture and forestry is responsible for “just under a quarter ofanthropogenic GHG emissions mainly from deforestation and agricultural emissions from livestock, soil, and nutrient management.
Anthropogenic forest degradation and biomass burning (forest fires and agricultural burning) also represent relevant contributions.” (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). Agriculture is also a heavy user of water,
primarily for irrigation.

130

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.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures67▪ 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 thegroup’s policy and market risks in the areas of GHG emissions and water, and its opportunities aroundcarbon sequestration, increasing food and fiber production, and reducing waste, including:▪ Efforts to reduce GHG emissions and water intensity, including such non-point GHG sources ascrop nutrient processes, livestock management processes, erosion, tillage practices, watershedpractices, and forest management.

▪ Efforts to improve sustainability through better recycling of outputs and residual waste(e.g., wood products, food waste, and animal byproducts).

▪ Climate-related impacts on food and fiber production (e.g., extreme weather or water events).
▪ Opportunities that capture shifts in business and consumer trends toward food and fiber
products, processes and services that produce lower emissions and are less water-/wasteintensive while maintaining adequate food security (e.g., bioplastics, GMOs, new uses forwood/animal byproducts).

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

Agriculture, Food, and Forest Product Group organizations should consider providing additional
industry-specific metrics.131 Examples of potential metrics include total water withdrawn and total
water consumed, percent of water withdrawn and consumed in regions with high or extremely highbaseline water stress, emissions from biological processes, changes in carbon stocks as a result of landuse, and land use changes.

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices131

For more sector-specific information, see SASB, “Climate Risk Technical Bulletin,” April 12, 2021 and WBCSD, “Food, Agriculture and Forest
Products TCFD Preparer Forum,” April 9, 2020.

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

68

F.
Fundamental
Principles
for Effective
Disclosure
A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures69

F. Fundamental Principles for Effective Disclosure
To underpin its recommendations and help guide current and future developments in climate-related
financial reporting, the Task Force developed a set of principles for effective disclosure.132 As
understanding of, and approaches to, climate-related issues evolve over time, so too will climaterelated financial reporting. 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 these principles as they
develop climate-related financial disclosures.
The Task Force’s disclosure principles are largely consistent with other mainstream, internationallyaccepted frameworks for financial reporting and are generally applicable to most providers of financial
disclosures. They are informed by the qualitative and quantitative characteristics of financial
information and further the overall goals of producing disclosures that are consistent, comparable,
reliable, clear, and efficient, as highlighted by the FSB in establishing the Task Force. The principles,taken together, are designed to assist organizations in making clear the linkages and connections
between climate-related issues and their governance, strategy, risk management, and metrics andtargets.
A.
Introduction

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

B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure▪ Disclosures should be eliminated if they are immaterial or redundant to avoid obscuring
relevant information. However, when a particular risk or issue attracts investor and market
interest or attention, it may be helpful for the organization to include a statement that the risk
or issue is not significant. This shows that the risk or issue has been considered and has notbeen overlooked.

▪ Disclosures should be presented in sufficient detail to enable users to assess the organization’s
exposure and approach to addressing climate-related issues, while understanding that the typeof information, the way in which it is presented, and the accompanying notes will differ
between organizations and will be subject to change over time.

▪ Climate-related impacts can occur over the short, medium, and long term. Organizations canexperience chronic, gradual impacts (such as impacts due to shifting temperature patterns), as
well as acute, abrupt disruptive impacts (such as impacts from flooding, drought, or sudden
regulatory actions). An organization should provide information from the perspective of thepotential impact of climate-related issues on value creation, taking into account and addressing
the different time frames and types of impacts.

Appendices▪ Organizations should avoid generic or boilerplate disclosures that do not add value to users’
understanding of issues. Furthermore, any proposed metrics should adequately describe orserve as a proxy for risk or performance and reflect how an organization manages the risk andopportunities.
Principle 2: Disclosures should be specific and complete▪ An organization’s reporting should provide a thorough overview of its exposure to potential
climate-related impacts; the potential nature and size of such impacts; the organization’s
governance, strategy, processes for managing climate-related risks, and performance withrespect to managing climate-related risks and opportunities.

132

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 Disclosures70▪ To be sufficiently comprehensive, disclosures should contain historical and future-oriented
information in order to allow users to evaluate their previous expectations relative to actual
performance and assess possible future financial implications.

▪ For quantitative information, the disclosure should include an explanation of the definition andscope 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 forinvestment 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 and quantitative terms.
Principle 3: Disclosures should be clear, balanced, and understandable▪ Disclosures should be written with the objective of communicating financial information thatserves the needs of a range of financial sector users (e.g., investors, lenders, insurers, analysts).
This requires reporting at a level beyond compliance with minimum requirements. The
disclosures should be sufficiently granular to inform sophisticated users, but should also
provide concise information for those who are less specialized. Clear communication will allow
users to identify key information efficiently.

A.
Introduction
B.
Recommendations▪ Disclosures should show an appropriate balance between qualitative and quantitativeC.
Guidance for All Sectors▪ Fair and balanced narrative explanations should provide insight into the meaning of

information and use text, numbers, and graphical presentations as appropriate.

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendicesquantitative 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 thedisclosures 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 the development
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 ispreferred; 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. Anysuch changes should be explained.
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, andperformance across organizations and within sectors and jurisdictions.

▪ The level of detail provided in disclosures should enable comparison and benchmarking ofrisks 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.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures71

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
information reported is verifiable to ensure it is high quality. For future-oriented information,
this means assumptions used can be traced back to their sources. This does not imply arequirement for independent external assurance; however, disclosures should be subject tointernal governance processes that are the same or substantially similar to those used forfinancial reporting.
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.

A.
Introduction▪ 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.

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

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 can also arise within a single
principle. For example, Principle 6 states that disclosures should be verifiable, but assumptions madeabout future-oriented disclosures often require significant judgment by management that is difficult toverify. 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 disclosuresthat reasonably satisfy the recommendations and principles while avoiding overwhelming users with
unnecessary information.

F.
Fundamental Principles
for Effective Disclosure
Appendices

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures72

AppendicesA.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Appendices73

Appendix 1: Climate-Related Risks, Opportunities, andFinancial Impacts
The central objective of the Task Force’s recommendations is to encourage organizations to evaluate
and disclose, as part of their financial filing preparation and reporting processes, the material climaterelated risks and opportunities that are most pertinent to their business activities.
The Task Force divided climate-related risks into two major categories: (1) risks related to the transition
to a low-carbon economy and (2) risks related to the physical impacts of climate change. The Task
Force identified certain subcategories under each of these categories.
Transition Risks− Policy and Legal− Technology

Physical Risks− Acute− Chronic− Market− ReputationA.
Introduction

The Task Force divided climate-related opportunities into five major categories related to resource
efficiency and cost savings, the adoption of low-emission energy sources, the development of new
products and services, access to new markets, and building resilience along the supply chain.

B.
Recommendations
C.
Guidance for All Sectors

Opportunities

D.

F.
Fundamental Principles
for Effective Disclosure− Markets− Energy Source− Resilience− Products and Services

Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups− Resource Efficiency

Tables A1.1 and A1.2 (pp. 75–76) provide examples and potential financial impacts related to thespecific categories of climate-related risks and opportunities the Task Force identified. Please note thatthe sub-category risks and examples described under each major category are not mutually exclusive,and some overlap exists.
Table A1.3 (p. 77) provides additional examples of how organizations could be affected by climaterelated financial impacts.

Appendices

Appendices74

Table A1.1

Examples of Climate-Related Risks and Potential Financial Impacts
Type

Climate-Related Risks133

Potential Financial Impacts

Policy and Legal‒ Increased pricing of GHG emissions‒ Enhanced emissions-reporting‒ Increased operating costs (e.g., higher compliance costs,

obligations‒ Mandates on and regulation ofexisting products and services‒ Exposure to litigation‒ Write-offs, asset impairment, and early retirement of

increased insurance premiums)
existing assets due to policy changes‒ Increased costs and/or reduced demand for products
and services resulting from fines and judgments

Technology

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors

Transition Risks‒ Substitution of existing products andservices with lower emissions
options‒ Unsuccessful investment in newtechnologies‒ Costs to transition to lower
emissions technology‒ Write-offs and early retirement of existing assets‒ Reduced demand for products and services‒ Research and development (R&D) expenditures in new
and alternative technologies‒ Capital investments in technology development‒ Costs to adopt/deploy new practices and processes

Market‒ Changing customer behavior‒ Uncertainty in market signals‒ Increased cost of raw materials‒ Reduced demand for goods and services due to shift inconsumer preferences‒ Increased production costs due to changing input prices(e.g., energy, water) and output requirements(e.g., waste treatment)D.

‒ Abrupt and unexpected shifts in energy costs‒ Change in revenue mix and sources, resulting in

Supplemental Guidance
for the Financial Sector‒ Re-pricing of assets (e.g., fossil fuel reserves, landdecreased revenues
valuations, securities valuations)E.
Supplemental Guidancefor Non-Financial Groups

Reputation‒ Shifts in consumer preferences‒ Stigmatization of sector‒ Increased stakeholder concern orF.
Fundamental Principles
for Effective Disclosure

negative stakeholder feedback‒ Reduced revenue from decreased demand forgoods/services‒ Reduced revenue from decreased production capacity(e.g., delayed planning approvals, supply chaininterruptions)‒ Reduced revenue from negative impacts on workforce

Appendicesmanagement and planning (e.g., employee attraction
and retention)‒ Reduction in capital availability
Acute‒ Increased severity of extreme

Physical Risks

weather events such as cyclones andfloodsChronic‒ Changes in precipitation patterns
and extreme variability in weather
patterns‒ Rising mean temperatures‒ Rising sea levels‒ Reduced revenue from decreased production capacity(e.g., transport difficulties, supply chain interruptions)‒ Reduced revenue and higher costs from negative
impacts on workforce (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 water supply
for hydroelectric plants or to cool nuclear and fossil fuelplants)‒ 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”
locations133

The sub-category risks described under each major category are not mutually exclusive, and some overlap exists.

Appendices75

Table A1.2

Examples of Climate-Related Opportunities and Potential Financial Impacts

Resource Efficiency

Type

Climate-Related Opportunities134

Potential Financial Impacts‒ Use of more efficient modes of‒ Reduced operating costs (e.g., through efficiency gains

transport‒ Use of more efficient production
and distribution processes‒ Use of recycling‒ Move to more efficient buildings‒ Reduced water usage andconsumption‒ Use of lower-emission sources ofEnergy SourceenergyA.
Introduction

and cost reductions)‒ Increased production capacity, resulting in increased
revenues‒ Increased value of fixed assets (e.g., highly rated energyefficient buildings)‒ Benefits to workforce management and planning(e.g., improved health and safety, employee satisfaction)
resulting in lower costs‒ Reduced operational costs (e.g., through use of lowest
cost abatement)‒ Use of supportive policy incentives‒ Reduced exposure to future fossil fuel price increases‒ Use of new technologies‒ Reduced exposure to GHG emissions and therefore less

‒ Participation in carbon market‒ Shift toward decentralized energy
generation

sensitivity to changes in cost of carbon‒ Returns on investment in low-emission technology‒ Increased capital availability (e.g., as more investors favor
lower-emissions producers)

B.

‒ Reputational benefits resulting in increased demand for

Recommendations

D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure

Resilience

AppendicesMarketsC.
Guidance for All Sectors

Products and Services

goods/services

134‒ Development and/or expansion of
low emission goods and services‒ Development of climate adaptationand insurance risk solutions‒ Development of new products orservices through R&D andinnovation‒ Increased revenue through demand for lower emissions
products and services‒ Increased revenue through new solutions to adaptationneeds (e.g., insurance risk transfer products and services)‒ Better competitive position to reflect shifting consumer
preferences, resulting in increased revenues‒ Ability to diversify business activities‒ Shift in consumer preferences‒ Access to new markets‒ Use of public-sector incentives‒ Access to new assets and locations‒ Increased revenues through access to new and emerging
markets (e.g., partnerships with governments,
development banks)needing insurance coverage‒ Increased diversification of financial assets (e.g., green‒ Participation in renewable energy‒ Increased market valuation through resilience planning

programs and adoption of energyefficiency measures‒ Resource substitutes/diversification

bonds and infrastructure)(e.g., infrastructure, land, buildings)‒ Increased reliability of supply chain and ability to operate
under various conditions‒ Increased revenue through new products and services
related to ensuring resiliency

The opportunity categories are not mutually exclusive, and some overlap exists.

Appendices76

Table A1.3

Examples of Potential Climate-Related Impacts by Financial Category
Category andDefinition
Revenue
Income fromnormal businessactivities, usuallyfrom the sale ofgoods andservices

Climate-Related Implications135

Examples of Potential Impacts

Rationale and Illustrative Metrics

Changing market demand for productand services due to climate-related risks/
opportunities, such as a shift in customer
preferences.

- Revenue from operational disruption

Drivers of climate change, such as water usage, emissions, and land use,are expected to be the focus of regulations (e.g., standards, emission
limits, carbon prices), technology development, and market changes.
These policy, market, and technology changes may result in a significant
shift in an organization’s future earning capacity depending on theemissions, energy, and water intensity of its products and services
relative to constraints and demands.

+/- Revenue from changing sales of
products/services

Sensitivity of existing revenue streams,
products, and services to constraints on,or perceptions of, carbon intensity,
emissions, water intensity, land use.

Example Metrics:

Development of new revenue streams,
products, and services in response to
climate-related opportunities.
Expenditures:
OpEx
Ongoing cost of
running acompany

Required or discretionary increases inoperating expenditures to address
climate-related risk mitigation,
adaptation, regulatory requirements, or
cost of supply/materials.
Decreases in expenses as a result of
increased energy or water efficiency inresponse to climate-related risks.

• Percentage of revenue by product or service line
• Energy, emissions, water intensity of each product or service line
+ R&D in new technology, products,
services+/- Purchased energy and water andother costs of supply/materials+ Increased production costs due tochanging output requirements(e.g., waste treatment, emissions
controls)+ Costs to improve energy or water
conservation and efficiency capabilities

Drivers of climate change, such as water usage, emissions, and land use,are expected to be the focus of regulations (e.g., standards, emission
limits, carbon prices), technology development, and market changes.
These policy, market, and technology changes may result in a significant
shift in an organization’s cost of supply and operating expenses
depending on the emissions, energy, and water intensity and land use ofan organization in its business activities.
Example Metric: Percentage of R&D expenditures for low-carbon
alternatives and energy/water efficiencies+ Expenses to address physical risks(e.g., insurance premiums, recovery
expenses)
Assets: CapEx
An expense where
the benefit
continues over along period; nonrecurring nature;
results inacquisition of
permanent assets

Required or discretionary increases incapital expenditures to address climaterelated risk mitigation, adaptation, or
regulatory requirements.

+ CapEx in equipment or new
technologies to manage transition risk,
adaptation, and conservation/efficiency
efforts+ CapEx for physical risk mitigation(e.g., facilities location/hardening,resiliency capabilities)+/- Investment hurdles affected byinternal and external carbon prices

Drivers of climate change, such as water usage, emissions, and land use,are expected to be the focus of regulations (e.g., standards, emission
limits, carbon prices), technology development, and market changes.
These policy, market, and technology changes may result in a significant
shift in an organization’s planned capital expenditures, including
acquisition or disposal of assets, investments in land and facilities,
acquisition of new technology, and other shifts, depending on how theorganization responds to identified climate-related issues.
Example Metrics:• Percentage of CapEx allocated to low-carbon/renewable assets,
deployment of low-carbon technology, efficiency of facilities• Internal/external carbon price and discount rate used to establish
investment hurdle rates

135

The information contained in this table is not intended to reflect accounting treatments, but rather seeks to lay out a general understanding of how climate-related risks might affect general financial
categories. Importantly, there are a number of relationships among some of the financial implications illustrated in the table. For example, legal liabilities for climate change (a contingent liability) may berealized as an expense if a judgment is rendered. Similarly, expenses on mitigation and adaptation efforts may result in future cost savings (expense reductions).

Appendices77

Table A1.3

Examples of Potential Climate-Related Impacts by Financial Category (continued)
Category andDefinition

Climate-Related Implications56

Examples of Potential Impacts Impacts

Rationale and Illustrative Metrics

Assets: Tangible
Land, equipment,
facilities, reserves,
cash, etc.

Changes in the value of an organization’s
assets, or the acquisition or sale ofassets, as a result of climate-related risks
and opportunities.

+/- Value of assets based on emissions,energy or water intensity; carbon price;
demandClimate change, especially the transition to a low-carbon economy, may
affect the value of an organization’s assets (either positively or
negatively) depending on how the organization is positioned regarding
emissions, energy, water, and land use.

- Write-offs/early retirement of existing
assets due to high emissions, energy, or
water intensity- Physical damage or impairment of assets
due to weather events and other acute or
chronic physical climate effects

Assets:Intangible
Brand, copyrights,
goodwill

Changes in an organization’s reputation
as a result of perceptions about its
management of climate-related risks andopportunities.

+/- Brand value+/- Value of copyrights- Reduction or disruption in production
capacity (e.g., shutdowns, delayed planningapprovals, interruptions to supply chain)- Impacts on workforce management(e.g., employee attraction and retention)

Liabilities
Contingent
liabilities136

The potential for liability or civil/criminal
penalties for the organization’s climaterelated activities.

+ Legal liability for climate-related risks

Liabilities
Current liabilities(<= 1 year)

Changes in cost and level of current
liabilities as a result of climate-relatedrisks and opportunities.

Financing
Long-term debt
liabilities (> 1 year)

Changes in cost and level of long-term
debt as a result of climate-related risks
and opportunities.

+/- Amount of debt

Financing
Equity capital

Changes in the cost and level of equity
capital as a result of climate-related risks
and opportunities.

+/- Stock price+ Compliance penalties

Example Metrics:• Value, and percent by value, of assets located in coastal or floodzones• Breakdown of assets by associated current or potential future
emissions (MT CO2e), water intensity, or energy intensity
How an organization plans and invests in a transition to a low-carbon
economy may positively or negatively affect perceptions about theorganization and its reputation, which in turn may affect its future
earning capacity, market valuation, employee relationships, andrelationships with regulators and customers. Climate-related risks andopportunities also may positively or negatively affect the value oftechnology patents or copyrights.
As laws, regulations, and case law related to an organization’s
preparedness for climate change evolves, the incident or probability ofcontingent liabilities arising for an organization may increase.
Example Metric: Amount reserved for pending legal actions+/- Amount of equity capital+/- Credit rating+/- Debt interest rates

Drivers of climate changes, such as water usage, emissions, and landuse, are expected to be the focus of regulations (e.g., standards,
emission limits, carbon prices), technology development, and market
changes. These policy, market and technology changes may result in asignificant shift in an organization’s revenues, cost of
supply/materials/production, and capital expenses. An organization’s
demonstrated ability to manage these changes (positively or poorly)
may affect:• Access to capital and debt markets• Equity price and risk premium on debt
• Creditworthiness• Exposure to divestment risk
• Ability/flexibility in responding to climate-related risks andopportunities by being able to competitively tap financing markets

136

Contingent liabilities are liabilities that may be incurred depending on the outcome of an uncertain future event. Likelihood of loss is often described as probable, reasonably possible, or remote; ability toestimate loss is described as known, reasonably estimable, or not reasonably estimable.

Appendices78

Appendix 2: Cross-Industry, Climate-Related Metric
Categories
As part of the Task Force’s work to monitor and promote organizations’ adoption of its
recommendations, it has periodically published guidance to support preparers in their implementation
efforts (see Section A.5. Summary of Additional Supporting Materials). In October 2021, the Task Forcepublished Guidance on Metrics, Targets, and Transition Plans, which includes seven metric categories(Table A2.1) the Task Force believes are generally applicable to all organizations.137 Importantly, theseven metric categories are not additions to the Metrics and Targets recommendation as they relate to
metrics that have been part of the Task Force’s guidance for all sectors since the release of its 2017
report.
The Task Force is highlighting these specific metric categories because they are important proxies formeasuring climate-related risks and opportunities, form the basis for estimating climate-related
financial impact, and are important inputs into investment, lending, and insurance underwriting
decisions. While these metric categories are relevant across organizations, they may be
operationalized differently to reflect industry-specific risks and opportunities. More information
regarding the cross-industry, climate-related metric categories can be found in the Guidance on Metrics,
Targets, and Transition Plans.

A.
Introduction

D.

While some organizations already disclose metrics consistent with the cross-industry, climate-related
metric categories, the Task Force recognizes others—especially those in the early stages of disclosing
climate-related financial information—may need time to adjust internal processes before disclosing
such information. In addition, some of the metric categories may be less applicable to certain
organizations. For example, data and methodologies for certain metrics for asset owners (e.g., impact
of climate change on investment income) are in early stages of development. In such cases, the Task
Force recognizes organizations will need time before such metrics are disclosed to their stakeholders.

Supplemental Guidance
for the Financial Sector

Table A2.1

B.
Recommendations
C.
Guidance for All Sectors

E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

Cross-Industry, Climate-Related Metric Categories
Metric Category

Example Unitof Measure138

Rationale for Inclusion

GHG Emissions
Absolute Scope 1,
Scope 2, andScope 3; emissions
intensity139

MT of CO2e

Disclosure of GHG emissions is crucial for users to understandan organization’s exposure to climate-related risks andopportunities. Disclosure of both absolute emissions across anorganization’s value chain and relevant emissions intensity
provides insight into how a given organization may be affectedby policy, regulatory, market, and technology responses to limit
climate change.

Transition Risks
Amount and extent
of assets or businessactivities vulnerable
to transition risks*

Amount orpercentage

Disclosure of the amount and extent of an organization’s assets
or business activities vulnerable to climate-related transition
risks allows users to better understand potential financial
exposure regarding such issues as possible impairment or
stranding of assets, effects on the value of assets and liabilities,
and changes in demand for products or services.

137

TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021.

138

The Task Force has noted the most common unit of measure. There are multiple ways to measure and disclose metrics, and different
jurisdictions or industries may follow different practices. Allowing for differences in units of measure can help provide organizations withflexibility without significantly impacting comparability as long as units are clearly stated.

139

The Task Force believes Scope 3 GHG emissions are an important metric reflecting an organization’s exposure to climate-related risks andopportunities and recognizes the data and methodological challenges associated with calculating such emissions. The Task Force encourages
organizations to refer to the GHG Protocol’s The Corporate Value Chain (Scope 3) Accounting and Reporting Standard for guidance on reportingthese emissions.

Appendices79

Table A2.1

Cross-Industry, Climate-Related Metric Categories (continued)
Metric Category

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

140

Example Unitof Measure140

Rationale for Inclusion

Physical Risks
Amount and extent
of assets or businessactivities vulnerable
to physical risks*

Amount orpercentage

Disclosure of the amount or extent of an organization’s assets orbusiness activities vulnerable to material climate-related
physical risks allows users to better understand potential
financial exposure regarding such issues as impairment or
stranding of assets, effects on the value of assets and liabilities,
and cost of business interruptions.

Climate-Related
Opportunities
Proportion ofrevenue, assets, orother businessactivities alignedwith climate-related
opportunities

Amount orpercentage

Disclosure of the proportion of revenue, assets, or businessactivities aligned with climate-related opportunities provides
insight into the position of organizations relative to their peers
and allows users to understand likely transition pathways andpotential changes in revenue and profitability over time.

Capital Deployment
Amount of capital
expenditure,
financing, orinvestment deployed
toward climaterelated risks andopportunities

Reportingcurrency

Capital investment disclosure by non-financial organizations andfinancing by financial organizations gives an indication of theextent to which long-term enterprise value might be affected.

Internal Carbon
PricesPrice on each ton of
GHG emissions usedinternally by anorganization

Price in reporting
currency, per MT
of CO2eInternal carbon prices provide users with an understanding of
the reasonableness of an organization’s risk and opportunity
assessment and strategy resilience. The disclosure of internalcarbon prices can help users identify which organizations havebusiness models that are vulnerable to future policy responses
to climate change and which are adapting their business models
to ensure resilience to transition risks.

Remuneration
Proportion of
executive
management
remuneration linked
to climate
considerations**

Percentage,
weighting,description, or
amount inreportingcurrency

Remuneration policies are important incentives for achieving anorganization’s goals and objectives and may provide insight onan organization’s governance, oversight, and accountability for
managing climate-related issues.

The Task Force has noted the most common unit of measure. There are multiple ways to measure and disclose metrics, and different
jurisdictions or industries may follow different practices. Allowing for differences in units of measure can help provide organizations withflexibility without significantly impacting comparability as long as units are clearly stated.

Appendices80

Table A2.1

Cross-Industry, Climate-Related Metric Categories (continued)
Metric Category

Example Unitof Measure140

Rationale for Inclusion

Note: While some organizations already disclose metrics consistent with these categories, the Task Forcerecognizes others—especially those in the early stages of disclosing climate-related financial information—mayneed time to adjust internal processes before disclosing such information.141 In addition, some of the metriccategories may be less applicable to certain organizations. For example, data and methodologies for certain
metrics for asset owners (e.g., impact of climate change on investment income) are in early stages ofdevelopment. In such cases, the Task Force recognizes organizations will need time before such metrics aredisclosed to their stakeholders.
On the application of materiality, the Task Force believes all organizations should disclose absolute Scope 1 andScope 2 GHG emissions independent of a materiality assessment. The disclosure of Scope 3 GHG emissions issubject to materiality; however, the Task Force encourages organizations to disclose such emissions. The othercross-industry, climate-related metric categories remain subject to materiality. Organizations should determinemateriality for climate-related metrics consistent with how they determine the materiality of other information
included in their financial filings.
*Transition and Physical Risks: Due to challenges related to portfolio aggregation and sourcing data fromcompanies or third-party fund managers, financial organizations may find it more difficult to quantify exposure
to climate-related risks. The Task Force suggests that financial organizations provide qualitative and quantitative
information, when available.

A.
Introduction**Remuneration: While the Task Force encourages quantitative disclosure, organizations may include
descriptive language on remuneration policies and practices, such as how climate change issues are included inbalanced scorecards for executive remuneration.

B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

141

Organizations may need time to evaluate and determine which metrics are relevant to disclose, identify and collect data and otherinformation needed for the calculation of metrics, implement new or update existing processes to address or include relevant metrics, etc.
The Task Force recognizes the amount of time needed to disclose certain metrics (e.g., physical risks) consistent with the categories identified
in Table A2.1.

Appendices81

Appendix 3: 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.”142
CARBON FOOTPRINTING refers to the calculation of the total greenhouse gas emissions caused by anindividual, event, organization, service, or product expressed as a carbon dioxide equivalent.
CLIMATE-RELATED OPPORTUNITY refers to the potential positive impacts related to climate change
on an organization. Efforts to mitigate and adapt to climate change can produce opportunities fororganizations, such as through resource efficiency and cost savings, the adoption and utilization of
low-emission energy sources, the development of new products and services, and building resiliencealong the supply chain. Climate-related opportunities will vary depending on the region, market, andindustry in which an organization operates.

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

CLIMATE-RELATED RISK refers to the potential negative impacts of climate change on an organization.
Physical risks emanating from climate change can be event-driven (acute) such as increased severity of
extreme weather events (e.g., cyclones, droughts, floods, and fires). They can also relate to longer-term
shifts (chronic) in precipitation and temperature and increased variability in weather patterns (e.g., sealevel rise). Climate-related risks can also be associated with the transition to a lower-carbon global
economy, the most common of which relate to policy and legal actions, technology changes, market
responses, and reputational considerations.
ENTERPRISE VALUE INCLUDING CASH refers to the sum of the market capitalization of ordinary sharesat fiscal year-end, the market capitalization of preferred shares at fiscal year-end, and the book valuesof total debt and minorities’ interests. No deductions of cash or cash equivalents are made to avoid thepossibility of negative enterprise values143
FINANCIAL FILINGS refer to the annual reporting packages in which organizations are required todeliver their audited financial results under the corporate, compliance, or securities laws of thejurisdictions in which they operate. While reporting requirements differ internationally, financial filings
generally contain financial statements and other information such as governance statements andmanagement commentary.144
FINANCIAL PERFORMANCE refers to an organization’s income and expenses as reflected on its income
and cashflow statements (actual) or potential income and expenses under different climate-related
scenarios.
FINANCIAL PLANNING refers to an organization’s consideration of how it will achieve and fund its
objectives and strategic goals. The process of financial planning allows organizations to assess futurefinancial positions and determine how resources can be utilized in pursuit of short- and long-term
objectives. As part of financial planning, organizations often create “financial plans” that outline thespecific actions, assets, and resources (including capital) necessary to achieve these objectives over a
1–5 year period. However, financial planning is broader than the development of a financial plan as it
includes long-term capital allocation and other considerations that may extend beyond the typical
3–5 year financial plan (e.g., investment, research and development, manufacturing, and markets).

142

OECD, G20/OECD Principles of Corporate Governance, 2015.

143

EU Technical Expert Group on Sustainable Finance, Financing a Sustainable European Economy: Report on Benchmarks: Handbook of Climate
Transition Benchmarks, Paris Aligned Benchmark, and Benchmarks’ ESG Disclosure, 2019.

144

Based on Climate Disclosure Standards Board, CDSB Framework for Reporting Environmental and Climate Change Information, December 2019.

Appendices82

FINANCIAL POSITION refers to an organization’s assets, liabilities, and equity as reflected on its
balance sheet (actual) or potential assets, liabilities, and equity under different climate-related
scenarios.
GOVERNANCE refers to “the system by which an organization is directed and controlled in the interestsof shareholders and other stakeholders.”145 “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 the organization are set, progress against
performance is monitored, and results are evaluated.”146
GREENHOUSE GAS (GHG) EMISSIONS SCOPE LEVELS147▪ 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 chainof 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.148

A.
Introduction
B.
Recommendations

INTERIM TARGET refers to a short-term milestone between the organization’s medium- or long-termtarget and current period.

C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

INTERNAL CARBON PRICE refers to a monetary value on GHG emissions an organization uses
internally to guide its decision-making process in relation to climate change impacts, risks, andopportunities.149
MANAGEMENT refers to those positions an organization views as executive or senior management
positions and that are generally separate from the board.
PUBLICLY AVAILABLE 2°C SCENARIO refers to a 2°C scenario that is (1) used/referenced and issued byan independent body; (2) wherever possible, supported by publicly available datasets; (3) updated on aregular basis; and (4) linked to functional tools (e.g., visualizers, calculators, and mapping tools) that canbe applied by organizations. 2°C scenarios that presently meet these criteria include IEA 2DS, IEA 450,
Deep Decarbonization Pathways Project, and International Renewable Energy Agency.
RISK MANAGEMENT refers to a set of processes that are carried out by an organization’s board andmanagement to support the achievement of the organization’s objectives by addressing its risks andmanaging the combined potential impact of those risks.
SCENARIO ANALYSIS refers to a process for identifying and assessing a potential range ofoutcomes of future events under conditions of uncertainty. In the case of climate change, forexample, scenarios allow an organization to explore and develop an understanding of how thephysical and transition risks of climate change may impact its businesses, strategies, andfinancial performance over time.

145

A. Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance, 1992.

146

OECD, G20/OECD Principles of Corporate Governance, 2015.

147

World Resources Institute and World Business Council for Sustainable Development, The Greenhouse Gas Protocol: A Corporate Accounting andReporting Standard (Revised Edition), March 2004.

148

IPCC, Climate Change 2014 Mitigation of Climate Change, 2014.

149

Based on World Bank, “What is Carbon Pricing?,” accessed September 20, 2021.

Appendices83

SECTOR refers to a segment of companies performing similar business activities in an economy. A
sector generally refers to a large segment of the economy or grouping of business types, while“industry” is used to describe more specific groupings of companies within a sector.
STRATEGY refers to an organization’s desired future state. An organization’s strategy establishes afoundation against which it can monitor and measure its progress in reaching that desired state.
Strategy formulation generally involves establishing the purpose and scope of the organization’s
activities and the nature of its businesses, taking into account the risks and opportunities it faces andthe environment in which it operates.
TRANSITION PLAN refers to an aspect of an organization’s overall business strategy that laysout a set of targets and actions supporting its transition toward a low-carbon economy,
including actions such as reducing its GHG emissions.
VALUE CHAIN refers to the upstream and downstream life cycle of a product, process, orservice, including material sourcing, production, consumption, and disposal/recycling.
Upstream activities include operations that relate to the initial stages of producing a good orservice (e.g., material sourcing, material processing, supplier activities). Downstream activities
include operations that relate to processing the materials into a finished product and delivering
it to the end user (e.g., transportation, distribution, and consumption).

A.
Introduction

Abbreviations

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

CO2—Carbon dioxide

PCAF—Partnership for Carbon Accounting Financials

CO2e —Carbon dioxide equivalent

R&D—Research and development

EEDI—Energy Efficiency Design Index

R&DDD—Research, development, demonstration, anddeployment

EVIC—Enterprise Value Including Cash

SASB—Sustainability Accounting Standards Board

FSB—Financial Stability Board

SBTi—Science Based Targets initiative

G20—Group of 20

TCFD—Task Force on Climate-related Financial
Disclosures

GHG—Greenhouse gas

USDE—U.S. Dollar Equivalent

GMO—Genetically modified organism

WACI—Weighted Average Carbon Intensity

IEA—International Energy Agency

WBCSD— World Business Council for Sustainable
Development

IPCC—Intergovernmental Panel on Climate Change

WRI—World Resources InstituteF.
Fundamental Principles
for Effective Disclosure
Appendices

MT—Metric ton

Appendices84

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A.
Introduction
B.
Recommendations

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C.
Guidance for All Sectors

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D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.

IPCC. Fifth Assessment Report (AR5). 2014. www.ipcc.ch/report/ar5/.
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Fundamental Principles
for Effective Disclosure

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Appendices

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Appendices85

Sustainability Accounting Standards Board (SASB). “SASB Climate Risk Technical Bulletin #: TB001-10182016.”
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A.
Introduction

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B.
Recommendations
C.
Guidance for All Sectors

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D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

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WBCSD. “TCFD Electric Utilities Preparer Forum.” July 16, 2019. https://www.wbcsd.org/Programs/RedefiningValue/External-Disclosure/TCFD/Resources/Disclosure-in-a-time-of-transition-Climate-related-financialdisclosure-and-the-opportunity-for-the-electric-utilities-sector
WBCSD. “TCFD Oil and Gas Preparer Forum.” July 18, 2018. https://www.wbcsd.org/Programs/RedefiningValue/External-Disclosure/TCFD/Resources/Climate-related-financial-disclosure-by-oil-and-gas-companies
World Resources Institute (WRI). Water-Energy Nexus: Business Risks and Rewards. 2016.
https://www.wri.org/research/water-energy-nexus-business-risks-and-rewards.

Appendices86

A.
Introduction
B.
Recommendations
C.
Guidance for All Sectors
D.
Supplemental Guidance
for the Financial Sector
E.
Supplemental Guidancefor Non-Financial Groups
F.
Fundamental Principles
for Effective Disclosure
Appendices

For more information, please visit fsb-tcfd.org
Nothing in this document constitutes an offer or a solicitation of an offer to buy or sell a security or financial instrument orinvestment advice or recommendation of a security or financial instrument. The Task Force on Climate-related Financial Disclosuresbelieves the information herein was obtained from reliable sources but does not guarantee its accuracy. Copyright 2021 The Task
Force on Climate-related Financial Disclosures.

Appendices87