DRAFT – FOR DISCUSSION PURPOSES ONLY

2018 Status Report
DRAFT

Task Force on
Climate-related
Financial Disclosures:
Status Report

September 2018

The Task Force on Climate-related Financial DisclosuresiSeptember 17, 2018

Letter from Michael R. Bloomberg
Mr. Mark Carney
ChairmanFinancial Stability Board
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
Switzerland

Dear Chairman Carney,
It is my pleasure to provide to you a status report of The Task Force on Climate-related Financial
Disclosures (TCFD). The report reviews our efforts to promote adoption of the TCFD disclosure framework
and reviews the disclosures that hundreds of companies have already made, demonstrating that it is bothpractical and useful for companies to do so. This report also provides perspectives from users that we
believe will prove very helpful in guiding companies that are just beginning the process of disclosing
climate risks.
Since the release of the TCFD recommendations in June 2017, the Task Force has worked extensively with
global companies, NGOs, and industry groups to encourage implementation. More than 500 public- andprivate-sector organizations have now indicated their support for our recommendations, including global
companies, banks, insurers, asset managers, stock exchanges, and governments. Your continued
leadership, as well as the dedication of our Task Force members and the TCFD Secretariat, has been
crucial to the progress we’ve made.
However, as this report indicates, there’s still much work to do. While many companies report onenvironmental issues, most have yet to specifically provide the market with consistent information on thefinancial implications of climate change for their businesses. In the coming year, we will vigorously support
further implementation efforts.
Ultimately, we aim for the implementation of the TCFD recommendations to become commonplace infinancial disclosure. The more adoption increases, the more transparent the markets will become, themore secure and stable the economy will be, and the faster we can make progress against the harmful
effects of climate change.
Thank you for your continued support of the Task Force. We look forward to continuing this critical work,and to providing you with another progress report in 2019.
Sincerely,

Michael R. Bloomberg Michael R. Bloomberg

The Task Force on Climate-related Financial DisclosuresiExecutive Summary
In June 2017, The Task Force on Climate-related Financial Disclosures (Task Force or TCFD)
released its final recommendations (2017 report), which provide a framework for companies todevelop more effective climate-related financial disclosures through their existing reporting
processes.1 In its 2017 report, the Task Force emphasized the importance of transparency inpricing risk—including risk related to climate change—to support informed, efficient capitalallocation decisions.2 The Task Force also recognized the challenges associated with measuring
and disclosing information on risks related to climate change, but underscored that moving
climate-related issues into mainstream annual financial filings would allow practices andtechniques to evolve more rapidly.

Improved practices and techniques would further improve the quality ofclimate-related financial disclosures and, ultimately, support more
appropriate pricing of risks and allocation of capital in the global economy.
For many investors, climate change poses significant financial challenges and opportunities. The
expected transition to a lower-carbon economy is estimated to require around $3.5 trillion, on
average, in energy sector investments a year for the foreseeable future, generating newinvestment opportunities.3 At the same time, the risk-return profile of companies exposed toclimate-related risks may change significantly because of physical impacts of climate change,
climate policy, or new technologies. In fact, one study estimated the value at risk to the total
global stock of manageable assets because of climate change ranges from $4.2 trillion to$43 trillion between now and the end of the century.4 The study highlights that “much of the
impact on future assets will come through weaker growth and lower asset returns across theboard.” This suggests investors may not be able to avoid climate-related risks by moving out ofcertain asset classes as a wide range of asset types could be affected.
Both investors and the companies in which they invest, therefore, should consider their longerterm strategies and most efficient allocation of capital. Companies that invest in activities that aresusceptible to climate-related risks may be less resilient to the transition to a lower-carbon
economy; and their investors may experience lower returns. Compounding the effect on longerterm returns is the risk that present valuations do not adequately factor in climate-related risks
because of insufficient information. As such, long-term investors need adequate information on
how companies are preparing for a lower-carbon economy; and those companies that meet thisneed may have a competitive advantage over others.

Climate-Related Financial Disclosure Review
As part of its efforts to promote adoption of the recommendations, the Task Force prepared thisstatus report to provide an overview of current disclosure practices related to core elements of
the TCFD recommendations as well as additional information to support preparers in
implementing the recommendations. It is important to note that the Task Force has not
attempted to assess the level of adoption of its recommendations for this report nor whether
1

For purposes of this report, the Task Force uses the term “companies” to refer to entities with public debt or equity as well as asset managers
and asset owners, including public- and private-sector pension plans, endowments, and foundations.

2

In December 2015, the Financial Stability Board established the Task Force on Climate-related Financial Disclosures to develop voluntary,consistent climate-related financial disclosures that would be useful in understanding material risks related to climate change.
International Energy Agency, “Chapter 2 of Perspectives for the Energy Transition-Investment Needs for a Low-Carbon Energy System,” 2017.
The Economist Intelligence Unit, “The Cost of Inaction: Recognising the Value at Risk from Climate Change,” 2015. Value at risk measures theloss a portfolio may experience, within a given time horizon, at a particular probability, and the stock of manageable assets is defined as thetotal stock of assets held by non-bank financial institutions. The study focused on the asset management industry and excluded bank assets
as they are largely managed by banks themselves.

3
4

The Task Force on Climate-related Financial Disclosuresiiexisting climate-related financial disclosures fully meet the TCFD recommendations. Companies
implementing the recommendations in their 2017 reports had a very limited amount of time
between the release of the Task Force’s 2017 report and the start of their internal processes toprepare their 2017 financial filings. As a result, in its review of disclosures, the Task Force focusedon how many companies, in eight specific groups, included information in recent reports that
addressed the core elements of the Task Force’s recommended disclosures (Figure 2, p. 2).5

The Task Force’s disclosure review found disclosing information in alignment
with its recommendations is possible for preparers and helpful to users.
While the Task Force found some of the results of its disclosure review encouraging, it also
recognized further work is needed for disclosures to contain more decision-useful climate-related
information. The majority of companies reviewed disclosed information that is aligned with atleast one of the recommended disclosures in their financial filings, annual reports, orsustainability reports. In addition, the Task Force found several instances of disclosures
addressing the core element of each of the 11 recommended disclosures. These results
demonstrate that it is both possible and practicable for companies to disclose certain baseline
climate-related information today. Key takeaways from the review are summarized in Figure E1.

Figure E1

Key Takeaways
The majority disclose some climate-related information. The majority of companies
reviewed disclosed information aligned with at least one recommended disclosure, usually insustainability reports.
Financial implications are often not disclosed. While many companies disclose climaterelated information, few disclose the financial impact of climate change on the company.
Information on strategy resilience under different climate-related scenarios is limited.
Few companies describe the resilience of their strategies under different climate-related
scenarios, including a 2°C or lower scenario, which is a key area of focus for the Task Force.
Disclosures vary across industries and regions. Companies’ areas of focus in terms ofclimate-related financial disclosures vary significantly. For example, a higher percentage of
non-financial companies reported information on their climate-related metrics and targets
compared to financial companies; but a higher percentage of financial companies indicatedtheir enterprise risk management processes included climate-related risks. In terms ofregional differences, a higher percentage of companies in Europe disclosed informationaligned with the recommendations compared to companies in other regions.
Disclosures are often made in multiple reports. Companies often provided informationaligned with the TCFD recommendations in multiple reports—financial filings, annual
reports, and sustainability reports.

The review results also indicate that climate-related financial disclosures are still in early stages.
This is consistent with the Task Force’s view that implementation of its recommendations is ajourney and companies are in different places in terms of their exposure to climate-related risks
and opportunities and their reporting capabilities. The Task Force encourages more companies touse its recommendations as a framework for reporting on climate-related risks and opportunities

5

The eight groups include the financial sector, divided into four industries (Banks, Insurance Companies, Asset Managers, and Asset Owners),
and four groups of non-financial industries (Energy, Transportation, Materials and Buildings, and Agriculture, Food, and Forest Products).

The Task Force on Climate-related Financial Disclosuresiii

during the next reporting cycle, especially companies with material climate-related risks.
Companies in early stages of evaluating the impact of climate change on their businesses andstrategies and those that have determined climate-related issues are not material are encouraged
to disclose information on their governance and risk management practices.6
The Task Force believes the results of its climate-related financial disclosures review highlight theneed for continued efforts to support implementation of the recommendations. To this end,
companies supporting the Task Force’s work have undertaken many initiatives to encourage
implementation in different industries and with different areas of focus. The TCFD Knowledge
Hub, with more than 400 resources, offers a starting place for companies working on
implementing the TCFD recommendations. In addition, industry working groups are tacklingindustry-specific implementation challenges, including scenario analysis. These and many otherefforts are critical for achieving climate-related financial disclosures that provide decision-useful
information for investors and others.

Next StepsIn the nearly 15 months since the 2017 report was
Figure E2
released, the Task Force has focused on promoting andNumber of TCFD
monitoring adoption of its recommendations. During thattime, the Task Force has seen significant momentum
Supporters
around and support for its work (Figure E2). When thereport was issued, it was supported by just over 100 chief
executive officers. Less than six months later, at
513
President Emmanuel Macron’s One Planet Summit in
Paris, Michael Bloomberg announced the TCFD had over237
230 supporters. Today, the TCFD has more than 500
September 2018
supporters, including 457 companies and 56 other
One Planet Summit
organizations (e.g., industry associations, governments).
December 2017101
The companies represent a broad range of sectors with a
Release of TCFD Report
combined market capitalization of over $7.9 trillion. This
June 2017
includes over 287 financial firms, responsible for assets ofnearly $100 trillion. In addition to the 457 companies that
support the TCFD, the Task Force’s review identified another 104 companies that, in their financial
filings or sustainability reports, stated they are already aligning their reporting with the TCFD or
expressed intent to implement the recommendations. The TCFD has also received support fromgovernments—Belgium, France, Sweden, and the United Kingdom—as well as financial regulators
around the world, including in Australia, Belgium, France, Hong Kong, Japan, the Netherlands,
Singapore, South Africa, Sweden, and the United Kingdom.
Over the next nine months, the Task Force will continue to promote and monitor adoption of its
recommendations and will prepare a second status report for the Financial Stability Board in mid2019. The Task Force believes the success of its recommendations depends on continued,
widespread adoption by companies in the financial and non-financial sectors. Throughwidespread adoption, climate-related risks and opportunities will become a natural part ofcompanies’ risk management and strategic planning processes. As this occurs, companies’ andinvestors’ understanding of the financial implications associated with climate change will grow,information will become more useful for decision making, and risks and opportunities will be
more accurately priced, allowing for the more efficient allocation of capital.

6

The Task Force understands many investors want insight into the governance and risk management context in which companies' financial
and operating results are achieved. The Task Force believes disclosures that follow its Governance and Risk Management recommendations
directly address this need for context.

The Task Force on Climate-related Financial Disclosuresiv

Contents
Letter from Michael R. Bloomberg ................................................................................................................... i
Executive Summary ........................................................................................................................................... ii
A Introduction.................................................................................................................................................... 1
1. Background ................................................................................................................................................................... 1
2. Purpose of Report......................................................................................................................................................... 4

B. Review of Climate-Related Financial Disclosures ...................................................................................... 6
1. Scope and Approach .................................................................................................................................................... 6
2. Overall Observations .................................................................................................................................................... 9
3. Key Takeaways ............................................................................................................................................................ 13
4. Observations by Group and Disclosure Examples ................................................................................................. 15

C. User Perspectives on Decision-Useful Climate-Related Financial Disclosures ................................... 45
1. Buy Side Analyst’s Perspective on a Consumer Goods Company ........................................................................ 45
2. Credit Analyst’s Perspective on a Steel Company ................................................................................................... 50
3. Buy Side Analyst’s Perspective on a Banking Institution ........................................................................................ 55
4. Buy Side Equity and Credit Analysts’ Perspective on an Electric Utility Company .............................................. 57
5. Portfolio Manager’s Perspective on a Mining Company ........................................................................................ 58

D. Preparer Perspective: Oil and Gas Industry ............................................................................................ 64
1. Implementation Path ................................................................................................................................................. 64
2. Current Disclosure Practices Aligned with TCFD Recommendations ................................................................... 64
3. Challenges and Further Work.................................................................................................................................... 66

E Initiatives Supporting TCFD ........................................................................................................................ 69
1. Group-Focused Implementation Initiatives ............................................................................................................. 69
2. Investor Initiatives ...................................................................................................................................................... 70
3. Alignment of Reporting Guidelines .......................................................................................................................... 70
4. Government Support ................................................................................................................................................. 72
5. Tools and Resources .................................................................................................................................................. 72

Appendix 1: Task Force Members ................................................................................................................. 74
Appendix 2: Disclosure Selection and Review Methodology ..................................................................... 76
Appendix 3: Glossary and Abbreviations ...................................................................................................... 80
Appendix 4: References .................................................................................................................................. 83

The Task Force on Climate-related Financial Disclosuresv

A Introduction
A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosure

6

A Introduction
1. Background
In April 2015, the G20 Finance Ministers and Central Bank Governors asked the Financial Stability
Board to convene public- and private-sector participants and review how the financial sector cantake account of climate-related issues.7 As part of its review, the Financial Stability Board
identified the need for better information to support informed investment, lending, andinsurance underwriting decisions and improve understanding and analysis of climate-related risks
and opportunities.8 To help identify the information needed by investors, lenders, and insurance
underwriters to appropriately assess and price climate-related risks and opportunities, theFinancial Stability Board established an industry-led task force: the Task Force on Climate-related
Financial Disclosures (Task Force or TCFD).9 The Task Force was asked to develop voluntary,consistent climate-related financial disclosures that would be useful to investors, lenders, andinsurance underwriters in understanding material risks. The 31-member Task Force is global; andits members were selected by the Financial Stability Board and come from various organizations,
including large banks, insurance companies, asset managers, pension funds, large non-financial
companies, accounting and consulting firms, and credit rating agencies. See Appendix 1 for a listof current Task Force members.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The Task Force’s Recommendations
On June 29, 2017, the Task Force released its
Figure 1
Final Report: Recommendations of the Task
Key Features of Recommendations
Force on Climate-related Financial Disclosures(2017 report). The report is centered on fourAdoptable by all organizations
widely adoptable recommendations on climateDesigned to solicit decision-useful,related financial disclosures that are applicableforward-looking information on financial
to both non-financial and financial companies
impacts
across sectors and jurisdictions (Figure 1).
Importantly, the Task Force believes assetBrings the “future” nature of issues into
the present through scenario analysis
managers and asset owners should implement
the recommendations. Large asset owners andStrong focus on risks and opportunities
asset managers sit at the top of the investment
related to the transition to a lowerchain and, therefore, have an important role tocarbon economy
play in influencing the companies in which they
invest to provide better climate-related financial disclosures.
The Task Force structured its recommendations around four thematic areas that represent coreelements of how companies operate: governance, strategy, risk management, and metrics andtargets. The four overarching recommendations are supported by recommended disclosures thatbuild out the framework with information that will help investors and others understand howreporting companies assess climate-related risks and opportunities (Figure 2, p. 2). In addition,
there is guidance to support all companies in developing climate-related financial disclosuresconsistent with the recommendations and recommended disclosures. For the financial sector andcertain non-financial sectors, supplemental guidance was developed to highlight important sectorspecific considerations and provide a fuller picture of potential climate-related financial impacts in
those sectors. The Task Force’s guidance and supplemental guidance is included in Implementing
the Recommendations of the Task Force on Climate-related Financial Disclosures (Annex).

7“Communiqué from the G20 Finance Ministers and Central Bank Governors Meeting in Washington, D.C. April 16-17, 2015,” April 2015.

8

FSB, “FSB to establish Task Force on Climate-related Financial Disclosures,” December 4, 2015.

9

Ibid.

The Task Force on Climate-related Financial Disclosures1

Figure 2

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 overthe short, medium, and longterm.

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

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

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

b) Describe the impact of climaterelated risks and opportunities
on the organization’s
businesses, strategy, andfinancial 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 related risks.

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

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

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

The Task Force on Climate-related Financial Disclosures2

Disclosure in Mainstream Financial Filings
The Task Force recommends that preparers of climate-related financial disclosures provide suchdisclosures in their mainstream (i.e., public) annual financial filings.10 In most G20 jurisdictions,companies with public debt or equity have a legal obligation to disclose material information in
their financial filings—including material climate-related information. The Task Force believes
climate-related issues are or could be material for many companies, and its recommendations
should be useful to companies in complying more effectively with existing disclosure obligations.
Importantly, companies should make financial disclosures in accordance with their national
disclosure requirements. If certain elements of the recommendations are incompatible withnational disclosure requirements for financial filings, the Task Force encourages companies todisclose those elements in other official company reports that are issued at least annually, widelydistributed 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.
The Task Force recognizes reporting by asset managers and asset owners is intended to satisfy
the needs of clients, beneficiaries, regulators, and oversight bodies and follows a format that is
generally different from corporate financial reporting. For purposes of adopting the Task Force’s
recommendations, asset managers and asset owners should use their existing means of financial
reporting to their clients and beneficiaries where relevant and where feasible.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

The Task Force believes that climate-related financial disclosures should be subject to appropriate
internal governance processes. Since these disclosures should be included in annual financial
filings, the governance processes should be similar to those used for existing financial reporting
and would likely involve review by the chief
financial officer and audit committee, as
Figure 3
appropriate. The Task Force recognizes that some
Principles for Effective Disclosurescompanies may provide some or all of theirclimate-related financial disclosures in reports
Disclosures should represent
other than financial filings. This may occur
relevant information
because the companies are not required to issue
public financial reports (e.g., some asset
Disclosures should be specificmanagers and asset owners). In such situations,and complete
companies should follow internal governance
Disclosures should be clear,processes that are the same or substantiallybalanced, and understandable
similar to those used for financial reporting.

1

E
Initiatives Supporting TCFD

2
3

Appendices4

Disclosures should be consistent
Principles for Effective Disclosuresover time
To underpin its recommendations and help guidecurrent and future developments in climateDisclosures should be comparable
related financial reporting, the Task Forceamong companies within a sector,
industry, or portfolio
developed seven principles for effective
disclosure (Figure 3), which are described more
Disclosures should be reliable,
fully in the 2017 report. When used by companies
verifiable, and objective
in preparing their climate-related financial
disclosures, these principles can help achieve
Disclosures should be provided
high-quality and decision-useful disclosures thaton a timely basis
enable users to understand the impact of climatechange on companies. The Task Force encourages
companies to consider these principles as they develop climate-related financial disclosures.

5
6
7

10

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. While reporting requirements differ internationally,financial filings generally contain financial statements and other information such as governance statements and management commentary.

The Task Force on Climate-related Financial Disclosures

3

The Task Force’s disclosure principles are largely consistent with internationally acceptedframeworks for financial reporting and are generally applicable to most providers of financial
disclosures. The principles are designed to assist companies in making clear the linkages between
climate-related issues and their governance, strategy, risk management, and metrics and targets.

2. Purpose of Report
In February 2017, the Financial Stability Board welcomed a proposal by the Task Force to continue
its work until at least September 2018 to focus on promoting and monitoring adoption of therecommendations by companies.11 As part of its efforts to promote and monitor adoption of therecommendations, the Task Force prepared this report to provide (1) an overview of current
disclosure practices that are aligned with the Task Force’s recommendations and (2) information
to support preparers in implementing the recommendations.
The remainder of this report is organized as follows:A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated DisclosuresD
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Appendices

11

Review of Climate-Related Financial Disclosures. This section provides companies thatare implementing or considering implementing the recommendations with baseline
information on the alignment of current climate-related financial disclosures with therecommendations.
User Perspectives on Decision-Useful Climate-Related Financial Disclosures. Thissection describes the types of information individual investors and analysts (users) look forin climate-related financial disclosures and provides examples of disclosures that, consistent
with the TCFD recommendations, those individual users view as providing decision-useful
information.
Preparer Perspective: Oil and Gas Industry. This section summarizes the findings of asmall group of oil and gas companies, including the types of information they currently
disclose that is consistent with the Task Force’s recommendations as well as disclosure
challenges they have identified.
Initiatives Supporting TCFD. This section describes various initiatives aimed at supporting
preparers and users of climate-related financial disclosures.
Appendices. These sections provide supplemental information on the Task Force, themethodology for its review of disclosures, a glossary of terms, and references.

FSB, “FSB assesses implementation progress and effects of reforms,” February 28, 2017.

The Task Force on Climate-related Financial Disclosures

4

A
Introduction

B Review of ClimateRelated Financial
Disclosures

B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E

Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures

5B. Review of Climate-Related Financial Disclosures
Since the release of the Task Force’s 2017 report, Task Force members and the TCFD Secretariat
have heard from many companies that they would like additional information to help them in
implementing the TCFD recommendations. To assist these companies, the Task Force reviewed
climate-related financial disclosures from companies in eight specific groups highlighted in the2017 report. The results of this review, summarized below, provide baseline information on thealignment of recent climate-related financial disclosures with the Task Force’s recommendations.
Importantly, the Task Force has not attempted to assess the level of adoption of its
recommendations for this report nor whether existing climate-related financial disclosures fully
meet the recommendations. Companies implementing the recommendations in their 2017
reports had a limited amount of time between the release of the Task Force’s 2017 report and thestart of their internal processes to prepare their 2017 financial filings. As a result, the Task Forcefocused on providing companies with a general indication of how many companies, in eightspecific groups, included information in recent reports that address the core element of each of
the Task Force’s 11 recommended disclosures. The Task Force believes the analysis in this section
may help companies develop a roadmap for disclosing information consistent with the 11
recommended disclosures.
A
Introduction

1. Scope and Approach

B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesThis section provides a brief summary of the scope and approach used to develop baseline
information on the alignment of recent disclosures with the Task Force’s 11 recommended
disclosures. More information on the Task Force’s methodology is provided in Appendix 2.
Scope of Review
The Task Force focused its review on climate-related financial disclosures developed by thelargest companies in eight specific groups highlighted in the Task Force’s 2017 report. The eightgroups include the financial sector, divided into four industries, and four groups of non-financial
industries potentially most affected by climate change and the transition to a lower-carbon
economy—referred to as non-financial groups (Figure 4).
Figure 4

TCFD Financial Sector Industries and Non-Financial Groups
Financial Sector Industries

Non-Financial Groups– Banks– Energy– Insurance Companies– Transportation– Asset Managers– Materials and Buildings– Asset Owners
The financial sector was organized into four major industries
largely based on activities performed. The activities arelending (banks), underwriting (insurance companies), asset
management (asset managers), and investing (asset owners).

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

Review Approach
To develop baseline information on the alignment of recent climate-related financial disclosureswith the Task Force’s 11 recommended disclosures (Figure 2, p. 2), the Task Force started bynarrowing down each recommended disclosure to a single closed-ended or yes-no question (seeFigure 61 in Appendix 2 for a list of the 11 questions). For example, recommended disclosure a)under the Governance recommendation (Governance a) asks companies to describe the board’s
oversight of climate-related risks and opportunities. The yes-no question for Governance a) asked
The Task Force on Climate-related Financial Disclosures6

reviewers whether the company describes the board’s or a board committee's oversight ofclimate-related risks or opportunities. If the reviewer determined the answer was “yes,” the Task
Force considered the company to have disclosures aligned with Governance a). Importantly, thisapproach was not designed to assess the quality or comprehensiveness of companies’ climaterelated financial disclosures, but rather to provide an indication of the alignment of existing
disclosures with the Task Force’s 11 recommended disclosures.
In reviewing companies’ disclosures, the Task Force focused primarily on information included in
the largest companies’ financial filings and sustainability reports.12 Most of the financial filings andsustainability reports reviewed were for fiscal year 2017. Reports for fiscal year 2016 were
included if fiscal year 2017 reports were not available at the time of review. In addition, integrated
reports, annual reports, and other relevant documents were included, as needed.
The Task Force used a two-pronged approach to review companies’ disclosures:A
Introduction



B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Artificial Intelligence Disclosure Review (AI Review). The Task Force applied artificial
intelligence (AI) technology to nearly 1,750 large companies’ publicly available reports todetermine whether those reports included information that appeared to align with one ormore of the 11 recommended disclosures. The companies were pulled from six of the eightgroups listed in Figure 4 (p. 6)—asset managers and asset owners were excluded.13
Disclosure Practices Review. The Task Force formed a small group of members to review
publicly available reports of 200 large companies—25 from each of the eight groups—todetermine whether those reports included information aligned with one or more of the Task
Force’s 11 recommended disclosures and gather additional insights on climate-related
financial disclosure practices. It is important to highlight that the sample of 200 companies
was intentionally biased toward companies more likely to disclose information on climatechange.14 This was done so the Task Force could provide insight on the current disclosure
practices of large companies. In addition, the reviews of companies in the four non-financialgroups and the reviews for banks and insurance companies were used to train theunderlying models used in the AI technology.

Figure 5

Review Scale

Appendices

Few

Some

Several0%Majority

50%

Most

100%

It is important to recognize the accuracy of the AI technology in identifying disclosures that alignwith the Task Force’s 11 recommended disclosures varies for each recommended disclosure, as
described in Appendix 2. The results from both the AI review and disclosure practices review are
informative when considered on a relative basis (e.g., comparison of one recommended
disclosure to another in terms of which is “higher or lower” versus exact numbers). Because thereview results should be viewed on a relative basis, the Task Force developed a review scale,
12

The Task Force used revenue to identify the largest companies in the four non-financial groups whereas total assets were used for banks andinsurance companies, assets under management for asset managers, and assets owned for asset owners.

13

Asset owners and asset managers were excluded from the AI review because, in many cases, the types of reports needed are not publicly
available. See Appendix 2 for more information.

14

The Task Force needed a simple methodology to identify organizations “more likely” to disclose information on climate change. For the sakeof simplicity, the Task Force reviewed disclosures from organizations that used the term “climate change” in their financial filings.

The Task Force on Climate-related Financial Disclosures

7

shown in Figure 5 (p. 7), to describe the relative number of companies (e.g., a few is less thansome) that disclose information aligned with the recommended disclosures.
As noted previously, Appendix 2 provides more information on the Task Force’s methodology,
including how the review populations were determined. Box 1 summarizes the populations for
the AI review and disclosure practices review.

Box 1

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures82. Overall Observations
This section summarizes the results of the AI review and the disclosure practices review. Figure 6
shows the results from the reviews for each of the recommended disclosures.15 Observations foreach of the eight groups are described in B.4. Observations by Group and Disclosure Examples.
Figure 6

Artificial Intelligence Review Results (1,734 Companies)
Governance

a.
b.
a.

Strategy

b.
c.
a.

Risk
Managementb.
c.

Metrics andA

Targets

Introduction

a.
b.
c.
Few

B
Review of ClimateRelated Disclosures

Some

SeveralMajority

Most

Majority

Most

50%
50%

Disclosure Practices Review Results (200 Companies)

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

Governanceb.
a.

StrategyD
Preparer Perspective: Oiland Gas Industry

b.
c.
a.

Risk

E
Initiatives Supporting TCFD
Appendicesa.

Managementb.
c.

Metrics andTargets

a.
b.
c.
Few

Some

Several50%
50%
Minimum

Average

Maximum

LegendThe results are displayed as a range of the percentage of companies from each group whose
disclosures were identified as aligned with the recommended disclosure. The minimum for each
recommended disclosure is set by the group in which the lowest percentage of alignment was
found; similarly, the maximum is set by the group with the highest percentage of alignment. The
average, shown in gray, is the average percentage of companies across the groups whose
disclosures were identified as aligned with the recommended disclosure.

15

In some cases, the review results may seem counterintuitive. For example, one may expect the review results for Strategy b)—impact ofclimate-related risks or opportunities on companies’ businesses, strategy, or financial planning—never to be higher than Strategy a)—companies’ specific climate-related risks or opportunities. However, a company’s disclosure may describe changes it has made to its strategy
because of climate change in general, but not describe specific climate-related risks or opportunities to which the company is exposed.

The Task Force on Climate-related Financial Disclosures

9

As shown in Figure 6 (p. 9), the review results for the disclosure practices review are higher than
the results for the AI review. As mentioned previously, the sample of 200 companies used in thedisclosure practices review was intentionally biased toward companies more likely to disclose
information on climate change. Because an intentionally biased sample was chosen, one would
expect the results to be higher than they would be for a larger, less biased sample. Below, theTask Force describes its observations on the AI and disclosure practices review results for each of
its recommendations as well as insights from the disclosure practices review.
Observations by Recommendation
Governance Observations
Governance a)
Describe the board’s
oversight of climate-relatedrisks and opportunities.
Governance b)
Describe management’s rolein assessing and managing
climate-related risks andopportunities.

A
Introduction
B
Review of ClimateRelated Disclosures

Strategy Observations

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Few

Some

SeveralMajority

Most

The AI review results were50%
similar for both of these recommended100%
disclosures, with some companies disclosing information on theboard or management’s role in governance of climate-relatedrisks or opportunities. In the disclosure practices review, themajority of companies disclosed information aligned with theserecommended disclosures. If a company described board ormanagement responsibilities related to sustainability or ESG
programs, but did not explicitly state that those programs
included climate-related issues, the company’s disclosure was notconsidered as aligned with the recommended disclosures.

0%

Few

Some

SeveralMajority

Most

Strategy a)
the AI review disclosed theirclimate0%Some of the companies in 50%
100%
Describe the climate-related related risks or opportunities. For five of the eight groups in therisks and opportunities thedisclosure practices review, however, most of the companies
organization has identified
disclosed information on their climate-related issues; and, in theover the short, medium, and other three groups (insurance companies, asset owners, andlong term.
materials and buildings companies), the majority of thecompanies disclosed such information. Only some companies
provided information on the short-, medium-, and long-term
timeframes associated with their risks or opportunities.
Strategy b)
Describe the impact ofclimate-related risks andopportunities on theorganization’s businesses,
strategy, and financial
planning.

Under the AI review, several companies provided information thatappeared to align with this recommended disclosure, including
the majority of companies in the Energy group. The disclosure
practices review found that a majority of the companies disclosed
information aligned with Strategy b). Those disclosures primarily
described targeted actions or initiatives companies haveundertaken as part of their efforts to address climate-related
issues, sometimes including the related costs or investment
figures. The disclosures largely did not describe financial impacts
to the company as a whole, which is of specific interest toinvestors.

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

Both reviews identified only a few companies with disclosuresthat appeared to align with Strategy c). When looking at the eightgroups in the disclosure practices review, a higher percentage ofcompanies in the Energy, Materials and Buildings, and Insurancegroups disclosed this information compared to the other fivegroups. Of the few companies in the disclosure practices review
that described the resilience of their strategies, over half of themdescribed using a 2°C or lower scenario.

The Task Force on Climate-related Financial Disclosures10

Risk Management Observations

Few

Some

SeveralMajority

Most

Risk Management a)
Some companies in the AI 50%
review and the majority of 100%0%
Describe the organization’s processes companies in the disclosure practices review disclosed
for identifying and assessing climate- information on their climate-related risk identification,
related risks.
assessment, and management processes. In manycases in the disclosure practices review, reviewers had
Risk Management b)
to connect information located in different parts of a
Describe the organization’s processes
report to determine whether a company's disclosures
for managing climate-related risks.
were aligned with these recommended disclosures. For
example, a company may describe its enterprise risk
management processes broadly in one section and inanother section mention climate-related risks areincluded in the enterprise risk management framework.
Risk Management c)
Describe how processes for
identifying, assessing, and managing
climate-related risks are integrated
into the organization’s overall risk
management.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Metrics and Targets Observations

The AI review found only a few companies withdisclosures that appeared to align with thisrecommended disclosure. For the disclosure practices
review, several companies disclosed information
allowing reviewers to determine that the companies’
climate-related risk identification, assessment, andmanagement processes were integrated into theiroverall risk management.

Few

Some

SeveralMajority

Most

Metrics and Targets a)aligned with Metrics
0%Both reviews identified disclosures
50%
100%
Disclose the metrics used by the
and Targets a) as the second most common type oforganization to assess climate-related disclosure. In addition, the AI review found the majority
risks and opportunities in line with its of companies in the Energy and Materials and Buildings
strategy and risk management
groups disclosed information that appeared to beprocess.
aligned with this recommended disclosure.
Metrics and Targets b)
Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas(GHG) emissions, and the relatedrisks.

The AI review found some companies’ disclosuresappeared to be aligned with Metrics and Targets b), while
the disclosure practices review found that the majority
of companies’ disclosures aligned with thisrecommended disclosure. Notably, the disclosure
practices review found the greatest amount of variation
among the eight groups for this recommended
disclosure. In part, this is because only a few asset
managers disclosed GHG emissions associated with
their investments as requested in the TCFD guidance.

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

Several companies in the AI review and the majority ofcompanies in the disclosure practices review disclosed
information on their climate-related targets. Most of thecompanies that disclosed their targets also disclosed
performance against those targets.

Other Observations
The AI review provided insight, again on a relative basis, into whether there are differences inreporting aligned with the Task Force’s recommended disclosures by company size or by theregion in which the company is based.

The Task Force on Climate-related Financial Disclosures11

To assess disclosure by company size, the Task Force divided the review population into threegroups by annual revenue: large companies (over $10 billion), medium companies ($4 billion to$10 billion), and small companies (less than $4 billion). For most of the 11 recommended
disclosures, a higher percentage of large companies’ disclosures appeared to align with therecommended disclosures than those of medium or small companies (Figure 7). Medium-sizedcompanies appeared to have a slightly higher percentage of aligned disclosures than small
companies.
Figure 7

AI Review: Company Size (Annual Revenue USD)
Governance

Size

a)

Large
(>$10b)b)

Small(<$4b)

Introduction
B
Review of ClimateRelated Disclosures

Legend

a)

b)

Few

Few

D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Risk Management

Metrics and Targets

a)

a)

b)

c)

b)

c)

Few

Several Several Some Majority Majority Majority

Some

SeveralSeveral

Few

Some

Some

Few

SeveralSeveralSeveral

Few

Some

Some

Few

Some

Few

Few

Some

Few

Some

Some

SeveralMajority0%

C
User Perspectives on
Decision-Useful ClimateRelated Disclosuresc)

Several Several Majority Majority

MediumSome($4b-$10b)
A

Strategy

Most

50%

100%

To assess whether there are regional differences in disclosure, the Task Force categorized the 78
countries in which the companies in the AI review population are based into five broad regions:
Asia Pacific (40% of companies), Europe (25%), North America (24%), the Middle East and Africa(8%), and South America (3%). The AI review found that, on average, a higher percentage ofcompanies in the Europe region disclosed information aligned with the recommended disclosures(Figure 8).
Figure 8

AI Review: Disclosure by Region

Appendices

GovernanceRegionStrategy

Risk Management

Metrics and Targets

a)

b)

a)

b)

c)

a)

b)

c)

a)

b)

c)

Asia
Pacific

Few

Some

Some

Several

Few

Some

Some

Few

SeveralSome

SeveralEuropeSeveralSeveral Several Majority

Few

Several Several

Few

Majority Several Majority

Middle East
and Africa

Few

Some

Few

Some

Few

Some

Few

Few

Some

Few

Few

North
America

Some

Few

SeveralSeveral

Few

Some

Some

Few

SeveralSome

SeveralSouth
America

Some

Some

SeveralSeveralFew

Some

SeveralFew

Several Several

SeveralLegend
0%

Few

Some

SeveralMajority

50%

The Task Force on Climate-related Financial Disclosures

Most

100%

12

3. Key Takeaways
While the Task Force found the majority of the companies reviewed report some climate-related
information today, further work is needed for disclosures to contain more decision-useful,climate-related information. The majority of companies reviewed disclosed information that isaligned with the core element of at least one of the recommended disclosures in their financial
filings, annual reports, or sustainability reports. In addition, the Task Force found several
instances of disclosures addressing the core element of each of the 11 recommended disclosures.

The review results demonstrate that it is both possible and practicable forcompanies to disclose certain baseline climate-related information today.
To reach a state where disclosures contain more complete, consistent, and comparable climaterelated information that is useful to market participants, continued focus is needed on improving
data analytics and modeling of climate-related issues. Improved practices and techniques should
further improve the quality of climate-related financial disclosures and, ultimately, support more
appropriate pricing of risks and allocation of capital in the global economy. Over the next ninemonths, the Task Force will continue to promote and monitor adoption of its recommendations
and will prepare a second status report for the Financial Stability Board in mid-2019.

A
Introduction

The Task Force believes the success of its recommendations depends on continued, widespread
adoption by companies in the financial and non-financial sectors. To this end, the Task Forceencourages more companies to use its recommendations as a framework for reporting on
climate-related risks and opportunities during the next reporting cycle, especially companies withmaterial climate-related risks. Companies in early stages of evaluating the impact of climatechange on their businesses and strategies and those that have determined climate-related issues
are not material are encouraged to disclose information on their governance and risk
management practices.16

B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

The key takeaways from the Task Force’s reviews are summarized below.

E
Initiatives Supporting TCFD
AppendicesFinancial Implications are Often Not Disclosed
While many companies disclose climate-related information, they often do not disclose thefinancial implications of climate change on the company. As part of the disclosure practices
review, the Task Force found companies more often disclosed information on the costs ofindividual projects, investments with climate-related implications, or measures of the company’s
impact on the environment. Users of disclosure have expressed the need for more quantitative
information on the actual or potential climate-related financial impacts on a company. Manycompanies with material climate-related issues could improve their disclosures by describing theactual or potential financial implications of climate change.
Information on Strategy Resilience under Different Climate-Related Scenarios is Limited
The recommended disclosure with the lowest percentage of disclosure overall relates to one of
the Task Force’s key areas of focus—the description of the resilience of a company’s strategy,
taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Qualitative or quantitative disclosure on how a company’s strategies might address potential
climate-related risks and opportunities is a key step to better understanding the potential
implications of climate change on the company. The Task Force recognizes the use of scenarios inassessing climate-related issues and their potential financial implications is relatively recent and

16

The Task Force understands many investors want insight into the governance and risk management context in which companies' financial
and operating results are achieved. The Task Force believes disclosures that follow its Governance and Risk Management recommendations
directly address this need for context.

The Task Force on Climate-related Financial Disclosures13

practices will evolve over time, but believes such analysis is important for improving thedisclosure of decision-useful, climate-related financial information.
Disclosures Vary Across Industries and Regions
The results of the disclosure practices review show that companies’ climate-related financial
disclosures vary by industry. There was often a large difference between the group with thehighest percentage of disclosures aligned with a recommended disclosure and the group with thelowest percentage. For example, only a few companies in the Materials and Buildings groupdisclosed information on the integration of climate-related risk management processes into theiroverall risk management (Risk Management c). However, the majority of the banks disclosed
information aligned with Risk Management c). In addition, Energy group companies had thehighest percentage of disclosure for four of the 11 recommended disclosures in the disclosure
practices review and five of 11 in the AI review—the most of any group. In terms of regional
differences, a higher percentage of companies in Europe disclosed information aligned with the
11 recommended disclosures compared to companies in other regions. In addition, a higher
percentage of companies in North America disclosed information on the board's oversight ofclimate-related issues than on management's role in assessing and managing such issues, but thereverse is true for companies in the Asia Pacific region. A higher percentage of companies in the
Asia Pacific region disclosed information on management's role in assessing and managing
climate-related issues than on the board's oversight of such issues.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesDisclosures are Often Made in Multiple Reports
The Task Force found that companies often provided information aligned with the TCFD
recommendations in multiple reports (e.g., financial filings, annual reports, integrated reports,
and/or sustainability reports). Companies in the disclosure practices review most often disclosed
information related to the TCFD recommendations in sustainability reports—information related
to around half of the recommended disclosures was found in sustainability reports and around athird in financial filings. For example, disclosure on climate-related metrics and targets was two to
three times more likely to be found in a sustainability report than in a financial filing. Whenclimate-related financial disclosures are spread across multiple reports or included in very lengthy
reports, companies may wish to consider providing cross-references or mappings to assist users
of disclosure in locating relevant information.
Context is Key
In the disclosure practices review, identification of disclosures aligned with the TCFD
recommendations generally required judgment and context gathered through a review ofmultiple reports issued by a company or a complete review of a single report (rather than justspecific sections). For example, a company might disclose in one part of its report that climaterelated risks are integrated into its overall risk management, but describe the actual processes for
identifying, assessing, and managing risks in another section without specifying that those
processes address climate-related issues.
In addition, in some cases, it was difficult to understand the significance of climate-related
projects described in companies’ reports and their relevance to the companies’ overall strategies.
Reasons for climate-related projects could range from increasing the resilience of a company’s
strategy to reducing costs to demonstrating good corporate citizenship. If companies do notdescribe the reasons for their climate-related projects, it may be difficult for investors and others
to determine the importance of such projects.

The Task Force on Climate-related Financial Disclosures

144. Observations by Group and Disclosure Examples
This section summarizes the results of the AI review, where available, and the disclosure practices
review for each of the eight groups listed in Figure 4 (p. 6). This section also describes the Task
Force’s observations on current climate-related financial disclosure practices based on its review
of a biased sample of 25 large companies from each group. Because the sample of 25 large
companies from each group was intentionally biased toward companies more likely to disclose
information on climate change, the associated review results are higher than the corresponding
results from the AI review.
The review results are shown for each of the 11 recommended disclosures, which are denoted by
the recommendation category (e.g., Governance) followed by the letter associated with thesupporting recommended disclosures(see Figure 2, p. 2 for the four
Figure 9
recommendations and 11 supporting
Example of Review Results by Group
recommended disclosures). The
results are displayed as a range of the
Average
Maximum
Minimum
percentage of companies from eachgroup whose disclosures wereidentified as aligned with theRange of % of Organizations in Each Group withrecommended disclosure along with a
Aligned Disclosuresdark blue box that represents the% of Organizations in a Specific Group withpercentage of companies in a specific
Aligned Disclosuresgroup whose disclosures were50%
identified as aligned with therecommended disclosure (Figure 9).

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

In addition, as part of its review of disclosure practices of 25 large companies from each group, asmall group of Task Force members selected examples of disclosure that provided informationaligned to one or more of the 11 recommended disclosures. The Task Force members included
examples from three different regions for each group whenever possible and tried to cover
specific aspects of the 11 recommended disclosures. The examples included are not intended torepresent “best practice” nor demonstrate disclosures that fully meet the associatedrecommended disclosure.17 Instead, the examples are provided because they may help
companies generate ideas for their own disclosures.
Consistent with the descriptions of the review results in section B.2. Overall Observations thereview results in this section are also described using the review scale shown in Figure 6 (p. 9).
Again, the review scale is intended to emphasize the importance of viewing the review results ona relative basis.

17

The mention of specific companies does not imply that they are endorsed by the TCFD or its members in preference to others of a similar
nature that are not mentioned.

The Task Force on Climate-related Financial Disclosures

15

Banks18
AI Summary
Three hundred and one banks from 54 countries
were included in the AI review. They ranged fromover $3 trillion to around $13 billion in asset size.
Five hundred and nineteen documents werereviewed, of which 68% were financial filings orannual reports and 32% were sustainability
reports. The AI review found that the mostcommon disclosure among banks was
information on climate-related risk identification
and assessment processes (Figure 10).
Disclosure Practices Summary
All 25 banks disclosed information aligned with atleast one of the recommended disclosures; andthe majority provided information aligned withten of the 11 recommended disclosures. The
banks disclosed information aligned with therecommended disclosures in their financial filings
more than any other group. Other observations
include the following (Figure 10):A
Introduction
B
Review of ClimateRelated Disclosures

Governance: The majority of the 25 banks
provided information on the role of the board
and management as it relates to climate-related
issues, including describing specific board
committees that oversee climate-related risks.

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesFigure 10

Banks
Artificial Intelligence (301 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralMajority

Most

Majority

Most

Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralLegendBanks
Strategy: Most of the banks disclosed their
Average|50%
Minimum
Maximum
climate-related risks or opportunities, with therisks being focused more on transition risks thanphysical risks. Some of the banks noted climate change concerns might lead to regulation that
could increase operating costs or negatively affect investments. A majority of the banks described
the impact of climate-related issues on their businesses, but only a few disclosed information on
how their strategies would be resilient under different climate-related scenarios. Somementioned that they plan to begin disclosing information on climate-related scenario analysis in
the coming years.

Risk Management: The majority of the 25 banks disclosed information about their processes for
identifying, assessing, and managing climate-related risks and indicated that such processes areintegrated with overall risk management processes. Some of the banks described how they
determine the relative significance of climate-related risks in relation to other risks and theprocesses for assessing the potential size and scope of the identified climate-related risks.
Metrics and Targets: Most of the banks disclosed the metrics they use to assess or monitor
climate-related issues; and the majority disclosed Scope 1 and Scope 2 GHG emissions and thetargets they use to manage climate-related issues. Several banks focused on metrics and targets
related to climate-related opportunities—green bonds and lending to specific social andenvironmental segments to stimulate a low-carbon economy.

18

The Task Force organized the financial sector into four industries based on activities performed: banks (lending), insurance companies(underwriting), asset managers (asset management), and asset owners (investing). This analysis focuses on banks’ lending activities.

The Task Force on Climate-related Financial Disclosures16

Examples of Disclosure Aligned with TCFD Recommendations
Strategy Recommendation
Strategy a) asks companies to describe the climate-related risks and opportunities they haveidentified, and the guidance asks for a description of the specific climate-related issues for eachtime horizon (short, medium, and long term) that could have a material financial impact on thecompany. Figure 11 provides a bank’s description of its indirect risks in the short, medium, andlong term, potential impacts, and mitigating actions.

Figure 11

Excerpt from Non-Financial Statement
Indirect risks for the Intesa Sanpaolo Group
Potential risks

A
Introduction

Timeframe*

Potential impact

Actions

Uncertainty surrounding
Short term
environmental regulations

Negative impact on thepossibility of implementing
new products and services

Active collaboration with policy
makers to highlight the need forstable and clear regulations andto be kept up-to-date on changes
underway

Regulations and incentives Short termon renewable energy

Negative impact on loans tocustomers that want toinvest in renewable energy
sources, due to an Italianscenario characterized byuncertainty and a sharp
reduction in public incentives

Offering of advisory services tocustomers on new regulations
and incentives for the energy
efficiency sectors

Introduction of new rules Short term
related to waste reduction
or emission reduction

Increased costs for corporate Study of possible scenarios forcustomers
Intesa Sanpaolo’s customers andcreation of financial solutions toprevent excessive costs

Extreme atmospheric
eventsShort/medium/long term

Financial implications related
to the default risk ofbusinesses seriously
damaged by extreme
atmospheric events

Suspension of repayments ofloans and allocation of specificfunding at special conditions infavour of damaged customers

Fluctuation of socioeconomic conditions

Medium/longterm

Reduction of customers’
economic capacity andsubsequent difficulty inrepaying debts

Implementation of a Disasterevents ceiling for thereconstruction of damaged
properties and suspension of
payments in the case of major
natural events

B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices* 0-3 years short term; 3-6 years medium term; over 6 years long term.

Europe: Intesa Sanpaolo Group, 2017 Consolidated Non-Financial Statement, p. 55

The Task Force on Climate-related Financial Disclosures17

Risk Management Recommendation
Risk Management b) asks companies to describe their processes for managing climate-relatedrisks. Figure 12 provides a bank’s description of some of its risk management processes.19

Figure 12

Excerpt from Financial Filing
MANAGEMENT’S DISCUSSION AND ANALYSISThe ESG group and ES group work in partnership with the lines of business and Corporate
Support areas to manage environmental and social risk within our business. We work withexternal stakeholders to understand the consequences and impacts of our operations andfinancing decisions. As part of our enterprise risk management framework and credit risk
management framework, we evaluate the environmental and social risk associated with credit
and counterparty transactions and exposures. We have developed and implemented specificfinancing guidelines to address environmental and social risk for specific lines of business. To
assess exposure to clients’ environmental risks, we apply enhanced due diligence to transactions
with clients operating in environmentally sensitive industry sectors, and we avoid doing businesswith borrowers that have poor environmental and social risk management track records.
We consider the impact our decisions have on our stakeholders. Our Board-approved Codeof Conduct reflects our commitment to manage our business responsibly. We expect our
suppliers to be aware of, understand and respect the principles of our Supplier Code of
Conduct, which outlines our standards for integrity, fair dealing and sustainability. We issued our
first statement under the United Kingdom Modern Slavery Act and we updated our Supplier
Code of Conduct to reflect this legislation.

A
Introduction
B
Review of ClimateRelated Disclosures

MD&A

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

BMO has been a signatory to the Equator Principles since 2005 and applies its credit risk
management framework to identify, assess and manage environmental and social risk in project
finance transactions. We also apply the World Bank/International Finance Corporation
environmental and social screening process to categorize and assess projects based on themagnitude of their potential impacts and risks. These principles have been integrated into ourcredit risk management framework. We are a long-time signatory to and participant in the
Carbon Disclosure Project – a global initiative that assembles and publishes corporate disclosureon greenhouse gas emissions and climate change.
BMO is a signatory to the United Nations Principles for Responsible Investment, aframework designed to encourage sustainable investing through the integration of ESG issues
into investment, decision-making and ownership practices. We are a partner in the Carbon
Pricing Leadership Coalition, a voluntary partnership that supports the effective implementationof carbon pricing around the world.
To keep informed of emerging issues, we participate in global forums with our peers,maintain an open dialogue with our internal and external stakeholders, and continuously
monitor and evaluate policy and legislative changes in the jurisdictions where we operate. We
publicly report our environmental and social performance and targets in our annual
Environmental, Social and Governance (ESG) Report and Public Accountability Statement (PAS),and on our Corporate Responsibility website. Selected environmental and social indicators in
the ESG Report and PAS are assured by a third party.

North America: BMO Financial Group, 2017 BMO Financial Group Annual Report, p. 112

19

Earlier in its report, the bank defines environmental and social risk as covering “a broad spectrum of issues, such as climate change.”

The Task Force on Climate-related Financial Disclosures18

Risk Management Recommendation
Risk Management c) asks companies to describe how processes for identifying, assessing, andmanaging climate-related risks are integrated into the company’s overall risk management.
Figure 13 provides a bank’s description of its integration of climate-related risks and opportunities
into its strategy and risk management processes.

Figure 13

Excerpt from Sustainability Report
On climate change
2017 marks almost a decade since we released our
first climate change action plan and over this time
we have continued to integrate the considerationof climate-related risks and opportunities into ourstrategy and risk management processes.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

Building on extensive stakeholder consultation andclimate change scenario analysis (see 2016
Sustainability Performance Report), we released
our third Climate Change Position Statement and2020 Action Plan in May 2017. Outlining the next
phase of actions we are taking over the short term
to 2020, medium term to 2030, and long-term to2050, it demonstrates our commitment to operate
in a manner consistent with limiting global
warming to less than 2°C above pre-industrial
levels.
This process helped inform our approach totransitional risks including the policy, legal,

technology and financial impacts related toclimate change, as well as the business
implications of physical risks such as changes inclimate patterns and extreme weather events. It
has also underpinned our new ambitious
financing targets for climate change solutions(see Positive societal impact) which are based onan economy-wide pathway to net zero emissions
by 2050.
To address climate-related risks, we haveenhanced our approach to lending to emissionsintensive sectors. We support customers that arein, or reliant on, these sectors and who assess
the financial implications of climate change on
their business, including how their strategies arelikely to perform under various forward-looking
scenarios and demonstrate a rigorous approachto governance, strategy setting, risk
management and reporting.

Asia Pacific: Westpac Group, 2017 Westpac Group Sustainability Performance Report, p. 45

E
Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures

19

Insurance Companies20
AI Summary
Three hundred and eleven insurance companies
from 54 countries were included in the AI review.
They ranged from $2.6 trillion to $52 billion in
asset size. Five hundred and nineteen documents
were reviewed, of which 85% were financial filings
or annual reports and 15% were sustainability
reports. Overall, the 311 insurance companies
disclosed information that appeared to align withthe recommended disclosures less frequently
than the other five groups included in the AI
review (Figure 14). The AI review found that themost common disclosure within the sample wasinformation on the companies’ processes for
identifying and assessing climate-related issues.
Disclosure Practices Summary
The 25 insurance companies disclosed
information aligned with the recommended
disclosures in their financial filings more than any
other group except for banks. The most common
disclosure among the insurance companies wason climate-related metrics. Other observations
include the following (Figure 14):A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

Insurance Companies
Artificial Intelligence (311 Companies)
GovernanceE
Initiatives Supporting TCFD

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralMajority

Most

Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

D
Preparer Perspective: Oiland Gas Industry

AppendicesFigure 14

a.
b.
c.
a.
b.
c.

Governance: The majority of the 25 insurance
Most
Majority
Few Some Several
companies described board-level oversight ofLegendclimate-related issues, and some described theInsurance Companies
Average50%|
frequency of relevant board-level meetings. The
Maximum
Minimummajority of the insurance companies describedmanagement’s responsibility for climate-related issues at a high-level, but usually did not describe
management’s specific roles or responsibilities.
Strategy: The majority of the insurance companies disclosed information on their climate-relatedrisks and opportunities. The majority also provided information on the impact of climate-related
issues on their business, strategy, or financial planning. Some insurance companies reported on
how their strategies would be resilient under different climate-related scenarios, with half of themmentioning the use of a 2°C climate-related scenario.
Risk Management: The majority of the 25 insurance companies provided information on theirrisk identification and assessment processes related to climate change; however, significantly
fewer reported on their risk management processes. A majority of the companies indicated that
their processes for identifying, assessing, and managing climate-related risks are integrated into
their overall risk management processes.
Metrics and Targets: Most of the 25 insurance companies disclosed the metrics they use toassess or monitor climate-related issues, and the majority disclosed their Scope 1 and Scope 2
GHG emissions as well as the targets they use to manage climate-related issues.

20

The Task Force organized the financial sector into four industries based on activities performed: banks (lending), insurance companies(underwriting), asset managers (asset management), and asset owners (investing). This analysis focuses on the underwriting side of insurance
activities.

The Task Force on Climate-related Financial Disclosures

20

Examples of Disclosure Aligned with TCFD Recommendations
Governance Recommendation
Governance a) and b) ask companies to describe the board’s oversight of climate-related risks andopportunities and management’s role in assessing and managing climate-related risks andopportunities, respectively. Figure 15 provides an insurance company’s description of its
governance of climate-related issues, including the roles of the board and management.

Figure 15

Excerpt from Sustainability Report

ALLIANZ‘S CLIMATE-RELATEDFINANCIAL DISCLOSURE

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The Allianz Group has
had a Climate Change
Strategy in place since2005, which steers ourbusiness and is regularly
updated. In our
corporate reporting on
climate change, we areapplying therecommendations
developed by the G20
Financial Stability Board’s
Task Force on Climaterelated Financial
Disclosures (TCFD). The
TCFD’s four-pillar
framework provides
guidance on disclosureand business integrationof risks and opportunities
from a changing climate.
As an active driver ofbest practice and tools,
we strive to continuously
enhance our reporting
and business practices.

GOVERNANCE
Within the Allianz Group diverse
committees steer sustainability
topics, including climate change,
within their scope of influence.
The Group ESG Board is the highest
governing body for sustainability
issues, such as climate change, andoversees the Allianz Group Climate
Change Strategy. It consists of threemembers of the Allianz SE Board ofManagement (BoM), meetsquarterly, and informs the BoM on
relevant topics and activities at least
twice a year. It also reviews andrecommends policy proposals forconsideration by the BoM and/or
relevant Board committees.
The Group Finance and Risk
Committee (GFRC), consisting ofmembers of the BoM, oversees risk
management and monitoring,
including sustainability and climate
risks, and serves as an escalation
point based on analysis anddeliberations within the Group ESG
Board. Risks identified as emerging
and/or significant are addressed
either in the GFRC or the Group
Underwriting Committee (GUC). The
GUC consists of Members of theBoM, the Group Chief Risk Officer,
Chief Underwriting Officers, andother executives of the Group. It
monitors underwriting business, aswell as its risk management andstrategy and develops anunderwriting policy.

The Allianz Group Corporate
Responsibility department, andparticularly the Group ESG Office, is
responsible for steering the integrationof ESG and climate aspects into core
investment and insurance activities andacts as the Executive Office of theGroup ESG Board.
All internal asset managers, thecomplete investment management
function (Allianz Investment
Management), and key insurance
operating entities have wellestablished dedicated ESG functions
and practice. Several units also havededicated competence centers on
promoting low-carbon technologies(Allianz Capital Partners, Allianz Global
Investors, Allianz Global Corporate &Specialty, Allianz Climate Solutions,and others). ESG specialists and/or
representatives from different local
operating entities, global lines, andGroup centers come together in the
ESG Working Group to develop anddiscuss projects and proposals for ESG
and climate integration in the business.
Specifically for climate change, wehave a Climate Contact Group (CCG),
consisting of experts from across theGroup, exchanging and developing
proposals on climate integration intobusiness. The CCG’s secretariat
formally reports to the Group ESG
Board, input from the CCG is used to
inform top management and GroupESG Board.

Europe: Allianz Group, Allianz Group Sustainability Report 2017, p. 86

The Task Force on Climate-related Financial Disclosures21

Strategy Recommendation
Strategy a) asks companies to describe the climate-related risks and opportunities they haveidentified. Figure 16 provides an insurance company’s description of one of its climate-relatedrisks.

Figure 16

Excerpt from Integrated Report(ii) Risk of large insurance claims due to natural disasterNatural disasters such as typhoons and earthquakes can result in large losses, and with suchnatural disasters growing in frequency and scale worldwide due to the impact of such factors as
climate change, there is a possibility that huge natural disasters exceeding forecast levels will occur.
The Group utilizes reinsurance and builds appropriate catastrophe reserves, so it is able to properly
respond to instances of large claim payments arising from such catastrophic events. Nonetheless,there is a risk of a negative impact on the Group’s business results due to excessive payments
caused by larger-than-expected natural disasters.
Asia Pacific: MS&AD Insurance Group, MS&AD Integrated Report 2017, p. 64
A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures

22

Strategy Recommendation
Strategy a) asks companies to describe the climate-related risks and opportunities they haveidentified. Figure 17 provides an insurance company’s description of its physical risks.

Figure 17

Excerpt from Financial Filing
Climate-related risks
PHYSICAL RISKS. Physical risks posed by climate

If rises in re/insurance premiums
necessitated by increasing extreme
weather risks remain modest, ie
re/insurance protection remains
economically viable for our clients,
the overall premium volume will
actually grow. Larger increases,
In addition, we expect weather risk however, will reverse this effectto remain assessable by scientificeventually by pushing re/insurance
methods, meaning we can continue prices for certain exposed risks
to update our loss models in the
beyond the limits of economic
Our own operations
future to assure adequate costing of viability. This is particularly
According to our in-houseextreme weather events. Since most relevant for areas with inadequate
catastrophe loss models, severeof the re/insurance contracts withconstruction planning andweather risks are potentially of
our clients have a duration of one
development. In addition, timing isimportance for some of ouryear, we can thus adequately pricealso of crucial importance: if
operations, mainly in Florida and on natural catastrophe risks bymeasures to exclude a particular
the northeastern coast of the US.
updating our models to reflect therisk are taken too early andHowever, even assuming an extreme current climate.
without broader market support,
climate change scenario, we do not
we can offer our clients lessexpect any of these locations to be
Regarding the long-term timeinsurance protection and may lose
exposed to risk levels that would
horizon (2040), we expect asignificant market share; ifquestion their economic viability. In substantial need to adjust some of
measures are taken too late, we
2012, Hurricane Sandy in New York
our weather risk models, based on may end up with increased loss
showed that some of Swiss Re’s
current scientific knowledge. We are potential.
offices are already exposed toconfident, however, that future
severe weather risks today. In
research will give us sufficient
In line with independent external
response, we have sharpened theguidance on the magnitude andstudies, we have shown through aGroup’s business continuity
direction of these adjustments.
series of scenario assessments
management to minimise property(Economics of Climate Adaptation
losses and business interruption.
Impact on the economic viability studies, ECA) that in many regions,Thanks to these investments, we are of re/insurance protection
climate adaptation measures needable to swiftly transfer work tasks to An increase in the frequency andto be taken to limit expectedunaffected areas if required and toseverity of extreme weather events increases in natural catastrophe
keep potential financial impacts
can restrict the affordability ofdamages and thus to ensure theminimal.
re/insurance in certain regions,
economic viability of re/insurance
especially in coastal areas, byin the future. This is a key reason
Modelling and pricing of weather- requiring a rise in premiums. While why Swiss Re actively engages withrelated perils
climate projections are associatedthe United Nations, the public
Based on our proprietary loss
with a large range of uncertainty,
sector, clients, industry peers andmodelling, we calculate the annual
especially when it comes to storms employees to advocate costexpected losses (AEL) of the major
making landfall, increases in theeffective adaptation to climate
weather-related natural
frequency and severity of tropicalchange.
catastrophes; the four perils with the storms are likely. Natural variability
largest AEL at present are disclosed is expected to remain the dominant Conclusion: Although the physicalon page 148 (North Atlantic
factor in the short and medium time risks arising from climate change
hurricane, US tornado, European
horizon (2025 and 2030). In thewill have significant economic
windstorm, Japanese tropicallonger term (2040), though, sea
consequences over time, especiallycyclone). Our models show that with level rise will lead to non-linear
from a wider societal perspective,
the current climate, the dominant
increases in the storm surge risk for they represent a limited andfactor is natural variability affecting
coastal areas. Additionally, warmer manageable risk for Swiss Re.
both the frequency and severity oftemperatures will lead to more
extreme weather events in all
extreme rainfall events that may
regions.
increase flood risk.
change could potentially affect threeareas of our business:
 Reduction/disruption of our own
operations
 Modelling and pricing of weatherrelated natural perils
 Impact on the economic viabilityof re/insurance for risks exposed
to extreme weather eventsA
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

We expect this to remain the caseboth in the short and medium term(ie 2025 and 2030), in line with thelatest scientific findings (see the
IPCC Fifth Assessment Report,
chapter 11).

Europe: Swiss Re, 2017 Financial Report, p. 141

The Task Force on Climate-related Financial Disclosures

23

Asset Managers
AI Summary
Asset managers were not included in the AI
review. The AI population selection methodology
is described in Appendix 2.
Disclosure Practices Summary
As described in the 2017 report, preparers ofclimate-related financial disclosures should
provide such disclosures in their annual financial
filings. However, the Task Force recognizedcomparable reporting by asset managers to theirclients would usually occur in other types offinancial reporting and may not be publicly
available. To provide some insight on climaterelated financial disclosures by asset managers,
the Task Force reviewed publicly available
reports, recognizing such reports are a proxy andmay differ from what is provided to clients on aconfidential basis.

A
Introduction
B
Review of ClimateRelated Disclosures

Figure 18

Asset Managers
Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralMajority

Most

LegendAsset Managers|

50%

Minimum

Average

Maximum

The majority of the documents reviewed for asset managers were financial filings andsustainability reports, consistent with the documentation reviewed for the non-financial groups,
banks, and insurance companies.21 Two of the organizations issued specific reports on climatechange and asset management, which were also reviewed. Of the 53 reports reviewed across the
25 asset managers, all but three were for fiscal year 2017 (issued in late 2017 or in 2018). The
three reports that were for fiscal year 2016 were sustainability reports. The majority of asset
managers mentioned support for the TCFD in their financial filings or sustainability reports. Other
observations include the following (Figure 18):

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Governance: Several of the asset managers provided information on the role of the board as it
relates to climate-related issues, and the majority described the role of management. Less thanhalf of the companies that described management’s role also described the board’s role.
Strategy: Most of the asset managers provided information about their climate-related risks oropportunities, but none explicitly discussed how the risks or opportunities related to the short,medium, or long term. The majority provided information about how their investment strategies
consider climate-related risks, but none described how their strategies might change under
different climate-related scenarios. One asset manager, however, described how it is exploring
ways to measure the positioning of its portfolio versus a 2°C target.

Appendices

Risk Management: Several of the 25 asset managers provided information on how they identify
or assess climate-related risks, and most described actions they take to manage climate-relatedrisks. The majority provided information that indicated their management of climate-related risks
is integrated into their overall risk management.
Metrics and Targets: Several asset managers described metrics and targets they use for climaterelated issues. While the majority provided information on their own GHG emissions, only a few(as reflected in Figure 18 for recommended disclosure b) provided information on the GHG
emissions associated with their investments, which is the metric the Task Force recommends
asset managers disclose.
21

Most of the asset managers reviewed are part of diversified financial institutions. As a result, their financial filings and sustainability reports
cover more than just their asset management activities. For purposes of this review, we focused on information related to the organization's
asset management activities whenever possible.

The Task Force on Climate-related Financial Disclosures

24

Examples of Disclosure Aligned with TCFD Recommendations
Governance Recommendation
Governance b) asks companies to describe management’s role in assessing and managing climaterelated risks and opportunities. Figure 19 provides an asset manager’s description of the role ofits management.
Figure 19

Excerpt from Financial Filing
1) GOVERNANCE OF ESG AND CLIMATE-RELATED RISKS AND OPPORTUNITIESOVERALL APPROACH
AXA defines Responsible Investment (RI) as the integration of Environmental, Social and Governance (ESG)
considerations into investment processes, including ownership practices. Our conviction is that ESG integration
may impact long-term investment performance by offering an enhanced understanding of risk drivers. Thisconviction is derived from academic research and empirical market data. It is also a way to strive for alignment
between our investments and our broader Corporate Responsibility (CR) commitments. AXA developed acomprehensive RI strategy covering the Group’s €600bn+ General Account assets and will extend it to its UnitLinked investments. The process of ESG integration is coordinated centrally, with an active input from our asset
managers that include ESG metrics in their investment analysis across asset classes and regions, as well as local
investment teams.

A
Introduction

ESG AND CLIMATE-RELATED GOVERNANCE
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

AXA created a Group-level Responsible Investment Committee (RIC), chaired by the Group Chief Investment
Officer, and including representatives from AXA Asset Management entities, Corporate Responsibility (CR), Risk
Management and Communications. The RIC reports to the Group Investment Committee, chaired by the Group
Chief Financial Officer. In addition, the “ESG Footprint Committee” reviews risks posed by companies or sectors
presenting a low ESG performance and/or serious and persistent controversies. AXA’s RI policy is supported by
the RI Center of Expertise, a transversal working group from AXA’s local investment teams interacting with the
CR network and the Group’s Asset Management entities. Finally, in 2016 the Group created a dedicatedshareholder engagement-related function at Group level, to complement engagement initiatives alreadyundertaken by AXA IM and AB, AXA’s in-house investment managers.
Europe: AXA Group, Registration Document 2017, p. 381

E
Initiatives Supporting TCFD
Appendices

Metrics and Targets Recommendation
Metrics and Targets b) asks companies to disclose Scope 1, Scope 2, and, if appropriate, Scope 3
GHG emissions. For asset managers, the Task Force asks them to disclose GHG emissions
associated with their investments. Figure 20 provides an asset manager’s disclosure of this metric.

Figure 20

Excerpt from Financial Filing
Unit(*)

2017

2016

2015

Assets subject to a carbon footprint calculation (15)€ billion

463.84--

Carbon emissions in million euros of revenue

CO2 TEQ

226.5

-

-

Carbon emissions in millions of euros invested

CO2 TEQ

180.5

-

-

Business line indicators
Carbon footprint of theportfolios ****Scope: Amundi SEU (Amundi France)*** Scope: Amundi (old configuration: Pioneer data not available)(15) The outstanding amount on which the carbon footprint is calculated, i.e. €463.84 billion, corresponds to assets managed by
Amundi (with the exception of assets of Pioneer, JV and Real assets), less non-rated and non-rateable securities, and for which
we have data provided by TRUCOST.

Europe: Amundi, Registration Document 2017, p. 114

The Task Force on Climate-related Financial Disclosures

25

Risk Management Recommendation
Risk Management a) asks companies to describe their process for identifying and assessing
climate-related risks, and the supplemental guidance for asset managers asks them to describe,
where appropriate, engagement activity with investee companies. Figure 21 provides an asset
manager’s description of its approach to engaging with investee companies.

Figure 21

Excerpt from Corporate Responsibility Report
However, we do believe that progress can be made. It is our belief, that by providing data in thefollowing four areas, investors can gain a more holistic perspective of how a company manages
climate-related risks, understand what steps the company is taking to mitigate such risks, and gain an
overview of the governance structures in place to oversee these processes. We engage withcompanies in the following areas:
Governance: We expect companies, particularly in high-impact sectors such as the oil and gas sector,
to address how the board or its committees oversee climate risks. As a best practice, companies will
ensure that directors have some knowledge, expertise or training on material sustainability or climate
risks facing the company.
Establishing GHG Goals: We view establishing company-specific GHG emissions targets as one of themost important steps in managing climate risk. Appropriate, long-term goals help companies manage
emissions, demonstrate robust planning processes, and help contextualize capital allocation
processes.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Carbon Pricing Assumptions: Establishing a price for carbon (carbon price) is a tool that companies
have used to capture and monetize the costs and impacts of their activities as they relate to climatechange, allowing them to express and incorporate the cost of operations, compliance, and future
regulations into strategic decision-making.
Role of Scenario Planning: By incorporating results from scenario planning exercises into long-term
strategy, companies can better position themselves to capitalize on opportunities and to mitigate
risks. We have found that companies undertaking robust scenario-planning exercises often
demonstrate their leadership in addressing climate risk by communicating to shareholders theimpacts of their findings on their long-term capital expenditure plans.
We recognize that the work on improving disclosure of climate-related information has only justbegun. As a long-term investor, State Street Global Advisors expects boards to consider climate risk as
they would any other material risk to the sustainability of their business. However, the challenge ofdeveloping detailed guidance on emerging best practices remains.
North America: State Street, 2017 Corporate Responsibility Report, pp. 16-17

The Task Force on Climate-related Financial Disclosures

26

Asset Owners
AI Summary
Asset owners were not included in the AI review.
The AI population selection methodology is
described in Appendix 2.
Disclosure Practices Summary
As described in the 2017 report, preparers ofclimate-related financial disclosures should
provide such disclosures in their annual financial
filings. However, the Task Force recognizedcomparable reporting by asset owners to theirbeneficiaries would usually occur in other types offinancial reporting and may not be publicly
available. To provide some insight on climaterelated financial disclosures by asset owners, theTask Force reviewed publicly available reports,
recognizing such reports are a proxy and may
differ from what is provided to beneficiaries.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesFigure 22

Asset Owners
Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralMajority

Most

LegendAsset Owners|

50%

Minimum

Average

Maximum

Many of the asset owners reviewed are private organizations or government-run pension funds
not subject to public company financial reporting requirements, making it challenging to findrelevant reports for review. Observations based on the reports reviewed include the following(Figure 22):
Governance: Several asset owners provided information about the role of the board inoverseeing climate-related issues, and several provided information on the role of management
in assessing or managing climate-related issues. However, only some provided information on theroles of both the board and management.
Strategy: The majority of the 25 asset owners provided information about (1) their climaterelated risks or opportunities and (2) how those risks or opportunities have affected theirstrategies. Some asset owners also described the timeframes associated with their climaterelated issues (short, medium, or long term). While several asset owners mentioned, at a highlevel, the Paris Agreement or the potential for varying future scenarios related to climate change,
only a few described the resilience of their strategies under different climate-related scenarios.
Risk Management: The majority of the asset owners provided information on how they identify
or assess climate-related risks. In addition, the majority described actions they take to manage
climate-related risks, primarily related to engagement with asset managers or companies held in
their portfolios or through instituting requirements for asset managers to consider ESG/climaterelated issues in their investment decisions. Several asset owners provided specific examples ofpast engagements to affect change within companies held in their portfolios, such as reducing
GHG emissions, increasing energy efficiency, or encouraging adoption of the TCFD
recommendations.
Metrics and Targets: The majority of the asset owners described metrics they use to assess ormonitor climate-related risks, and a few provided several metrics with an explanation of their
meaning. Several asset owners provided information on the GHG emissions associated with theirinvestments, which is the metric the Task Force recommends asset owners disclose. Several asset
owners also provided information on targets they use and their performance relative to thosetargets.

The Task Force on Climate-related Financial Disclosures

27

Examples of Disclosure Aligned with TCFD Recommendations
Governance Recommendation
Governance a) and b) ask companies to describe the board’s oversight of climate-related risks andopportunities and management’s role in assessing and managing such issues, respectively.
Figure 23 provides a description of an asset owner’s governance of climate-related issues,
including the roles of the board and management.
Figure 23

Excerpt from Annual Report
Climate change governance and risk management
At Ontario Teachers’, board members oversee management’s implementation of responsible investing
principles and approve investment policies and enterprise risk appetite. Management reports to theboard at least annually on responsible investing initiatives and results, and this includes discussion ofclimate-related risks and opportunities.
The CEO, Chief Risk & Strategy Officer and Chief Investment Officer set responsible investing priorities,
strategies and guidelines that help manage risk. Senior managing directors in the Investment Division
regularly report to the Chief Investment Officer on material ESG exposures. The plan’s investment
professionals evaluate company-specific risks as well as broader ESG factors that could affect the longterm value of the investment portfolio.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Our 2017 Responsible Investing Report highlights some of our priorities. We began to adopt some of
the recommendations of the Task Force on Climate-related Financial Disclosures. We developed
climate change scenarios and have published our first carbon footprint. The report also provides more
information on our engagements with companies, our voting record, and case studies illustrating how
our portfolio companies are integrating ESG factors into their operations. View the full Responsible
Investing Report at otpp.com/responsibleinvesting.
North America: Ontario Teachers’ Pension Plan, 2017 Annual Report, p. 23

Metrics and Targets Recommendation
Metrics and Targets b) asks companies to disclose Scope 1, Scope 2, and, if appropriate, Scope 3
GHG emissions. For asset owners, the Task Force asks them to disclose GHG emissions associatedwith their investments. Figure 24 provides an asset owner’s disclosure of several metrics related
to emissions associated with its listed equity portfolio.

AppendicesFigure 24

Excerpt from Annual and Sustainability Report

Europe: AP2, Annual and Sustainability Report 2017, p. 3

The Task Force on Climate-related Financial Disclosures28

Risk Management Recommendation
Risk Management a) asks companies to describe their process for identifying and assessing
climate-related risks, and the supplemental guidance for asset owners asks them to describe,
where appropriate, engagement activity with investee companies. Figure 25 provides an asset
owner’s description of assessing climate-related risks and engaging with investee companies.

Figure 25

Excerpt from Climate ReportA
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesFirst State Super’s Climate Change Adaptation Plan comprises three elements as follows:
1. Portfolio weather-proofingThis is seen as the first line of defence and involves a technical asset-by-asset review of the portfolio
to assess asset-specific climate change risks and options to build resilience. These reviews go beyond
basic carbon foot-printing to assessing exposures to plausible climatic events, supply chains, policy or
technological change and public activism. The reviews are conducted by First State Super incollaboration with its asset managers and advisors over a two year cycle. It should be noted thatmany risks are interdependent and difficult to assess – such risks may not always present themselvesin the way we anticipate.
2. Engagement
A key part of First State Super’s ESG Policy is proactive engagement with senior executives andboards of the companies we hold, even where our percentage of share-holdings is small, e.g. listed
shares. The second part of our Climate Change Adaptation Plan involved upgrading the ‘E’ piece inour engagement to ensure:
suitable reporting of emissions and (more generally) climate change risk assessment andmanagement;stress testing the impact of a carbon price on long-term business plans, including thedevelopment of each firm’s own Adaptation Plan, including a review of energy efficiency andscope for embedded generation; and(in some cases) a return of capital over time rather than reinvestment in new
exploration/development of fossil fuel reserves.
Divestments are possible under First State Super’s engagement model, but are the last line ofdefence, considered only where: 1) assets have high levels of stranded asset risk; and 2)
engagement fails or is unlikely to succeed. First State Super acknowledges that divestment may
be ineffective in climate change mitigation as it simply transfers ownership of capital that has
already been deployed and to which management will be largely indifferent. But there may still
be a case for divestment to reduce excessive asset-specific risk. Moreover, when many pension
funds divest en masse, this can increase the cost of capital for new projects, and may have real
signalling effects that change corporate attitudes

3. Investing in Renewable Technology
The third plank in First State Super’s Climate Change Adaptation Plan is the proactive assessment ofinvestment in renewable energy generation, notably in wind and solar farms. Globally, renewables
accounted for two-thirds of all new capacity in recent years. In Australia, investment in large-scale
renewable generation came to a standstill in 2013 due to uncertainty around the government’s
Renewable Energy Target (RET) policy. The reset of the RET to 33,000GWh by 2020 however, isestimated to create the need for 5-6GW of new large scale capacity, estimated to require ~$10 billion incapital over the next 3-4 years.
A key aspect of climate change mitigation in Australia is for this renewable capacity to displace a largepart of our coal-fired generation capacity. In practice, the level of coal-fired capacity is likely to decline
anyway as ageing coal-fired plants are decommissioned over the next 15-20 years. Around 1.5GW ofcoal-fired capacity was retired and another 500MW mothballed in recent years and other large coalplants such as Liddell (2GW) and Vale’s Point are scheduled for decommissioning over the next decade.
As a back-of-the-envelope exercise, $600 million (<1% of First State Super’s total assets) in new
renewables capacity over the next 3-4 years, would create 350-400MW of capacity – 6% of new
capacity needed under the RET. Assuming this displaced an equivalent level of coal-fired capacity; thiswould reduce emissions by ~3MtCO2e in emissions, or ~0.5% of Australia’s current total emissions andreduce the Fund’s net carbon footprint virtually to zero, i.e. ‘carbon neutrality’.
Asia Pacific: First State Superannuation Fund, Responding to Climate Change: A case study, pp. 14-15

The Task Force on Climate-related Financial Disclosures

29

Energy Group22
AI Summary
Two hundred and seventy energy companies
from 49 countries were included in the AI review.
They ranged from $305 billion to $1 billion in
annual revenue. Five hundred and nine reports
were reviewed, of which nearly 70% were
financial filings or annual reports and 30% were
sustainability reports. The 270 energy companies
had the highest percentage of disclosures thatappeared to align with five of the recommended
disclosures (Figure 26). The most common
disclosure within the sample was information on
the impact of climate-related risks oropportunities on the company’s businesses,
strategy, or financial planning.
Disclosure Practices Summary
Similar to the AI review, the 25 energy companies
had the highest percentage of disclosures alignedwith four of the recommended disclosures(Figure 26). The majority of the energy companies
provided information on climate-related issues intheir sustainability or other reports rather thantheir financial filings. Other observations include
the following:A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

Energy Companies
Artificial Intelligence (270 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

E
Initiatives Supporting TCFD

SeveralMajority

Most

Majority

Most

Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

D
Preparer Perspective: Oiland Gas Industry

AppendicesFigure 26

SeveralGovernance: The majority of the 25 companies
Legenddisclosed information about the role of the board
Energy
50%|
Minimum
Average Maximumin overseeing climate-related issues, with several
mentioning how the board integrates climaterelated issues into strategy and business plans. The majority disclosed information about the roleof management in assessing or managing climate-related issues, including the management
committees that focus on climate-related issues as part of daily operations.
Strategy: Most of the 25 energy companies disclosed their climate-related risks or opportunities
and their impact on business, strategy, or financial planning. The risks disclosed included thoserelated to the regulation of carbon emissions, access to capital, and weather extremes, and theopportunities primarily described the companies’ investments in renewable energy. Some of theenergy companies reported on the resilience of their strategies under different climate-related
scenarios; and all of those companies referenced 2°C climate-related scenarios.
Risk Management: The majority of the 25 companies disclosed information about the processes
they use to identify, assess, and manage climate-related risks. Several provided information
indicating their management of climate-related risks is integrated into overall risk management.
Metrics and Targets: Most of the energy companies disclosed metrics used to assess climaterelated issues, and several indicated that performance metrics are incorporated into
remuneration programs for key executives. The majority disclosed Scope 1 and Scope 2 GHG
emissions, and several of those disclosed Scope 3 GHG emissions. The majority also disclosed
their climate-related targets and performance against those targets, often using tables and charts
along with explanatory text.

22

Industries in the Energy Group include oil and gas, coal, and electric utilities.

The Task Force on Climate-related Financial Disclosures

30

Examples of Disclosure Aligned with TCFD Recommendations
Governance Recommendation
Governance a) asks companies to describe the board’s oversight of climate-related risks andopportunities. Figure 27 provides an oil and gas company’s description of the oversight
responsibilities of the board and three board committees as they relate to climate change.

Figure 27

Excerpt from Financial Filing
Climate change management organogram
Board of Royal Dutch
Shell plc [1]Corporate andSocial Responsibility
Committee (CSRC) [2]A
Introduction
B
Review of ClimateRelated Disclosures

CEO and Executive Committee

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

Executive Vice President,
Safety & Environment

Vice President, Group CO2
Chair

Remuneration
Committee(REMCO) [4]

Most senior individuals
with accountability forclimate change risk
management

Businesses andFunctions [5]

CO2 Leadership TeamE
Initiatives Supporting TCFD
Appendices

Audit
Committee(AC) [3]Ensures the effective delivery of Shell’s
GHG management programme throughout
Shell’s businesses, and the oversight of
GHG policy positions[1] Oversight of climate change risk management.
[2] Non-executive Directors appointed by the Board to review and advise on
sustainability policies and practices including climate change.
[3] Non-executive Directors appointed by the Board to oversee theeffectiveness of the system of risk management and internal control.
[4] Non-executive Directors appointed by the Board to set the remuneration
policy in alignment with strategy.
[5] Responsible for implementing Shell’s GHG strategy. They are represented
in the CO2 Leadership Team.

Europe: Royal Dutch Shell, Shell Annual Report and Form 20-F 2017, p. 63

The Task Force on Climate-related Financial Disclosures

31

Strategy Recommendation
Strategy a) asks companies to describe the climate-related risks and opportunities they haveidentified. Figure 28 provides an oil and gas company’s description of its climate-related risks.

Figure 28

Excerpt from Integrated Report
STRATEGY
Main risks and opportunities
The climate change risk is analysed taking into
account five drivers for which the main results areshown below.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesMarket scenario. In a low carbon scenario, as in
the IEA SDS2 (WEO 2017), the role of fossil fuelsremains central to the energy mix. Natural gasthat increases also the SDS scenario, represents
an opportunity for strategic repositioning for oil &gas companies, due to its lower carbon intensity
and the possibility of integration with renewablesources in electricity production. Although the IEA
SDS scenario foresees the oil demand reaching apeak in around 2020 and going down to 75 Mb/d
in 2040, the need for significant investments inthe upstream sector to compensate for the dropin production from existing fields. There isresidual uncertainty linked to the effect that
regulatory developments and breakthroughtechnologies could have on the scenario, with aconsequent impact on the company businessmodel.
Regulatory developments. The adoption ofpolicies (e.g. reduction of emissions, also fromdeforestation; carbon pricing; development of
renewable sources; energy efficiency;
diversification of electricity production; advanced
biofuels; electric vehicles; etc.) designed tosupport energy transition to low carbon sources
could have significant impacts on the business.
The differentiated approach by Country could
provide an advantage for the development of
new business opportunities.

Technological developments. Technologies tocapture and reduce GHG emissions as well asleaks of natural gas along the oil & gas value
chain will be fundamental for affirming thedominant role of natural gas in the global energy
mix. On the other hand, technologicaldevelopment in the field of renewable energy
production and storage and in the efficiency ofelectric vehicles could have impacts on the
demand for hydrocarbons and therefore on thebusiness. The capacity to rapidly intercept andintegrate technological break-throughs in thebusiness will play a key role in businesscompetitiveness.
Reputation. The increasing attention being given
to climate change has a negative impact on the
reputation of the entire oil & gas industry, seen as
one of the main parties responsible for GHG
emissions, with effects on the management ofrelations with the key stakeholders. The ability todevelop and implement strategies to adapt thebusiness model to a low-carbon scenario, as wellas the capacity to communicate these in atransparent manner provides an opportunity to
improve stakeholder perceptions.
Physical risks. The intensification of extreme/
chronic weather and climate phenomena could
result in an increase in costs (including insurance)
for adaptation measures to protect assets andpeople. The IPCC (Intergovernmental Panel on
Climate Change) scenarios predict that these
physical effects will manifest themselves mainly
over the medium to long-term. The exposure torisk is mitigated by the design requirements
adopted (defined to resist extreme environmental
conditions) and the insurance covers taken out.

Europe: Eni, 2017 Integrated Report, p. 95

The Task Force on Climate-related Financial Disclosures

32

Strategy Recommendation
Strategy c) asks companies to describe the resilience of their strategy, taking into considerationdifferent climate-related scenarios, including a 2°C or lower scenario. Figure 29 provides an oil
and gas company’s description of the sensitivity of its portfolio to changes in oil and gas prices
under different scenarios.

Figure 29

Excerpt from Financial Filing
Portfolio sensitivity test: To assess energy transition-related risks, Statoil has analysed the sensitivity
with changing the oil and gas prices and keeping other parameters constant, of its project portfolio(equity production and expected production from accessed exploration acreage) against theassumptions regarding commodity and carbon prices in the International Energy Agency’s (IEA) energy
scenarios, as laid out in their “World Economic Outlook 2017” report. The sensitivity analysis
demonstrated a positive impact of around 20% on Statoil’s net present value (NPV) when replacing
Statoil’s price assumptions as of 1 December 2017 with the price assumptions in the IEA’s New Policies
Scenario, a positive impact of 42% when using the price assumptions in the Current Policies Scenario,
and a negative NPV impact of approximately 13% when using the price assumptions in the Sustainable
Development Scenario. This sensitivity analysis is based on Statoil’s and the IEA’s energy scenario
assumptions which may not be accurate and which are likely to develop over time as new information
becomes available. Scenarios should not be mistaken for forecasts or predictions. Accordingly, there
can be no assurance that the assessment, which is presented in more detail in Statoil ASA’s 2017
Sustainability report, is a reliable indicator of the actual impact of climate change on Statoil’s portfolio.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

Europe: Statoil (now Equinor), 2017 Annual Report and Form 20-F, p. 69

D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures

33

Transportation Group23
AI Summary
Three hundred and thirty one transportationcompanies from 47 countries were included in the
AI review. They ranged from $261 billion to $862
million in annual revenue. Three hundred andninety two documents were reviewed, of which
72% were financial filings or annual reports and
28% were sustainability reports. The AI review
found the most common disclosures within thesample were on the targets used to manage
climate-related issues (Figure 30).
Disclosure Practices Summary
Most of the 25 transportation companies
disclosed information on their climate-relatedrisks and opportunities and the metrics used toassess or monitor such risks and opportunities.
The majority provided disclosures on climaterelated issues in their sustainability reports rather
than in financial filings. Other observations
include the following (Figure 30):

A
Introduction
B
Review of ClimateRelated Disclosures

Governance: The majority of the 25
transportation companies disclosed informationon the board’s role in overseeing climate-relatedrisks and opportunities, and several describedmanagement’s role in assessing and managing
climate-related issues.

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

Transportation Companies
Artificial Intelligence (331 Companies)
GovernanceInitiatives Supporting TCFD

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralMajority

Most

Majority

Most

Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralLegendTransportation|

E

AppendicesFigure 30

50%

Minimum

Average

Maximum

Strategy: Most of the 25 transportationcompanies disclosed information on climaterelated risks or opportunities, with opportunities described more often than risks. The majority ofcompanies disclosed the impact of climate-related issues on business, strategy, or financial
planning, and a few described the resilience of their strategies, taking into consideration different
climate-related scenarios.
Risk Management: The majority of the 25 transportation companies disclosed their processes
for identifying, assessing, and managing climate-related risks, but only some described whether
those processes were integrated with overall risk management.
Metrics and Targets: Most of the 25 transportation companies disclosed the metrics they use toassess or monitor climate-related issues, usually in alignment with the Global Reporting Initiative(GRI) standards. The majority disclosed Scope 1, Scope 2, and Scope 3 GHG emissions anddescribed the targets they use to manage climate-related issues.

23

Industries in the transportation group include air freight, passenger air, maritime transportation, rail transportation, trucking services, andautomobiles.

The Task Force on Climate-related Financial Disclosures

34

Examples of Disclosure Aligned with TCFD Recommendations
Strategy Recommendation
Strategy b) asks companies to describe the impact of climate-related risks and opportunities on
the company’s businesses, strategy, or financial planning. Figure 31 provides a transportationcompany’s description of some of the changes to its businesses to respond to climate change.

Figure 31

Excerpt from Sustainability Report
Responding to Climate Change
Classification

GHG emission
reduction atbusiness sites

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

2016 Achievements

Mid-to Long-term Directions



Met the target allocated by thegovernment under the Koreanemissions trading schemeIntroduced the energy storage
system (ESS), and began todevelop a co-generation system‒

Supply equipment: Improveequipment efficiency, operation,and technologyContinued efforts to save energy
and improve process efficiency –changed lighting and heat source
for material facilities, and adopted
high efficiency equipment‒

Production equipment:
Standardize operating hours andenergy sources‒

Indirect equipment: Standardize
management guidelines andoptimize energy uses of buildings‒

New technology: Adopt selfpower generation and renewableenergy sources

Mid-to long-term direction for GHG
emissions reduction at businesssites

Asia Pacific: Hyundai Motor Company, 2017 Sustainability Report, p. 63

D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures

35

Risk Management Recommendation
Risk Management a) asks companies to describe their processes for identifying and assessing
climate-related risks. Figure 32 provides a transportation company’s description of its process for
identifying and assessing sustainability issues, which includes climate-related issues.
Figure 32

Excerpt from Sustainability ReportA
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Europe: A.P. Moller–Maersk Group, 2017 Sustainability Report, p. 21

The Task Force on Climate-related Financial Disclosures

36

Strategy Recommendation
Strategy a) asks companies to describe the climate-related risks and opportunities they haveidentified. Figure 33 provides a mapping of a transportation company’s disclosure of climaterelated risks and opportunities.
Figure 33

Excerpt from Sustainability ReportA
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesNorth America: General Motors, 2017 Sustainability Report, p. 174 (format has been modified to fit page)

The Task Force on Climate-related Financial Disclosures37

Materials and Buildings Group24
AI Summary
Two hundred and seventy one materials andbuildings companies from 35 countries were
included in the AI review. They ranged from$205 billion to $4 billion in annual revenue. Fivehundred and eight documents were reviewed, of
which 57% were financial filings or annual reports
and 43% were sustainability reports. The AI review
found the most common disclosure within thegroup to be the metrics used to assess climaterelated issues in line with the companies’ strategy
and risk management (Figure 34).
Disclosure Practices Summary
The 25 materials and buildings companies
disclosed information aligned with therecommended disclosures primarily insustainability reports—at nearly twice the rate ofsuch disclosures in financial filings. Other
observations include the following (Figure 34):

A
Introduction
B
Review of ClimateRelated Disclosures

Figure 34

Materials and Buildings
Companies
Artificial Intelligence (271 Companies)
Governance

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendicesb.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralMajority

Most

Majority

Most

Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

Governance: The majority of the 25 materials
and buildings companies disclosed the role ofthe board and the role of management withrespect to climate-related issues. Some of thecompanies disclosed specific roles andresponsibilities of management related tosustainability; however, not all explicitly statedthat climate is included as part of theirsustainability program.

a.

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralLegendMaterials and Buildings|

50%

Minimum

Average

Maximum

Strategy: The majority of the materials andbuildings companies disclosed climate-related risks and opportunities and their impact on business,strategy, or financial planning. Some companies defined the climate-related issues in relation toshort-, medium-, or long-term timeframes. While only some of the companies disclosed theresilience of their strategies under different climate-related scenarios, the percentage of companies
disclosing this information was higher than most other groups. In addition, the companies that
disclosed this information often provided information on the climate-related scenarios used.
Risk Management: The majority of the 25 materials and buildings companies provided
information on how they identify or assess climate-related risks, and several disclosed theirprocesses for managing climate-related risks. However, only a few indicated climate-related risks
were integrated into overall risk management.
Metrics and Targets: The majority of the 25 companies disclosed information aligned with all
three recommended disclosures, including their Scope 1 and Scope 2 GHG emissions. In addition,
the companies usually disclosed climate-related metrics in alignment with the Global Reporting
Initiative (GRI) standards. The targets disclosed included ones related to GHG emissions andwater usage and generally included comparative performance results for the past several years.

24

Industries in the materials and buildings group include metals and mining, chemicals, construction materials, capital goods, and real estate
management and development.

The Task Force on Climate-related Financial Disclosures

38

Examples of Disclosure Aligned with TCFD Recommendations
Risk Management Recommendation
Risk Management a) asks companies to describe their process for identifying and assessing
climate-related risks. Figure 35 provides a mining company’s description of its approach forassessing climate-related risks.
Figure 35

Excerpt from Sustainability Report
Risk
Management

Rio Tinto has used an internal price on carbon as an input for investment decisions since1998. We use carbon price projections to assess the possible impact on costs and productprices. These price projections are calculated based on input from internal and external
technical experts, and use existing short-term market data and alternative price forecasts.
In 2017, we undertook an assessment of our operations to the physical risks of climatechange. This has provided us with a better understanding of exposure at each asset topotential changes in climate variables such as temperature, sea level rise, water risk andclimatic extremes in the regions where our assets are located. The next stage of this study
will look at operational characteristics and existing risk controls, to build up a Group view ofthe physical risks of climate change.
In the near term, we manage for physical risk impacts, such as extreme weather events, bymonitoring our exposure using seasonal weather outlooks, and ensuring sites have a
response plan for extreme weather events.

A
Introduction

Europe: Rio Tinto Group, 2017 Sustainable Development Report, p. 34

B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

Metrics and Targets Recommendation
Metrics and Targets a) asks companies to disclose the metrics used by the company to assessclimate-related risks and opportunities in line with its strategy and risk management process.
Figure 36 provides a steel company’s disclosure of its climate-related metrics.
Figure 36

D
Preparer Perspective: Oiland Gas Industry

Excerpt from Annual Report
Classification
Environment

Indicator
Air pollutant emissions

E
Initiatives Supporting TCFD
Appendices

SOx
NOx
Dust

Energy consumption6)
GHG emissions

SCOPE1+SCOPE2
SCOPE1 (direct emissions)
SCOPE2 (indirect emissions)
CO2 emissions per ton of steel (direct)
CO2 emissions per ton of steel (indirect)
Water
Water consumption
Municipal water
Surface water
Underground water
Wastewater discharge
Waste7)
Waste generated
Waste volume(recycled)
Waste volume(disposed)
Landfill(in-house/outsource)
Incineration(in-house/ outsource)
Chemical substance discharge
Air quality
Investment in
Water quality
environmental facilities
Recycling and other
Costs for environmental facility operation
Environmental costs
and recycling
Depreciation costs
Administrative costs
Environmental R&D costs
Energy recovery costs
Total

Unit
K tons/year
K tons/year
K tons/year
TJ
K tons CO2e
K tons CO2e
K tons CO2et-CO2/t-s
t-CO2/t-sMillion m3/year
Million m3/year
Million m3/year
Million m3/year
Million m3/year
10K tons/year
10K tons/year
10K tons/year
10K tons/year
10K tons/year
Tons/year
KRW in billion
KRW in billion
KRW in billion

2015
21.3
32.3
3.4
355,877
72,33968,147
4,192
1.83
0.11
155.1
34.9
113.6
6.5
57.2
1,172
1,144
27
24
3
78
92
34
43

2016
21.5
33.5
3.5
355,649
70,367
66,888
3,479
1.78
0.1
154.5
34.4
111.9
8.3
56.2
1,110
1,051
59
52
7
82*
70.9
52.1
26.8

2017
21.3
30.9
3.4
353,463
70,70067,743
2,956
1.82
0.08
160.8
37.2
116.9
6.6
57.8
1,059
1,020
39
32
7
81
100.9
50.6
44.9

KRW in billion

778

804

801

KRW in billion
KRW in billion
KRW in billion
KRW in billion
KRW in billion

174
51
10
47
1,060

174
52
14
56
1,100

189
51
13
51
1,105

3) Commercial initiative: Social contribution expenses for advertisements
6) Based on the figures on the statement submitted to the government. Electricity consumption was totaled up by converting into 3.6 TJ/GWh on the recommendation of the CDP.
7) Settled in accordance with domestic waste reporting standards.(2015, 2016)* Corrected numerical errors in past years

Asia Pacific: POSCO, 2017 POSCO Report, p. 39

The Task Force on Climate-related Financial Disclosures39

All Four Recommendations
Given the variety of reporting venues companies use, some investors have expressed thatmapping the location of disclosures that address the Task Force’s recommendations is helpful forfinding climate-related information more quickly. Figure 37 provides a metals and mining
company’s mapping of information related to each of the recommended disclosures and thelocation in the report.

Figure 37

Excerpt from Annual Report
Climate-related disclosures
Responding to climate change is an integral part of our strategy and operations. Therefore information relating
to climate change is contained throughout this Report. The table below shows how our disclosures in thisReport align to the TCFD recommendations, and where the relevant information can be found. Further
information can also be found in BHP’s Sustainability Report 2017, Climate Change: Portfolio Analysis (2015) andClimate Change: Portfolio Analysis – Views after Paris (2016).
TCFD recommendation

Disclosure

Location

Governance - Disclose the organization’s governance around climate-related risks and opportunities.
(a) Describe the Board’s oversight of climate-related risks and Board skills and experience – climate change 2.8
opportunities.
Sustainability Committee – role and focus
2.13.4A
Introduction(b) Describe management’s role in assessing and managing
climate-related risks and opportunities.

Our climate change strategy
1.10.6
Sustainability Committee – role and focus
2.13.4FY2017 STI performance outcomes
3.3.2
Strategy - Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s
businesses, strategy, and financial planning where such information is material.

B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry(a) Describe the climate-related risks and opportunities theorganization has identified over the short, medium, andlong term.

Sustainability risks
Operational risks
Climate change – overview

1.8.3
1.8.3
1.10.6(b) Describe the impact of climate-related risks andopportunities on the organization’s businesses, strategy,
and financial planning.

Sustainability risks
Operational risks
Portfolio evaluation

1.8.3
1.8.3
1.10.6(c) Describe the resilience of the organization’s strategy,
Portfolio evaluation
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Risk Management - Disclose how the organization identifies, assesses, and manages climate-related risks.

1.10.6

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

Managing performance and risk

1.5.2

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

Managing performance and risk
Sustainability risks

1.5.2
1.8.3

E

(c) Describe how processes for identifying, assessing, andManaging performance and risk
1.5.2
managing climate-related risks are integrated into the
Sustainability risks
1.8.3
organization’s overall risk management.
Sustainability KPIs
1.6.1
Metrics and Targets - Disclose the metrics and targets used to assess and manage relevant climate-related risks andopportunities where such information is material.
(a) Disclose the metrics used by the organization to assessclimate-related risks and opportunities in line with its
strategy and risk management process.

Sustainability KPIs

1.6.1(b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions, and the related risks.

Sustainability KPIs (GHGs)
Mitigation – GHGs
Low emissions technology

1.6.1
1.10.6
1.10.6(c) Describe the targets used by the organization to manage
climate-related risks and opportunities and performanceagainst targets.

Sustainability KPIs (GHGs)
FY2017 STI performance outcomes

1.6.1
3.3.2

Asia Pacific: BHP Billiton Limited, 2017 Annual Report, p. 51

The Task Force on Climate-related Financial Disclosures

40

Agriculture, Food, and Forest Products Group25
AI Summary
Two hundred and fifty agriculture, food, andforest product companies from 44 countries were
included in the AI review. They ranged from $91
billion to $615 million in annual revenue. Four
hundred and twenty five documents werereviewed, of which 66% were financial filings orannual reports and 34% were sustainability
reports. The AI review found the most common
disclosure within this sample was on the metrics
used to assess climate-related issues in line withthe company’s strategy and risk management
process (Figure 38).
Disclosure Practices Summary
Nearly all of the 25 agriculture, food, and forest
products companies disclosed information on
their climate-related risks or opportunities. The
agriculture, food, and forest products companies
primarily disclosed information aligned with therecommended disclosures in sustainability
reports rather than in financial filings. Other
observations include the following (Figure 38):

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Governance: The majority of the 25 companies
in the agriculture, food, and forest products
group disclosed information on the role of theboard in overseeing climate-related risks oropportunities; and several describedmanagement’s role in assessing and managing
climate-related issues.

Figure 38

Agriculture, Food, and Forest
Product Companies
Artificial Intelligence (250 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralMajority

Most

Majority

Most

Disclosure Practices (25 Companies)
Governance

a.
b.
a.

Strategy

b.
c.

Risk
Management

Metrics andTargets

a.
b.
c.
a.
b.
c.
Few Some

SeveralLegendAgriculture, Food,|and Forest Products
50%

Minimum

Average

Maximum

Strategy: Nearly all of the 25 agriculture, food, and forest products companies disclosed
information on their climate-related risks or opportunities, with many disclosing physical climaterelated risks related to the availability of water and raw materials. The majority provided
information on the impact of climate-related issues on business, strategy, or financial planning,but only a few companies disclosed information on the resilience of their strategies, taking into
consideration different climate-related scenarios. None of those companies described the use of
a 2°C or lower scenario in evaluating the resilience of their strategy.

Appendices

Risk Management: The majority of the 25 companies disclosed information on their processes
for identifying, assessing, and managing climate-related risks. Several companies provided
information that indicated those processes are integrated into their overall risk management.
Metrics and Targets: Most of the 25 companies disclosed metrics used to assess or monitor
climate-related risks, which often related to water availability. Most of the companies also
disclosed their Scope 1 and Scope 2 GHG emissions, but only a few disclosed their Scope 3 GHG
emissions. The majority of the companies described climate-related targets for the coming years
and current performance against those targets.

25

Industries in the Agriculture, Food, and Forest Products group include beverages, agriculture, packaged foods and meats, and paper andforest products.

The Task Force on Climate-related Financial Disclosures

41

Examples of Disclosure Aligned with TCFD Recommendations
Strategy Recommendation
Strategy a) asks companies to describe the climate-related risks and opportunities they haveidentified. Figure 39 provides a food company’s description of its climate-related risks andapproach to monitoring and managing those risks.
Figure 39

Excerpt from Financial Filing
OVERVIEW OF ACTIVITIES, RISK FACTORS
2.7 RISK FACTORSIDENTIFICATION OF RISKRISK MONITORING AND MANAGEMENTNatural and climate change risks
Natural risks
Danone’s geographic expansion sometimes leads
it to be present in regions exposed to naturalrisks, notably seismic. Natural disasters could
therefore cause damage to persons, property or
the environment, and directly affect Danone, its
consumers or the regions where it is present,
potentially having a negative impact on Danone’s
activities, financial situation and image.

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E

Climate change risks
Danone’s businesses are directly related to nature
and agriculture and are naturally faced withclimate change, which could have negative effects
on the natural water cycles, soil, biodiversity andecosystems. Climate change could therefore
affect the activity of Danone, its suppliers and its
customers, which could have negative impacts on
its results and financial situation.

Initiatives Supporting TCFD
Appendices

For its new site development projects, Danone
conducts a risk exposure analysis for such risks inorder to choose the site with the least possible
exposure. If, however, the site chosen (or the
existing site in the case of an expansion) is
exposed to these risks, the building constructionand equipment installation take into accountrecommendations from prevention/protection
experts to limit the potential impacts of thesenatural risks. In addition, each year, Danone
conducts a screening of its production sites’
localization to identify its exposure to water cycles
and climate change risks.
Danone is developing and implementing actions,procedures, tools and policies that seek toprevent and reduce these risks, notably its
Climate Policy which aims in particular to reduce
its greenhouse gas emissions, foster “carbon
positive” solutions, offer healthy and sustainableproducts, reinforce the resiliency of its water andfood cycles, and eliminate deforestation from its
supply chain by 2020.

Europe: Danone, 2017 Registration Document, p. 28

The Task Force on Climate-related Financial Disclosures

42

Risk Management Recommendation
Risk Management b) asks companies to describe their processes for managing climate-relatedrisks, and the guidance asks companies to describe their processes for prioritizing climate-relatedrisks, including how materiality determinations are made. Figure 40 provides a beveragecompany’s description of the factors considered in determining the materiality of issues.
Figure 40

Excerpt from Financial Filing
Business review (continued)
Our role in society
Sustainability & Responsibility review
Our vision is to create a positive role for alcohol in society, and an inclusive business that can play its part in a lowcarbon and water-resilient economy. Our 2020 sustainability and responsibility targets are designed to help us on thatjourney, by addressing the issues most material to our stakeholders, and to us as a business. They are core to our
growth, now and in the future.
Our sustainability and responsibility strategy is designed to support Diageo’s overall growth and performance. It
aims to make a positive contribution to society while building our business by growing our brands’ relationships with
consumers, strengthening our supply chain, supporting our productivity, and mitigating risk.
Key to our strategy is our assessment of our most material issues – those which are important to our stakeholders, theenvironment, and the future success of our business. These are reflected in our risk register and our growth plans too. That means
looking at what will matter to the world, and our business, in 2020, 2030, and even 2050. As a result, we prioritise addressing
climate change, water, non-communicable diseases, and empowering women – issues central to the UN’s Global Goals for
Sustainable Development.

A
Introduction
B
Review of ClimateRelated Disclosures

Europe: Diageo, 2017 Form 20-F, p. 119

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Metrics and Targets Recommendation
Metrics and Targets c) asks companies to describe the targets used by the company to manage
climate-related risks and opportunities and performance against targets. Figure 41 provides abeverage company’s disclosure of its climate-related targets.
Figure 41

Excerpt from Annual Report

AppendicesNorth America: FEMSA, Annual Report 2017, p. 27

The Task Force on Climate-related Financial Disclosures

43

A
Introduction
B
Review of ClimateRelated Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E

C User Perspectives
on Decision-Useful
Climate-Related
Financial
Disclosures

Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures

44

C. User Perspectives on Decision-Useful Climate-Related
Financial Disclosures
The purpose of this section is to provide companies that are implementing or considering
implementing the recommendations with examples of climate-related disclosures that anindividual investor or analyst (user) views as having decision-useful information aligned with oneof the Task Force’s recommendations. Each analysis was prepared by a user from a Task Forcemember’s company and represents the user’s individual views (rather than a consensus view of
the users on the Task Force). The users—buy side analysts, credit analysts, and a portfolio
manager—independently chose and assessed, based on their expertise, the companies anddisclosures discussed in this section.

1. Buy Side Analyst’s Perspective on a Consumer Goods Company
Unilever is a consumer goods company headquartered in the UK and the Netherlands. It makes
and sells around 400 brands in more than 190 countries. The document reviewed for thisassessment was Unilever’s financial filing—Annual Report and Accounts 2017—and the areas offocus are disclosures related to governance and strategy.26
A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Introduction
Unilever’s Annual Report and Accounts 2017 (report) is an integrated report, combining material
financial and non-financial data, and expressly states Unilever’s intention to apply therecommendations of the TCFD in the report. It contains four sections: a Strategic Report, aGovernance Report, the Financial Statements, and Additional information. One aspect ofUnilever’s ongoing strategy is the Unilever Sustainable Living Plan (USLP), which it expressly links
with positive commercial and financial outcomes throughout the report. USLP includes setting
targets aligned to the United Nations Sustainable Development Goals (UN SDGs or SDGs) andreporting on performance against those targets. Included among those are certified Science
Based Targets to reduce GHG emissions from its operations to align with a 2°C scenario.
Unilever’s report details the board’s governance of climate risks, and the ultimate responsibility ofthe board and executives for delivery, assessment, and management of climate-related risks andopportunities. One of four board committees is the Corporate Responsibility Committee, which
has specific responsibility for delivering on climate change and USLP objectives. Unilever has
enlisted a Big Four accounting firm to verify its accounting of GHG emissions and climate-related
risk in line with the GHG protocol.
Executive remuneration is determined, in part, by performance on the targets set out in the USLP,
including climate targets. Though the report explains how a portion of executive bonus pay isdetermined by performance on the Sustainability Progress Index, this disclosure could be clarified
by explaining how Unilever converts the USLP into a quantitative index, which can be used as amultiplier.
As part of its strategic review, Unilever outlines the findings of scenario analyses for both 2°C and
4°C scenarios. Though these are laudable, they could be enhanced by further disclosing themethodology employed and linking the scenarios to long-term financial performance metrics.
Disclosure Example: Governance
Implementation of Unilever’s sustainability strategy is made possible by board and executive
oversight and management. The report states that “[t]he Boards take overall accountability forthe management of climate change risks and opportunities with support from the ULE [Unilever
Leadership Executive] and the USLP Steering Team” (p. 32). Incentives are designed to promote

26

Unilever. Annual Report and Accounts 2017, February 2018.

The Task Force on Climate-related Financial Disclosures45

sustainability and management of climate-related risk;
long-term bonuses are linked, in part, to performanceagainst the USLP targets, including GHG emissions
reductions.

Governance
Disclose the organization’s governancearound climate related risks andopportunities.

One of four board committees is the Corporate
Responsibility Committee, which has responsibility foroverseeing the implementation of the USLP, including GHG emissions reductions targets. This
committee is also consulted by the Compensation Committee when assessing management’s
performance against sustainability targets. As shown on p. 64 of the report, performance onsustainability targets determines 25% of management- and executive-level, long-term
performance bonuses (Management Co-Investment Plan or MCIP) (Figure 42).

Figure 42

Excerpt from Financial FilingA

AT A GLANCE

MCIP

 Implemented in line with the2018 Remuneration Policy.

Introduction

ADDITIONAL INFORMATION
Performance conditions are assessed over a four-year period. The performance
conditions and target ranges for 2018 awards under the MCIP will be as follows: MCIP award to be made on [3]B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

Initiatives Supporting TCFDMCIP 2018 AWARDS

May 2018 (vesting 16
February 2022).

Weighting Paul Polman elected to invest

Underlying Sales Growth(CAGR, current rates)

the value of 67% (£1,353,400)
of his 2017 annual bonus into
the MCIP.

(CAGR, current rates)

invest the value of 67%(£659,531) of his 2017 annual
bonus in MCIP investment
shares.

Sustainability Progress Index

 Matching shares are awarded(Committee assessmentof USLP progress)

based on performance up to a
maximum of 3 x matching
shares.
from the matching shares for
the CEO would be £4,060,200
and for the CFO would be£1,978,594.

25%

Underlying EPS Growth Graeme Pitkethly elected to Therefore the maximum value

E

Appendices

ELEMENTS OF
REMUNERATION

Return on Invested Capital(exit year %)

Min

Max

1.5%

5.5%

0 x matching

3 x matching

6.0%

11.0%

0 x matching

3 x matching

25%

25%

17.0%

21.0%

0 x matching

3 x matching

Evaluated basis

25%
0 x matching

3 x matching

Performance at threshold results in no matching shares being awarded, target
performance results in an award of 1.5 x matching shares, up to a maximum
award of 3 x matching shares, with straight-line vesting between threshold andmaximum. Participants are required to hold all their own investment shares andremain employed by Unilever for the duration of the relevant performance
period.
It is the Committee’s intention that management should be assessed against the
progress they make on the USLP as a whole, rather than selected components of
it. Accordingly, each year the Committee will determine a numerical rating forthe previous year’s MCIP Sustainability Progress Index in the range of zero to200%, with 100% representing on-target performance; annual ratings will thenbe tallied as an average index for each four-year MCIP performance period. At
the end of the MCIP performance period, the Committee will disclose a fullnarrative setting out the performance achieved and the corresponding outcomethat the Committee determines for the Sustainability Progress Index.

Unilever, Annual Report and Accounts 2017, p. 64

Disclosure Assessment: Governance
Unilever’s report lays out the boards’ responsibility to deliver against climate targets. The fact that
one of only four board committees is the Corporate Responsibility Committee with ultimate
responsibility for the governance of the company’s sustainability targets shows that this is anorganizational priority and identifies the parties accountable for climate-related risks andopportunities. In the report (p. 44), the board’s effectiveness is assessed, noting “…the Committee
has agreed to further enhance its effectiveness by reviewing how the USLP has been embedded
into Unilever and how it should evolve.”
In terms of management oversight of climate-related risks and opportunities, Unilever has aligned
incentives to sustainability to performance. The company’s practice of tying management
The Task Force on Climate-related Financial Disclosures46

compensation to sustainability performance ensures that stewardship of sustainability does notstop at board level, but is required for success throughout the company. Compensation is a
powerful tool to embed board-level strategy throughout the company. This practice gives
investors assurance the plan will be taken seriously and targets are more likely to be met.
Though the report provides the calculus for management pay and shows that the Sustainability
Progress Index accounts for 25% of the MCIP (long-term incentive bonus), it does not provide agreat deal of detail on how the index is calculated.
It would be particularly useful to know what the Index rating was and exactly how the figures
were calculated. This would perform the dual purpose of clarifying progress against strategic
goals (something noted in the next section) and providing transparency on how sustainability isincorporated into management pay.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

Disclosure Example: Strategy
Unilever’s report clearly links its business strategy andsustainability strategy, including its performanceagainst climate and SDG targets. It highlights the factthat consumers are increasingly interested in moresustainable products and that its Sustainable Living
brands are enjoying growth at a rate 50% higher thantheir other products. The value-creation model, shownin Figure 43, incorporates sustainability,
demonstrating the company’s integrated approach.

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

Figure 43

Excerpt from Financial FilingD
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Unilever, Annual Report and Accounts 2017, p. 9

The report highlights on p. 32 that Unilever’s efforts to track and reduce GHG emissions havebeen part of its strategy since 1995; and the company noted that efforts have already benefited
their profitability, resulting in a €490 million reduction in energy costs since 2008.
The Task Force on Climate-related Financial Disclosures

47

The report also presents internal targets associated with the USLP (pp. 6-7). These include an
ambition to become carbon positive by 2030—a plan which entails using only renewable energy
in its manufacturing operations and providing renewable energy to the communities in which it
operates (p. 32). The GHG emissions reduction targets have been filed and reviewed by the
Science Based Targets Initiative, which has deemed them as aligned to a 2°C scenario, meaning
that—if they follow through on their commitments—their emissions will not exceed their
proportionate share of the 2°C carbon budget. Using verifiable and externally audited targets toguide their strategy provides investors comfort that Unilever is managing its exposure to climaterelated risks and aligning the business strategy to avail of climate-related opportunities that may
arise.
Finally, Unilever has implemented the TCFD’s recommendation to perform scenario analysis. The
company considered the impact of both 2°C and 4°C scenarios, based on the International Energy
Agency (IEA) scenarios. The report provides the summary findings of that exercise on p. 32 (seespecifically the bolded text in Figure 44).

Figure 44

Excerpt from Financial FilingA
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

UNDERSTANDING IMPACT
Climate change has been identified as a principal risk to
Unilever (see page 28). To further understand the impactthat climate change could have on Unilever’s business weperformed a high-level assessment of the impact of 2°C and
4°C global warming scenarios. The 2°C and 4°C scenarios areconstructed on the basis that average global temperatures
will have increased by 2°C and 4°C in the year 2100. Between
today and 2100 there will be gradual changes towards these
endpoints and we have looked at the impact on our businessin 2030 assuming we have the same business activities as we
do today. We also made the following simplifying
assumptions:E
Initiatives Supporting TCFD
Appendices

In the 2°C scenario, we assumed that in the period to2030 society acts rapidly to limit greenhouse gas
emissions and puts in place measures to restrain
deforestation and discourage emissions (for example
implementing carbon pricing at $75-$100 per tonne,taken from the International Energy Agency’s 450
scenario). We have assumed that there will be no
significant impact to our business from the physicalramifications of climate change by 2030 – ie fromgreater scarcity of water or increased impact of severe
weather events. The scenario assesses the impact on
our business from regulatory changes.
In the 4°C scenario, we assumed climate policy is lessambitious and emissions remain high so the physicalmanifestations of climate change are increasingly
apparent by 2030. Given this we have not included
impacts from regulatory restrictions but focus on thoseresulting from the physical impacts.

We identified the material impacts on Unilever’s businessarising from each of these scenarios based on existing
internal and external data. The impacts were assessed
without considering any actions that Unilever might take tomitigate or adapt to the adverse impacts or to introduce new
products which might offer new sources of revenue asconsumers adjust to the new circumstances.

The main impacts of the 2°C scenario were as follows:Carbon pricing is introduced in key countries andhence there are increases in both manufacturing costs
and the costs of raw materials such as dairy
ingredients and the metals used in packaging
Zero net deforestation requirements are introduced
and a shift to sustainable agriculture puts pressure on
agricultural production, raising the price of certain raw
materials

The main impacts of the 4°C scenario were as follows:Chronic and acute water stress reduces agricultural
productivity in some regions, raising prices of raw
materials
Increased frequency of extreme weather (storms andfloods) causes increased incidence of disruption to ourmanufacturing and distribution networks
Temperature increase and extreme weather events
reduce economic activity, GDP growth and hence sales
levels fall

Our analysis shows that, without action, both scenarios
present financial risks to Unilever by 2030,
predominantly due to increased costs. However, while
there are financial risks which would need to be
managed, we would not have to materially change ourbusiness model. The most significant impacts of bothscenarios are on our supply chain where costs of raw
materials and packaging rise, due to carbon pricing andrapid shift to sustainable agriculture in a 2°C scenario anddue to chronic water stress and extreme weather in a 4°C
scenario. The impacts on sales and our own manufacturing
operations are relatively small.
The results of this analysis confirm the importance of doing
further work to ensure that we understand the criticaldependencies of climate change on our business and toensure we have action plans in place to help mitigate theserisks and thus prepare the business for the futureenvironment in which we will operate. We plan to conduct
further analysis on the impact of climate change on our
agricultural supply chain and the impact of changing
weather patterns (including both persistent effects such as
droughts and the temporary effects of storms) on criticalmarkets and manufacturing.

Unilever, Annual Report and Accounts 2017, p. 32 (emphasis added)

The Task Force on Climate-related Financial Disclosures48

Disclosure Assessment: Strategy
Unilever’s report, through its integration of targets, risks, and use of third-party verified carbon
and environmental data, shows investors the company’s commitment and strategic approach toidentifying and managing climate-related risks and opportunities.
By setting Science Based Targets that ensure compliance with the 2°C carbon budget, they signal
to investors that the company’s exposure to regulatory and market risk in a 2°C scenario is likely
to be low. Clearly outlining annual performance against quantitative GHG and sustainability
targets alongside financial metrics invites investors to evaluate the likelihood of achieving (orexceeding) climate action goals. In their scorecard of USLP targets, however, in some instances
they fail to provide the information that would help investors understand their progress toward
their climate goals.
For example, one target is, “[b]y 2020 CO2 emissions from energy from our factories will be at or
below 2008 levels despite significantly higher volumes” (p. 7). This metric does not, however,indicate whether they are close to achieving this goal, since the metric is presented as “CO2 by
tonne of production,” a relative measure, which does not actually tell investors if they will achieve
their absolute target to reduce overall emissions from below 2008 levels by 2020.
A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Unilever’s report integrates their sustainability strategy with their business strategy and highlights
the financial benefits of initiatives such as their waste and emissions reductions and the improved
sales of their sustainable living brands as consumers begin to be more conscious of theirindividual environmental impact. By also including targets on the end use (Scope 3) impacts of
their products, they give investors a fuller picture of the company’s strategic management ofclimate impacts.
The scenario analysis gives investors the ability to understand the company’s exposure to climaterelated risk and demonstrates Unilever’s acknowledgement and preparation for potential impacts
of a 2°C or 4°C scenario. They discuss the actions they intend to take to manage the risks andopportunities identified in the scenario analysis. For example, they announce a program of work
called the Sustainable Agriculture Code (SAC) which they will launch in 2018 in an effort toimprove sustainability throughout their supply chains, thus mitigating their supply chain risk in a
2°C or 4°C scenario. They also reiterate their target of being “carbon positive” by 2030, stating:“Our 2030 carbon positive target commits us to eliminating fossil fuels from our manufacturing
operations by using only energy from renewable sources and supporting the generation of more
renewable energy than we consume, making the surplus available to the communities in which we
operate” (p. 32).
In future iterations of the report, investors would benefit from more detail on the methodology
employed in this scenario analysis. Though Unilever identifies some of the impacts it is likely toface in each scenario, they miss an opportunity to describe how they would fare in a scenario
where, for example, a carbon tax of $100t/kgCO2e were implemented. For example, given they
are on track to achieve significant emissions reductions and aim to be “carbon positive” by 2030,
they might discuss the possibility of a climate-related opportunity they may enjoy in the form of
improved market position if their competitors were penalized for emissions-intensity in a 2°C
scenario. Improved disclosure and depth in the scenario analysis would help investors to gain adeeper understanding of climate-related risks and opportunities.
Conclusion
Overall, Unilever’s report provides detailed disclosures addressing climate-related risks andopportunities and linking them clearly and specifically to current and future financial
performance, providing decision-useful information for investors. By using specific, time-limited,independently verified targets, they give confidence to investors that the disclosures are reliable.
Clearer presentation of progress against targets would help investors to evaluate the company’s

The Task Force on Climate-related Financial Disclosures49

climate-related performance. Board-level oversight and alignment of incentives to performanceagainst sustainability targets assures investors that these targets are genuinely integrated into thebusiness. The use of scenario analysis gives investors insight into the company’s climate-relatedrisks and opportunities. In the future, more detail on the methods and models used and further
disclosure of the financial impacts would be useful.

2. Credit Analyst’s Perspective on a Steel Company
SSAB is a Stockholm, Sweden-based steelmaker with primary operations in Finland, Sweden, andthe United States. The document reviewed for this assessment was the SSAB 2017 Annual Report
and the areas of focus are disclosures related to strategy and metrics and targets. 27

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

Introduction
SSAB’s 2017 Annual Report includes disclosures in accordance with the Global Reporting Initiative(GRI) disclosure framework and contains four components: a business review, corporate
governance report, GRI report, and the financial report. Although SSAB does not disclose any
analysis of scenarios regarding the transition to a low-carbon economy, as recommended by the
TCFD, it does report on seven of the United Nations Sustainable Development Goals (UN SDGs)
that it believes are closely linked to its business and where it believes it can have impact, including
goal 13 (Climate Action). Within the GRI report, SSAB provides an index of the various GRI
disclosures included in its report (pp. 144-145 for Environmental Standards). Many of these
disclosures also provide information aligned with the TCFD recommendations, particularly thoserelated to metrics and targets.
SSAB’S GRI environmental standards disclosures include:

Materials (Disclosures 301-1; 301-2)

Energy (Disclosures 302-1; 302-3; 302-4)



Water (Disclosure 303-1)

Emissions (Disclosures 305-1; 305-2; 305-3; 305-4; 305-5; 305-7)

Effluents and waste (Disclosure 306-2)

The company also provides a materiality assessment, with the topics for reporting defined incompliance with the requirements of the GRI Standards. Overall, the materiality assessment is
opportunity focused. There is little discussion of climate-related risks, only a recognition that“steel production is energy and resource intensive and has a significant impact on theenvironment. In both Sweden and Finland, SSAB’s blast furnaces are among the largest sources of
CO2 emissions.”

AppendicesDisclosure Example: Strategy
In its disclosures, SSAB clearly outlines a strategic decision
stemming from identified climate-related risks: that it aims
to be a fossil fuel-free steelmaker by 2045. As part of thisstrategy, the company discloses that it has entered into a
joint venture called HYBRIT with two other Swedish firms.
HYBRIT seeks to replace coking coal with hydrogen. SSAB
provides a descriptive case study on p. 59 of its Business
Review that summarizes the HYBRIT project (Figure 45,
p. 51).

27

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

SSAB. SSAB 2017 Annual Report, March 2018.

The Task Force on Climate-related Financial Disclosures

50

Figure 45

Excerpt from Annual ReportA
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

SSAB, SSAB Annual Report 2017, p. 59

On page 60 of its annual report, SSAB offers a discussion of financial impacts related to theproject—costs for the planning and design of the pilot plant—as well as a timeline for the project.
SSAB also estimates its future production costs as being “20%-30% more expensive” by goingfossil fuel free, based on today’s electricity costs but also notes that it expects electricity prices forrenewable sources to continue to drop and that it will ultimately be able to compete in the market
with traditional steel (Figure 46).

E
Initiatives Supporting TCFD
AppendicesFigure 46

Excerpt from Annual Report
Planning and designing the pilot plant is estimated tocost SEK 20 million and it was recently confirmed that
the Swedish Energy Agency will finance half of this,while the other half will be covered by SSAB, LKAB and
Vattenfall. The Swedish Energy Agency has earlier
contributed SEK 60 million to the pre-feasibility study
and a four-year-long research project.
The pilot phase is planned to last until 2024, after
which it will move to the demonstration phase in
2025–2035. The conclusion is that fossil-free steel,given today’s price of electricity, coal and CO2
emissions, would be 20–30% more expensive. With
falling prices in electricity from fossil-free sources andincreasing costs for CO2 emissions through theEuropean Union Emissions Trading System (ETS), thepre-feasibility study considers that fossil-free steel will,in future, be able to compete in the market withtraditional steel.

Already before a solution for fossil-free steel making isin place, SSAB aims to cut its joint carbon dioxide
emissions in Sweden by 25% by as early as 2025,
through conversion of the blast furnace in Oxelösund,Sweden. Between 2030–2040, the aim is convert also
the blast furnaces in Luleå, Sweden and Raahe, Finland
to eliminate most of the remaining CO2 emissions andto attain the target of being fossil-free by 2045.
To be able to carry out this project, however,significant national contributions are still required
from the state, research institutions and universities.
There has to be good access to fossil-free electricity,
improved infrastructure and rapid expansion of highvoltage networks, research initiatives, faster permit
processes and the government’s active support for thepilot and demonstration facilities and long term
support at the EU level.

SSAB, SSAB Annual Report 2017, p. 60

The Task Force on Climate-related Financial Disclosures

51

Also in the discussion on p. 60, there is a narrative on achieving a 25% reduction in CO2 emissionsin Sweden by 2025 through conversion of a blast furnace in Oxelosund to an electric arc furnace(EAF). SSAB also identifies two other furnaces it aims to convert to EAFs (one each in Sweden and
Finland) between 2030 and 2040. A timeline on the company’s sustainability section of its website,
depicts how these projects will phase in, the expected drop in emission associated with each
event, and the anticipated use of electricity through the period. SSAB provides an overview of therisks associated with its plans:“To be able to carry out this project, however, significant national contributions are still required
from the state, research institutions and universities. There has to be good access to fossil-freeelectricity, improved infrastructure and rapid expansion of high voltage networks, research
initiatives, faster permit processes and the government’s active support for the pilot anddemonstration facilities and long term support at the EU level.”
Disclosure Assessment: Strategy
In terms of understanding SSAB’s carbon exposure and strategy for addressing its emissions,these disclosures are “decision useful” in that they set objectives for emissions remediation andidentify near-term costs related to the identified opportunities. They also provide insight into
SSAB’s strategy and describe the actions taken to manage climate-related risks.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesAcknowledging the potential for higher operating costs gives context to future risk. While
recognizing the EAF conversions and HYBRIT in particular are long term projects, estimates of
longer term costs for both would be of added use, as would identifying the challenges associatedwith each. Greater granularity in the risk overview for these long-term projects would also bebeneficial.
Many of the climate-driven initiatives SSAB is pursuing would also benefit profitability (lower
energy usage, greater waste recycling, increased sales of high-strength steel to truck andconstruction equipment manufacturers), as discussed in the Business Review. A clear connection
between the company’s emissions strategy and overall operating strategy is articulated andinvestors are able to understand the overall value proposition of the actions and opportunities
the company has identified. The use of goals (short-, medium-, and long-term) with quantifiabletargets attached provides good insight into the company’s strategic direction.
Investors would benefit from scenario analysis to assess risks it may face associated with atransition to a lower-carbon economy, as well as discussion of any physical climate-related risks
SSAB faces and their potential financial impacts.
Disclosure Example: Metrics and Targets
In support of its sustainability strategy, SSAB provides welldefined, measurable short-term targets for GHG emissions,energy usage, and waste recycling. These targets are closely
tied with the company’s planning and performancemonitoring reporting.

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

SSAB discloses that the targets have been updated withincreased levels and a new target year of 2020 (previously 2019); all previous targets wereachieved faster than anticipated from when they were originally set in 2015. The original targets
are not disclosed. The current targets, discussed in the GRI Report, are:



A lasting emissions reduction of 300,000 tonnes in CO2 emissions (p. 125)
A lasting reduction of 400 GWh in purchased energy (electricity and fuels) (p. 120) (Figure 47,
p. 53)
A lasting improvement of 50,000 tones in residual (p. 115)

The Task Force on Climate-related Financial Disclosures

52

The target completion date for each is by the end of 2020 and the targets are set against a 2014baseline.
Within its energy disclosure, SSAB also discloses its energy consumption over the past five years
by fuel type (p. 119). The company also discloses it has purchased “guarantees of origin”
regarding renewable electricity for the share of electricity it buys in the Nordic countries, of whicha minimum of 30% is from hydropower and a minimum of 20% is wind power. SSAB currently
relies on electricity for 51% of its power needs, which will increase as it transitions to EAFs.

Figure 47

Excerpt from Financial FilingA
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

SSAB, SSAB Annual Report 2017, p. 120

D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesWithin the GRI discussion of each metric there is description of the progress made to date, adetailed accounting of the most important factors contributing to progress on meeting targets,and the yearly results over previous five years. In addition to robust discussion of the targets andprogress toward meeting them, the targets themselves are viewed to be strong: CDP considers
SSAB’s emissions reduction target among the strongest of the steel companies it assessed.
Due to the inherent difficulty industrial issuers such as steelmakers face in cutting theirconsiderable Scope 1 GHG emissions in the near term, SSAB encourages consideration of lifecycle emissions. Consistent with this approach, the company seeks to identify emissions savings
achieved by end use of its products; SSAB has set a target for customer CO2 savings of 10 million
tonnes annually by 2025, which equals SSAB’s Scope 1 emissions. Pages 49 and 50 of the Business
Review provide a detailed description and a case study of how the company calculates thesesavings. The sustainability section on the company’s website provides a more detailed discussion
and calculations for twelve additional applications where emissions savings can be achieved by
end users.
Pages 122-124 of the GRI Report provide disclosure and discussion of SSAB’s Scope 1, Scope 2,
and Scope 3 emissions (Figure 48, p. 54). Of note in the discussion:

Scope 1 emissions are calculated in accordance with the procedures in the GHG Protocol,
together with additional guidelines from the EU and/or national authorities.
Scope 2 methodology uses a grid average. This results in an overestimate because SSAB
does not take into account renewable energy it procures through its “guarantee of origin” –minimum of 30% hydropower; 20% wind power.

The Task Force on Climate-related Financial Disclosures53

Scope 3 GHG emissions are calculated using the GHG Protocol and a table is provided listing
Scope 3 GHG emissions by source. SSAB was assisted in calculating scope 3 by Gaia
Consulting. More information can be found in the report “SSAB Scope 3 Calculation Report
2017” on the company’s website.

SSAB also discloses GHG emissions intensity (p. 124) over the past five years, by activity.



Disclosure Assessment: Metrics and Targets
Disclosure around these metrics provides decision-useful insight into how SSAB intends toachieve its strategy for addressing climate-related risks. It also allows for monitoring of thecompany’s operational performance against these targets—a key indicator of the company’slevels of dedication and success in pursuing its strategy around mitigating climate-related risks.
Presentation of the methodology used to calculate Scope 3 GHG emissions savings achieved by
end users provides a meaningful basis for future evaluation of progress toward fully offsetting
Scope 1 GHG emissions by 2025. In addition, presentation of the GHG emissions calculation
methodologies for all types of emissions allows for greater comparability across different
companies’ disclosures. Financial disclosure around expenditures made to achieve progress todate and expected future spending would enhance the usefulness of these disclosures.
A

Figure 48

Introduction
B
Review of Climate-Related
Disclosures

Excerpt from Annual Report305-1, 305-2: GREENHOUSE GAS EMISSIONS1)
2017

2016

2015

2014

2013

9,117

9,323

8,850

8,910

8,643

Scrap-based steel production in US

690

644

581

651

651

Preparer Perspective: Oiland Gas Industry

Other reported sites

21

22

18

17

17

9,828

9,989

9,448

9,578

9,311

E

305-2: Indirect emissions from the generation ofpurchased electricity, heating and steam (Scope 2)
167

182

182

193

194

1,032

934

934

1,009

1,234

17

17

17

18

18

1,216

1,166

1,133

1,220

1,447

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D

Initiatives Supporting TCFD
AppendicesThousand tonnes
305-1: Direct greenhouse gas (GHG) emissions(Scope 1)2)
Iron ore-based steel production in Nordics

Total

Iron ore-based steel production in Nordics
Scrap-based steel production in US
Other reported sites
Total

Only CO2 is included in the calculation.
2)
Generation of electricity from process gases is included in the direct emissions (Scope 1).
1)

SSAB, SSAB Annual Report 2017, p. 123

Conclusion
Overall, SSAB’s disclosures provide a helpful level of specificity in the information provided
around its strategy and climate-related metrics and targets, and several decision-useful forwardlooking insights. Disclosure of such information can help give users of disclosure confidence thatthe company has concrete objectives and a plan for meeting them. Incorporation of scenario
analysis and additional disclosure around the costs of SSAB’s climate-related risk mitigation
activities would further help in understanding the potential for future impacts and outcomes ofthese efforts.

The Task Force on Climate-related Financial Disclosures54

3. Buy Side Analyst’s Perspective on a Banking Institution
ANZ (Australia and New Zealand Banking Group) is the third largest bank in Australia and thelargest bank in New Zealand. It operates in Asia, the Pacific, Europe, North America, and the
Middle East and serves retail, commercial, and institutional clients. Its presence in the Pacific, inparticular, implies that ANZ is exposed to areas vulnerable to rising sea levels. The documents
reviewed for this assessment include ANZ’s Climate-related Financial Disclosures and Climate
Change Statement. 28,29
Introduction
ANZ is an early supporter of the TCFD recommendations and one of the members of the United
Nations Environment Programme Finance Initiative (UNEP FI) pilot project on implementing the
TCFD Recommendations for banks. All 16 banks participating in this pilot have committed to
publishing an initial TCFD disclosure by mid-2019.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

Disclosure Example: Strategy
ANZ’s Climate-related Financial Disclosures report covers
each of the four major categories of the TCFD
recommendations. The strategy section discusses thepotential implications of two scenarios for ANZ’s customers
most exposed to transition risk, i.e., ANZ’s lending book. In
addition, the Climate Change Statement describes ANZ’s
policy on financing fossil fuel industries.

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

Disclosure Assessment: Strategy
The initial focus has been on customers in the thermal coal supply chain. The analysis provides
insight into the extent to which ANZ’s customers—and, hence, ANZ as a lender—are exposed tovarious climate-related scenarios, how these customers are preparing for the energy transition,and how ANZ can support customers to transition to a low-carbon economy (Figure 49).

Figure 49

Excerpt from Climate-related Financial Disclosures ReportE
Initiatives Supporting TCFD

What is scenario analysis?

AppendicesA scenario is not necessarily what the company thinks will happen, but what might happen.
Scenario analysis can be used to test whether business strategies are sufficiently robust and flexible
to withstand potential implications – in this case from climate change.
What did we do to test ANZ’s customers?
We chose two scenarios, and a group of customers, and took all the information we knew about
those customers and their strategy for managing climate change transition risks.
Once we understood how each customer had planned for climate change, we assigned a level ofcustomer awareness and a level of resilience to climate change risks.
We also assessed their disclosure of climate-related risks.
ANZ, 2017 Climate-Related Financial Disclosures, p. 2

ANZ discusses its policy towards financing fossil fuel industries, addressing implicitly investors’potential concern for stranded assets (Figure 50, p. 56). Although ANZ has an ambition to28

ANZ. Climate-related Financial Disclosures, 2018.

29

ANZ. Climate Change Statement, 2017.

The Task Force on Climate-related Financial Disclosures55

contribute to the energy transition, the bank also understands that fossil fuels will continue toplay a significant role in the energy mix for the coming decades. The focus is, therefore, on
supporting alternatives to fossil fuels, such as energy efficiency measures and renewableenergies, and on the most carbon efficient fossil fuel plants.
Figure 50

Excerpt from Climate Change Statement
FINANCING FOSSIL FUEL INDUSTRIESWe understand some of our stakeholders view our financing of fossil fuel industries as a material
risk and in direct conflict with our stated position on the need to reduce greenhouse gas
emissions. Today, around 40% of the world’s electricity comes from coal-fired power stations andcoal remains the cheapest source of fuel. We therefore consider that decarbonisation of theeconomy must be managed responsibly and over time.
To facilitate a gradual and orderly transition, ANZ makes the following commitments:

We will fund and facilitate at least $10 billion by 2020 to support our customers to transition to a
low carbon economy, including increased energy efficiency in industry, low emissions transport,
green buildings, reforestation, renewable energy and battery storage, emerging technologies(such as carbon capture and storage) and climate change adaptation measures

B
Review of Climate-Related
DisclosuresWe will consider financing new coal fired power plants if they use advanced technologies andhigher quality thermal coal to significantly reduce emissions to at least 0.8 tC02/ MWh.2 We will
not finance any new build of conventional3 coal fired power plants

C
User Perspectives on
Decision-Useful ClimateRelated DisclosuresWe will implement strengthened due diligence processes which govern our lending to coalmining, transportation and power generationA
Introduction

D

2 For example, ultra-supercritical plants using advanced, commercially proven low emissions technologies to reduce emissions
by up to ~50% compared to some existing subcritical plants.

Preparer Perspective: Oiland Gas Industry

3 “Conventional” plants are those not utilising advanced, commercially proven technologies (such as supercritical or ultrasupercritical boilers, gasification or circulating fluidised boilers) to significantly reduce CO2 emissions.

E

ANZ, 2017 Climate Change Statement, p. 1

Initiatives Supporting TCFD
Appendices

Investors would benefit from a wider coverage of customers (beyond coal supply chain) and risks,in particular physical risks. For instance, is ANZ still willing to provide mortgages for residential
and commercial real estate in flood-prone areas? How would a business-as-usual scenario (likely
leading to more than 3°C degrees of global warming) affect risk-return tradeoffs?
Disclosure Example: Metrics and Targets
ANZ’s Climate-related Financial Disclosures report covers
the evolution of the carbon intensity of financed energy
generation. In a separate subsection, ANZ discusses metrics
for other lending activities (qualitatively) and the footprint of
its own physical assets (office buildings and data centers,
quantitatively).

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

Disclosure Assessment: Metrics and Targets
Figure 51 (p. 57) provides some evidence for recent improvements in energy efficiency and may
be used to assess ANZ’s exposure to higher carbon prices. Investors would benefit from a morecomprehensive discussion of financed emissions. In particular, how are they measured (which
scopes are included)? Which sectors and asset classes are included? Would it be possible to add
forward-looking information?

The Task Force on Climate-related Financial Disclosures

56

Figure 51

Excerpt from Climate-related Financial Disclosures Report
3.3 WE REDUCED THE INTENSITY OF OUR FINANCED EMISSIONS
During 2017, we continued to reduce the emissions intensity of our direct exposure to electricity
generation in our project finance portfolio.
Average emissions intensity of ANZ financed energy generation
Tonnes of Carbon Dioxide per Megawatt hourA
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D

OutsideAustralia

2017

0.58

0.24

2016

0.62

0.16

2015

0.64

0.20

2014

0.77

0.25

Movement 2014–2017

-25%

-4%

The average emissions intensity of generation we finance continues to be below the grid average inAustralia and internationally.
The reduction in Australia is due to new renewable generation projects we finance. The finance of
new windfarms in Australia increased the amount of electricity generated from renewable sourcesfrom 30% in 2016 to 35% in 2017.
ANZ, 2017 Climate-Related Financial Disclosures, p. 5

4. Buy Side Equity and Credit Analysts’ Perspective on an Electric Utility
Company

Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Australia

Duke Energy is a diversified energy company with mostly regulated utility operations
headquartered in Charlotte, North Carolina. Its largest business consists of its electric utilities andinfrastructure segment, which serves approximately 7.5 million retail electric customers in six U.S.
states. The company’s gas utilities and infrastructure businesses provide natural gas to over 1.5
million customers located in five states. Duke Energy has also formed a joint venture to build andown the proposed Atlantic Coast Pipeline and has a $225 million investment in the Sabal Trail
Pipeline into Florida. The smaller commercial renewables business segment builds, develops, andoperates wind and solar generation projects throughout the continental U.S. The document
reviewed for this assessment was Duke Energy’s 2017 Climate Report to Shareholders.30
Disclosure Example: Strategy
In its disclosures, Duke Energy provides a clear strategy
focused on transforming the customer experience,
modernizing the power grid, generating cleaner energy,
expanding the natural gas infrastructure, and engaging
employees and stakeholders.

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

Duke Energy is committed to a lower-carbon future and has
incorporated carbon dioxide (CO2) emissions into its longterm planning. The company has retired older, less efficientcoal- and oil-fired power plants, built highly efficient natural gas generation, expanded its
30

Duke Energy, 2017 Climate Report to Shareholders, March 2018.

The Task Force on Climate-related Financial Disclosures57

portfolio of wind and solar resources, increased energy efficiency offerings, and invested in zeroCO2 emissions hydropower and nuclear plants.
Duke Energy has reduced CO2 emissions by 31% since 2005. In 2017, Duke Energy established agoal to reduce CO2 emissions 40% from 2005 levels by 2030. Beyond 2030, the company’s longterm strategy will continue to drive carbon out of the system.
Duke Energy’s 2017 Climate Report to Shareholders explains its business strategy (pp. 3-8) andsteps it is taking to address the risks described in Figure 52.
Figure 52

Excerpt from Climate Report
The purpose of this report is to provide information on Duke Energy’s strategy and the steps we aretaking to mitigate risks from climate change including: Physical Risk – How we are addressing issues such as managing water resources and hardening
the system against extreme weather; Policy Risk – How we are navigating policy uncertainty and planning for possible constraints on
CO2 emissions; andA
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

 Economic Risk – How we are strategically planning investments that will reduce the risk of
stranded assets and position the company well into the future.
As part of our Policy Risk analysis, we evaluated a “two-degree policy” where CO2 emissions are
sharply reduced in order to limit global temperature increase to no more than 2 degrees Celsius
above pre-industrial levels. This analysis provides high-level insights on one possible pathway
consistent with a carbon-constrained future, including potential long-term impacts on thecompany’s generation mix associated with a “two-degree policy” scenario. It is important to notethat our current plan to achieve a 40 percent reduction by 2030 is consistent with a pathway toachieve a science-based two-degree target.
Duke Energy, 2017 Climate Report to Shareholders, p. 1

E
Initiatives Supporting TCFD
AppendicesDisclosure Assessment: Strategy
The information in Duke Energy’s 2017 Climate Report to Shareholders is useful for investment
decisions because it clearly describes the climate-related risks associated with the company’s
existing power generation portfolios as well as strategies over the short, medium, and long term
to reduce CO2 emissions. In addition, Duke Energy describes alternate ways it plans to reduce CO2
emissions above and beyond changes to its power generation mix, including reducing the growthin demand for electricity through energy efficiency and smart grid modernization.

5. Portfolio Manager’s Perspective on a Mining Company
Teck Resources Ltd. (Teck) is an integrated natural resource group with activities in mining,smelting, and refining. The company mines zinc, copper, molybdenum, gold, and metallurgicalcoal in the United States, Canada, Peru, and Chile. Teck also produces refined metals, specialized
metal products, and other products.
Teck produces zinc, metallurgical coal, and copper. Its Red Dog mine in Alaska holds some of theworld's largest zinc reserves. The company's coal business operates through subsidiary Fording
Canadian Coal Trust, which mines copper in Canada, Chile, and Peru. Teck’s energy segment
consists of stakes in three oil sands projects in Canada that are in the development stage. In 2012,
Teck acquired Canada's SilverBirch Energy, which holds a 50% stake in the Frontier oil sands

The Task Force on Climate-related Financial Disclosures58

mining project, for $425 million. The documents reviewed for this assessment, which focuses on
metrics and targets, include Teck’s 2017 Sustainability Report and 2017 Sustainability
Performance Data. 31,32
Disclosure Example: Metrics and Targets
Teck’s 2017 Sustainability Report includes considerable data
and references a downloadable spreadsheet ofsustainability performance data—2017 Sustainability
Performance Data—that is a good prototype for its industry.
The data in the spreadsheet covers topics such as economic
performance, workforce demographics, relationships with
communities, waste and product impacts, and energy andemissions.

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

This assessment draws on supplemental guidance for the Materials and Buildings group in the
Task Force’s Implementing the Recommendations of the Task Force on Climate-related Financial
Disclosures (Annex) and, in particular, the examples of metrics identified as possibly relevant tometals and mining companies. These metrics are included in Figure 53.
A
Introduction

Figure 53

Excerpt from TCFD Annex: Example Metrics for Metals and Mining

B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesFinancial
Category

ClimateRelated
Category

Revenues

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

Expenditures

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

Example Metric

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

Expenditures Energy/FuelTotal fuel consumed—percentage from coal, natural gas, oil,
GJ
and renewable sources

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

Expenditures Water

Percent of fresh water withdrawn in regions with high orextremely high baseline water stress

GJ

Percentage

Task Force on Climate-related Financial Disclosures, Implementing the Recommendations of the Task Forceon Climate-related Financial Disclosures, pp. 60-61

Disclosure Assessment: Metrics and Targets
In its 2017 Sustainability Performance Data spreadsheet, Teck provides energy consumption by
type, Scope 1 and Scope 2 GHG emissions by fuel type over the past four years, and coal, copper,
zinc and lead production intensity that helps analysts compare Teck to other industry participants
on a like-for-like basis (Figure 54, p. 60). This information largely addresses the energy and fuelconsumption and adaptation metrics included in Figure 53. In addition, by collecting additional
data (separately disclosed by the company) on production, it is straightforward to calculateenergy expenditures relative to volume, revenues, or other metrics with good accuracy.
The only missing item in terms of disclosure might be the proportion of energy from renewablesources, though this may not be possible without footprinting the grids to which the company is
31

Teck Resources. 2017 Sustainability Report, April 2018.

32

Teck Resources. 2017 Sustainability Performance Data, April 2018.

The Task Force on Climate-related Financial Disclosures59

connected. In addition, this data might not be meaningful if Teck cannot source energy frommultiple sources.

Figure 54

Energy Consumption by Type(1)
2017

2016

2015

2014

16,287

15,141

15,861

17,256

275

264

266

221

Coal

3,720

3,420

3,123

2,792

Natural Gas

7,851

7,744

7,206

7,251

Coke & Petroleum Coke

424

455

635

1,379

Other

869

862

1,606

2,126

Electricity

14,473

14,651

14,463

14,037

Total

43,89942,53843,15945,062

DieselGasoline(1) Other includes propane, waste oil, and other process fuels.

Scope 1 and Scope 2 GHG Emissions by Fuel Type(1),(2)A
Introduction

DieselB
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

2017

2016

2015

2014
1,248

1,179

1,095

1,147

Gasoline

19

18

18

15

Coal

359

324

298

272

Natural Gas

395

389

362

365

Coke and Petroleum Coke

47

50

64

135

Other

97

97

147

180

Fugitive Emissions

586

578

525

579

Electricity

328

379

373

343

3,010

2,931

2,934

3,135

D

Total

Preparer Perspective: Oiland Gas Industry(1) Scope 1 (Direct) GHG emissions are those that occur from energy sources that are owned or controlled by the company.
(2) Scope 2 (indirect) GHG emissions are those that occur from the generation of purchased electricity consumed by the company,
and physically occur at the facility where electricity is generated.

E
Initiatives Supporting TCFD
Appendices

Steelmaking Coal Production Intensity
Type

2017

2016

2015

2014

Energy Intensity (energy used per tonne ofproduct)

0.73

0.65

0.69

0.7

Carbon Intensity (carbon emitted per
tonne of product)

0.067

0.06

0.062

0.065

Copper Production Intensity
Type

2017

2016

2015

2014

Energy Intensity (energy used per tonne ofproduct)

50.46

43.72

41.2

46.65

Carbon Intensity (carbon emitted per
tonne of product)

2.86

2.65

2.54

2.86

Zinc and Lead Production Intensity
Type

2017

2016

2015

2014

Energy Intensity(energy used per tonne ofproduct)

12.81

12.05

12.52

12.06

Carbon Intensity(carbon emitted per
tonne of product)

0.56

0.53

0.55

0.54

Teck, 2017 Sustainability Performance Data

The Task Force on Climate-related Financial Disclosures60

In terms of adaptation, the company discloses the effect of energy reduction and emission
projects (Figure 55). This data enables the analyst to place the company on the IEA "glide path" foradaptation to a 2°C world using IEA emission and carbon budgets for each industry.

Figure 55

Energy Reduction Projects(1)Cumulative reductions in energy fromprojects implemented since 2011(TJ)

2017

2016

2015

2014

2,132

1,550

1,200

1,050

2017

2016

2015

2014

281

217

200

170

(1) Calculations made using 2011 as the baseline year.

GHG Emission Reduction Projects
Cumulative reductions in GHG
emissions since 2011 (kt)Teck, 2017 Sustainability Performance DataAIntroduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The other major area of impact and disclosure is around water stewardship. Similar to its energyrelated disclosures, Teck has extensive disclosure around water used, reused, and recycled(Figure 56 and Figure 57, p. 62). Water intensity (relative to tonnage) is disclosed and company-

Figure 56

Water Used, Reused, and Recycled (million m3)
2017

2016

2015

2014

Total water inputs

365.4

346.5

333.2

391.6

Total water outputs

376.3

353.4

340.2

388.7

Total water use(1)

291.9

285.3

285.9

326.7

New water use

117.3

117.9

115.5

128.4

Water reused/recycled(1)

174.6

167.3

170.4

198.4

Reused/recycled as % of total new water use(1)(2)

149%

142%

148%

155%

(1) The figures for 2014-2016 have been restated due to improved methodology for reporting total water reuse at our Red Dog
Operations.
(2) The percentage calculation is based on the total volume of water reused/recycled divided by the total volume of new water used.

New Water Use Intensity at Coal Operations(1)2017
New water use (million m )Raw coal processed (tonnes)

2016

2015

2014

11.3

15.5

14.9

15.4

40,706,000

38,871,000

35,302,000

40,424,000

0.28

0.4

0.42

0.38

3

New water use intensity (million
m3/tonne)(1) Includes Cardinal River, Coal Mountain, Elkview, Fording River, Greenhills and Line Creek operations.

New Water Use Intensity at Milling and Flotation Operations(1)2017
New water use (million m3)
Ore processed (tonnes)

2016

2015

2014

33.1

28.0

27.2

29.5

74,356,000

72,262,000

69,186,000

72,565,000

0.45

0.39

0.39

0.41

New water use intensity (million
m3/tonne)(1) Includes Red Dog, Pend Oreille, Highland Valley Copper and Carmen de Andacollo operations.

Teck, 2017 Sustainability Performance Data

The Task Force on Climate-related Financial Disclosures61

wide water balance is calculated. This level of disclosure is unusually rich and clearly permits theanalyst to make like-for-like comparisons.

Figure 57

Total Water Use and New Water Use (million m3)
2017

2016

2015

2014

New water use (all operations)

117.3

117.9

115.5

128.4

Total water use (all operations)

291.9

285.3

285.8

326.7

New water use (mining operations only excludes Trail Operations)

46.2

45.2

43.7

46.8

Total water use (mining operations only excludes Trail Operations)

220.8

212.5

214.1

231.6

Company-Wide Water Balance (million m3)(1)(2)(3)
2017

2016

2015

2014
355.9

Water Inputs
A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

Surface Water

329.8

312.6

298.8

Groundwater

35.6

33.8

34.4

35.7

Third-Party Water

0.003

0.003

0.003

0.003

Total Water Inputs

365.4

346.5

333.1

391.6

New Water Used

117.3

117.9

115.5

128.4

Reused and Recycled Water

174.6

167.3

170.4

198.4

Water Inputs Discharged Without Use

248.1

228.5

217.7

263.3

Water Outputs

D

Surface Water

277.7

247

236.7

287.6

Preparer Perspective: Oiland Gas Industry

Other

60.7

61.9

58.6

55.8

Groundwater

35.1

41.5

42.4

43.5

Third-Party Water

2.7

3

2.4

1.8

Seawater

0.1

0.1

0.1

0.1

Total Water Outputs

376.3

353.4

340.2

388.7

Total Difference Between Water Inputs
and Water Outputs(10.70)

(7.0)

(7.1)

3.0

E
Initiatives Supporting TCFD
Appendices(1) Surface water includes water from precipitation and runoff that is not diverted around the operation, and water inputs fromsurface waterbodies that may or may not be within the boundaries of our operations. While we do not actively collect rainwater
for use in our operations, the quantities of rainwater and runoff inputs to our operations constitute the majority of our surface
water inputs, except at Trail Operations.
(2) Third-party water is water supplied by an entity external to the operation, such as from a municipality. We do not use wastewaterfrom other organizations.
(3) Other includes water that has evaporated and/or is not recoverable (e.g., contained in ore concentrate or tailings).

Teck, 2017 Sustainability Performance Data

Conclusion
Taken together with the sustainability report commentary, Teck discloses a high level of data with
granular detail that makes it possible for an analyst to make a detailed assessment of thecompany with respect to climate-related risk and ESG risk and to specifically make comparisons toother industry participants.

The Task Force on Climate-related Financial Disclosures

62

D Preparer
Perspective: Oiland Gas Industry

A
Introduction

B
Review of Climate-Related
Disclosures

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E

Initiatives Supporting TCFD
Appendices

The Task Force on Climate-related Financial Disclosures

63

D. Preparer Perspective: Oil and Gas Industry
Similar to the approach the Task Force used during the development of its 2017 report, the Task
Force again sought to understand the perspectives of both users of climate-related financial
disclosures and preparers of such disclosures. Section C. User Perspectives on Decision-Useful
Climate-Related Financial Disclosures provides individual users’ views on existing disclosurescontaining decision-useful information, while this section summarizes the views of a group of oil
and gas company preparers.
This group of preparers—the TCFD Oil and Gas Preparer Forum (Forum)—was established in
October 2017, by the World Business Council for Sustainable Development (WBCSD) with input
from the TCFD Secretariat. The Forum includes representatives from four large European oil andgas companies (Eni, Equinor, Shell, and Total), and its work is coordinated by WBCSD. 33 The Forum
recently released a report—Climate-Related Financial Disclosure by Oil and Gas Companies:
Implementing the TCFD Recommendations (Forum’s report)—with its findings, which aresummarized below.34 Excerpts from the Forum’s report are included to highlight how the four
member companies are implementing the TCFD recommendations today and how reporting may
continue to develop in the future, including through wider engagement with other companies inthe energy sector and with users of climate-related financial disclosures.
A
Introduction

1. Implementation Path

B
Review of Climate-Related
Disclosures

The Forum’s report highlights that the progression of disclosure content and the quality of
information depends on (1) input from and interaction between the preparers and users of
disclosures to balance users’ information needs and the interests of reporting companies,
including commercial sensitivities and (2) the continuing development of enabling conditions to
support effective disclosure including data collection processes, agreed definitions, and assurance
approaches.

C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

The Forum’s report also highlights that disclosures related to the Task Force’s recommendations
related to strategy and metrics and targets depend on a range of interpretations including“management analysis,” strategic discussion, and some forward-looking assessments and,
therefore, involve a greater degree of judgement than the recommendations related togovernance and risk management. As a result, the Forum notes the implementation pathway fordisclosures related to strategy and metrics and targets is likely to proceed through more steps
and at a different pace than disclosures on governance and risk management.

2. Current Disclosure Practices Aligned with TCFD Recommendations
One of the key areas of focus of the Forum’s report is an “illustrated guide” to reporting inalignment with each of the TCFD’s recommendations: Governance, Strategy, Risk Management,
and Metrics and Targets. The illustrated guide includes more than 30 examples of current
disclosures from Forum member companies that Forum members view as responsive to therecommendations as well as aspects of the supplemental guidance. Figure 58 (p. 65) describes
the types of information or topics covered in the disclosure examples in the Forum’s report,organized by each recommendation (category) and recommended disclosure (a, b, and c). Also
described below is the Forum’s perspective on each of the TCFD recommendations.

33

Membership in the Forum was deliberately restricted to a small number of oil and gas companies because of the limited time the Forum had
to complete its work and contribute to the Task Force's 2018 status report. Forum members include companies whose senior management
made public statements of support for the TCFD’s work and welcomed the initiative to further enhance transparency regarding climaterelated financial risk.

34

WBCSD, “Climate-Related Financial Disclosure by Oil and Gas Companies: Implementing the TCFD Recommendations,” July 2018.

The Task Force on Climate-related Financial Disclosures64

Figure 58

Topics Addressed in Disclosure Examples
Supporting Recommended Disclosure
Category
Governancea)b)‒ Outline the process for Board oversight of climate changec)
N/A‒ Identify roles and responsibilities for climate change‒ Define the frequency with which climate change is discussed by the Board‒ Show whether and how oversight and management of climate change risks andopportunities are taken into account in business and strategic decisions, risk
management, budgeting, performance and capital expenditure, acquisition anddivestment‒ Describe how management monitors climate-related issues

Strategy‒ Identify and describe material climaterelated risks‒ Sensitivity to carbon pricing and sensitivity to oil price‒ Identify and describe climate-related
opportunities‒ Descriptions of portfolio optimization‒ Describe the time horizons over whichclimate-related risk and opportunities
might affect the organization‒ Describe the process used to determine
which climate-related risks andopportunities could have a material
financial impact on the organization‒ Committed and uncommitted capital expenditure‒ Management of the cost base, production forecasts, internal rate of return, andbreakeven and cost of supply‒ Key quantitative assumptions/ parameters: population, GDP, final consumption, primaryenergy, CO2 emissions and emissions captured‒ Factors and options that support strategic and business resilience‒ The optimization and development of the business, its portfolio, new capabilities ortechnologies‒ Capital allocation and expenditure plans in place to support strategies‒ Identify that climate change risk is integrated into the organization’s overall risk management

Risk
Management ‒ Identify and describe the process for climate change risk management‒ Outline risk identification processes applied at the asset level‒ Outline use of impact metrics and prioritization matrices

Metrics andTargets‒ Identify emission reductions, flaring, methane emissions and carbon captured‒ Identify Scope 3 GHG emissions including the use of sold products‒ Demonstrate how operational metrics are used to manage climate-related risk and opportunities through target setting‒ Connect climate to strategy and financial planning

The Task Force on Climate-related Financial Disclosures

65Governance
Where climate change issues are already integrated into robust governance processes,
disclosures made in the ordinary course of reporting might already provide much of theinformation recommended by the TCFD about the processes and policies used for climate change
governance. Disclosure is useful when it complements that information with explanatory material
about why companies have made particular governance choices, how the policies are executed,
who is involved, and what decisions result from the policies.
Strategy
The TCFD recommends that companies identify climate-related risks and opportunities over the
short, medium, and long term and quantify their impact on the business, including analyses of theresilience of their strategy. Forum members have identified transition risks as typically being
more material than physical risks, with transition risks described in the risk section of theirfinancial filings. Forum members disclose the safeguards in place to minimize the possibility ofphysical risks becoming material risks. As physical risks are currently considered less material for
Forum members, their disclosure in this area can be more limited.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesAchieving consistent and comparable scenario analyses will be challenging given the range ofviews on the pace and implications of the transition to a low-carbon economy. Against abackground of uncertainty, the purpose of scenario analyses is therefore to inform strategy andassess resilience rather than as a forecasting tool. Forum members use cautionary language toexplain this uncertainty.
All Forum member companies use energy transition scenarios to inform choices and strategic
decisions. The companies disclose the inputs to and outputs of their scenario analyses including
strategic responses to the low-carbon transition, such as changes in portfolio mix or investment
in new technologies. Evidence of resilience to climate change risks can also be found inconventional measures such as capital and cost base flexibility, reserve life, capital allocationplans, or research and development (R&D) spending although these may not necessarily belabeled as specifically related to climate change.
Risk management
As with governance, where climate change is already integrated into a company’s overall risk
processes, Forum members question whether disclosures that specifically address risk
management related to climate change add value. However, disclosure is useful where it includes
information about how the risk management processes are applied to climate issues, such as
stress-testing new projects and identifying the relative significance of climate change in relation toother risks.
Metrics and targets
Forum members’ disclosures already include many of the climate-related metrics and targets
suggested in the TCFD’s Annex. However, the Forum report indicates the need for a progression
from operational to more financial measures. As disclosures develop in this area, the Forum’s
report anticipates greater linkage and coherence between operational metrics such as GHG
emissions, energy usage, strategic targets, management of risks and opportunities, and financial
metrics.

3. Challenges and Further WorkThe Forum’s conclusions are described on pages 41-42 of its report and are summarized below.
The Forum believes the foundations of effective climate-related financial disclosure practice are
already in place and that the progression and enhancement of climate-related financial disclosurefor the oil and gas industry is dependent on the continued development of content andcomplementary information.
The Task Force on Climate-related Financial Disclosures66

Standardization of Measures
Climate-related metrics are currently not standardized. To support comparability among oil andgas companies, standardized methodologies and a common level of disclosure could be
developed. Developments in disclosure practices are dependent not only on oil and gas
companies but also on continuing engagement with users. This will help to establish principles forthe disclosure of critical assumptions and may lead to the development of a simple standardized
resilience test for the industry.
Communicating Resilience
Analyzing and disclosing business resilience to different climate-related scenarios is considered
one of the more challenging areas of the TCFD’s recommendations. As many variables are needed
to illustrate resilience over the longer term, the complexity, uncertainty, and lack of consistency
between companies on scenario analyses can limit their value to users. Further work is required
to determine whether and to what extent longer-term resilience assessments can be developed inorder to make them comparable and meaningful to users.
Coherence and Linking
At this stage in climate-related financial disclosure, information, strategies, results, and ambitions
relating to climate change are often widely dispersed and disconnected (e.g., mainstream reports,
sustainability reports, submissions to surveys of rating agencies, investor presentations).

A
Introduction
B
Review of Climate-Related
Disclosures

Better linking and coherence in climate-related disclosures could be achieved by the following:C
User Perspectives on
Decision-Useful ClimateRelated Disclosures

D
Preparer Perspective: Oiland Gas Industry

E
Initiatives Supporting TCFD

Signposting and navigation tools could help to show where and how complementary
information is reported.
Connecting a company’s performance, targets, and ambitions with the level ofdecarbonization required to achieve national goals or to keep global temperature increase
below 2°C.
Presenting assumptions, results, strategies, and actions relating to climate change.

The Forum’s report acknowledges the limited and informal nature of engagement it was able toundertake with users of climate-related financial disclosures and highlights the need for ongoinginteraction between users and preparers of information along the implementation path.

Appendices

The Task Force on Climate-related Financial Disclosures

67

DRAFT – FOR DISCUSSION PURPOSES ONLY

AIntroduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

E Initiatives
Supporting TCFDC
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosureslxviii

E Initiatives Supporting TCFD
The Task Force recognizes that support from market participants is critical to its success as anindustry-led initiative. Since the release of the Task Force’s 2017 report, several groups have beenworking to help preparers of disclosure report information aligned with the recommendations,highlight user demand for climate-related financial disclosures, and build support for the Task
Force, significantly extending the reach of the recommendations. This section describes some of
the major initiatives supporting the TCFD.

1. Group-Focused Implementation Initiatives

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting
TCFD
Appendices

Since the release of the recommendations, an increasing number of organizations have begun towork together on implementation efforts. For example, the World Business Council on
Sustainable Development (WBCSD) formed an oil and gas industry working group to identify
examples of effective disclosure practices and consider how disclosures may evolve over time.
The group’s report was published in July 2018 and is summarized in Section D. Preparer
Perspective: Oil and Gas Industry. WBCSD plans to form two additional working groups for theutilities and chemicals industries. Members of the International Council for Mining and Metals(ICMM) also formed a working group to address TCFD implementation. The ICMM working group
has met throughout 2018 to advance members’ understanding of the TCFD recommendations,learn from industry leaders, and improve reporting. They are focused on ways to address
disclosure challenges in their industry, investor engagement, and sharing key lessons with othermembers of the ICMM.
Ceres has worked with its investor members to engage with companies in the oil and gas, electric
power, and transportation industries to address carbon asset risks and encourage reporting inline with the TCFD recommendations. Ceres has also published guidance to help companies in theelectric power industry with 2°C scenario analysis.
In the financial sector, the United Nations Environment Programme Finance Initiative (UNEP FI)
formed a TCFD pilot project in July 2017 to develop guidance on scenario analysis. In the pilot, 16
banks from around the world worked on modeling and stress testing with climate change experts
to develop a scenario-based approach for assessing the potential impact of climate change on
their lending portfolios. The group published two publicly available reports focused on scenario
analysis for banks: one on climate-related transition risks and opportunities and one on climaterelated physical risks and opportunities. UNEP FI launched a similar pilot project with a group of
20 investors in March 2018 and a pilot for insurance companies in July 2018.
The Institute of International Finance (IIF) has provided additional support for financial sector
organizations by integrating the TCFD recommendations into multiple aspects of its annual
agenda and bringing together organizations across banking, asset management, and insurance
industries to work toward greater alignment of disclosures with the TCFD recommendations.35 In
addition, the 29 global insurance companies that constitute ClimateWise have agreed to align“The ClimateWise Principles” with the Task Force’s recommendations.
The City of London Green Finance Initiative, China Green Finance Committee, and Principles for
Responsible Investment (PRI) together established a working group of financial institutions from
China and the United Kingdom to pilot TCFD reporting and help inform the direction of China’s
environmental disclosure guidelines. In September 2018, the pilot group released an action plan
outlining additional work related to the TCFD and improving climate-related disclosure.
The European Bank for Reconstruction and Development (EBRD) and the Global Centre of
Excellence on Climate Adaptation worked with financial and non-financial companies and others
to develop guidance on physical climate risks and opportunities, published in May 2018. The

35

Institute of International Finance, “IIF Launches Forum on Implementation of TCFD Recommendations.” December 7, 2017.

The Task Force on Climate-related Financial Disclosures69

guidance includes recommendations that are intended to support early efforts to adopt the TCFD
recommendations. In addition, in September 2018, the EBRD released a web tool with step-bystep examples of how the recommendations may be put into practice by businesses across a
range of sectors.
Other organizations assisting with adoption of the TCFD recommendations include the Climate
Disclosure Standards Board (CDSB), which secured a commitment from 19 companies toimplement the recommendations over three years, and Accounting for Sustainability (A4S), which
released a statement from over 60 corporate CFOs, CEOs of accounting bodies, and chairs ofpension funds committing to support and work towards adoption. Business for Social
Responsibility has incorporated TCFD into its climate work streams and is helping members inJapan and the United States adopt the recommendations.
The World Economic Forum (WEF) formed an Alliance of CEO Climate Leaders focused on
implementation of the recommendations and building support for effective carbon markets. In
addition, the Institutional Investors Group on Climate Change (IIGCC) formed an Investor Practices
Programme to focus on climate-related governance, strategic tools and metrics, and practicalsupport and guidance. In India, the Confederation of Indian Industry (CII) has been working withits members across India to build awareness of and support for the TCFD and to help its
members implement the recommendations.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting
TCFD
Appendices2. Investor Initiatives
Investors are also working to increase the availability of disclosures made in alignment with the
TCFD recommendations. One of the first of these initiatives to support the TCFD was a combinedgroup of 390 investors—coordinated by the Asia Investor Group on Climate Change (AIGCC), CDP,
Ceres, Investor Group on Climate Change (IGCC), IIGCC, and signatories of the PRI—that called on
G20 leaders and their nations to support the TCFD recommendations.
In addition, 289 investors with $30 trillion in assets under management committed to engage theworld’s largest corporate greenhouse gas emitters to strengthen climate-related disclosures byimplementing the TCFD recommendations as part of the Climate Action 100+.36 PRI published aguide to support asset owners implementing the TCFD recommendations. The guide focuses on
the actions asset owners can take to improve processes around governance, strategy, risk
management, and metrics and targets. Other investor groups have focused on specific industries.
For example, the Farm Animal Investment Risk and Return (FAIRR) initiative is working withinvestors and corporations in the food industry with a specific focus on using climate-related
scenario analysis.

3. Alignment of Reporting Guidelines
In developing its recommendations, the Task Force drew from the work of existing voluntary andmandatory climate-related reporting frameworks, including those developed by CDP, CDSB, theGlobal Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), PRI, andthe International Integrated Reporting Council (IIRC). As part of the work of the Corporate
Reporting Dialogue (CRD), several of these organizations have adjusted their frameworks basedon the TCFD recommendations to increase alignment of disclosure standards; and CDSB, CDP,
and PRI note where their disclosure standards and questions relate to the recommendations. In
addition, PRI and CDP included TCFD-aligned items in their 2018 reporting frameworks; and Box 2(p. 71) provides response rates on TCFD-aligned items in the those frameworks.37 In a September
2017 report, “Converging on Climate Risk: CDSB, the SASB, and the TCFD,” SASB and CDSB issued
36

Climate Action 100+ is led by Asia Investor Group on Climate Change; Ceres; Investor Group on Climate Change; Institutional Investors Groupon Climate Change; and Principles for Responsible Investment.

37

CDP response rates are as of August 22, 2018. The deadline for 2018 CDP questionnaires was August 29, 2018.

The Task Force on Climate-related Financial Disclosures70

a statement of agreement to further this harmonization. The report illustrates how the standards
and reporting frameworks align with the recommendations.
The Sustainable Stock Exchanges initiative updated its Model Guidance on Reporting ESG
Information, encouraging companies to support TCFD implementation, and the World Federationof Exchanges is taking the TCFD recommendations into account in revising its Environmental,
Social & Governance (ESG) Guidance & Metrics.

Box 2

TCFD Recommendations in PRI and CDP Frameworks
Principles for Responsible Investment
In late 2017, PRI integrated 14 climate-related indicators based on the TCFD recommendations into its
2018 reporting framework. Those indicators were marked with “CC” (climate change).
About one third of PRI 2018 respondents provided information on at least one of the 14 CC indicators. Of
these respondents, 132 are asset owners and 348 are asset managers, with the majority in Europe.
Number of Responses to PRI CC Indicators by Region
A
Introduction

Asia Pacific

B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting
TCFD

66

EuropeMiddle East and Africa

295
11North America
South America

103
5

0
100
200
Responded to CC-Indicators
On average, PRI respondents that provided
information on CC indicators most frequently
addressed CC indicators related to the TCFD
recommendation on risk management, followed bygovernance.
Twenty eight percent of PRI respondents thatprovided information on CC indicators opted toshare their information publicly.

300
400
500
600
700
Did not Respond to CC-Indicators

800

Preliminary Average Rates of Response
Governance

66%

Strategy

45%

Risk Management

74%

Metrics

30%

0%

Appendices

20%

40%

60%

80%

CDP Climate Change Questionnaire
The 2018 CDP climate change questionnaire was updated to include 25 new questions aligned with the
TCFD recommendations.
As of August 22, 2018, over 70% of the companies
that had submitted their CDP questionnaires
answered 21 or more of the 25 questions. These
results are preliminary as all responses were due
by August 29, 2018.
Of note, 1,612 out of 1,734 companies (93%) that
submitted their CDP questionnaires answeredquestions on how the organization’s process for
identifying, assessing, and managing climaterelated issues are integrated into the overall risk
management process. This information (RiskManagement c) was one of the lowest areas of
disclosure in the AI and disclosure practices
reviews.

The Task Force on Climate-related Financial Disclosures

Rates of Response for TCFD-Aligned
CDP Climate Change Questions
2%
26%

Number of TCFDAligned Questions
Answered
0 to 12 Questions
13 to 20 Questions72%

21 to 25 Questions71

4. Government Support
While the TCFD remains a voluntary initiative, support from governments can help develop aholistic approach to improving climate-related financial disclosures. To date, governments in
Belgium, France, Sweden, and the United Kingdom (U.K.) have expressed support for the TCFD. In
addition, financial regulators around the world, including in Australia, Belgium, France, Hong
Kong, Japan, the Netherlands, Singapore, South Africa, Sweden, and the U.K. support the TCFD.
The U.K. Green Finance Taskforce recommends that “relevant financial regulators should
integrate the TCFD recommendations throughout the existing U.K. corporate governance andreporting frameworks.”38
In August 2018, the European Commission published its Action Plan: Financing Sustainable
Growth, in which it commits to revise the guidelines of the Non-Financial Reporting Directive by
the second quarter of 2019 to include guidance on disclosing information in line with the TCFD
recommendations. The European Commission created the Technical Expert Group on Sustainable
Finance to implement elements of the Action Plan, including revising the guidelines.
In the Netherlands, the Sustainable Finance Platform—chaired by the central bank—has aworking group on climate risks that is developing tools for measuring and managing climaterelated risks and assessing gaps in approaches to the TCFD recommendations.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting
TCFD
Appendices

In Canada, the Minister of Environment and Climate Change and the Minister of Finance launched
an Expert Panel on Sustainable Finance, which will provide recommendations for the federal
government to build on the work of the TCFD in the fall of 2018. Additionally, a G7 investor
initiative led by Caisse de dépôt et placement du Québec and Ontario Teachers’ Pension Plan, in
collaboration with the Government of Canada and 11 global partner institutions, includes apledge to accelerate implementation of the TCFD recommendations.
In Japan, public support from the Financial Services Agency (FSA) and Ministry of the Environment(MOE) has helped encourage adoption of the recommendations. MOE is implementing initiatives
in response to the TCFD recommendations, such as plans to revise its Environmental Reporting
Guidelines and disseminate the experiences of companies that support the TCFD, particularly
related to scenario analysis. Additionally, the Ministry of Economy, Trade and Industry (METI) has
organized a project with corporations and investors to explore methodologies for climate
mitigation, sustainable growth, and building best practices for TCFD-aligned disclosure.

5. Tools and Resources
Recognizing the importance of providing preparers
and users of disclosures with resources related to the
TCFD recommendations, CDSB created the TCFD
Knowledge Hub: a dedicated online aggregator for
publicly available resources, events, and case studies
on climate-related disclosure in alignment with the
TCFD recommendations (Figure 59).

Figure 59

TCFD Knowledge Hub
To access resources,
events and casesstudies visit www.tcfdhub.org. Over 400
resources can be searched by TCFD
recommendation, region, industry, andresource type. Resources can also be
submitted for consideration for inclusionon the TCFD Knowledge Hub.

The TCFD Knowledge Hub houses guidance on the
TCFD recommendations, climate-related tools, and other resources for stakeholders to use foryears to come. CDSB and the TCFD Secretariat are currently working with resource and data
providers to provide more public access to climate-related tools. In addition, there are plans toinclude further examples of decision-useful climate-related disclosure as more become available.

38

Green Finance Taskforce, A report to Government by the Green Finance Taskforce: Accelerating Green Finance, March 2018, p. 8.

The Task Force on Climate-related Financial Disclosures

72

AA
Introduction
Introduction

AppendicesBB
Review of Climate-Related
Climate-Related
Risks,
Disclosures andOpportunities,
Financial Impacts
C
CUser Perspectives on
Decision-Useful ClimateRecommendations
andRelated Disclosures
Guidance
DD
PreparerAnalysis
Perspective:
Scenarioand Oiland Gas Industry
Climate-Related
Issues
EE
Initiatives
Key
Issues Supporting
ConsideredTCFD
andAreas for Further Work
AppendicesF
Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial DisclosureslxxiiiAppendix 1: Task Force Members
Chairman and Vice Chairs
Michael Bloomberg
Chair
Founder
Bloomberg LP and Bloomberg Philanthropies

A
Introduction

Graeme Pitkethly

Vice Chair
Executive Director
Banco Bradesco

Vice Chair
Chief Financial Officer
Unilever

Christian Thimann

Yeo Lian Sim

Vice Chair
CEO and Chairman of the Management Board
Athora Germany

Vice Chair
Special Adviser, Diversity
Singapore Exchange

Members

B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Denise Pavarina

Jane Ambachtsheer

Matt Arnold

Global Head of Sustainability
BNP Paribas Asset Management

Managing Director and Global Head of Sustainable
Finance
JPMorgan Chase & Co.

Wim Bartels

Bruno Bertocci

Partner Corporate Reporting
KPMG

Managing Director, Head of Sustainable Investors
UBS Asset Management

David Blood

Richard Cantor

Senior Partner
Generation Investment Management

Chief Risk Officer, Moody’s Corporation
Chief Credit Officer, Moody’s Investor Service

Koushik Chatterjee

Brian DeeseGroup Executive Director, Finance and Corporate
Tata GroupManaging Director, Global Head of Sustainable
InvestingBlackRock

Eric Dugelay

Liliana Franco

Partner, Sustainability Services
Deloitte

Director, Accounting Organization and Methods
Air Liquide Group

Takehiro Fujimura

Neil Hawkins

General Manager, Corporate Sustainability
Mitsubishi Corporation

Corporate Vice President and Chief Sustainability
Officer
The Dow Chemical Company

Thomas Kusterer

Diane Larsen

Chief Financial Officer
EnBW Energie Baden-Württemberg AG

Audit Partner, Global Professional Practice
EY

Stephanie Leaist

Eloy Lindeijer

Managing Director, Head of Sustainable Investing
Canada Pension Plan Investment Board

Chief, Investment Management, Member
Executive Committee
PGGM

The Task Force on Climate-related Financial Disclosures

74

Members (continued)
Giuseppe Ricci

General Manager, Risk Department
Industrial and Commercial Bank of China

Chief Refining and Marketing Officer
Eni

Martin Skancke

Rhian-Mari Thomas

Chair, Risk Committee
StorebrandGlobal Head of Green Banking
Barclays

Steve Waygood

Fiona Wild

Chief Responsible Investment Officer
Aviva Investors

Vice President, Sustainability and Climate Change
BHP

Martin Weymann

Michael Wilkins

Head Sustainability, Emerging & Political Risk
Management, Group Risk Management
Swiss Re

Global Head of Sustainable Finance
S&P Global Ratings

Jon Williams

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Ruixia Liu

Partner, Sustainability and Climate Change
PwC

Special Adviser
Russell Picot
Chair, Audit and Risk Committee, LifeSight
Board Chair, HSBC Bank (UK) Pension Scheme
Trustee
Former Group Chief Accounting Officer, HSBC

Secretariat
Mary Schapiro

Curtis Ravenel

Special Advisor to the Chair
Former Chair, U.S. Securities and Exchange
Commission

Global Head, Sustainable Business & FinanceBloomberg LP

Didem Nisanci

Jeff Stehm

Managing Director
Promontory Financial Group, an IBM Company

Director
Promontory Financial Group, an IBM Company

Stacy Coleman

Ani Kavookjian

Managing Director
Promontory Financial Group, an IBM Company

Sustainable Business & FinanceBloomberg LP

Mara Childress

Veronika Henze

Principal
Promontory Financial Group, an IBM Company

Head of Communications
Bloomberg New Energy FinanceObservers
Susan Nash

Joe PerryMember of Secretariat
Financial Stability Board

Member of Secretariat
Financial Stability Board

Rupert Thorne
Deputy to the Secretary General
Financial Stability Board

The Task Force on Climate-related Financial Disclosures75Appendix 2: Disclosure Selection and Review Methodology
As summarized in Section B. Review of Climate-Related Financial Disclosures of this report, theTask Force developed a two-pronged review approach (AI review and disclosure practices
review) to provide baseline information on the alignment of recent climate-related financial
disclosures with the TCFD recommendations.39 This appendix describes the Task Force’s
methodology for selecting and reviewing disclosures under the two approaches.

1. Companies Included in the Reviews
The Task Force focused its review on climate-related financial disclosures developed by thelargest companies in eight specific groups highlighted in the Task Force’s 2017 report. The eightgroups are Banks, Insurance Companies, Asset Managers, Asset Owners, Energy, Materials andBuildings, Transportation, and Agriculture, Food, and Forest Products. The Task Force selectedcompanies included in these reviews using the following methodology.
A
Introduction



B
Review of Climate-Related
DisclosuresC
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Identified universe of public companies—companies with public debt or equity—in therelevant groups and industries (more than 26,000) as well
as several hundred asset managers and asset owners.40
Figure 60
Ranked companies by size. The Task Force used annual
revenue to identify the largest companies in the four nonfinancial groups whereas total assets were used for banks
and insurance companies, assets under management for
asset managers, and assets owned for asset owners.
Selected the 400 largest companies in each group orindustry, except asset managers and asset owners where
the top 50 in each industry were identified (2,500 in total).
Adjusted population based on available documents andreview objectives as follows (see Figure 60 for the size ofthe final AI review population. For the disclosure practices
review, 200 companies were reviewed—25 in each group):oRemoved companies that did not have financial
filings available in English.

Size of AI Review
Population
Industry or Group

NumberBanks

301

Insurance Companies

311

Asset Managers

N/A

Asset Owners

N/A

Energy270

Materials and Buildings

271

Transportation

331

Agriculture, Food, andForest Products

250

Total

1,734

o

For the disclosure practices review, identified thelargest 25 companies that included the term “climatechange” in their most recent financial filings.41,42o

For the AI review, removed companies whose reports
could not be sufficiently processed (see Digitized Relevant Reports for more
information) and removed asset managers and asset owners.

Asset owners and asset managers were excluded from the AI review because, in many cases, thetypes of reports needed are not publicly available. In its 2017 report, the Task Force
39

The Task Force gratefully acknowledges the work of Richard Berriman and Joaee Chew from PwC in developing the AI technology, running the
AI review, and supplying supporting information for this report.

40

The Task Force used the Bloomberg terminal to identify over 26,000 public companies in the six groups and Willis Towers Watson’s “TheWorld’s 500 Largest Asset Managers” and “The World’s 300 Largest Pension Funds” to identify several asset managers and asset owners.

41

Because the disclosure practices review focused on companies more likely to disclose climate-related information, the Task Force needed asimple methodology for identifying such companies. Therefore, companies that used the term “climate change” in their financial filings wereselected for review. The Task Force recognizes this approach may not have captured all examples of climate-related financial disclosure.

42

For asset managers and asset owners, the Task Force reviewed a broader set of reports for the term “climate change” (annual reports,
sustainability reports, financial filings, or other public reports).

The Task Force on Climate-related Financial Disclosures76

recommended that companies provide climate-related financial disclosures in their public annual
financial filings (or other publicly available corporate reporting). However, the Task Forcerecognized comparable reporting by asset managers and asset owners to their clients andbeneficiaries, respectively, would usually occur in other types of financial reporting and may not
be publicly available. As a result, the Task Force decided to exclude asset managers and asset
owners from the AI review given the lack of a consistent set of public reports in the two industries.
To provide some insight on climate-related financial disclosures by asset managers and asset
owners to their clients and beneficiaries, respectively, the Task Force included them in thedisclosure practices review. The Task Force recognizes that, in many cases, the publicly available
reports reviewed for the two industries are simply a proxy and may differ from what is provided
to clients and beneficiaries on a confidential basis.

2. Documents Reviewed
A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry

The Task Force focused primarily on companies' fiscal year 2017 financial filings, most of whichwere released after the publication of the 2017 report, and fiscal year 2017 annual andsustainability reports. Reports for fiscal year 2016 were included if fiscal year 2017 reports were
not available at the time of review. In addition, integrated reports, documents incorporated byreference in financial filings, and other relevant documents were also reviewed. The Task Force
only selected documents available in English.
E
Initiatives Supporting TCFD

Appendices

Financial Filings (including 10-Ks, 20-Fs, annual report and accounts, and registration
documents): Reports that describe companies’ audited financial results under the corporate,compliance, or securities laws of the jurisdictions in which they operate. While reporting
requirements differ internationally, financial filings generally contain financial statements
and other information such as governance statements and management commentary.
Sustainability Reports (including Corporate Social Responsibility (CSR) and Environmental,
Social, and Governance (ESG) reports): Reports that describe companies’ impact on society,often addressing environmental, social, and governance issues.
Annual or Integrated Reports: Reports that describe companies’ activities for thepreceding year (annual reports) or the broader range of measures that contribute tocompanies’ long-term value and the role they play in society (integrated reports).
Documents Incorporated by Reference and Other Relevant Documents: Documents
formally incorporated into financial filings that contain required information, such as proxystatements in the U.S., other documents mentioned in a company’s financial filings orannual reports (e.g., climate-specific or scenario analysis reports), and publicly available
reports issued on an annual or periodic basis by asset managers or asset owners.

3. Review Methodology
To develop baseline information on the alignment of climate-related financial disclosures with the
Task Force’s 11 recommended disclosures (Figure 2, p. 2), the Task Force narrowed down each
recommended disclosure to a single yes-no question (Figure 61, p. 78). For example,
recommended disclosure a) under the Governance recommendation (Governance a) asks
companies to describe the board’s oversight of climate-related risks and opportunities. The yesno question for Governance a), Question 1, asked reviewers whether the company describes theboard’s or a board committee's oversight of climate-related risks or opportunities. If the reviewer
determined the answer was “yes,” the Task Force considered the company to have disclosure(s)aligned with Governance a). Importantly, this approach was not designed to assess the quality orcomprehensiveness of companies’ climate-related financial disclosures, but rather to provide anindication of the alignment of existing disclosures with the 11 recommended disclosures.
The Task Force on Climate-related Financial Disclosures77

Figure 61

AI and Disclosure Practices Review Questions#

Question

Recommended
Disclosure

1 Does the company describe the board’s or a board committee's oversight of Governance a)
climate-related risks or opportunities?

2 Does the company describe management’s or a management committee's

Governance b)

3 Does the company describe the climate-related risks or opportunities theStrategy a)

4 Does the company describe the impact of climate-related risks andStrategy b)

5 Does the company describe the resilience of its strategy, taking into

Strategy c)

6 Does the company describe the organization's processes for identifying

Risk Management a)

7 Does the company describe the organization's processes for managing

Risk Management b)

8 Does the company describe how processes for identifying, assessing, andRisk Management c)role in assessing and managing climate-related risks or opportunities?
organization has identified?

opportunities on the organization (e.g. businesses, strategy, or financial
planning)?
consideration different climate-related scenarios, including a 2°C or lower
scenario?

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD

and/or assessing climate-related risks?
climate-related risks?

managing climate-related risks are integrated into the organization's overallrisk management?

9 Does the company disclose the metrics it uses to assess climate-related risks Metrics and Targets a)or opportunities?

10 Does the company disclose Scope 1 and Scope 2, and, if appropriate Scope 3 Metrics and Targets b)
greenhouse gas (GHG) emissions?

11 Does the company describe the targets it uses to manage climate-related

Metrics and Targets c)risks or opportunities?

AppendicesDisclosure Practices Review
The Task Force formed a small group to review publicly available reports of 200 large
companies—25 from each of the eight groups—to determine whether those reports included
information aligned with one or more of the Task Force’s 11 recommended disclosures andgather additional information on climate-related financial disclosure practices. The sample of 200
companies was intentionally biased toward companies more likely to disclose information on
climate change. This was done so the Task Force could (1) provide insight on current climaterelated financial disclosure practices of large companies and (2) identify a robust set of disclosure
examples aligned with the recommended disclosures to train the models used in the AI review.43
Artificial Intelligence Review
The Task Force used AI technology to perform an automated review of several hundredcompanies’ public reports. The AI technology was based on a set of statistical language models
that were designed to answer the 11 yes-no questions tied to the recommended disclosures forcompanies in the four non-financial groups and for banks and insurance companies. The
development of the AI review approach consisted of four steps, as described below.
43

Because the AI review did not include asset managers and asset owners, disclosure examples for 150 companies (six groups with 25
companies each) were used to train the AI models.

The Task Force on Climate-related Financial Disclosures78

Digitized Relevant Reports
To use the AI technology to review companies’ reports, the reports first had to be “digitized” byrunning a program to extract text from each report. In some cases, the digitization program was
not able to extract all relevant text. Companies with one or more reports that could not be
digitized were removed from the review population. Ultimately, nearly 3,000 reports associatedwith 1,734 companies were processed, yielding over 7.9 million passages of text for review.
Trained AI Models to Identify Climate-Related Financial Disclosures
The statistical language models underlying the AI technology were trained using “labeled data,“
which was developed from the passages of text or excerpts identified as aligning with the 11 yesno review questions during the disclosure practices review. After the initial training, the models
were calibrated to account for potential biases between the labeled data from the 150 large
companies and the larger AI review population of 1,734.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Validated the AI Results
The AI technology allocated each excerpt with a likelihood that it aligned with the recommended
disclosures. Those excerpts were then categorized as either positive or negative results
depending on whether the likelihood of alignment was over or under a specific confidence level
for a given recommended disclosure. In addition, human reviewers performed a validation
exercise on a sample of 480 excerpts that were randomly drawn from excerpts that wereidentified as either positive results or negative results that were borderline cases. The validation
results, shown in Figure 62, were then used to adjust the confidence level necessary to judge an
excerpt as aligning with a recommended disclosure and to refine further the AI models.
Figure 62

AI Validation Results
Recommended Disclosure

Validation
results (a)Expected (a) The validation results are the true positive
rates for the sample of excerpts identified as
results (b)aligning with each of the recommended
77%
disclosures (i.e., the proportion of excerpts
74%
that the human reviewers agreed with AI
69%
sample).
79%(b) Each passage of text is attributed with aGovernance a

60%

Governance b

53%

Strategy a87%Strategy b

55%Strategy c

10%

50%

Risk Management a

37%

70%

Risk Management b

57%

65%

Risk Management c

53%

68%

Metrics and Targets a

73%

80%

Metrics and Targets b

83%

76%

Metrics and Targets c

87%

82%

likelihood of being a positive result throughthe AI review. The higher the likelihood, themore confident that an excerpt aligns with arecommended disclosure. The expected
results are the average of the likelihoods
across the sample of excerpts and hence theproportion that would be expected to be
returned as true positives.

Overall, the validation results were consistent with the expected results. However, the outputs
from the models were typically “over confident” that an excerpt aligned with a recommended
disclosure. In addition, the model for recommended disclosure Strategy c) performed very poorly.
For this disclosure, very few excerpts were identified through the disclosure practices review andavailable to train the AI model. Results for this disclosure are, therefore, unreliable.
Applied AI Models to Review Population
Finally, the revised AI models were applied to all excerpts from the reports of the 1,734
companies, and the results were aggregated for analysis by the 11 recommended disclosures, thesix groups, the reports in which relevant excerpts were found, and by the regions in which thecompanies were located.

The Task Force on Climate-related Financial Disclosures79Appendix 3: Glossary and Abbreviations
Glossary
BOARD OF DIRECTORS (or BOARD) refers to a body of elected or appointed members who
jointly oversee the activities of a company or organization. Some countries use a two-tiered
system where “board” refers to the “supervisory board” while “key executives” refers to the“management board.”44
CLIMATE-RELATED OPPORTUNITY refers to the potential positive impacts related to climatechange on a company or organization. Efforts to mitigate and adapt to climate change canproduce opportunities for companies, such as through resource efficiency and cost savings, theadoption and utilization of low-emission energy sources, the development of new products andservices, and building resilience along the supply chain. Climate-related opportunities will varydepending on the region, market, and industry in which an organization operates.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

CLIMATE-RELATED RISK refers to the potential negative impacts of climate change on a company
or organization. Physical risks emanating from climate change can be event-driven (acute) such asincreased severity of extreme weather events (e.g., cyclones, droughts, floods, and fires). They canalso relate to longer-term shifts (chronic) in precipitation and temperature and increased
variability in weather patterns (e.g., sea level rise). Climate-related risks can also be associatedwith 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.
DECARBONIZATION refers to a decrease in the “average carbon intensity of primary energy overtime.”45
FINANCIAL FILINGS refer to the annual reporting packages in which companies 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 governancestatements and management commentary.46
FINANCIAL PLANNING refers to a company’s consideration of how it will achieve and fund its
objectives and strategic goals. The process of financial planning allows companies to assess
future financial positions and determine how resources can be utilized in pursuit of short- andlong-term objectives. As part of financial planning, companies often create “financial plans” thatoutline the specific actions, assets, and resources (including capital) necessary to achieve theseobjectives over a 1-5 year period. However, financial planning is broader than the development ofa 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 theinterests of shareholders and other stakeholders.”47 “Governance involves a set of relationships
between an organization’s management, its board, its shareholders, and other stakeholders.

44OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.

45

IPCC, “3.4.1.1 Decarbonization trends,” Climate Change 2007: Working Group III: Mitigation of Climate Change, 2007.
Based on Climate Disclosure Standards Board, “CDSB Framework for Reporting Environmental Information, Natural Capital and AssociatedBusiness Impacts,” April 2018.
47
A. Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance, London, 1992.
46

The Task Force on Climate-related Financial Disclosures80Governance provides the structure and processes through which the objectives of theorganization are set, progress against performance is monitored, and results are evaluated.”48
GREENHOUSE GAS (GHG) EMISSIONS SCOPE LEVELS49

Scope 1 refers to all direct GHG emissions.
Scope 2 refers to indirect GHG emissions from consumption of purchased electricity, heat,or steam.
Scope 3 refers to other indirect emissions not covered in Scope 2 that occur in the value
chain of the reporting company, including both upstream and downstream emissions.
Scope 3 emissions could include: the extraction and production of purchased materials andfuels, 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. 50

MANAGEMENT refers to those positions a company or organization views as executive or senior
management positions and that are generally separate from the board.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFDRISK MANAGEMENT refers to a set of processes that are carried out by a company ororganization’s board and management to support the achievement of its objectives by addressing
its risks and managing the combined potential impact of those risks.
SCENARIO ANALYSIS is a process for identifying and assessing a potential range of outcomes of
future events under conditions of uncertainty. In the case of climate change, for example,
scenarios allow an organization to explore and develop an understanding of how the physical andtransition risks of climate change may impact its businesses, strategies, and financial
performance over time.
SCIENCE BASED TARGETS are targets adopted by companies to reduce greenhouse gas
emissions that are in line with the level of decarbonization required to keep global temperature
increase below 2°C compared to pre-industrial temperatures.51
SECTOR refers to a segment of companies performing similar business activities in an economy. A
sector generally refers to a large segment of the economy or grouping of business types, while“industry” is used to describe more specific groupings of companies within a sector.

Appendices

STRATEGY refers to an organization’s desired future state. An organization’s strategy establishes
a foundation against which it can monitor and measure its progress in reaching that desired
state. Strategy formulation generally involves establishing the purpose and scope of theorganization’s activities and the nature of its businesses, taking into account the risks andopportunities it faces and the environment in which it operates.
SUSTAINABILITY REPORT is a report that describes a company or organization’s impact onsociety, often addressing environmental, social, and governance issues.
VALUE AT RISK measures the loss a portfolio may experience within a given time horizon and at aparticular probability.
VALUE CHAIN refers to the upstream and downstream life cycle of a product, process, or service,including material sourcing, production, consumption, and disposal/recycling. Upstream activities
OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.
World Resources Institute and World Business Council for Sustainable Development, The Greenhouse Gas Protocol: A Corporate Accounting andReporting Standard (Revised Edition), March 2004.
50
IPCC, Climate Change 2014 Mitigation of Climate Change, Cambridge University Press, 2014.
48
49

51

Science-Based Targets Initiative, “What is a science-based target.”

The Task Force on Climate-related Financial Disclosures81

include operations that relate to the initial stages of producing a good or service (e.g., material
sourcing, material processing, supplier activities). Downstream activities include operations that
relate to processing the materials into a finished product and delivering it to the end user (e.g.,transportation, distribution, and consumption).

Abbreviations

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices2°C—2° Celsius

ICMM—International Council on Mining and Metals

3°C—3° Celsius

IEA—International Energy Agency

4°C—4° Celsius

IGCC—Investor Group on Climate Change

AI—Artificial Intelligence

IIF—Institute for International Finance

AIGCC—Asia Investor Group on Climate Change

IIGCC—Institutional Investors Group for Climate
ChangeANZ—Australia New Zealand Bank

IIRC—International Integrated Reporting Council

CDSB—Climate Disclosure Standards Board

IPCC—Intergovernmental Panel on Climate Change

CEO—Chief Executive Officer

kg—Kilogram

CFO—Chief Financial Officer

METI—Ministry of Economy, Trade, and Industry(Japan)CO2—Carbon Dioxide

MOE—Ministry of the Environment (Japan)

CO2e—Carbon Dioxide Equivalent

OECD—Organization for Economic Co-operation andDevelopment

CRD—Corporate Reporting Dialogue

PRI—Principles for Responsible Investment

CSR—Corporate Social Responsibility

R&D—Research and Development

EBRD—European Bank for Reconstruction andDevelopment

SASB—Sustainability Accounting Standards Board

ESG—Environmental, Social, and Governance
FAIRR—Farm Animal Investment Risk and Return
FSA—Financial Services Agency (Japan)
G20—Group of 20
GHG—Greenhouse Gas

TCFD—Task Force on Climate-related Financial
Disclosures
UN SDGs—United Nations Sustainable Development
Goals
UNEP FI—United Nations Environment Programme
Financial Initiative
WBCSD—World Business Council for Sustainable
Development
WEF—World Economic ForumGRI—Global Reporting Initiative

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Amundi. Registration Document 2017. April 10, 2018. http://about.amundi.com/Shareholders/FinancialInformation.
ANZ. ANZ Climate Change Statement. 2017. https://www.anz.com/resources/4/9/49dc76c2-d4b5-465e-aa027bf1f5714cad/anz-climate-change.pdf.
ANZ. ANZ Climate-Related Financial Disclosures. 2018.
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AP2. The Second Swedish National Pension Fund Annual Report and Sustainability Report 2017. March 2018.
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A.P. Moller–Maersk. 2017 Sustainability Report. February 2018. https://www.maersk.com//media/ml/migration/about/sustainability/reports/01-apmm-sustainability-report-2017-a3-180221final.pdf.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

Asia Investor Group on Climate Change, et al. “Letter from Global Investors to Governments of the G20
Nations.” July 3, 2017. https://www.ceres.org/sites/default/files/Global-Investor-Letter-to-G20Governments.pdf.
AXA Group. Registration Document 2017. April 2018. https://www-axa-com.cdn.axa-contento118412.eu/www-axa-com%2Fa3fd87ca-ce10-4c5a-8eab-dccc54d315c8_axa-ddr2017-en-pdf-eaccessible_02.pdf.
BHP. Annual Report 2017. September 20, 2017. https://www.bhp.com//media/documents/investors/annual-reports/2017/bhpannualreport2017.pdf.
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Cadbury, A. Report of the Committee on the Financial Aspects of Corporate Governance. London, 1992.
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Danone. 2017 Registration Document: Annual Financial Report. March 12, 2018. http://danone-danonecomprod.s3.amazonaws.com/Danone_-_Registration_Document_2017.pdf.

The Task Force on Climate-related Financial Disclosures

83Descombes, Laura, M. Päällysaho, and A. Heino. “SSAB scope 3 calculation report.” Gaia Consulting for
SSAB. March 9, 2018. https://www.ssab.com/company/sustainability/sustainability-documents.
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Eni. Integrated Annual Report 2017. April 6, 2018. https://www.eni.com/docs/en_IT/enicom/publicationsarchive/publications/reports/rapporti-2017/Integrated-Annual-Report-2017.pdf.
European Bank for Reconstruction and Development (EBRD). Advancing TCFD Guidance on Physical Climate
Risks and Opportunities. May 31, 2018. http://427mt.com/wp-content/uploads/2018/05/EBRDGCECA_final_report.pdf.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

EBRD. “Knowledge Hub.” https://www.physicalclimaterisk.com/knowledge-hub.
European Commission. Action Plan: Financing Sustainable Growth. August 3, 2018. https://eurlex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018DC0097&from=EN.
FEMSA. Annual Report 2017. April 24, 2018. http://www.annualreport.femsa.com/annual-report-femsa2017.pdf.
Financial Stability Board (FSB), “FSB assesses implementation progress and effects of reforms.” February
28, 2017. http://www.fsb.org/2017/02/fsb-assesses-implementation-progress-and-effects-of-reforms/.
FSB. “FSB to establish Task Force on Climate-related Financial Disclosures.” December 4, 2015. www.fsbtcfd.org/wp-content/uploads/2016/01/12-4-2015-Climate-change-task-force-press-release.pdf.
FSB. “Proposal for a Disclosure Task Force on Climate-Related Risks.” November 9, 2015. www.fsb.org/wpcontent/uploads/Disclosure-task-force-on-climate-related-risks.pdf.
Financial Stability, Financial Services, and Capital Markets Union. “Technical Expert Group on Sustainable
Finance (TEG).” European Commission, July 30, 2018.
https://ec.europa.eu/info/publications/sustainable-finance-technical-expert-group_en.
First State Super. Responding to Climate Change: A Case Study, May 2016. http://www.feal.asn.au/wpcontent/uploads/2016/08/FSS-Responding-to-Climate-Change-a-Case-Study_May-2016_FINAL.pdf.
G7 Global Initiatives. “Leading Canadian and G7 Investors Come Together in Support for Global
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news_release.pdf.
General Motors. 2017 Sustainability Report. June 12 2018. https://www.gmsustainability.com/_pdf/
downloads/GM_2017_SR.pdf.
Government of Canada. “Expert Panel on Sustainable Finance.” April 12, 2018. https://www.canada.ca/
en/environment-climate-change/news/2018/04/expert-panel-on-sustainable-finance.html.
Green Finance Initiative. “China-UK TCFD Pilot Group.” January 24, 2018.
http://greenfinanceinitiative.org/china-uk-tcfd-pilot-group/.
Green Finance Initiative. UK-China Climate and Environmental Information Disclosure Pilot – Action plan.
September 2018. http://greenfinanceinitiative.org/wp-content/uploads/2018/09/
GFI_UKChina_ENG_06.pdf.
Green Finance Task Force. A report to Government by the Green Finance Task Force: Accelerating Green
Finance. March 2018. https://assets.publishing.service.gov.uk/government/uploads/system/
uploads/attachment_data/file/703816/green-finance-taskforce-accelerating-green-finance-report.pdf.

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Hyundai Motor Company. Road to Sustainability: 2017 Sustainability Report. July 7, 2017.
https://www.unglobalcompact.org/system/attachments/cop_2017/400441/original/HMC_2017SR_Engli
sh_Interactive_Final.pdf?1499386286.
Intergovernmental Panel on Climate Change (IPCC). Climate Change 2007: Working Group III: Mitigation of
Climate Change. May 4, 2017. https://www.ipcc.ch/publications_and_data/ar4/wg3/en/ch3s3-4-1.html.
IPCC. Climate Change 2014: Mitigation of Climate Change: Working Group III Contribution to the Fifth
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15, 2014. https://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf.
International Energy Agency. “Chapter 2 of Perspectives for the Energy Transition - Investment Needs for a
Low-Carbon Energy System.” 2017.
https://www.iea.org/publications/insights/insightpublications/PerspectivesfortheEnergyTransition.pdf.
Intesa Sanpaolo Group. 2017 Consolidated Non-Financial Statement. March 2018.
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Institute of International Finance. “IIF Launches Forum on Implementation of TCFD Recommendations.”
December 7, 2017. https://www.iif.com/press/iif-launches-forum-implementation-tcfdrecommendations.
A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
AppendicesInstitutional Investors Group for Climate Change (IIGCC). “Russell Picot outlines IIGCC’s new Investor
Practices Programme that he will Chair.” http://www.iigcc.org/blog/russell-picot-outlines-the-newinvestor-practices-programme.
Ministry of Economy, Trade, and Industry (METI). “METI Establishes Study Group on Implementing TCFD
Recommendations for Mobilizing Green Finance through Proactive Corporate Disclosure.” July 23,
2018. http://www.meti.go.jp/english/press/2018/0723_002.html.
Ministry of the Environment (Japan). “Support of the Ministry of the Environment to TCFD (Task Force on
Climate-related Financial Disclosures established by the Financial Stability Board).” July 27, 2018.
https://www.env.go.jp/press/105756.html.
Ministry of the Environment (Japan). “Approval of the Ministry of Environment for the TCFD.“ July 2018.
https://www.env.go.jp/press/files/jp/109649.pdf.
MS&AD Insurance Group. MS&AD Integrated Report 2017. September 2017. https://www.ms-adhd.com/en/ir/library/annual/main/05/teaserItems2/00/linkList/0/link/msad_report_2017_all.pdf.
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Ontario Teachers’ Pension Plan. 2017 Annual Report. April 3, 2018.
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Park, Jacob, and David Wei. “How to Implement the TCFD Recommendations to Enhance Your Company’s
Resilience.” BSR, July 23, 2018. https://www.bsr.org/en/our-insights/blog-view/how-to-implement-tcfdrecommendations-to-enhance-company-resilience.
POSCO. POSCO Report 2017. July 2018. http://www.posco.com/homepage/docs/eng5/dn/
sustain/customer/2017_POSCO_Report_EN.pdf.
Principles for Responsible Investment. Implementing the Task Force on Climate-Related Financial Disclosures(TCFD) Recommendations: A Guide for Asset Owners. 2018. https://www.unpri.org/download?ac=4652.
Rio Tinto Group. Partnering for Progress: 2017 Sustainable development report. March 23, 2018.
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Royal Dutch Shell. Annual Report 2017. March 15, 2018. https://reports.shell.com/annualreport/2017/servicepages/downloads/files/shell_annual_report_2017.pdf.
Science Based Targets. “What is a science-based target?” https://sciencebasedtargets.org/what-is-ascience-based-target.
SSAB. Annual Report: Toward Industry-Leading Profitability 2017. March 2018. http://mb.cision.com/
Public/980/2475074/9ff135a8fced7703.pdf.
State Street. 2017 Corporate Responsibility Report. December 31, 2017. http://www.statestreet.com/
content/dam/statestreet/documents/values/CR_Report_2017.pdf.

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Statoil. 2017 Annual Report and Form 20-F. March 23, 2018. https://www.equinor.com/content/dam/statoil/
documents/annual-reports/2017/statoil-annual-report-20f-2017.pdf.
Sustainability Accounting Standards Board (SASB), and Climate Disclosure Standards Board (CDSB).
Converging on Climate Risk: CDSB, the SASB, and the TCFD. September 2017.
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Sustainable Stock Exchanges (SSE). “SSE Campaign to Close the ESG Guidance Gap.”
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2017/12/FINAL-TCFD-Annex-Amended-121517.pdf.
Task Force on Climate-related Financial Disclosures. Recommendations of the Task Force on Climate-related
Financial Disclosures. June 29, 2017. https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINALTCFD-Report-062817.pdf.
TECK Resources Limited. 2017 Sustainability Performance Data. April 26, 2018. Microsoft Excel file.
https://www.teck.com/media/Teck-2017-Sustainability-Performance-Data(0).xlsx.

A
Introduction
B
Review of Climate-Related
Disclosures
C
User Perspectives on
Decision-Useful ClimateRelated Disclosures
D
Preparer Perspective: Oiland Gas Industry
E
Initiatives Supporting TCFD
Appendices

TECK Resources Limited. Horizons: 2017 Sustainability Report. April 2018. https://www.teck.com/media/
Teck-2017-Sustainability-Report.pdf.
United Nations Environment Programme Finance Initiative (UNEP FI). Extending our Horizons: Assessing
credit risk and opportunity in a changing climate: Outputs of a working groups 16 banks piloting the TCFD
Recommendations. April 2018. http://www.unepfi.org/publications/banking-publications/extending-ourhorizons/.
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UNEP FI. “Task Force on Climate-Related Financial Disclosures.” http://www.unepfi.org/climatechange/tcfd/.
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Westpac Group. 2017 Sustainability Performance Report. November 9, 2017.
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Willis Towers Watson. The World’s Largest Asset Managers. October 2017.
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Willis Towers Watson. The World’s 300 Largest Pension Funds – Year Ended 2016. September 4, 2017.
https://www.willistowerswatson.com/en/insights/2017/09/The-worlds-300-largest-pension-funds-yearended-2016.
World Business Council for Sustainable Development (WBCSD). “Climate-Related Financial Disclosure by
Oil and Gas Companies: Implementing the TCFD Recommendations.” July 2018.
https://docs.wbcsd.org/2018/07/Climate_related_financial_disclosure_by_oil_and_gas_companies.pdf.
World Economic Forum (WEF). “Climate Initiative.” https://www.weforum.org/projects/climate-changesolutions.
World Resources Institute (WRI) and WBCSD. The Greenhouse Gas Protocol: A Corporate Accounting andReporting Standard (Revised Edition). March 2004. www.ghgprotocol.org/standards/corporatestandard.

The Task Force on Climate-related Financial Disclosures86Embargoed Until 8am ET September 26, 2018

Nothing in this document constitutes an offer or a solicitation of an offer to buy or sell a security or financial
instrument or investment advice or recommendation of a security or financial instrument. The Task Force on
Climate-related Financial Disclosures believes the information herein was obtained from reliable sources, butdoes not guarantee its accuracy. Copyright 2018 The Task Force on Climate-related Financial Disclosures.

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