Implementing the
Recommendations of
the Task Forceon Climate-related
Financial Disclosures
June 2017

June 2017

Recommendations of the Task Force on Climate-related Financial DisclosureiContents
A Introduction .................................................................................................................................................... 1
1. Background ................................................................................................................................................................... 1
2. Structure of Recommendations .................................................................................................................................. 2
3. Application of Recommendations .............................................................................................................................. 3
4. Assessing Financial Impacts of Climate-Related Risks and Opportunities ............................................................ 4

B Recommendations.......................................................................................................................................11
C Guidance for All Sectors ..............................................................................................................................14
1. Governance ................................................................................................................................................................. 14
2. Strategy ........................................................................................................................................................................ 15
3. Risk Management ....................................................................................................................................................... 16
4. Metrics and Targets .................................................................................................................................................... 17
5. Alignment of Recommended Disclosures with Other Frameworks ..................................................................... 18

D Supplemental Guidance for the Financial Sector .....................................................................................22
1. Banks ............................................................................................................................................................................ 23
2. Insurance Companies................................................................................................................................................. 28
3. Asset Owners .............................................................................................................................................................. 33
4. Asset Managers ........................................................................................................................................................... 38
5. Carbon Footprinting and Exposure Metrics ............................................................................................................ 43

E Supplemental Guidance for Non-Financial Groups .................................................................................46
1. Energy Group .............................................................................................................................................................. 52
2. Transportation Group ................................................................................................................................................ 56
3. Materials and Buildings Group ................................................................................................................................. 59
4. Agriculture, Food, and Forest Products Group ....................................................................................................... 62

F Fundamental Principles for Effective Disclosure .....................................................................................67
Appendix 1: Climate-Related Risks, Opportunities, and Financial Impacts ..............................................71
Appendix 2: Glossary and Abbreviations ......................................................................................................78
Appendix 3: References ...................................................................................................................................80

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

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosuresi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. The Task Force’s final 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

E

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 where 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.

Supplemental Guidancefor Non-Financial Groups

This Annex contains the following information:

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

F
Fundamental Principles
for Effective Disclosure
Appendices directions on the application of the recommendations; information on assessing financial impacts of climate-related risks and opportunities(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 alignment of the recommended disclosures with other frameworks.
In addition, the Task Force developed seven principles for effective disclosure, which are included in
Section F, to help guide current and future developments in climate-related financial reporting. Whenused by organizations in preparing their climate-related financial disclosures, these principles can help
achieve high-quality and decision-useful disclosures that enable users to understand the impact ofclimate-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.

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 orindirect GHG emissions.

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

12. Structure of Recommendations
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 below.
Figure 1

Recommendations and Guidance
Recommendations
Four widely adoptable recommendations tied to:governance, strategy, risk management, and metrics andtargets

Recommendations

Recommended Disclosures
Specific recommended disclosures organizations should
include in their financial filings to provide decision-useful
information

Guidance for All
SectorsA
Introduction

Recommended
Disclosures

B
Recommendations

Supplemental
Guidance for
Certain Sectors

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
Guidance providing context and suggestions for
implementing the recommended disclosures for allorganizations
Supplemental Guidance for Certain Sectors
Guidance that highlights important considerations forcertain sectors and provides a fuller picture of potential
climate-related financial impacts in those sectors
Supplemental guidance is provided for the financial sector
and for non-financial sectors potentially most affected byclimate change

The Task Force also developed supplemental guidance to assist preparers in the financial sector andnon-financial industries potentially most affected by climate change and the transition to a lowercarbon 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-financialgroups.

AppendicesFigure 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)

Financial

Banks
Insurance Companies
Asset Owners

Non-Financial

Asset Managers
EnergyTransportation
Materials and Buildings
Ag, Food, and Forest Products

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures2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.
b. Which recommendations involve an assessment of materiality?
The disclosures related to the Strategy and Metrics and Targets recommendations involve anassessment of materiality. For asset managers and asset owners, the Task Force recommends including
carbon footprinting information in reports to clients and beneficiaries independent of a materiality
assessment.

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
Appendicesc. Where should preparers disclose?
Preparers of climate-related financial disclosures should provide such disclosures in their mainstream(i.e., public) annual financial filings.3 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
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.4 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, where relevant and where 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.
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.
e. Who should review climate-related financial disclosures prior to release?
Because these disclosures should be included in mainstream financial filings, the governanceprocesses should be similar to those used for existing public financial disclosures and would likely
involve review by the chief financial officer and audit committee, as appropriate. Organizations thatprovide 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.

3

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.

4

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).

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

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.
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.

A
Introduction

4. Assessing Financial Impacts of Climate-Related Risks and Opportunities

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

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.5 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.6
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 are likely to affectan organization’s future financial position as reflected in its income statement, cash flow statement, andbalance sheet.
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., throughmitigation, transfer, acceptance, or control). 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 (p. 5) outlines themain climate-related risks (transition and physical) and opportunities organizations should consider aspart of 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.

5

SASB research demonstrates that 72 out of 79 Sustainable Industry Classification System (SICS™) industries are significantly affected in some
way by climate-related risk, as described in SASB’s Climate Risk Technical Bulletin.

6World Business Council for Sustainable Development, “Sustainability and enterprise risk management: The first step towards integration,”January 18, 2017.

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

4

Figure 3

Climate-Related Risks, Opportunities, and Financial Impact
Transition Risks
Policy and Legal

Opportunities
Resource Efficiency

Technology

Energy Source

MarketRisks

Reputation

Opportunities

Products/Services
Markets

Physical Risks
Acute

Strategic Planning
Risk Management

Chronic

Resilience

Financial Impact

Revenues
Expenditures
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

IncomeStatement

Cash Flow
Statement

Balance
Sheet

Assets & Liabilities
Capital & Financing

Climate-related issues can affect several important aspects of an organization’s financial 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 andamount of long-lived assets and the proportion of debt and equity to be funded on an organization’sbalance sheet. Climate-related issues may also carry implications for future cash flows (operating,investing, and financing activities). An organization, therefore, should consider how climate-related
issues affect its current financial position and may potentially affect its future financial positions interms of four major categories of financial impact, as described in Figure 4.
Figure 4

Major Categories of Financial Impact
Income Statement

Balance Sheet

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 impacts ofsuch pricing on business revenues.

Assets and Liabilities. Supply and demandchanges from changes in policies, technology,
and market dynamics related to climatechange could affect the valuation oforganizations’ assets and liabilities. Use oflong-lived assets and, where relevant, reserves
may be affected by climate-related issues. It is
important for organizations to provide anindication of the potential impact on theirassets and liabilities, especially long-lived
assets. This should focus on existing andcommitted 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-cost suppliers
may be more resilient to changes in cost resulting fromclimate-related issues and more flexible in their ability
to address such issues. By providing an indication of
their cost structure and flexibility to adapt,organizations can better inform investors about theirinvestment 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
and opportunities may change the profile ofan organization's debt and equity structure,
either by increasing debt levels to compensate
for reduced operating cash flows or for newcapital expenditures or research anddevelopment (R&D). It may also affect theability to raise new debt or refinance existing
debt, or reduce the tenor of borrowing
available to the organization. There could also
be changes to capital and reserves fromoperating losses, asset write-downs, or theneed to raise new equity to meet investment.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures5

To assist organizations in understanding which financial impacts are likely to be most relevant to them,
Figure 5 provides a high-level overview of four areas—revenues, expenditures, assets and liabilities,
and capital and financing—where organizations in the financial sector and non-financial groups may
be affected.7 Whether an individual organization is or may be affected financially by climate-related
issues usually depends on: the organization’s exposure to, and anticipated effects of, specific climate-related risks andopportunities;

 the organization’s planned responses to manage (i.e., mitigate, transfer, accept, or control) its
risks or seize opportunities; and the implications of the organization’s planned responses on its income statement, cash flow
statement, and balance sheet.

Figure 5

Evidence of Financial Impact
A
Introduction

Groups and Industries
Banks

Financial

B
Recommendations
C

Insurers
Asset Owners
Asset Managers

D
Supplemental Guidance
for the Financial Sector

Oil and Gas

EnergyGuidance for All Sectors

EF
Fundamental Principles
for Effective Disclosure
Appendices







Coal
Electric Utilities



Air FreightTransportation

Supplemental Guidancefor Non-Financial Groups

Revenues

Passenger Air Transportation
Maritime Transportation
Rail Transportation
Trucking Services
Automobiles and ComponentsAg, Food, andForestMaterials andBuildings

Metals and Mining

7

Chemicals
Construction Materials
Capital Goods
Real Estate Management andDevelopment






Beverages
Agriculture

Packaged Foods and Meats
Paper and Forest Products

Expenditures






















Assets andLiabilities













Capital and
Financing



















Figure 5 is largely, but not solely, based on select content from the Sustainability Accounting Standards Board (SASB) “Financial Impacts of
Climate Risk” table in its Climate Risk Technical Bulletin. SASB also prepares detailed industry research briefs (see Appendix 3).

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures6

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 lower-carbon economy and/or the physical aspects
of 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:8

 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
F
Fundamental Principles
for Effective Disclosure
Appendices

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.
Table 1 (p. 8) shows six broad categories of metrics that may help an organization understand its
vulnerability or resilience to various transition and physical risks. For example, organizations with highemissions in their operations and supply chains, high water use, unsustainable land use practices, or
facilities in geographically “at-risk” areas, such as coastal zone locations, may be more vulnerable totransition and physical risks. Alternatively, organizations that are energy and water efficient, have low
emissions, or use sustainable land practices may be less vulnerable to climate-related risks, dependingon the policy, technological, and geographic constraints that they face.
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., mitigate, transfer, accept, or control); capital expenditures (CapEx) on new technology or facilities that may be warranted; and R&D expenditures that may be necessary.
These are largely strategic and financial planning decisions around the operating and capital
expenditures 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

8

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 Disclosures7

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.
Table 1Categories of Climate-Related Metrics and Associated Risk Types
Category

Subcategory

Risk Type

Description of MetricGreenhouse
Gas (GHG)
Emissions

Emission Level

Transition

Total emissions (by type of GHG, by source, by
Scope)

Emission Intensity

Transition

Emissions per output scaling factor (e.g.,revenues, sales, units produced)

Embedded
Emissions

Transition

Emissions per unit of fossil fuel reserves

Energy Usage

Transition

Total energy consumption (megawatt hour
[MWh] or gigajoules [GJ] per year)

Energy Intensity

Transition

Total energy consumed per output scaling factor(e.g., revenues, sales, units produced, floor area)

Energy Mix

Transition

Percent of energy by type of energy source (e.g.,renewable, hydro, coal, oil, natural gas) (MWh or
GJ)

Water Usage

Physical

Total freshwater withdrawn (cubic meters)

Recommendations

Water Intensity

PhysicalAmount used per output scaling factor (e.g.,revenues, sales, units produced) (cubic meters)

C

Water Source

PhysicalAmount withdrawn from areas of high baselinewater stress (cubic meters)
Amount treated and recycled (cubic meters)

Land Cover

Physical

Percent of land by cover type (e.g., grassland,
forest, cultivated, pasture, urban)
Annual change in cover typeLand Use Practices

Transition

Percent of land used for agriculture tillage,grazing practices, sustainability practices, orconservation practices

Coastal Zone

Physical

Locations within a coastal zone

Flood Zone

Physical

Locations within a designated flood zone

R&D—

Amount invested in developing low-carbon
products, services and/or technology

CapEx

—

Amount invested in deployment of low-carbon
technology, energy efficiencies, etc.
Amount invested in resiliency capabilities

Energy/FuelA
Introduction

Water

B

Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Land Use

E
Supplemental Guidancefor Non-Financial Groups

LocationF
Fundamental Principles
for Effective Disclosure
Appendices

Risk Adaptation& Mitigationc. 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 targeted 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 from a financial perspective (e.g., the impact on future revenues,
expenditures, assets and liabilities, and capital and financing).
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

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures8 the financial implications of mitigating 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
Appendices

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

9

A
Introduction

B Recommendations

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

10

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 6). 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 7, p. 12).

Figure 6

Core Elements of Recommended Climate-Related Financial Disclosures
Governance

Governance
StrategyA

Risk
Management

Introduction
B
Recommendations

The organization’s governance around climate-related risks
and 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

Metrics
and Targets

and manage climate-related risks
Metrics and Targets
The metrics and targets used to assess and manage relevantD
Supplemental Guidance
for the Financial Sector
E
Supplemental Guidancefor Non-Financial Groups
F
Fundamental Principles
for Effective Disclosure
Appendicesclimate-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.9 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.

9

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).

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

11

Figure 7

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

12

A
Introduction
B

C Guidance for All
Sectors

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

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 the board’s
oversight of climaterelated risks 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
when reviewing and guiding strategy, major plans of action, risk management
policies, annual budgets, and business plans as well as setting theorganization’s performance objectives, monitoring implementation andperformance, and overseeing major capital expenditures, acquisitions, anddivestitures, 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
Appendices

Recommended
Disclosure b)
Describemanagement’s role inassessing andmanaging climaterelated risks andopportunities.

Guidance for All Sectors
In describing management’s role related to the assessment and management ofclimate-related 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 suchmanagement positions or committees report to the board or a committee ofthe board and whether those responsibilities include assessing and/or
managing climate-related issues,‒a description of the associated organizational structure(s),‒processes by which management is informed about climate-related issues, and‒how management (through specific positions and/or management committees)monitors climate-related issues.

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

142. Strategy
Investors and other stakeholders need to understand how climate-related issues may affect anorganization’s businesses, strategy, and financial planning over the short, medium, and 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 the climaterelated risks andopportunities theorganization has
identified over the
short, medium, andlong term.
A
Introduction‒a description of what they consider to be the relevant short-, medium-, andlong-term time horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-related issues
often manifest themselves over the medium and longer terms,‒

a description of the specific climate-related issues potentially arising in eachtime 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 andopportunities could have a material financial impact on the organization.

Organizations should consider providing a description of their risks andopportunities by sector and/or geography, as appropriate. In describing climaterelated issues, organizations should refer to Tables A1 and A2 (pp. 72-73).

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
Organizations should provide the following information:

Recommended
Disclosure b)
Describe the impact ofclimate-related risks
and opportunities on
the organization’s
businesses, strategy,
and financial 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 and strategy
in the following areas:‒

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities‒

Investment in research and development‒

Operations (including types of operations and location of facilities)

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized. Organizations’ disclosures should reflect a holistic
picture of the interdependencies among the factors that affect their ability to create
value over time. Organizations should also consider including in their disclosures theimpact on financial planning in the following areas:‒

Operating costs and revenues‒

Capital expenditures and capital allocation‒

Acquisitions or divestments‒

Access to capital

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

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

15

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.

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

3. Risk Management

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

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 wellas other relevant factors considered.
Organizations should also consider disclosing the following:

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

‒

processes for assessing the potential size and scope of identified climaterelated risks and‒definitions of risk terminology used or references to existing risk classification
frameworks used.

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 thoserisks. In addition, organizations should describe their processes for prioritizing
climate-related risks, including how materiality determinations are made within theirorganizations.
In describing their processes for managing climate-related risks, organizations
should address the risks included in Tables A1 and A2 (pp. 72-73), as appropriate.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures16

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

4. Metrics and Targets
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.

A
Introduction
B
Recommendations

Metrics and Targets

C
Guidance for All Sectors

Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.

D

Recommended
Disclosure a)
Disclose the metrics
used by theorganization to assessclimate-related risks
and opportunities inline with its strategy
and risk management
process.

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

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage climaterelated risks and opportunities, as described in Tables A1 and A2 (pp. 72-73).
Organizations should consider including metrics on climate-related risks associatedwith 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 lower-carbon economy.
Metrics should be provided for historical periods to allow for trend analysis. In
addition, where not apparent, organizations should provide a description of themethodologies used to calculate or estimate climate-related metrics.

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions and, if
appropriate, Scope 3 GHG emissions and the related risks.10
GHG emissions should be calculated in line with the GHG Protocol methodology toallow for aggregation and comparability across organizations and jurisdictions.11 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.12

10

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 by transition
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.

11

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.

12

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 Disclosures17

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
GHG emissions and associated metrics should be provided for historical periods toallow 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 the targets
used by theorganization to
manage climaterelated risks andopportunities andperformance against
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 anticipated regulatory
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
for a lower-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.

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

B
Recommendations
C
Guidance for All Sectors

5. Alignment of Recommended Disclosures with Other Frameworks
Governance Recommended Disclosures

D
Supplemental Guidance
for the Financial Sectora)E
Supplemental Guidancefor Non-Financial Groups
F
Fundamental Principles
for Effective Disclosure
Appendicesb)

G20/OECD Principles of Corporate Governance5.a.4, 5.a.9, 6.a, 6.d.1, 6.d.2, 6.d.3, 6.d.4,
6.d.7, 6.e.2, 6.f

CDP Climate Change Questionnaire 2017

CC1.1aGRI 102: General Disclosures102-18, 102-19. 102-20, 102-26, 102-27,
102-29, 102-31, 102-32

CDSB Climate Change Reporting Framework

4.16, 4.17

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-03

International Integrated Reporting Framework

3.4, 3.41, 4.8, 4.9

GRI 102: General Disclosures102-29, 102-31, 102-32

CDP Climate Change Questionnaire 2017

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

CDSB Climate Change Reporting Framework

2.8, 2.9, 4.12, 4.13, 4.16, 4.17

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-01, REQ-03

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

CDP Climate Change Questionnaire 2017

CC2.1b, CC2.1c, CC5.1, CC6.1

CDSB Climate Change Reporting Framework

4.6, 4.9, 4.10, 4.11, 4.14

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

18

Strategy Recommended Disclosuresb)

A
Introduction

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

REQ-02, REQ-06

GRI 102: General Disclosures102-15International Integrated Reporting Framework

3.5, 3.17, 4.6, 4.7, 4.23, 4.24, 4.25, 4.26

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

CDP Climate Change Questionnaire 2017

CC2.2, CC2.2a, CC2.2b, CC3.2, CC3.3,
CC5.1, CC6.1

GRI 201: Economic Performance

201-2

CDSB Climate Change Reporting Framework

2.8, 2.9, 2.10, 4.6, 4.7, 4.9, 4.10, 4.11,
4.12, 4.13, 4.14

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-01, REQ-02, REQ-06

International Integrated Reporting Framework

3.3, 3.5, 3.39, 4.12, 4.23, 4.28, 4.29, 4.34,
4.35, 4.37

CDP Climate Change Questionnaire 2017

CC2.2aCDSB Climate Change Reporting Framework

4.7

Risk Management Recommended Disclosuresa)E
Supplemental Guidancefor Non-Financial Groups
F
Fundamental Principles
for Effective Disclosure
Appendices

CDSB Framework for Reporting Environmental
Information & Natural Capitalb)c)

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

CDP Climate Change Questionnaire 2017

CC2.1, CC2.1a, CC2.1b, CC2.1c, CC2.1c,
CC5.1, CC6.1

GRI 201: Economic Performance

201-2

CDSB Climate Change Reporting Framework

4.6, 4.7, 4.8, 4.9, 4.11

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-01, REQ-02, REQ-03

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

CDP Climate Change Questionnaire 2017

CC2.1c, CC5.1c

CDSB Climate Change Reporting Framework

4.12, 4.13, 4.16, 4.17

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-01, REQ-02, REQ-03

International Integrated Reporting Framework

4.23, 4.24, 4.25, 4.26, 4.40, 4.41, 4.42

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

CDP Climate Change Questionnaire 2017

CC2.1

CDSB Climate Change Reporting Framework

4.6, 4.7

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-01, REQ-02, REQ-03, REQ-06

International Integrated Reporting Framework

2.7, 2.8, 2.9

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures19

Metrics and Targets Recommended Disclosures
a)

b)

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

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

CDP Climate Change Questionnaire 2017

CC2.1c, CC2.1d, CC2.3, CC12

GRI 102: General Disclosures102-30CDSB Climate Change Reporting Framework

2.36, 2.37, 2.38, 4.14, 4.15

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-01, REQ-04, REQ-05, REQ-06

International Integrated Reporting Framework

3.52, 3.53, 4.30, 4.31, 4.32, 4.38, 4.53

CDP Climate Change Questionnaire 2017

CC7, CC7.2, CC8, CC9, CC10, CC12,
CC14

GRI 102: General Disclosures102-29, 102-30

GRI 201: Economic Performance

201-2

CDSB Climate Change Reporting Framework

4.19.1, 4.19.2, 4.29, 4.30, 4.31, 4.32,
4.33

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-04, REQ-05

CDP Climate Change Questionnaire 2017

CC3.1, CC3.2, CC3.3

CDSB Climate Change Reporting Framework

4.12, 4.13, 4.14, 4.15

CDSB Framework for Reporting Environmental
Information & Natural Capital

REQ-01

International Integrated Reporting Framework

4.53, 4.60, 4.61, 4.62

F
Fundamental Principles
for Effective Disclosure
Appendices

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

20

A
Introduction
B

D Supplemental
Guidance for the
Financial Sector

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 Disclosures21

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.”13 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 8. 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
Recommendations
C
Guidance for All Sectors

Figure 8

Supplemental Guidance for the Financial Sector
GovernanceD
Supplemental Guidance
for the Financial Sector

Industries

E
Supplemental Guidancefor Non-Financial Groups

Banks

F
Fundamental Principles
for Effective Disclosure

Asset Ownersa)b)Strategy

a)

b)

c)

Risk
Management

Metrics andTargets

a)

a)

b)

c)

b)

c)

Insurance Companies

Asset Managers

Appendices

13

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 Disclosures22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 the board’s
oversight of climaterelated risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-related issues, organizations should
consider including a discussion of the following:‒processes and frequency by which the board and/or board committees (e.g.,
audit, risk, or other committees) are informed about climate-related issues,‒

whether the board and/or board committees consider climate-related issues
when reviewing and guiding strategy, major plans of action, risk management
policies, annual budgets, and business plans 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 ofclimate-related 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 suchmanagement positions or committees report to the board or a committee of theboard and whether those responsibilities include assessing and/or managing
climate-related issues,‒a description of the associated organizational structure(s),‒processes by which management is informed about climate-related issues, and‒how management (through specific positions and/or management committees)monitors climate-related issues.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures23

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 the climaterelated risks 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 distinguish whether the climate-related risks aretransition or physical risks, 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
by sector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1 and A2 (pp. 72-73).

A
Introduction

Supplemental Guidance for Banks
Banks should describe significant concentrations of credit exposure to carbon-related
assets.14 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
E
Supplemental Guidancefor Non-Financial Groups
F
Fundamental Principles
for Effective Disclosure

Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on theorganization’s
businesses, strategy,
and financial
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 and strategy inthe following areas:‒

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities‒

Investment in research and development‒

Operations (including types of operations and location of facilities)

Organizations should describe how climate-related issues serve as an input to 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 also consider including in their disclosures the impact onfinancial planning in the following areas:

Appendices‒

Operating costs and revenues‒

Capital expenditures and capital allocation‒

Acquisitions or divestments‒

Access to capital

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

14

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 thisframework, the Task Force suggests banks define carbon-related assets as those assets tied to the energy and utilities sectors under the
Global Industry Classification Standard, excluding water utilities and independent power and renewable electricity producer industries.

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

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 lower-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.
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; 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.
A
Introduction

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

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

Recommended
Disclosure a)
Describe theorganization’s
processes for
identifying andassessing climaterelated risks.

E
Supplemental Guidancefor Non-Financial Groups

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:F
Fundamental Principles
for Effective Disclosure‒

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.

AppendicesBanks should also consider describing any risk classification frameworks used (e.g., theEnhanced Disclosure Task Force’s framework for defining “Top and Emerging Risks”).15
Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated risks.

15

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 climaterelated risks, including how materiality determinations are made within theirorganizations.
In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1 and A2 (pp. 72-73), as appropriate.

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.”

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

25

Risk Management
Disclose how the organization identifies, assesses, and manages climate-related risks.
Recommended
Guidance for All Sectors
Disclosure c)
Organizations should describe how their processes for identifying, assessing, and
Describe how
managing climate-related risks are integrated into their overall risk management.
processes for
identifying, assessing,and managing
climate-related risks
are integrated into
the organization’s
overall risk
management.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities in linewith its strategy andrisk management
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 and A2 (pp. 72-73).
Organizations should consider including metrics on climate-related risks associatedwith 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 lower-carbon economy.

E
Supplemental Guidancefor Non-Financial Groups

Metrics should be provided for historical periods to allow for trend analysis. In
addition, where not apparent, organizations should provide a description of themethodologies used to calculate or estimate climate-related metrics.

F
Fundamental Principles
for Effective Disclosure

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 businessactivities in the short, medium, and long term. Metrics provided may relate to credit
exposure, equity and debt holdings, or trading positions, broken down by:Appendices‒Industry16‒

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 connectedwith climate-related opportunities.17

16

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

17

Recognizing the term carbon-related assets is not well defined, the Task Force encourages banks to use a consistent definition to support
comparability. For purposes of disclosing amounts and percentages of carbon-related assets relative to total assets under this framework, theTask Force suggests banks define carbon-related assets as those assets tied to the energy and utilities sectors under the Global Industry
Classification Standard, excluding water utilities and independent power and renewable electricity producer industries.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures26

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.

A
Introduction
B
Recommendations

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions and, if
appropriate, Scope 3 GHG emissions and the related risks.18

Recommended
Disclosure c)
Describe the targets
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., 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 and services designed for a lowercarbon economy.

GHG emissions should be calculated in line with the GHG Protocol methodology toallow for aggregation and comparability across organizations and jurisdictions.19 As
appropriate, organizations should consider providing related, generally accepted,
industry-specific GHG efficiency ratios.20
GHG emissions and associated metrics should be provided for historical periods toallow for trend analysis. In addition, where not apparent, organizations should provide
a description of the methodologies used to calculate or estimate the metrics.

In describing their targets, organizations should consider including the following:‒whether the target is absolute or intensity based,

C
Guidance for All Sectors‒

time frames over which the target applies,‒

base year from which progress is measured, andD‒

key performance indicators used to assess progress against targets.

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

Alignment of Supplemental Guidance with Other Frameworks
Risk Management Recommended Disclosuresa)F
Fundamental Principles
for Effective Disclosure
Appendices

EDTF, Enhancing the Risk Disclosures of Banks

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

SASB, Commercial Banks: Sustainability
Accounting Standard

FN0101-16

Metrics and Targets Recommended Disclosuresa)

EDTF, Enhancing the Risk Disclosures of Banks

Recommendations 26, 28

18

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 more strongly impacted by transition
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.

19

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.

20

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 Disclosures27

2. Insurance Companies21
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.22
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 for asset
owners.

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

A
Introduction
B
Recommendations
C
Guidance for All Sectors

Guidance for All Sectors
In describing the board’s oversight of climate-related issues, organizations should
consider including a discussion of the following:‒processes and frequency by which the board and/or board committees (e.g.,
audit, risk, or other committees) are informed about climate-related issues,‒

whether the board and/or board committees consider climate-related issues
when reviewing and guiding strategy, major plans of action, risk management
policies, annual budgets, and business plans 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 ofclimate-related 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 suchmanagement positions or committees report to the board or a committee of theboard and whether those responsibilities include assessing and/or managing
climate-related issues,‒a description of the associated organizational structure(s),‒processes by which management is informed about climate-related issues, and‒how management (through specific positions and/or management committees)monitors climate-related issues.

21

Insurance companies include both insurers and re-insurers.

22Intergovernmental Panel on Climate Change, Fifth Assessment Report (AR5), Cambridge University Press, 2014.

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

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 the climaterelated risks 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-, andlong-term 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,‒

specific climate-related issues for each time horizon (short, medium, and longterm) that could have a material financial impact on the organization anddistinguish whether the climate-related risks are transition or physical risks, 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
by sector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1 and A2 (pp. 72-73).
A
Introduction
B
Recommendations

Recommended
Disclosure b)
Describe the impact ofclimate-related risks
and opportunities on
the organization’s
businesses, strategy,
and financial 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 and strategy
in the following areas:‒

Products and services‒

Supply chain and/or value chain

D‒

Adaptation and mitigation activities

Supplemental Guidance
for the Financial Sector‒

Investment in research and development‒

Operations (including types of operations and location of facilities)

C
Guidance for All Sectors

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

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
picture of the interdependencies among the factors that affect their ability to create
value over time. Organizations should also consider including in their disclosures theimpact on financial planning in the following areas:‒

Operating costs and revenues‒

Capital expenditures and capital allocation‒

Acquisitions or divestments‒

Access to capital

If climate-related scenarios were used to inform the organization’s strategy andfinancial planning, such scenarios should be described.
Supplemental Guidance for Insurance Companies
Insurance companies should describe the potential impacts of climate-related risks
and opportunities, as well as provide supporting quantitative information whereavailable, on their core businesses, products, and services, including:‒information at the business division, sector, or geography levels;‒

how the potential impacts influence client, cedent, or broker selection; and‒whether specific climate-related products or competencies are underdevelopment, such as insurance of green infrastructure, specialty climaterelated risk advisory services, and climate-related client engagement.

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

29

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.

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-relatedrisks and opportunities, taking into consideration a transition to a lower-carbon
economy consistent with a 2°C or lower scenario and, where relevant to theorganization, scenarios consistent with increased physical climate-related risks.
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; 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 Insurance Companies
Insurance companies that perform climate-related scenario analysis on theirunderwriting activities should provide the following information:A
Introduction
B
Recommendations‒

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

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 asother relevant 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 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:‒physical risks from changing frequencies and intensities of weather-related
perils,‒transition risks resulting from a reduction in insurable interest due to a decline
in value, changing energy costs, or implementation of carbon regulation, and‒liability risks that could intensify due to a possible increase in litigation.

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

30

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 climaterelated risks, including how materiality determinations are made within theirorganizations.
In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1 and A2 (pp. 72-73), as appropriate.
Supplemental Guidance for Insurance Companies
Insurance companies should describe key tools or instruments, such as risk models,
used to manage climate-related risks in relation to product development and pricing.
Insurance companies should also describe the range of climate-related events
considered and how the risks generated by the rising propensity and severity of such
events are managed.

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

Recommended
Guidance for All Sectors
Disclosure c)
Organizations should describe how their processes for identifying, assessing, and
Describe how
managing climate-related risks are integrated into their overall risk management.
processes for
identifying, assessing,and managing
climate-related risks
are integrated into theorganization’s overallrisk management.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization to assessclimate-related risks
and opportunities inline with its strategy
and risk management
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 and A2 (pp. 72-73).
Organizations should consider including metrics on climate-related risks associatedwith 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 lower-carbon economy.
Metrics should be provided for historical periods to allow for trend analysis. In
addition, where not apparent, organizations should provide a description of themethodologies used to calculate or estimate climate-related metrics.
Supplemental Guidance for Insurance Companies
Insurance companies should provide aggregated risk exposure to weather-related
catastrophes of their property business (i.e., annual aggregated expected losses fromweather-related catastrophes) by relevant jurisdiction.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures31

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.

A
Introduction
B
Recommendations

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions and, if
appropriate, Scope 3 GHG emissions and the related risks.23

Recommended
Disclosure c)
Describe the targets
used by theorganization to
manage climaterelated risks andopportunities andperformance against
targets.

Guidance for All Sectors
Organizations should describe their key climate-related targets such as those related
to GHG emissions, water usage, energy usage, etc., in 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 and services designed for a lowercarbon economy.

C
Guidance for All Sectors
DF
Fundamental Principles
for Effective Disclosure
Appendices

GHG emissions and associated metrics should be provided for historical periods toallow for trend analysis. In addition, where not apparent, organizations should
provide a description of the methodologies used to calculate or estimate the metrics.

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.

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

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

GHG emissions should be calculated in line with the GHG Protocol methodology toallow for aggregation and comparability across organizations and jurisdictions.24 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.25

Alignment of Supplemental Guidance with Other Frameworks
Strategy Recommended Disclosuresb)

ClimateWise, The ClimateWise Principles

Subprinciples 3.2, 3.4, 4.1, 4.2

Risk Management Recommended Disclosuresa)

SASB, Insurance: Sustainability Accounting Standard

FN0301-17.65

Metrics and Targets Recommended Disclosuresa)

UNEP FI, Principles for Sustainable Insurance

Principle 1

23

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 more strongly impacted by transition
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.

24

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.

25

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 Disclosures32

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.26
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

26

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 allows beneficiaries and otheraudiences to assess the asset owner’s investment considerations and approach to climate change. This
may include an assessment 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 new investment 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.

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

Guidance for All Sectors
In describing the board’s oversight of climate-related issues, organizations should
consider including a discussion of the following:‒processes and frequency by which the board and/or board committees (e.g.,
audit, risk, or other committees) are informed about climate-related issues,‒

whether the board and/or board committees consider climate-related issues
when reviewing and guiding strategy, major plans of action, risk management
policies, annual budgets, and business plans 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.

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

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

33

Governance
Disclose the organization’s governance around climate-related risks and opportunities.
Recommended
Disclosure b)
Describemanagement’s rolein assessing andmanaging climaterelated risks andopportunities.

‒

whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether suchmanagement positions or committees report to the board or a committee of theboard and whether those responsibilities include assessing and/or managing
climate-related issues,‒a description of the associated organizational structure(s),‒processes by which management is informed about climate-related issues, and‒how management (through specific positions and/or management committees)monitors climate-related issues.

StrategyA
Introduction

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.

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

Recommended
Guidance for All Sectors
Disclosure a)
Organizations should provide the following information:
Describe the climate‒ a description of what they consider to be the relevant short-, medium-, and longrelated risks andterm horizons, taking into consideration the useful life of the organization’s
opportunities theassets or infrastructure and the fact that climate-related issues often manifest
organization has
themselves over the medium and longer terms,
identified over the‒
specific climate-related issues for each time horizon (short, medium, and longshort, medium, andterm) that could have a material financial impact on the organization andlong term.
distinguish whether the climate-related risks are transition or physical risks, 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
by sector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1 and A2 (pp. 72-73).

F
Fundamental Principles
for Effective Disclosure
Appendices

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

Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on theorganization’s
businesses, strategy,
and financial
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 and strategy inthe following areas:‒

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities‒

Investment in research and development‒

Operations (including types of operations and location of facilities)

Organizations should describe how climate-related issues serve as an input to 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 also consider including in their disclosures the impact onfinancial planning in the following areas:‒

Operating costs and revenues‒

Capital expenditures and capital allocation

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

34

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.
‒

Acquisitions or divestments‒

Access to capital

If climate-related scenarios were used to inform the organization’s strategy andfinancial planning, such scenarios should be described.
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 ofthe total fund or investment strategy or individual investment strategies for various
asset classes.
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

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; 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 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 specificassets.

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

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 lower-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.

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 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.

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

35

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 climaterelated risks, including how materiality determinations are made within theirorganizations.
In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1 and A2 (pp. 72-73), 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 lower-carbon energy supply, production, and use.
This could include explaining how asset owners actively manage their portfolios’
positioning in relation to this transition.

A
Introduction
B
Recommendations
C
Guidance for All Sectors

Recommended
Guidance for All Sectors
Disclosure c)
Organizations should describe how their processes for identifying, assessing, and
Describe how
managing climate-related risks are integrated into their overall risk management.
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s overallrisk management.

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

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities in linewith its strategy andrisk management
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 and A2 (pp. 72-73).
Organizations should consider including metrics on climate-related risks associatedwith 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 lower-carbon economy.
Metrics should be provided for historical periods to allow for trend analysis. In
addition, where not apparent, organizations should provide a description of themethodologies 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.

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

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

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions and, if
appropriate, Scope 3 GHG emissions and the related risks.27
GHG emissions should be calculated in line with the GHG Protocol methodology toallow for aggregation and comparability across organizations and jurisdictions.28 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.29
GHG emissions and associated metrics should be provided for historical periods toallow 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 provide the weighted average carbon intensity, where data are
available or can be reasonably estimated, for each fund or investment strategy.
In addition, asset owners should provide other metrics they believe are useful for
decision making along with a description of the methodology used. See Table 2 (p. 43)
for common carbon footprinting and exposure metrics, including weighted averagecarbon intensity.

A
Introduction
B

Note: The Task Force acknowledges the challenges and limitations of current carbon
footprinting metrics, including that such metrics should not necessarily be interpreted as risk
metrics. The Task Force views the reporting of weighted average carbon intensity as a firststep and expects disclosure of this information to prompt important advancements in thedevelopment of decision-useful, climate-related risk metrics. The Task Force recognizes thatsome asset owners may be able to report weighted average carbon intensity for only aportion of their investments given data availability and methodological issues.

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 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., 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 and services designed for a lowercarbon 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.

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

27

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 more strongly impacted by transition
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.

28

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.

29

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 Disclosures37

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.30
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 lower-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

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.

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

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

Guidance for All Sectors
In describing the board’s oversight of climate-related issues, organizations should
consider including a discussion of the following:‒processes and frequency by which the board and/or board committees (e.g.,
audit, risk, or other committees) are informed about climate-related issues,‒

whether the board and/or board committees consider climate-related issues
when reviewing and guiding strategy, major plans of action, risk management
policies, annual budgets, and business plans 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.

30

Guidance for All Sectors
In describing management’s role related to the assessment and management ofclimate-related 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 suchmanagement positions or committees report to the board or a committee of theboard and whether those responsibilities include assessing and/or managing
climate-related issues,‒a description of the associated organizational structure(s),‒processes by which management is informed about climate-related issues, and‒how management (through specific positions and/or management committees)monitors climate-related issues.

Introductory language sourced from: Blackrock, “BlackRock Worldwide Leader in Asset and Risk Management,” 2016.

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.
Recommended
Disclosure a)
Describe the climaterelated risks 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,‒

specific climate-related issues for each time horizon (short, medium, and longterm) that could have a material financial impact on the organization anddistinguish whether the climate-related risks are transition or physical risks, 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
by sector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1 and A2 (pp. 72-73).
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 theorganization’s
businesses, strategy,
and financial
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 and strategy inthe following areas:‒

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities‒

Investment in research and development‒

Operations (including types of operations and location of facilities)

Organizations should describe how climate-related issues serve as an input to 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 also consider including in their disclosures the impact onfinancial planning in the following areas:‒

Operating costs and revenues‒

Capital expenditures and capital allocation‒

Acquisitions or divestments‒

Access to capital

If climate-related scenarios were used to inform the organization’s strategy andfinancial planning, such scenarios should be described.
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
be affected by the transition to a lower-carbon economy.

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

39

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.

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 lower-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.
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; 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.

Risk Management

A
Introduction

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

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

Recommended
Disclosure a)
Describe theorganization’s
processes for
identifying andassessing climaterelated risks.

E
Supplemental Guidancefor Non-Financial Groups

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:F
Fundamental Principles
for Effective Disclosure‒

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 withinvestee companies to encourage better disclosure and practices related to climaterelated risks in order to improve data availability and asset managers’ ability to assessclimate-related risks.

Appendices

Asset managers should also describe how they identify and assess material climaterelated risks for each product or investment strategy. This might include a descriptionof the resources and tools used in the process.
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 climaterelated risks, including how materiality determinations are made within theirorganizations.
In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1 and A2 (pp. 72-73), as appropriate.
Supplemental Guidance for Asset Managers
Asset managers should describe how they manage material climate-related risks foreach product or investment strategy.

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

40

Risk Management
Disclose how the organization identifies, assesses, and manages climate-related risks.
Recommended
Guidance for All Sectors
Disclosure c)
Organizations should describe how their processes for identifying, assessing, and
Describe how
managing climate-related risks are integrated into their overall risk management.
processes for
identifying, assessing,and managing
climate-related risks
are integrated into
the organization’s
overall risk
management.

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities in linewith its strategy andrisk management
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 and A2 (pp. 72-73).
Organizations should consider including metrics on climate-related risks associatedwith 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 lower-carbon economy.

E
Supplemental Guidancefor Non-Financial Groups

Metrics should be provided for historical periods to allow for trend analysis. In
addition, where not apparent, organizations should provide a description of themethodologies used to calculate or estimate climate-related metrics.

F
Fundamental Principles
for Effective Disclosure

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.

AppendicesWhere appropriate, asset managers should provide metrics considered in investment
decisions and monitoring.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas(GHG) emissions, andthe related risks.

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions and, if
appropriate, Scope 3 GHG emissions and the related risks.31
GHG emissions should be calculated in line with the GHG Protocol methodology toallow for aggregation and comparability across organizations and jurisdictions.32 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.33
GHG emissions and associated metrics should be provided for historical periods toallow for trend analysis. In addition, where not apparent, organizations should provide

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 more strongly impacted by transition
risk than other organizations. In addition, current or future constraints on emissions, either directly in emission restrictions or indirectly
through carbon budgets, may impact organizations financially.

32

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.

33

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 Disclosures41

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
a description of the methodologies used to calculate or estimate the metrics.
Supplemental Guidance for Asset Managers
Asset managers should provide the weighted average carbon intensity, where data are
available or can be reasonably estimated, for each product or investment strategy.
In addition, asset managers should provide other metrics they believe are useful for
decision making along with a description of the methodology used. See Table 2 (p. 43)
for common carbon footprinting and exposure metrics, including weighted averagecarbon intensity.
Note: The Task Force acknowledges the challenges and limitations of current carbon
footprinting metrics, including that such metrics should not necessarily be interpreted asrisk metrics. The Task Force views the reporting of weighted average carbon intensity as afirst step and expects disclosure of this information to prompt important advancements inthe development of decision-useful, climate-related risk metrics. The Task Force recognizes
that some asset managers may be able to report weighted average carbon intensity for only
portion of the assets they manage given data availability and methodological issues.
A
Introduction
B
Recommendations
C
Guidance for All Sectors
D
Supplemental Guidance
for the Financial Sector

Recommended
Disclosure c)
Describe the targets
used by theorganization to
manage climaterelated risks andopportunities andperformance against
targets.

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

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 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 and services designed for a lowercarbon 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.

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

Alignment of Supplemental Guidance with Other Frameworks
Strategy Recommended Disclosuresb)

PRI, Reporting Framework 2016 Strategy and GovernanceSG12.1, SG12.2

Risk Management Recommended Disclosuresa)

SASB, Asset Management & Custody Activities:
Sustainability Accounting Standard

FN0103-15

PRI, Reporting Framework 2017 Strategy and GovernanceSG13.2

Metrics and Targets Recommended Disclosuresa)b)

AODP, Global Climate Risk Survey 2017 for Asset Managers

2.13, 3.01

SASB, Asset Management & Custody Activities:
Sustainability Accounting Standard

FN0103-18

PRI, Reporting Framework 2017 Strategy and GovernanceSG13.3

PRI, Reporting Framework 2017 Strategy and GovernanceSG13.3

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

5. Carbon Footprinting and Exposure Metrics
Table 2 below provides descriptions, formulas, and additional information for common carbon
footprinting and exposure metrics. The table includes the weighted average carbon intensity metricthat the Task Force recommends asset owners and asset managers report to their beneficiaries andclients as well as other metrics such organizations should consider reporting.
Table 2

Common Carbon Footprinting and Exposure Metrics
MetricSupporting Information

Weighted
Average
CarbonIntensity

Description
FormulaPortfolio’s exposure to carbon-intensive companies, expressed in tons CO2e / $M
revenue. Metric recommended by the Task Force.
icurrent value of investmenti issuer' s Scope 1 and Scope 2 GHG emissionsi∑(*)
current portfolio value
issuer' s $M revenueinMethodology Unlike the next three metrics, Scope 1 and Scope 2 GHG emissions are allocatedbased on portfolio weights (the current value of the investment relative to the current
portfolio value), rather than the equity ownership approach (as described undermethodology for Total Carbon Emissions). Gross values should be used.

A
Introduction

Key Points+/-

B Metric can be more easily applied across asset classes since it does not rely onequity ownership approach.
 The calculation of this metric is fairly simple and easy to communicate to investors.

Recommendations

 Metric allows for portfolio decomposition and attribution analysis.
C
Guidance for All Sectors

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

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

Total
CarbonEmissions

Description
FormulaThe absolute greenhouse gas emissions associated with a portfolio, expressed in tons
CO2e.
i

current value of investmenti∑(*issuer' s Scope 1 and Scope 2 GHG emissionsi)
issuer' s market capitalization inFFundamental Principles
for Effective Disclosure

Methodology 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 acompany’s total market capitalization, then the investor owns 5 percent of thecompany as well as 5 percent of the company’s GHG (or carbon) emissions.

Appendices

While this metric is generally used for public equities, it can be used for other asset
classes by allocating GHG emissions across the total capital structure of the investee(debt and equity).
Key Points

 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 be misinterpreted.

CarbonFootprint

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

∑ (
n

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

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

43

Table 2

Common Carbon Footprinting and Exposure Metrics (continued)
MetricSupporting Information

CarbonFootprint

Methodology 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.

(continued)

The current portfolio value is used to normalize the data.
Key Points+/-

 Metric may be used to compare portfolios to one another and/or to a benchmark.
 Using the portfolio market value to normalize data is fairly intuitive to investors.
 Metric allows for portfolio decomposition and attribution analysis.
 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 be misinterpreted.

CarbonIntensity

Description

Volume of carbon emissions per million dollars of revenue (carbon efficiency of aportfolio), expressed in tons CO2e / $M revenue.
i

Formula∑ (nA
Introduction

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

∑ (
n

B

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

Methodology 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.

Recommendations

The company’s (or issuer’s) revenue is used to adjust for company size to provide ameasurement of the efficiency of output.

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

Key Points+/-

Appendices 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.

E
Supplemental Guidancefor Non-Financial Groups
F
Fundamental Principles
for Effective Disclosure Metric may be used to compare portfolios to one another and/or to a benchmark.

 The calculation of this metric is somewhat complex and may be difficult tocommunicate.
 Changes in underlying companies’ market capitalization can be misinterpreted.
Exposure Description
to CarbonRelated
Formula for
AssetsAmountFormula for
Percentage

The amount or percentage of carbon-related assets34 in the portfolio, expressed in$M or percentage of the current portfolio value.
i∑ $M current value of investments in carbon-related assetsn∑ current value of investments in carbon-related assets*100
current portfolio value

Methodology This metric focuses on a portfolio’s exposure to sectors and industries considered themost 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 andindependent power and renewable electricity producer industries).

Note: The term “portfolio” used in the table above is defined as “fund or investment strategy” for asset owners and“product or investment strategy” for asset managers.
34

Recognizing that the term carbon-related assets is not well defined, the Task Force encourages asset owners and asset managers to use aconsistent definition to support comparability. The Task Force suggests defining carbon-related assets as those assets tied to the energy andutilities sectors under the Global Industry Classification Standard, excluding water utilities and independent power and renewable electricity
producer industries.

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

44

A
Introduction

E Supplemental
Guidance for NonFinancial Groups

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 Disclosures45

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.35 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.36 Supplemental guidance for the nonfinancial groups is provided for select recommended disclosures related to strategy and metrics andtargets, as shown in Figure 9.
Figure 9

Supplemental Guidance for Non-Financial Groups
Governancea)Groupsb)Strategy

a)

b)

c)

Risk
Management

Metrics andTargets

a)

a)

b)

c)

b)

c)

EnergyA
Introduction

Transportation

B
Recommendations

Materials and Buildings

CAg, Food, and Forest Products

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

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.

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
when reviewing 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.

35

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

36

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.

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

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

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

Recommended
Disclosure a)
Describe the climaterelated risks andopportunities theorganization has
identified over the
short, medium, andlong term.

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

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
by sector and/or geography, as appropriate. In describing climate-related issues,organizations should refer to Tables A1 and A2 (pp. 72-73).
Recommended
Disclosure b)
Describe the impact
of climate-relatedrisks andopportunities on theorganization’s
businesses, strategy,
and financial
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 and strategy inthe following areas:‒

Products and services‒

Supply chain and/or value chain‒

Adaptation and mitigation activities‒

Investment in research and development‒

Operations (including types of operations and location of facilities)

Organizations should describe how climate-related issues serve as an input to theirfinancial planning process, the time period(s) used, and how these risks andopportunities are prioritized.
Organizations’ disclosures should reflect a holistic picture of the interdependencies
among the factors that affect their ability to create value over time. Organizations
should also consider including in their disclosures the impact on financial planning in
the following areas:‒

Operating costs and revenues

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

47

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.
‒

Capital expenditures and capital allocation‒

Acquisitions or divestments‒

Access to capital

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

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

‒

Existing and committed future activities such as investments, restructuring,
write-downs, 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 issues, if applicable, are considered incapital 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 climate-related risks andopportunities.

‒

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

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 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 lower-carbon economy
consistent with a 2°C or lower scenario and, where relevant to the organization,
scenarios consistent with increased physical climate-related risks.
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; 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 theresilience 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.37,38
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 their37

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.
38
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.”

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

48

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
strategies.39
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:‒

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.40

Risk Management
Disclose how the organization identifies, assesses, and manages climate-related risks.
A
Introduction
B
Recommendations
C
Guidance for All Sectors

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: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.

‒

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.

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 climaterelated risks, including how materiality determinations are made within theirorganizations.
In describing their processes for managing climate-related risks, organizations should
address the risks included in Tables A1 and A2 (pp. 72-73), as appropriate.

Recommended
Guidance for All Sectors
Disclosure c)
Organizations should describe how their processes for identifying, assessing, and
Describe how
managing climate-related risks are integrated into their overall risk management.
processes for
identifying, assessing,and managing
climate-related risks
are integrated into
the organization’s
overall risk
management.

39This will help identify the key characteristics that are relevant to assessing long-term strategy (e.g., changes in regulation, technology, andphysical impact).

40

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 Disclosures49

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
Recommended
Disclosure a)
Disclose the metrics
used by theorganization toassess climaterelated risks andopportunities in linewith its strategy andrisk management
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 and A2 (pp. 72-73).
Organizations should consider including metrics on climate-related risks associatedwith 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 lower-carbon economy.
Metrics should be provided for historical periods to allow for trend analysis. In
addition, where not apparent, organizations should provide a description of themethodologies 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.

A
Introduction
B
Recommendations
C
Guidance for All Sectors

Organizations should consider providing key metrics related to GHG emissions, energy,
water, land use, and, if relevant, investments in climate adaptation and mitigation that
address potential financial aspects of shifting demand, expenditures, asset valuation,and cost of financing. Illustrative examples of metrics for each of the four non-financialgroups are provided in the tables listed below.

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, andthe related risks.

‒

Energy Group: Table 3 (pp. 54-55)‒

Transportation Group: Table 4 (pp. 57-58)‒

Materials and Buildings Group: Table 5 (pp. 60-61)41‒

Agriculture, Food, and Forest Group: Table 6 (pp. 64-65)

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG emissions and, if
appropriate, Scope 3 GHG emissions and the related risks.42
GHG emissions should be calculated in line with the GHG Protocol methodology toallow for aggregation and comparability across organizations and jurisdictions.43 As
appropriate, organizations should consider providing related, generally acceptedindustry-specific GHG efficiency ratios.44
GHG emissions and associated metrics should be provided for historical periods toallow for trend analysis. In addition, where not apparent, organizations should provide
a description of the methodologies used to calculate or estimate the metrics.

41

The TCFD Secretariat corrected an error in Table 5 on December 15, 2017. Metric ton (MT) of carbon dioxide emissions (CO2e) was shown as
an illustrative metric for real estate, but it should have been shown as an illustrative metric for metals and mining.

42

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 more strongly impacted by transition
risk than other organizations. In addition, current or future constraints on emissions, either directly in emission restrictions or indirectly
through carbon budgets, may impact organizations financially.

43

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.

44

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 Disclosures50

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities 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., 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 and services designed for a lowercarbon 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.

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

The Task Force also developed illustrative metrics for each of the four key non-financial groups. The
following sections provide a description of how each group may be affected by climate-related issues
along with examples of metrics that may be relevant to the group. Importantly, the metrics provided
are for illustrative purposes to help organizations consider the types of metrics best suited for theiractivities and operations.
Organizations should define metrics and targets that are tailored to their particular climate-relatedrisks and opportunities and that address the key financial disclosure areas in the Task Force’s
supplemental guidance. In determining the most relevant and useful metrics, organizations areencouraged to engage with their key stakeholders, including investors, and review publicly available
frameworks.45 Again, the examples provided are illustrative to assist organizations in thinking about
appropriate metrics. The examples are not intended to imply additional or duplicative metrics for an
organization’s existing suite of metrics if existing metrics achieve the intended disclosure objective.

Appendices45

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

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures51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 10.
While many climate-related issues impact the Energy 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) and transition impacts(e.g., policy requirements, carbon prices, new technology, changes in market demand) of climaterelated risks and opportunities.

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

As fossil fuel and electricity providers, the organizations in this group generally have significant
financial exposure around transition issues related to GHG emissions and, in many cases, aredependent on the availability of water. For example, a majority of the current electricity supply comesfrom non-renewable fossil fuel resources, resulting in a significant exposure to transitions aroundglobal GHG emissions—either directly through utility companies’ own energy use for production orindirectly through combustion of fossil fuels.46 Electric utilities, therefore, face significant transition risk
(i.e., the financial risk arising from the changes in
asset valuations caused by the structural shift
Figure 10
toward a low-carbon energy system). This is
Energy Groupbecause the utility sector’s asset valuations are at
Industry/Sub-Industry
risk from the disruptive impact of the policy,
technology, and portfolio changes that will occur
Oil and Gas
Groupover the next two to three decades as policies,
EnergyCoaltechnology, and markets shift to a low-carbon
energy system.

Electric Utilities

E
Supplemental Guidancefor Non-Financial Groups

In addition to GHG emissions, both hydroelectric
power generation and cooling for nuclear and nonnuclear power generation use large quantities of water.47 Physical risks affecting water supplies createsa 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.48,49,50
These characteristics make the Energy Group particularly sensitive to physical, policy, or technologicalchanges affecting fossil fuel demand, energy production and usage, emission 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
46

According to International Energy Agency (IEA) data, CO2 emissions from fuel combustion across all energy sectors and activities totaled 32.2
Gigatons (Gt) in 2015, thereby accounting for 60 percent of total anthropogenic GHG emissions. The power-generation sector on its own
accounted for 13.6Gt, representing 42 percent of all CO2 emissions from energy and 25 percent of all anthropogenic GHG emissions. To put
this into context, the next most important industrial sector was transportation, which accounted for 7.4Gt (23 percent of all CO2 emissions
from fuel combustion, and 14 percent of total anthropogenic GHG emissions). IEA, CO2 Emissions from Fuel Combustion: Highlights. 2015.

47

Michelle T.H. van Vilet, et al., “Power-generation system vulnerability and adaptation to changes in climate and water resources.” Nature
Climate Change 6 (2016): 375-380.

48

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

49

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

50

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

52

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).

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

53

Table 3

Energy Group Metrics – Illustrative Examples
Energy Group organizations should consider providing key GHG emissions, energy, water, land use, and low-carbon alternative metrics on the financial aspects
related to revenue, costs, assets, liabilities, and capital allocation. Appendix 2 includes definitions of the abbreviations used in “Unit of Measure.”

Example Metric

Revenues

GHG
Emissions

Estimated Scope 3 emissions,
including methodologies andemission factors used

Unit of Measure Alignment

Rationale for Inclusion

GRI: 305-3
CDP: EU4.3(Relatively) high carbon emissions in the value chain may
accelerate development of alternative technologies in a lowcarbon economy. The level of emissions informs vulnerability to asignificant decrease in future earning capacity.

Revenues

Revenues/savings from
Risk Adaptation investments in low-carbon
Local currency& Mitigation
alternatives (e.g., R&D,
equipment, products or services)

CDP: CC3.2,
3.3, CC6.1
SASB:
NR0103-14

New products and revenue streams from climate-related
products and services and the return on investments of CapEx
projects that create operational efficiencies.

Expenditures

GHG
Emissions

CDP: CC2.2
SASB:
NR0101-22,
NR0201-16

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

Expenditures

Expenditures (OpEx) for lowRisk Adaptation carbon alternatives (e.g., R&D,
& Mitigationequipment, products, orservices)

Expenditures

Proportion of capital allocation
Risk Adaptation
to long-lived assets versus short- Percentage& Mitigation
term assets

Expenditures

Water

Percent water withdrawn inregions with high or extremely
high baseline water stress

GHG
Emissions

Amount of gross global Scope 1
emissions from: (1) combustion,(2) flared hydrocarbons, (3)MT of CO2e
process emissions, (4) directly
vented releases, and (5) fugitive
emissions/leaks

Expenditures

MT of CO2e

Describe current carbon price orLocal currency
range of prices used

Local currency

Percentage

Expenditures for new technologies are needed to manage
GRI: G4-OG2 transition risk. The level of expenditures provides an indication of
CDP: EU4.3
the level to which future earning capacity of core business might
be affected.

N/A

Impacts of climate change are subject to uncertainty in terms ofextent and timing. Understanding the allocation to long- versus
short-lived assets informs the potential of an organization toadapt to emerging climate-related risks and opportunities.

Water stress can result in increased cost of supply, impacts tooperations, and increased regulation/reduced access to water
SASB: IF0101withdrawal. The percent withdrawn in high water-stress areas
06
informs the risk of significant costs or limitations to production
capacity.

SASB:
NR0101-01

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

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

54

Electric
Utilities

ClimateRelated
Category

Coal

Financial
Category

Oil andGas

ENERGY GROUP METRICS – ILLUSTRATIVE EXAMPLESTable 3

Energy Group Metrics – Illustrative Examples (continued)

Example Metric

Unit of Measure Alignment

Rationale for Inclusion

Energy/Fuel

Indicative costs of supply forcurrent and committed future
projects (e.g., through a cost
curve or indicative price range.
This could be broken down by
product, asset, or geography)

Local currency

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

AssetsWater

Assets committed in regionswith high or extremely highbaseline water stress

Water stress can result in interruptions to or limitations on
Number of assets, SASB: IF0101production capacity or early curtailment of operating facilities.
value, percentage 06
The value of assets in high water-stress areas informs theof total assets
potential implications for asset valuation.

AssetsInvestment (CapEx) in lowRisk Adaptation
carbon alternatives (e.g., capital& Mitigationequipment or assets)

Expenditures

AssetsCapitalGHG
Emissions

CDP: CC3.3

Local currency

Investments in new technologies are needed to manage
GRI: G4-OG2 transition risk. The level of investment provides an indication of
CDP: EU4.3
the level to which future earning capacity of core business might
be affected.

A breakdown of reserves by type Amount ofand an indication of associated reserves
emissions factors to provide
MT of CO2e per
insight into potential future
unit of reserves
emissions

SASB:
NR0101-23

Transition to a low-carbon economy may affect the value ofreserves or long-lived assets. Providing insight into potential
future emissions can help to inform investors about the potential
impacts of regulatory measures and demand changes on earning
capacity.

Years, percentage
return on
CDP: CC3.3
investment

Impacts of climate change are subject to uncertainty in terms ofextent and timing. Understanding the capital payback periods orreturn on capital deployed informs the vulnerability of theorganization to emerging climate-related risks and opportunities
and the flexibility to continue the current technology portfolio at
lower financial returns in a transition period to low-carbon
technologies.

Risk Adaptation Capital payback periods or& Mitigation
return on capital deployed

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

55

Electric
Utilities

ClimateRelated
Category

Coal

Financial
Category

Oil andGas

ENERGY GROUP METRICS – ILLUSTRATIVE EXAMPLES

2. Transportation GroupThe Transportation Group includes, but is not limited to, industries listed in Figure 11.
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 is under increasing policy andregulatory pressure to achieve emission
targets for the use phase. Increasing
constraints on emissions fuel efficiency willcontinue to impact costs in this group,particularly around investments ininnovation (new technologies andefficiencies).51

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
AppendicesFigure 11

Transportation Group
Industry/Sub-Industry

Air FreightGroup

Transportation

Passenger Air
Transportation
Maritime Transportation
Rail Transportation
Trucking Services

The Transportation Group, therefore, will
Automobiles
likely face financial challenges from two
major drivers. First, policymakers are setting
stricter targets for emissions and fuelefficiency from transportation carriers. Second, new technology around low-emission/fuel-efficientcarriers (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 becompounded by the length of product cycles for transportation products, such as cars and trucks, andespecially 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 planning horizons are relevant
factors that must be taken into account when considering the climate-related risks 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 demandfor 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 ona range of traditional and alternative fuels.

51

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

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

56

Table 4

Transportation Group Metrics – Illustrative Examples
Transportation Group organizations should consider providing key metrics related to the implications of GHG emissions and energy/fuel on the financial aspects
related to revenue, costs, assets, liabilities, and capital allocation. Appendix 2 includes definitions of the abbreviations used in “Unit of Measure.”

Revenues

Revenues/savings from
CDP: CC3.2,
Risk Adaptation investments in low-carbon
3.3, CC6.1
Local currency& Mitigation
alternatives (e.g., R&D, equipment,
SASB:
products or services)
TR0102-4

New products and revenue streams from climate-related
products and services and the return on investments of
CapEx projects that create operational efficiencies.

Revenues

Vehicle sales (historical, current
and projected) by category (e.g.,
Number ofgas vehicles, diesel vehicles,
Risk Adaptation
vehicles sold,battery electric vehicles, plug-in& Mitigation
value ofhybrid electric vehicles,
vehicles soldalternative-powered vehicles (LPG,
CNG, fuel cells, compressed air)

SASB:
TR0101-10

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

Grams of
SASB:
CO2e per tonTR0301-05
nautical mile

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

Revenues

Risk Adaptation Energy Efficiency Design Index& Mitigation(EEDI) for new ships

Expenditures (OpEx) for R&D for
Risk Adaptation low-carbon transportation
Expenditures& Mitigationequipment or transportation
services

Automobiles

Energy/Fuel

MPG, L/Km,
SASB:
gCO2e/Km, Kg
TR0101-09
transported

Rationale for Inclusion

Trucking

Revenues

Sales-weighted average fleet fueleconomy, by region andweight/number of people
transported

Alignment

Rail

Unit ofMeasureMaritime

Example Metric

Passenger Air

ClimateRelated
Category

Financial
Category

Air Freight

TRANSPORTATION GROUP METRICS – ILLUSTRATIVE EXAMPLES

Fuel costs and associated emissions are high-priority issues
for transportation companies. Understanding how anorganization is managing a transition to more efficientequipment will provide insight into potential cost andregulatory impacts.

Expenditures for new technologies are needed to manage
SASB:
transition risk. The level of expenditures provides an
Local currency TR0201-F
indication of the level to which future earning capacity of(Age of fleet)core business might be affected.

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

57

Table 4

Transportation Group Metrics – Illustrative Examples (continued)

Expenditures Energy/FuelIn the transition to a low-carbon economy, fossil fuels willphase out whereas renewable energy will phase in. The
percentage of these energy sources embedded incurrent assets informs the level to which future earning
capacity of core business might be affected or asset
value impaired.

MT of CO2e or
CDP: AU2.3
CO2e/KmPart of transition risk is the potential implementation of
product-efficiency regulations by geography. It is
important to understand how organizations areoperating within these geographies and the potential
exposure/impact of noncompliance.

GHG
Emissions

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

AssetsGHG
EmissionsLife cycle reporting of GHG
emissions of Transportation
MT of CO2e
products (air, ship, rail, truck, auto)

AssetsSASB:
Investments (CapEx) in low-carbon
Risk Adaptation
TR0201-Ftransportation equipment or
Local currency& Mitigation(Age oftransportation services
fleet)

Expenditures

SASB:
TR0101-01/
02/03,
TR0102-02/
05/06

Rationale for Inclusion

Automobiles

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

SASB:
TR0201,2-03,
GJ, percentage
TR0301-03,
TR0401-03

Alignment

Trucking

Unit ofMeasureRail

Example Metric

Maritime

ClimateRelated
Category

Passenger Air

Financial
Category

Air Freight

TRANSPORTATION GROUP METRICS – ILLUSTRATIVE EXAMPLESHow an organization manages its product life cycle
emissions and utilization of raw materials will provide
insight into the organization’s ability to adapt to a lowcarbon economy.
Investments in new technologies are needed to managetransition risk. The level of investment provides anindication of the level to which future earning capacity ofcore business might be affected.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures58

3. Materials and Buildings Group
The Materials and Buildings Group includes, but is not limited to, industries listed in Figure 12.
Materials and Buildings Group organizations
are typically capital intensive, require highinvestments in plants, equipment, andbuildings that are (relatively) fixed in terms oflocation, and dependent on sources of raw
and refined materials. This may reduce theflexibility of organizations in this group toadapt to risks of climate change.
Many of this group’s activities result in
financial exposures around high GHG
emissions and high energy consumption.
Furthermore, a number of industries in thisgroup are dependent on water availability
and/or vulnerable to the effects of acute or
chronic physical risks from weather events.

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
AppendicesFigure 12

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.
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
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.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures59

Table 5

Materials and Buildings Group – Illustrative Examples
Materials and Buildings Group organizations should consider providing key metrics related to the implications of GHG emissions, energy, and water on the financial
aspects related to revenue, costs, assets, and financing costs. Appendix 2 includes definitions of the abbreviations used in “Unit of Measure.”

Expenditures (OpEx) for low-carbon
Risk Adaptation
Expenditures
alternatives (e.g., R&D, technology,& Mitigation
products, or services)

Local currency

Expenditures Energy/FuelTotal energy consumed, broken down
by source (e.g., purchased electricity
GJ
and renewable sources)

Expenditures Energy/FuelTotal fuel consumed—percentage
from coal, natural gas, oil, andrenewable sources

Expenditures Energy/FuelTotal energy intensity—by tons of
product, amount of sales, number of
products depending on informational
value

GJ

GJ

Expenditures Energy/Fuel

Building energy intensity (by occupants
GJor square area)

Expenditures Water

Percent of fresh water withdrawn inregions with high or extremely highbaseline water stress

Percentage

Alignment

GRI 302-5

Rationale for Inclusion

Expenditures for new technologies are needed to
manage transition risk. The level of expenditures
provides an indication of the level to which the future
earning capacity of the core business might be affected.

SASB: IF0402- The metals and mining industries are energy- and02
emission-intensive industries. Buildings also account for
GRI: 302-1
a large portion of energy and fuel consumption,
particularly in relation to heating. Understanding thelevels of energy consumption by source provides anindication of the potential impact of regulatory
SASB:
measures in relation to the use of certain energy
NR0302-04
sources as well as the transition risks in a low-carbon
economy scenario.

GRI 302-3

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

In the transition to a low-carbon economy, the energy
SASB: IF0402efficiency of properties provides investors with an
02; GRI: G4indication of the vulnerability of the portfolio toCRE1; GRESB:
transition risk and thus earning capacity of real estate
Q25.2
portfolios.
SASB:
NR0401-05

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

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

60

Real Estate

Unit ofMeasureCapital Goods

Revenues

CDP: CC3.2, New products and revenue streams from climateRevenues/savings from investments in
Risk Adaptation
3.3, CC6.1
related products and services and the return on
low-carbon alternatives (e.g., R&D,
Local currency& Mitigation
SASB: IF0403- investments of CapEx projects that create operational
equipment, products or services)1
efficiencies.

Example MetricConstruction
Materials

ClimateRelated
Category

Chemicals

Financial
Category

Metals andMining

MATERIALS AND BUILDINGS GROUP METRICS - ILLUSTRATIVE EXAMPLESTable 5

Materials and Buildings Group – Illustrative Examples (continued)

Expenditures Water

Expenditures

AssetsGHG
Emissions

Location

Building water intensity (by occupants Cubicor square area)
meters

GHG emissions intensity frombuildings (by occupants or squarearea) and from new construction andredevelopment

GJ

Alignment

Rationale for Inclusion

Water stress can result in increased cost of supply,
factual inability to deliver water to real estate tenants,
GRI: G4and/or legislation to regulate water withdrawal for
CRE2; GRESB:
consumption. The building water intensity informs theQ27.2(transition) risk of significant costs or limitations to thisservice capacity.

GRI: G4CRE3/ CRE4

In the transition to a low-carbon economy, the carbon
efficiency of the properties provides investors with anindication of the vulnerability of the product portfolio totransition risk and thus earning capacity of real estate
portfolios.

Percentage
Flooding risks can result in physical damage to
GRESB:
probability,
properties, affecting their serviceability. Understanding
Q15.1, 15.2
Area of buildings, plants or properties costs to insure SASB: IF0401- the potential impacts of flooding risks and the related
in locallocated in designated flood hazard
financial implications informs investors about potential
13, 02-13
currencyareaschanges to the earning capacity of real estate
Square meters SASB: IF0402- portfolios.
or acres13

AssetsGHG
Emissions

Metric ton
A breakdown of reserves and an(MT) of carbon
indication of associated emissions
SASB:
dioxidefactors to provide insight into potential
NR0101-23
emissionsfuture emissions(CO2e)GRESB:
NC5.2/
CA2/Q30.1/
Q30.2/Q31

AssetsRisk Adaptation For each property type, the percentage
Percentage& Mitigation
certified as sustainable

AssetsInvestment (CapEx) in low-carbon
Risk Adaptation
GRI 302-5
alternatives (e.g., capital equipment or Local currency& Mitigation
assets)A transition to a low-carbon economy may affect thevalue of reserves. Providing insight into potential future
emissions can help to inform investors about thepotential impacts of regulatory measures and demandchanges on earning capacity.
Regulatory measures such as carbon pricing as well astransition to low-carbon properties may affect thefinancial viability of existing properties. Understanding
the percentage certified as sustainable (against relevant
indices) provides investors with an indication about thepotential impact of regulatory measures and demandchanges on earning capacity of real estate portfolios.
Investments in new technologies are needed to
manage transition risk. The level of investment
provides an indication of the level to which the future
earning capacity of the core business might be affected.

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

61

Real Estate

Unit ofMeasureCapital Goods

Example MetricConstruction
Materials

ClimateRelated
Category

Chemicals

Financial
Category

Metals andMining

MATERIALS AND BUILDINGS GROUP METRICS - ILLUSTRATIVE EXAMPLES

4. Agriculture, Food, and Forest Products GroupThe Agriculture, Food, and Forest Products Group includes, but is not limited to, industries listed in
Figure 13.
Climate-related risks and opportunities
in this group largely emanate from GHG
emissions and water and waste
management driven by land use,
production practices, and changing landuse patterns.52
The absolute and relative impacts ofclimate-related transition and physicalrisks will vary between producers andprocessors of food and fiber.
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
AppendicesFigure 13

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

Beverages
Group

Agriculture, Food,and Forest Products

Agriculture
Packaged Foods and Meats

Paper and Forest Products
Producers, such as agriculture andforestry enterprises, will likely be
impacted financially to a somewhat greater degree by GHG and water risks (including extreme weather
events and 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).53
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, waste water, 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:

52

According to the Inter-Governmental 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.” (IIPCC.
“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.

53

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 Disclosures62 Increasing efficiency by lowering the level of carbon and water intensity per unit of output (e.g.,through drought-resistant hybrids, nutrient-efficient genetically modified organisms (GMOs),
feed and feed practices that reduce livestock methane emissions).

 Reducing inputs and residual waste for a given level of output (e.g., nutrient management
practices, tillage practices, conservation practices, biofuels, food waste reduction).

 Developing new products and services with lower carbon and water intensity (e.g., bioplastics).
Disclosures, therefore, should focus on qualitative and quantitative information related to both 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).

A
Introduction

 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).

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

63

Table 6

Agriculture, Food, and Forest Products Group Metrics – Illustrative Examples
Agriculture, Food, and Forest Products Group organizations should consider providing key metrics related to the implications of GHG emissions, energy and wateron the financial aspects related to revenue, costs, assets, liabilities, and capital allocation. Appendix 2 includes definitions of the abbreviations used in “Unit of
Measure.”Expenditures (OpEx) for lowRisk Adaptation carbon/water alternatives (e.g.,
Expenditures& Mitigation
R&D, equipment, products, orservices)

Unit ofMeasureTotal water withdrawn and total
water consumed

Expenditures Water

Percent of water withdrawn andconsumed in regions with high orPercentage
extremely high baseline water
stressAssetsAmount of assets committed inregions with high or extremely
high baseline water stress

AssetsGHG
EmissionsNon-mechanical (Scope 1):
Emissions from biologicalprocesses

Rationale for Inclusion

New products and revenue streams from climate-related
products and services and the return on investments of
CapEx projects that create operational efficiencies.

Expenditures for new technologies are needed to manage
GRI: G4-OG2 transition risk. The level of expenditures provides an
Local currency
CDP: EU4.3
indication of the level to which future earning capacity ofcore business might be affected.

Expenditures Water

Water

Alignment

Paper and
Forest Products

Revenues

Revenues/savings from
Risk Adaptation investments in low-carbon
CDP: CC3.2,
Local currency& Mitigation
alternatives (e.g., R&D,
3.3, 6.1
equipment, products or services)

Example Metric

Packaged Foods
and Meats

ClimateRelated
Category

Agriculture

Financial
Category

Beverages

AGRICULTURE, FOOD, AND FOREST PRODUCTS GROUP METRICS – ILLUSTRATIVE EXAMPLES

Cubic meters

SASB:
CN0101-06
SASB:
CN0101-06

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

Number of
Water stress can result in limitations to production capacity
assets, value, SASB: IF0101- or enforced demolition of assets. The level of assets in highpercentage of 06
water-stress areas informs the potential implications on
total assets
asset valuation.

MT of CO2e

For agriculture, non-mechanical emissions sources are
greater than mechanical sources. Reliance on biologicalsystems means emissions or removals of GHGs generally
occurs through much more complex mechanisms thanemissions from mechanical equipment used on farmland. It
CDP: FBT 1.3c
is important to understand the scope of an organization’sland-related biological emissions, as well as recent or
potential changes due to continuous processes and/or
discrete events, to assess the financial and regulatory impact
on an organization’s production and land use.

Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures64

Table 6

Agriculture, Food, and Forest Products Group Metrics – Illustrative Examples (continued)

Unit ofMeasureAssetsGHG
Emissions/Land Use

Land use change (Scope 1):
Changes of carbon stocks as aresult of land use and land use
MT of CO2echanges (e.g., from theconversion of native habitats into
farmlands)

Expenditures

GHG
Emissions

Mechanical (Scope 1): Emissions
from equipment or machinery
operated on farms/plants

MT of CO2e

GHG
Expenditures
EmissionsPurchased energy (Scope 2):
Emissions from purchased heat,steam, and electricity consumedon the farm /plant

MT of CO2e

AssetsInvestment (CapEx) in lowRisk Adaptation
carbon/water alternatives (e.g.,& Mitigation
capital equipment or assets)

Alignment

Rationale for Inclusion

Paper and
Forest Products

Example Metric

Packaged Foods
and Meats

ClimateRelated
Category

Agriculture

Financial
Category

Beverages

AGRICULTURE, FOOD, AND FOREST PRODUCTS GROUP METRICS – ILLUSTRATIVE EXAMPLES

For agriculture, non-mechanical emissions sources are
greater than mechanical sources. Reliance on biologicalsystems means emissions or removals of GHGs generally
occurs through much more complex mechanisms thanemissions from mechanical equipment used on farmland.
CDP: FBT 1.3c
It is important to understand the scope of an organization’sland-related biological emissions, as well as recent or
potential changes due to continuous processes and/or
discrete events, to assess the financial and regulatory impact
on an organization’s production and land use.
SASB:
CN0101-01,
Relatively high carbon emissions in the value chain are
CDP FBT 1.3b
expected to result in regulations (including carbon prices) todrive lower emissions from products. This can result in a
CDP: FBT
significant decrease in future earning capacity.
1.3bInvestments in new technologies are needed to manage
GRI: G4-OG2 transition risk. The level of investment provides an indication
Local currency
CDP: EU4.3of the level to which future earning capacity of core businessmight be affected.

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

65

A
Introduction
B

F Fundamental
Principles for
Effective Disclosure

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

66

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.54 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 offinancial 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 theorganization’s exposure and approach to addressing climate-related issues, while
understanding that the type of information, the way in which it is presented, and theaccompanying 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 andaddressing 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.

54

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 Disclosures67 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 definitionand scope applied. For future-oriented data, this includes clarification of the key assumptions
used. Forward-looking quantitative disclosure should align with data used by the organization
for investment decision making and risk management.

 Any scenario analyses should be based on data or other information used by the organization
for investment decision making and risk management. Where appropriate, the organization
should also demonstrate the effect on selected risk metrics or exposures to changes in the key
underlying methodologies and assumptions, both in qualitative 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. Any such 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 Disclosures68

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
to verify. Such tensions are inevitable given the wide-ranging and sometimes competing needs ofusers and preparers of disclosures. Organizations should aim to find an appropriate balance of
disclosures that reasonably satisfy the recommendations and principles while avoiding overwhelming
users with unnecessary information.

F
Fundamental Principles
for Effective Disclosure
Appendices

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

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

Appendices70

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 lower-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
Appendices Markets Energy Source Resilience Products and Services

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

 Resource Efficiency

Tables A1 and A2 (pp. 72-73) provide examples and potential financial impacts related to the specificcategories of climate-related risks and opportunities the Task Force identified. Please note that the
sub-category risks and examples described under each major category are not mutually exclusive, andsome overlap exists.
Following Tables A1 and A2, Tables A3 and A4 (pp. 74-75) describe selected sources of information
related to climate-related risks and opportunities. Table A5 (p. 76) provides additional examples of howorganizations could be affected by climate-related financial impacts.

Appendices71

Table A1

Examples of Climate-Related Risks and Potential Financial Impacts
Type

Climate-Related Risks55

Potential Financial Impacts

Policy and Legal‒ Increased pricing of GHG
emissions‒ Enhanced emissions-reporting
obligations‒ Mandates on and regulation ofexisting products and services‒ Increased operating costs (e.g., higher compliance costs,
increased insurance premiums)‒ Write-offs, asset impairment, and early retirement of existing
assets due to policy changes‒ Increased costs and/or reduced demand for products andservices resulting from fines and judgments‒ Exposure to litigation
Technology‒ Substitution of existing products
and services with lower emissions
options‒ Unsuccessful investment in newA
Introduction
B
Recommendations
C
Guidance for All Sectors

Transition Risks

technologies‒ 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 andalternative 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

Supplemental Guidance
for the Financial Sector‒ Change in revenue mix and sources, resulting in decreasedE
Supplemental Guidancefor Non-Financial Groups‒ Re-pricing of assets (e.g., fossil fuel reserves, land valuations,revenues
securities valuations)
Reputation

F
Fundamental Principles
for Effective Disclosure‒ Shifts in consumer preferences‒ Reduced revenue from decreased demand for goods/services‒ Stigmatization of sector‒ Reduced revenue from decreased production capacity (e.g.,‒ Increased stakeholder concern or
negative stakeholder feedback

Appendicesdelayed planning approvals, supply chain interruptions)‒ Reduced revenue from negative impacts on workforce
management and planning (e.g., employee attraction andretention)‒ Reduction in capital availability
Acute

Physical Risks‒ Increased severity of extreme
weather events such as cyclones
and floods
Chronic‒ Changes in precipitation patterns
and extreme variability in weather
patterns‒ 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 forhydroelectric plants or to cool nuclear and fossil fuel plants)‒ Increased capital costs (e.g., damage to facilities)‒ Rising mean temperatures‒ Reduced revenues from lower sales/output‒ Rising sea levels‒ Increased insurance premiums and potential for reduced
availability of insurance on assets in “high-risk” locations

55

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

Appendices72

Table A2

Examples of Climate-Related Opportunities and Potential Financial Impacts

Resource Efficiency

Type

Climate-Related Opportunities56

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

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 costabatement)‒ 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)‒ Reputational benefits resulting in increased demand forBgoods/services

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

Recommendations

56‒ 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.

Appendices73

Table A3

Sectors and Industries Affected by Climate-Related Risks
SourceDescription

MercerHighlights the potential variability of climate change on returns across 14 asset

Investing in a Time of
Climate Change

classes and 14 industry sectors over a 35-year period. It concludes that medianannual returns could vary from +3.5 percent (for renewables) to -4.9 percent (forcoal) under different climate scenarios.

Moody’s Investors Service

Qualitatively scores 86 rated sectors globally for credit exposure to environmental

Environmental Risks Heat
Map

risks in terms of both the materiality and timing of any likely credit effects.
Scoring is based on five subcategories of environmental risk, of which one
subcategory is carbon regulation. It identified 13 sectors with very high or highexposure to carbon regulations.

S&P Global Ratings

Identifies subsectors that are most exposed to environmental and climate-related

How Environmental andClimate Risks Factor Into
Corporate Ratings

risks and how ratings have been impacted over a two-year look back period byA
Introduction

Sustainability AccountingStandards Board

Profiles climate-related risk across 79 industries related to physical effects,

B

Technical Bulletin #: TB001101816

considers revenue impacts, cost impacts, asset impacts, and financing impacts. It

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

risk. Highlights nearly 300 cases where such risks affected the rating analysis andaround 60 cases where rating revisions were made.

transition to a low-carbon economy, and climate-related regulation. It also
identifies 72 industries significantly affected by climate-related risk, although therisk manifests itself differently from one industry to the next.

World Resources
Institute (WRI) andUnited Nations
Environment Program
Finance Initiative(UNEP FI)
Proposed Discussion
Framework on Carbon
Asset Risk

F
Fundamental Principles
for Effective Disclosure

Explores sector-level exposure to three indicators of carbon risk (sector carbon
intensity of sales, physical assets life span, and EBIT margin). The report identifies
sectors with the highest potential exposure to a low-carbon transition. They
include organizations with:‒ fossil fuel assets such as coal and consumable fuels that have high carbon
intensity per $ sales,‒ fossil-fuel-dependent infrastructure such as utilities, pipelines, airports andrailways that have high physical asset life spans,‒ high-carbon assets facing a shift to low-carbon technologies (e.g., energy-using
equipment in the transport sector), and‒ high carbon assets without low-carbon competitors (e.g., for production ofAppendicesbasic materials).

Appendices74

Table A4

Examples of Climate-Related Opportunities
SourceDescription

Bloomberg New
Energy Finance (BNEF)

Provides guidelines for identifying green bonds on the Bloomberg terminal. The

Guide to Green Bonds

and include labeled and unlabeled clean energy-related securities. Using use of(available on Bloomberg
Terminal)

classifications are consistent with International Capital Market Association principles
proceeds, governance process, project details, management of proceeds, reporting
information and assurance, Bloomberg has built a classification system that allows
companies and investors to better identify sustainable investment opportunities within
their own companies and the markets.

New Energy Exposure
RatingRepresents BNEF's estimate of the percent of an organization's value that is(available on Bloomberg
Terminal)

capture and storage, and carbon markets. Sector and sub-activities are analyzed within

attributable to its activities in renewable energy, energy smart technologies, carbon
these clean energy areas, which combined with reported segmented revenues andother available financial and energy metrics, contribute to the exposure estimate. The
ratings show which organizations have high or low amounts of value derived fromthese activities, enabling investors and companies to better analyze investment andA
Introduction

business growth opportunities.

B
Recommendations

Climate Bonds
Initiative

Develops standards for green bond classifications and provides analysis on climate

www.climatebonds.net

opportunities for areas such as solar, wind, low carbon buildings, and others.

bond developments. Technical working groups identify key issues and investment

C
Guidance for All Sectors

FTSE Russell

Measures green revenues of 13,400 companies, across 60 subsectors with seven years

D

Low Carbon Economy
Modelof data and allows users to track revenues from goods, products, and services that

Supplemental Guidance
for the Financial Sector

Revenues from a broad range of large, mid and small capitalization companies in 48
developed and emerging markets are mapped to 60 new green industrial subsectors,

E
Supplemental Guidancefor Non-Financial Groups
F
Fundamental Principles
for Effective Disclosure
Appendiceshelp the world adapt to, mitigate, or remediate the impact of climate change.

with FTSE Russell assigning each company in the model a low carbon industrial
indicator factor, representing the ratio of its green revenues to its total revenues.
Global Investor
Coalition on Climate
ChangeClimate Change
Investment Solutions

Provides asset owners with a range of investment strategies and solutions to address
the risks and opportunities associated with climate change. The guide includes a
specific framework for considering climate-related investment opportunities, withsteps for strategic review, strategic asset allocation, mitigation investment actions, andadaption investment actions and provides examples of opportunities, growth drivers,
and investment vehicles for industries ranging from transportation to retail.

International CapitalMarket Association

Provides guidelines for green bond issuers to promote transparency in the developing

Green Bond Principles

components for bringing a green bond to market, they aid investors by promoting

green bond market. The principles provide issuers with guidance on the key
availability of information necessary to evaluate the environmental impact of theirgreen bond investments, and they assist underwriters by moving the market towards
expected disclosures that should help facilitate transactions.

Appendices75

Table A5

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

Climate-Related Implications57

Examples of Potential Financial Impacts

Rationale and Illustrative Metrics

Changing market demand for product andservices 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 asignificant shift in an organization’s future earning capacity dependingon the emissions, energy, and water intensity of its products andservices 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, emission, water intensity of each product or service line
+ R&D in new technology, products,
services+/- Purchased energy and water and othercosts 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+ 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, andconservation/efficiency efforts+ CapEx for physical risk mitigation (e.g.,facilities location/hardening, resiliency
capabilities)+/- Investment hurdles affected by internaland 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 asignificant shift in an organization’s cost of supply and operating
expenses depending on the emissions, energy, and water intensity
and land use of an organization in its business activities.
Example Metric: Percentage of R&D expenditures for low-carbon alternatives andenergy/water efficiencies

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 asignificant shift in an organization’s planned capital expenditures,
including acquisition or disposal of assets, investments in land andfacilities, acquisition of new technology, and other shifts, depending
on how the organization 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

57

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).

Appendices76

Table A5

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

Climate-Related Implications56

Examples of Potential Financial 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, 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
Liabilities58

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

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

Financing
Equity Capital

Changes in the cost and level of equity
capital as a result of climate-related risks
and opportunities+ Legal liability for climate-related risks+ 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 debt+/- Amount of equity capital+/- Credit rating+/- Stock price+/- Debt interest rates

Drivers of climate changes, 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 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

58

Contingent liabilities are liabilities that may be incurred depending on 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.

Appendices77

Appendix 2: Glossary and Abbreviations
Glossary
BOARD OF DIRECTORS (or BOARD) refers to a body of elected or appointed members who jointly
oversee the activities of a company or organization. Some countries use a two-tiered system where“board” refers to the “supervisory board” while “key executives” refers to the “management board.”59
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.
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.

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

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.60
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 15 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).
GOVERNANCE refers to “the system by which an organization is directed and controlled in the interestsof shareholders and other stakeholders.”61 “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.”62
GREENHOUSE GAS (GHG) EMISSIONS SCOPE LEVELS63

 Scope 1 refers to all direct GHG emissions.

59
60

OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.
Based on Climate Disclosure Standards Board, “CDSB Framework for Reporting Environmental Information and Natural Capital.” June 2015.

61

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

62

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

63

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

Appendices78

 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.64
INTERNAL CARBON PRICE is an internally developed estimated cost of carbon emissions. Internalcarbon pricing can be used as a planning tool to help identify revenue opportunities and risks, as anincentive to drive energy efficiencies to reduce costs, and to guide capital investment decisions.
MANAGEMENT refers to those positions an organization views as executive or senior management
positions and that are generally separate from the board.
PUBLICLY AVAILABLE 2°C SCENARIO refers to a 2°C scenario that is (1) used/referenced and issued
by an independent body; (2) wherever possible, supported by publicly available datasets; (3) updated
on a regular basis; and (4) linked to functional tools (e.g., visualizers, calculators, and mapping tools)that can be applied by organizations. 2°C scenarios that presently meet these criteria include: IEA 2DS,
IEA 450, Deep Decarbonization Pathways Project, and International Renewable Energy Agency.

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

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.
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.

Abbreviations

F
Fundamental Principles
for Effective Disclosure
Appendices

64

AODP—Asset Owners Disclosure Project

Kg—Kilogram

CDSB—Climate Disclosure Standards Board

Km—Kilometer

CNG—Compressed natural gas

L—Liters

CO2—Carbon dioxide

LPG—Liquefied petroleum gas

CO2e —Carbon dioxide equivalent

MPG—Miles per gallon

EDTF—Enhanced Disclosure Task Force

MT—Metric ton

EEDI—Energy Efficiency Design Index

MWh—Megawatt hour

FSB—Financial Stability Board

OECD—Organization for Economic Co-operation andDevelopment

G20—Group of 20

PRI—Principles for Responsible Investment

GHG—Greenhouse gas

R&D—Research and development

GJ—Gigajoules

R&DDD—Research, development, demonstration, anddeployment

GMO—Genetically modified organism

SASB—Sustainability Accounting Standards Board

GRI—Global Reporting Initiative

TCFD—Task Force on Climate-related Financial Disclosures

IEA—International Energy Agency

UNEP FI—United Nations Environment Programme
Finance Initiative

IIRC—International Integrated Reporting Council

USDE—U.S. Dollar Equivalent

IPCC—Intergovernmental Panel on Climate Change

WRI—World Resources Institute

IPCC, Climate Change 2014 Mitigation of Climate Change, Cambridge University Press, 2014.

Appendices79

Appendix 3: References
Asset Owners Disclosure Project (AODP). “AODP Global Climate Risk Survey 2017 for Asset Managers.” 2016.
aodproject.net/wp-content/uploads/2016/10/2017-AODP-Asset-Manager-Climate-Survey-and-Guidance-NotesV1.pdf.
Blackrock. “BlackRock Worldwide Leader in Asset and Risk Management.” 2016. www.blackrock.com/corporate/enat/literature/whitepaper/viewpoint-blackrock-worldwide-leader-in-asset-management.pdf.
Cadbury, A. Report of the Committee on the Financial Aspects of Corporate Governance. London, 1992.
www.ecgi.org/codes/documents/cadbury.pdf.
CDP. “Climate Change Questionnaire.” 2017. https://www.cdp.net/en/guidance/guidance-for-companies.
CDP AU. “Guidance for reporting companies: sector module guidance; Auto and Auto Component Manufacturing
Sector Module 2016.” 2016.
www.cdp.net/Documents/Guidance/2016/CDP-2016-Auto-Module-Reporting-Guidance.pdf.
CDP EU. “Guidance for responding companies: sector module guidance; Electric Utilities Sector Module 2016.” 2016.
www.cdp.net/Documents/Guidance/2016/CDP-2016-Electric-Utility-Module-Reporting-Guidance.pdf.
CDP FBT. “Guidance for responding companies: sector module guidance; Food, beverage and tobacco sector module
2016.” December 2015.
www.cdp.net/Documents/Guidance/2016/CDP-2016-FBT-Module-Reporting-Guidance.pdf.

A

Climate Disclosure Standards Board (CDSB). “CDSB Framework for Reporting Environmental Information and Natural
Capital.” June 2015.
www.cdsb.net/sites/cdsbnet/files/cdsb_framework_for_reporting_environmental_information_natural_capital.pdf.

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

CDSB. “Climate Change Reporting Framework: Advancing and Aligning Disclosure of Climate Change-relatedInformation in Mainstream Reports.” Report edition 1.1. October 2012.
www.cdsb.net/sites/cdsbnet/files/cdsb_climate_change_reporting_framework_edition_1.1.pdf.
ClimateWise. “The ClimateWise Principles.” Cambridge Institute for Sustainability Leadership. 2013.
www.cisl.cam.ac.uk/business-action/sustainable-finance/climatewise/principles.
Enhanced Disclosure Task Force (EDTF). Enhancing the Risk Disclosures of Banks. October 2012.
www.fsb.org/wp-content/uploads/r_121029.pdf.

E
Supplemental Guidancefor Non-Financial Groups

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

F

Global Reporting Initiative (GRI) Standards. “GRI 102: General Disclosures” and “GRI 201: Economic Performance.”
October 2016. www.globalreporting.org/standards/gri-standards-download-center/.

Fundamental Principles
for Effective Disclosure
Appendices

GRI G4-CRE. “G4 Sector Disclosures: Construction and Real Estate.” 2014.
www.globalreporting.org/resourcelibrary/GRI-G4-Construction-and-Real-Estate-Sector-Disclosures.pdf.
GRI G4-EN. “Reporting Principles and Standard Disclosures.” 2013.
www.globalreporting.org/information/g4/Pages/default.aspx.
GRI G4-EU. “G4 Sector Disclosures: Electric Utilities.” 2013.
www.globalreporting.org/resourcelibrary/GRI-G4-Electric-Utilities-Sector-Disclosures.pdf.
GRI G4-OG. “G4 Sector Disclosures: Oil and Gas.” 2013.
www.globalreporting.org/resourcelibrary/GRI-G4-Oil-and-Gas-Sector-Disclosures.pdf.
Greenhouse Gas Protocol. “Category 15: Investments.” Technical Guidance for Calculating Scope 3 Emissions (version
1.0). 2013. ghgprotocol.org/sites/default/ files/ghgp/Scope3_Calculation_Guidance.pdf.
GRESB NC. “GRESB Real Estate 2017 Reference Guide.” April 6, 2017.
www.gresb.com/sites/default/files/2017-GRESB-RE-Reference-Guide.pdf.
GRESB Q. “2016 GRESB Real Estate Assessment.” April 1, 2016.
gresb-public.s3.amazonaws.com/2016/content/2016-GRESB-RE-Assessment.pdf.
Intergovernmental Panel on Climate Change (IPCC). “Agriculture, Forestry and Other Land Use (AFOLU),” In: Climate
Change 2014: Mitigation of Climate Change, 2014. Contribution of Working Group III to the Fifth Assessment Reportof the Intergovernmental Panel on Climate Change.
www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf.
IPCC. Fifth Assessment Report (AR5). Cambridge University Press, 2014. www.ipcc.ch/report/ar5/.

Appendices80

International Council on Mining and Metals (ICCM). In Brief: Water stewardship framework. London: International
Council on Mining and Metals, 2014. www.icmm.com/website/publications/pdfs/water/2014_water-stewardshipframework.pdf.
International Energy Agency (IEA). CO2 Emissions from Fuel Combustion: Highlights. 2015.
www.iea.org/publications/freepublications/publication/CO2EmissionsFromFuelCombustionHighlights2015.pdf
International Integrated Reporting Council (IIRC). “International <IR> Framework.” December 2013.
integratedreporting.org/wp-content/uploads/2015/03/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf.
IPIECA. Water Resource Management in the Petroleum Industry. 2005.
www.circleofblue.org/wp-content/uploads/2010/09/water_mngt.pdf.
Moody’s Global Credit Research. “Moody’s: Auto sector faces rising credit risks due to carbon transition.” September
20, 2016. www.moodys.com/research/Moodys-Auto-sector-faces-rising-credit-risks-due-to-carbon--PR_354984.
Organization for Economic Co-operation and Development (OECD). G20/OECD Principles of Corporate Governance,
OECD Publishing. Paris, 2015. dx.doi.org/10.1787/9789264236882-en.
Principles for Responsible Investment (PRI). “PRI Reporting Framework 2016 Strategy and Governance.” November
2015. www.unpri.org/download_report/6316.
Sustainability Accounting Standards Board (SASB). “Asset Management & Custody Activities: Sustainability AccountingStandard.” February 2014.
www.sasb.org/wp-content/uploads/2014/02/SASB_PrvStandard_Asset-Management.pdf.
A
Introduction

SASB. “Commercial Banks: Sustainability Accounting Standard.” February 2014.
www.sasb.org/wp-content/uploads/2014/02/SASB_PrvStandard_Commercial_Banks.pdf.

B
Recommendations

SASB. “Insurance: Sustainability Accounting Standard.” February 2014.
www.sasb.org/wp-content/uploads/2014/02/SASB_PrvStandard_Insurance.pdf.

C
Guidance for All Sectors

SASB CN0101. “Agricultural Products: Sustainability Accounting Standard.” June 2015.
www.sasb.org/wp-content/uploads/2015/06/Consumption_I_Standards.pdf.

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

SASB. “SASB Climate Risk Technical Bulletin #: TB001-10182016.” October 2016.
library.sasb.org/climate-risk-technical-bulletin.

SASB IF0101. “Electric Utilities: Sustainability Accounting Standard.” March 2016.
www.sasb.org/wp-content/uploads/2016/03/IF0101_ElectricUtilities_Standard.pdf.
SASB IF0402. “Real Estate Owners, Developers & Investment Trusts: Sustainability Accounting Standard.” March 2016.
www.sasb.org/wp-content/uploads/2016/03/IF0402_REOD_IT_Standard.pdf.
SASB NR0101. “Integrated Oil & Gas: Technical Bulletin.” June 2014.
https://www.sasb.org/wp-content/uploads/2014/06/NR0000_SASB_Bulletin_OG_Integrated.pdf.
SASB NR0302. “Metals & Mining: Sustainability Accounting Standard.” June 2014.
www.sasb.org/wp-content/uploads/2014/06/NR0302_ProvisionalStandard_MetalsMining.pdf.
SASB NR0401. “Construction Materials: Sustainability Accounting Standard.” June 2014. www.sasb.org/wpcontent/uploads/2014/06/NR0401_ProvisionalStandard_ConstructionMaterials.pdf.
SASB RR0202. “Pulp & Paper Products: Sustainability Accounting Standard.” December 2015. www.sasb.org/wpcontent/uploads/2015/12/RR0202_Pulp-Paper-Products_Standard.pdf.
SASB TR0101. “Automobiles: Sustainability Accounting Standard.” September 2014.
www.sasb.org/wp-content/uploads/2014/09/TR0101_ProvisionalStandard_Automobiles.pdf.
SASB TR0102. “Auto Parts: Sustainability Accounting Standard.” September 2014.
www.sasb.org/wp-content/uploads/2014/09/TR0102_ProvisionalStandard_AutoParts.pdf.
SASB TR0201. “Airlines: Sustainability Accounting Standard.” September 2014.
www.sasb.org/wp-content/uploads/2014/09/TR0201_ProvisionalStandard_Airlines.pdf.
SASB TR0301. “Marine Transportation: Sustainability Accounting Standard.” September 2014.
www.sasb.org/wp-content/uploads/2014/09/TR0301_ProvisionalStandard_Marine.pdf.
SASB TR0401. “Rail Transportation: Sustainability Accounting Standard.” September 2014.
www.sasb.org/wp-content/uploads/2014/09/TR0401_ProvisionalStandard_Rail.pdf.
Task Force on Climate-related Financial Disclosures (TCFD). “Phase I Report of the Task Force on Climate-related
Financial Disclosures.” March 31, 2016.
www.fsb-tcfd.org/wp-content/uploads/2016/03/Phase_I_Report_v15.pdf.

Appendices81United Nations Environment Programme Finance Initiative (UNEP FI). Principles for Sustainable Insurance. UNEP FI,
Geneva, June 2012. www.unepfi.org/psi/wp-content/uploads/2012/06/PSI-document.pdf.
van Vliet, Michelle T.H., et al. “Power-generation system vulnerability and adaptation to changes in climate and water
resources.” Nature Climate Change 6 (2016): 375-380.
www.nature.com/nclimate/journal/v6/n4/full/nclimate2903.html.
World Business Council for Sustainable Development. “Sustainability and enterprise risk management: The first step
towards integration.” January 18, 2017. http://www.wbcsd.org/contentwbc/download/2548/31131.
World Resources Institute (WRI). Water-Energy Nexus: Business Risks and Rewards. Washington, DC: 2016.
http://www.wri.org/sites/default/files/Water-Energy_Nexus_Business_Risks_and_Rewards.pdf.
World Resources Institute and World Business Council for Sustainable Development. “The Greenhouse Gas Protocol:
A Corporate Accounting and Reporting Standard” (Revised Edition). March 2004.
http://www.ghgprotocol.org/sites/default/files/ghgp/standards/ghg-protocol-revised.pdf.

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

Appendices82