Task Force on
Climate-related
Financial Disclosures
2020 Status Report

October 2020

Mr. Randal K. Quarles

September 22, 2020

Chair
Financial Stability Board
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
Switzerland

Dear Chair Quarles,
It is my pleasure to present the third annual status report of the Task Force on Climate-related
Financial Disclosures (TCFD). It outlines steady and encouraging progress since our last report.
As you know, the Task Force’s recommendations are intended to help build consideration of theeffects of climate change into routine business and financial decisions, and their adoption can help
companies demonstrate responsibility and foresight. Better disclosure will lead to more informed
and more efficient allocation of capital, and help facilitate the transition to a more sustainable,
lower-carbon economy.
Support for the TCFD framework has exceeded initial expectations, in both the private and public
sectors. Nearly 1,500 organizations have expressed their support, a group that includes every
major type of financial market participant. Disclosure in line with the TCFD recommendations
has increased every year since their release in 2017. Climate change considerations are becoming
increasingly common in the private sector — and investors, lenders, and insurance underwriters
are developing better capabilities for assessing climate-related risk in their decision-making.
However, greater disclosure and transparency are urgently needed.
Progress in the public sector is also accelerating. Among others, Canada, Chile, the European Union,
Hong Kong, Japan, New Zealand, the UK, Singapore, and South Africa have announced new policies,
partnerships, or other formal support for climate-related financial disclosure in line with the TCFD
recommendations. Going forward, it will be important to bring more standardization to reporting
requirements across different countries and jurisdictions, in order to minimize the burden forreporting companies and maximize the value of disclosure for investors.
The impacts of climate change continue to worsen, with clear and significant effects on the global
economy and on people’s lives. At the same time, global efforts to recover from the economic damageof the coronavirus pandemic have provided a unique opportunity to set a foundation for a moresustainable and resilient future. So the work of the Task Force is more important and more urgent
than ever before. We’re grateful for your continued support and dedication to this work.
Sincerely,

Michael R. Bloomberg

1

The Task Force on Climate-related Financial Disclosures

Executive Summary
In June 2017, the Financial Stability Board’s
Task Force on Climate-related Financial
Disclosures (Task Force or TCFD) released its
final recommendations (2017 report), which
provide a framework for companies and otherorganizations to develop more effective climaterelated financial disclosures through their existing
reporting processes (see Figure ES1).1, 2 In its 2017
report, the Task Force emphasized the importanceof transparency in pricing risk — including risk
related to climate change — to support informed,
efficient capital-allocation decisions.
Since the release of its 2017 report and at
the request of the Financial Stability Board(FSB), the Task Force has issued two status
reports — with this being its third — describing
the alignment of companies’ reporting with
the TCFD recommendations.3 In the months
between this status report and the 2019 status
report, the Task Force has seen significant
momentum around adoption of and support
for its recommendations. This report describes
the progress made to date and highlights thechallenges of more consistent and robust
implementation. It is important to view thesechallenges in the context of the substantial
progress made in “mainstreaming” the Task
Force’s recommendations in the financial
markets through investor demand for TCFD
disclosures, policy and regulatory actions,and good business practices.
Over the past 15 months, the number oforganizations expressing support for the TCFD
has grown more than 85%, reaching over
1,500 organizations globally, including over
1,340 companies with a market capitalizationof $12.6 trillion and financial institutions
responsible for assets of $150 trillion. Many ofthese companies have begun to implement the
TCFD recommendations or continue to refine
and improve their climate-related financial
disclosures. Through the efforts of the World
Business Council for Sustainable Development,
the Institute for International Finance, theUnited Nations Environment Programme
Finance Initiative, and other organizations,peer companies implementing the TCFD
recommendations have come together to discuss
effective climate-related financial disclosure

Figure ES1
The Task Force’s Remit
In April 2015, the Group of 20 (G20) Finance
Ministers and Central Bank Governors asked the
Financial Stability Board to convene public- andprivate-sector participants to review how thefinancial sector can take account of climate-related
issues. As part of its review, the FSB identified theneed for better information to support informed
investment, lending, and insurance underwriting
decisions and improve understanding of climaterelated risks.
To help identify the information needed to assess
and price climate-related risks, the FSB established
an industry-led task force — the TCFD. The FSB
asked the TCFD to develop voluntary climate-related
financial disclosures that would be useful toinvestors and others in understanding material risks.

practices and undertake work needed toenhance the effectiveness of such disclosures.4
Similar to the growth in the number oforganizations supporting the TCFD, investor
demand for companies to report informationin line with the TCFD recommendations
has also grown dramatically. For example,
as part of Climate Action 100+, more than
500 investors with over $47 trillion in assets
under management are engaging the world’s
largest corporate greenhouse gas emitters tostrengthen their climate-related disclosures byimplementing the TCFD recommendations.5 In
addition, many large asset managers and asset
owners have asked or encouraged investee
companies broadly to report in line with the
TCFD recommendations and reflected this in
their investment practices or policies.6
Over 110 regulators and governmental entities
from around the world support the TCFD,
including the governments of Belgium, Canada,
Chile, France, Japan, New Zealand, Sweden,
and the United Kingdom. In addition, central
banks and supervisors from across the globe— through the Network for Greening the
Financial System — have encouraged companies
issuing public debt or equity to disclose in line

In 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.

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

2

Financial Stability Board, “Task Force on Climate-related Financial Disclosures: 2019 Status Report,” June 5, 2019.

3

See Section E.1. Implementation Initiatives for more information.

4
5

See Climate Action 100+.

6

For example, see BlackRock’s Investment Stewardship Engagement Priorities for 2020 and CPP Investments’ Policy on Sustainable Investing.

2The Task Force on Climate-related Financial Disclosureswith the TCFD recommendations.7 The Task
Force is also seeing governments embed therecommendations in policy and guidance andmove toward requiring TCFD disclosures throughlegislation and regulation.
• New Zealand’s Ministry for the Environment
announced that the government plans to makeclimate-related financial disclosures mandatory
for certain publicly listed companies and large
financial institutions and that reporting would
be against a standard developed in line with
the TCFD recommendations.8• The European Commission incorporated the
TCFD recommendations into its Guidelines
on Reporting Climate-Related Information to
support companies in disclosing climate-related
information under the European Union’sreporting requirements.9• The United Kingdom’s Financial Conduct
Authority released a proposal for certain listedcompanies to state in their annual financial
reports whether they made disclosuresconsistent with the TCFD recommendations.10, 11
As 120 countries and the European Union work
toward achieving net-zero greenhouse gas
emissions by 2050, many of these jurisdictions
may legislate disclosure of climate-related
financial information to support market
transparency among other reasons.12 The
Task Force believes its recommendations canprovide policy makers and regulators in thesejurisdictions as well as other jurisdictions with thefoundation for requiring climate-related financial
disclosure, which could help avoid regulatory
fragmentation. As noted by the International
Financial Reporting Standards (IFRS) Foundation
Trustees in their recent consultation paper on
global sustainability standards, there is urgent
demand for consistency and comparability insustainability reporting, especially for climaterelated information:“Demand for better disclosure ofsustainability information is urgent[and] delays to global coherence, mostpressingly on climate-related disclosures,will increase the threat of fragmentationand consequently cause difficulties inengaging capital markets to smooththe transition to a low-carbon economy.”13
As the Task Force highlighted in its 2017 report,
in most G20 jurisdictions, companies withpublic debt or equity have a legal obligation
to disclose material information in their financial
filings — including material climate-related
financial information. The Task Force further
noted it believes climate-related issues areor could be material for many companies,
and its recommendations should be useful
to companies in complying with such existing
disclosure obligations. The Task Force believes
this is especially true for companies incomplying with or meeting new or revised
legal or regulatory requirements specificallyfocused on the disclosure of climate-related
financial information.

CLIMATE-RELATED FINANCIALDISCLOSURES
Similar to previous status reports, this reportprovides an overview of current disclosure
practices in terms of their alignment with the
Task Force’s recommendations. It also highlights
specific climate-related information a group of
expert users identified as the most useful formaking financial decisions, addresses the top
implementation issues identified by nearly 200
preparers, and includes case studies byfinancial sector preparers on implementing
the recommendations.
To better understand current climate-related
financial disclosure practices and how they
have evolved, the Task Force reviewed — using
artificial intelligence (AI) technology — reports
for about 1,700 large companies in multiple

Relatedly, in July 2020, the FSB published a stocktake of whether and how financial authorities incorporate climate-related risks into their financial
stability monitoring and found some authorities explicitly refer to the TCFD recommendations in setting supervisory expectations for banks andinsurance companies’ disclosure of climate-related risks.

7

New Zealand’s Ministry for the Environment, “Mandatory Climate-Related Financial Disclosures,” September 2020.

8

European Commission, Guidelines on Reporting Climate-Related Information, June 2019.

9

United Kingdom’s Financial Conduct Authority, Proposals to Enhance Climate-Related Disclosures by Listed Issuers and Clarification of Existing Disclosure
Obligations, Consultation Paper, March 2020.

10 

Other governmental authorities encouraging or calling for TCFD-aligned disclosures include the Australian Securities and Investment Commission,
the Bank of England, the European Central Bank, the Hong Kong Monetary Authority, the Japanese Ministry of Economy, Trade and Industry, theMonetary Authority of Singapore, and the National Treasury of South Africa.

11 

COP25 Chile UN Climate Change Conference, Climate Ambition Alliance: Nations Renew their Push to Upscale Action by 2020 and Achieve Net Zero CO2Emissions by 2050, December 11, 2019.

12 

IFRS Foundation, Consultation Paper on Sustainability Reporting, September 30, 2020, pp. 4 and 7.

13 

3

The Task Force on Climate-related Financial Disclosures

sectors and regions over a three-year period. In
addition, the Task Force consulted with a small
group of expert users to gain insight on thetypes of information, for each of the Task Force’s
recommendations, users find the most useful formaking investing and other financial decisions.
Table ES1 summarizes the key takeaways
and findings from the Task Force’s review ofcompany disclosures, insights from users,
and other research.

Table ES1

Key Takeaways and Findings
Nearly 60% of the world’s 100 largest public companies support the TCFD, report inline with the TCFD recommendations, or both.14 In addition, nearly 700 organizations
have become TCFD supporters since the Task Force issued its 2019 status report, an
increase of over 85%.15 The Task Force is encouraged by the growing support for its
recommendations and hopes to see similar growth in the percentage of companies
disclosing TCFD-aligned information going forward.
Disclosure of climate-related financial information has increased since 2017, but
continuing progress is needed. Disclosure of TCFD-aligned information increased by
six percentage points, on average, between 2017 and 2019; and the Task Force applauds
the improvements made — both in terms of the number of companies reporting andthe quality of such reporting. However, companies’ disclosure of the potential financial
impact of climate change on their businesses and strategies remains low. The Task Forcerecognizes the challenges associated with making such disclosures but encourages
continued efforts and faster progress.
Energy companies and materials and buildings companies lead on disclosure.
For fiscal year 2019 reporting, the average level of disclosure across the Task Force’s 11
recommended disclosures was 40% for energy companies and 30% for materials andbuildings companies.
One in 15 companies reviewed disclosed information on the resilience of its
strategy. The AI review found that the percentage of companies disclosing the resilienceof their strategies, taking into consideration different climate-related scenarios, wassignificantly lower than that of any other recommended disclosure.
Asset manager and asset owner reporting to their clients and beneficiaries,
respectively, is likely insufficient. While TCFD-aligned reporting by a sample of asset
managers and asset owners increased over the past three years, the Task Force believes
reporting by these organizations to their clients and beneficiaries may not be sufficientand that more progress may be needed to ensure clients and beneficiaries have the rightinformation to make financial decisions.16
Expert users find the impact of climate change on a company’s business andstrategy as the “most useful” for decision-making. Expert users also identified
information about a company’s material climate-related issues for each sector andgeography and its key metrics as extremely useful for financial decision-making.
Expert users’ insights on the most useful information for decision-making may
provide a road map for preparers. Companies already disclosing their governance andrisk management processes for climate-related issues and working toward full TCFD
implementation might consider expert users’ relative ranking of specific types of climaterelated information — from most useful to least useful — as one factor to consider inprioritizing their efforts.
Forbes, The World’s Largest Public Companies, May 13, 2020. In reviewing the 100 largest public companies, the Task Force did not evaluate the extent
or quality of a company’s TCFD reporting but rather identified whether the company indicated it reported in line with the TCFD recommendations orplanned to.

14 Importantly, not all organizations that support the TCFD recommendations implement them. Some organizations express support by convening
their members and facilitating consistency in implementation, while others — such as governments and regulators — express support byencouraging or requiring companies and other organizations to implement the recommendations.

15 The sample of asset managers and asset owners are signatories to the Principles for Responsible Investment. See Section A.2. TCFD-Aligned
Reporting by Asset Managers and Asset Owners for more information.

16 

4

The Task Force on Climate-related Financial Disclosures

TASK FORCE INITIATIVES TOSUPPORT IMPLEMENTATION
Concurrent with the release of this status
report, the Task Force is also issuing guidanceon two topics — conducting climate-related
scenario analysis and integrating climate-relatedrisks into existing risk management processes
and disclosing those processes — as well asa consultation document on forward-looking
metrics for the financial sector.17 As describedin its 2019 status report, the Task Force identified
specific areas it intended to explore to support
implementation of the recommendations. In
particular, the Task Force highlighted the following:• developing guidance on how to conduct
climate-related scenario analysis and• clarifying elements of the Task Force’s
supplemental guidance issued with its
2017 report.18
Over the past several months, the Task Forcehas worked on developing guidance andclarifying topics to address feedback received
from companies and other organizations thatare implementing the recommendations and toreflect market and industry developments. Brief
descriptions of the guidance and consultation
documents are provided below.
• Scenario Analysis for Non-Financial
Companies. This guidance is intended toassist non-financial companies interested
in using climate-related scenarios as part oftheir efforts to implement the Task Force’s
recommendations. It provides practical,
process-oriented ways for companies to use
climate-related scenario analysis and ideas
for disclosing the resilience of their strategies
under different climate-related scenarios.

• Integration of Climate-Related Risks into
Risk Management Processes. This guidanceis aimed at companies interested in integratingclimate-related risks into their existing risk
management processes and disclosing
information on their risk management
processes in alignment with the Task Force’s
recommendations.
• Forward-Looking Financial Sector Metrics.
This consultation paper seeks views on
decision-useful, forward-looking metrics forcompanies in the financial sector. Its publication
launches a 90-day public consultation period
until January 27, 2021.

NEXT STEPS AND CONCLUSION
Over the next several months, the Task Forcewill continue to promote and monitor adoptionof its recommendations and will prepare astatus report for the Financial Stability Board
in September 2021. As part of its efforts, theTask Force will review and consider feedback
received through public consultation on its
consultation document and determine
appropriate next steps based on the feedback
and other analyses it undertakes. The Task
Force continues to believe the success of its
recommendations depends on continued,
widespread implementation by companies in
the non-financial and financial sectors, including
asset managers and asset owners, and views its
guidance as a means of supporting widespread
implementation — as well as helping improve
the quality and consistency of climate-related
financial disclosures.

17

These documents are available on the TCFD’s website: https://www.fsb-tcfd.org/publications/.

18

TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017.

5

Contents
Letter from Michael R. Bloomberg

1

Executive Summary

2

A. State of Climate-Related Financial Disclosures7

1. TCFD-Aligned Reporting by Public Companies

8

2. TCFD-Aligned Reporting by Asset Managers and Asset Owners

18

B. Effective Climate-Related Financial Disclosures26

1. Scope and Approach28

2. Summary of Users’ Feedback on Usefulness of Disclosure Elements

29

3. Examples of Effective Climate-Related Financial Disclosures

34

C. Addressing Implementation Issues

45

1. Governance and Risk Management47

2. Strategy

50

3. Metrics and Targets

50

D. Case Studies on Implementation

52

1. Case Study by a Global Risk Assessment Firm

53

2. Case Study by an Asset Owner59

3. Case Study by an Asset Manager

63

E. Initiatives Supporting TCFD

67

1. Implementation Initiatives

69

2. Investor Initiatives70

3. Alignment of Reporting Frameworks

71

4. Government and Regulatory Efforts

71

Appendix 1. Task Force Members

75

Appendix 2. Company Selection and AI Review Methodology

77

Appendix 3. AI Review Results by Industry

81

Appendix 4. Additional Information on PRI Reporting

90

Appendix 5. User Feedback on Disclosure Elements

93

Appendix 6. Glossary and Abbreviations

104

Appendix 7. References

106

6

A.
State of Climate-Related
Financial Disclosures

The Task Force on Climate-related Financial Disclosures

A. State of Climate-Related
Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Consistent with previous status reports, theTask Force undertook a review of hundreds ofpublic companies’ reports for climate-related
financial information using artificial intelligence
technology.19, 20 The AI technology was used
to determine whether the reports include
information that appears to align with the Task
Force’s recommendations. The Task Force hasreceived feedback that the baseline information
on climate-related financial disclosures coming
out of its AI reviews is helpful for companies
implementing the TCFD recommendations inunderstanding current practices. In addition,
users, preparers, and others have expressedinterest in understanding changes in climaterelated financial disclosures over time,
particularly as many companies have now had
three full reporting cycles to implement the TCFD
recommendations since their release in June
2017. To assess the current state and evolutionof climate-related financial disclosures, the Task
Force reviewed the reports of just over 1,700
public companies for three years — 2017, 2018,and 2019, as described in Section A.1. TCFDAligned Reporting by Public Companies.

Also consistent with the approach used indeveloping the 2019 status report, asset
managers and asset owners were excluded fromthe AI review because, in many cases, the typesof reports needed for analysis are not publicly
available. However, because asset managers
and asset owners play an important role in theinvestment chain, the Task Force reviewed theaggregate responses of asset managers andasset owners to the Principles for Responsible
Investment (PRI) 2018, 2019, and 2020 signatory
assessments.21 The results of this review aredescribed in Section A.2. TCFD-Aligned Reportingby Asset Managers and Asset Owners.

1. T
 CFD-ALIGNED REPORTING
BY PUBLIC COMPANIESThis sub-section summarizes the scope andapproach used to review the alignment of publiccompanies’ reporting for fiscal years 2017, 2018,and 2019 with the Task Force’s 11 recommended
disclosures as well as the results and key findings
from the review.

Key Takeaways

C.
Addressing
Implementation Issues

Disclosure of climate-related financial information has increased since 2017, but moreprogress is needed. Disclosure increased, on average, across the 11 recommended
disclosures by six percentage points between 2017 and 2019. However, companies’
disclosure of the potential financial impact of climate change on their businesses,
strategies, and financial planning is low.

D.
Case Studies on
Implementation

Disclosures are primarily made in sustainability reports. On average, information alignedwith the recommended disclosures was over four times more likely to be disclosed insustainability reports than in financial filings or annual reports.

E.
Initiatives Supporting TCFD

One in 15 companies reviewed disclosed information on the resilience of its strategy
under different climate-related scenarios. The percentage of companies disclosing
strategy resilience was significantly lower than that of any other recommended disclosure.

Appendices

Larger companies are more likely to disclose information aligned with therecommendations. On average, 42% of companies with a market capitalization (cap) ofgreater than $10 billion disclosed information aligned with the TCFD recommendations in
2019, while the average was 15% for companies with a market cap less than $2.8 billion.
Energy companies and materials and buildings companies lead on disclosure. The
average level of disclosure across the 11 recommended disclosures for fiscal year 2019was 40% for energy companies and 30% for materials and buildings companies.
The Task Force gratefully acknowledges the work of Pearl Ho, Michel Kiffel, Niall McConville, Charlie Waller, Will Barnsley, Hannah Anscombe, Leena
Kang, Frankie Howland, Liron Mannie, Devina Shah, and Leanne Bouvet from PricewaterhouseCoopers (PwC) on the AI technology review.

19 

PwC contributed to the contents of this report by developing the artificial intelligence component and providing its results, as described in Appendix
2: Company Selection and AI Review Methodology. PwC’s contribution has been prepared only for the TCFD. PwC accepts no liability (including fornegligence) to anyone else in connection with the PwC contents of this report.

20 

See the “climate-related indicators only” sections of the PRI’s 2018, 2019, and 2020 Reporting Frameworks.

21 

8

The Task Force on Climate-related Financial Disclosures

Scope and Approach
The Task Force reviewed financial filings, annual
reports, integrated reports, and sustainability
reports of 1,701 public companies from 69
countries in eight industries (Figure A1).22 Six ofthe eight industries align with groups highlighted
in the Task Force’s 2017 report: Banking,Insurance, Energy, Materials and Buildings,
Transportation, and Agriculture, Food, andForest Products.23 To incorporate other typesof companies that may be exposed to climaterelated risks, two additional industries wereadded to the review in 2019 and retained forthis year — Technology and Media andConsumer Goods.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

The Task Force identified an initial review
population of nearly 4,500 public companies
across the eight industries based on company
size thresholds.24 Banks and insurancecompanies were selected for the initial
population if their assets totaled $10 billion ormore or $1 billion or more, respectively, for the2019 fiscal year. Companies in all other groups
were selected if their annual revenue totaled$1 billion or more for the 2019 fiscal year.
Once the initial population was identified,companies that did not have annual reports
available for review in all three years were
removed from the population to ensure a
consistent population of companies and theirreporting could be reviewed across all three

Figure A1
AI Review Population Size
Industry

NumberBanking

286

Insurance

138

Energy274

Materials and Buildings

414

Transportation

162

Ag., Food, and Forest Products

147

Technology and Media

113

Consumer Goods

167

Total

1,701

years. Companies were also removed fromthe initial population if they did not have annual
reports available in English in all three years.
This approach resulted in a final review
population of 1,701 companies.25 Importantly,
the companies included in the AI review
population for this year’s status report are
different from the companies reviewed in the2019 status report; therefore, the AI review
results in the two status reports are not directlycomparable. More information on the Task
Force’s methodology is provided in Appendix 2:
Company Selection and AI Review Methodology.

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

The Task Force used revenue to identify the largest public companies in non-financial industries and total assets for banks and insurance companies.

22 

TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017.

23 Companies were also removed from the initial population if they were a subsidiary of a larger company that had already been included in the population.

24 

Because the AI technology cannot process reports in languages other than English, the AI review population has a higher representation ofinternational companies and companies with large English-speaking populations than it would if non-English reports could be assessed. The
regional distribution of companies in the AI review population is provided in Figure A4 (p. 14).

25 

9

The Task Force on Climate-related Financial Disclosures

Similar to the approach used to review climaterelated financial disclosures for the 2018 and2019 status reports, the Task Force again used
AI technology to review companies’ reports.26, 27
The AI technology was used to review over 17,300
reports from the 1,701 companies and determine
whether the reports included informationthat appeared to align with one or more of the

Task Force’s 11 recommended disclosures (seeTable A1). Importantly, this approach was notdesigned to assess the quality of companies’
climate-related financial disclosures, but rather
to provide an indication of the alignment ofexisting disclosures with the Task Force’s 11
recommended disclosures.28

Table A1

TCFD Recommendations and Supporting
Recommended Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Governance

Strategy

Risk Management

Metrics and Targets

Disclose the company’s
governance aroundclimate-related risks andopportunities.

Disclose the actual andpotential impacts ofclimate-related risks andopportunities on thecompany’s businesses,
strategy, and financial
planning where suchinformation is material.

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

Disclose the metrics andtargets used to assess
and manage relevant
climate-related risks
and opportunities wheresuch information ismaterial.

a) D escribe the board’s
oversight of climaterelated risks andopportunities.

a) D escribe the climaterelated risks andopportunities thecompany has identified
over the short,medium, and long
term.

a) D
 escribe thecompany’s processes
for identifying andassessing climaterelated risks.

a) D isclose the metrics
used by the company toassess climate-relatedrisks and opportunities
in line with its strategy
and risk management
process.

b) D escribe management’s
role in assessing andmanaging climaterelated risks andopportunities.

b) D escribe the impact ofclimate-related risks
and opportunities
on the company’sbusinesses, strategy,
and financial planning.

b) D escribe thecompany’s processes
for managing climaterelated risks.

b) D isclose Scope 1, Scope2, and, if appropriate,
Scope 3 greenhousegas (GHG) emissions,and the related risks.

c) D escribe the resilienceof the company’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.

c) D escribe how
processes for
identifying, assessing,and managing climaterelated risks areintegrated into thecompany’s overall risk
management.

c) D escribe the targets
used by the company tomanage climate-relatedrisks and opportunities
and performanceagainst targets.

E.
Initiatives Supporting TCFD
Appendices

TCFD, 2018 Status Report, September 26, 2018 and TCFD, 2019 Status Report, June 5, 2019.

26 

The Task Force used AI technology to perform an automated review of several hundred companies’ public reports. Performing such a review“manually” or through human reviewers would take thousands of hours, which would not be feasible for the Task Force. The AI technology is basedon a set of statistical language models that were designed to answer 11 yes-no questions tied to the recommended disclosures for companies in
the four non-financial groups and for banks and insurance companies.

27 

It is important to recognize the confidence of the AI technology in identifying disclosures that align with the Task Force’s 11 recommended
disclosures varies for each recommended disclosure, as described in Appendix 2: Company Selection and AI Review Methodology.

28 

10

The Task Force on Climate-related Financial Disclosures

Key Findings
This sub-section summarizes the overall
results and takeaways from the Task Force’s
AI review of companies’ 2017, 2018, and 2019
reports for alignment with the Task Force’s
11 recommended disclosures. Figure A2
shows the AI review results by year for each of
the Task Force’s recommended disclosures.
It is important to note that the results of the
Task Force’s AI review for the 2020 status report
are not directly comparable to the AI review

results provided in the Task Force’s 2019 status
report due to several methodological changes as
described in Appendix 2: Company Selection and
AI Review Methodology. Changes include a new
methodology for selecting companies for review— intended to broaden coverage of the largest
companies in each industry — and further
validation of the AI technology model. However,
the key findings and themes resulting from the AI
review remain similar to previous years’ findings
and themes.

Figure A2

TCFD-Aligned Disclosures by YearA.
State of Climate-Related
Financial Disclosures

Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

8

2017
2018
2019

b) Management’s Role

8

2017
2018
2019

a) Risks andOpportunities

1

2017
2018
2019

b) Impact on
Organization

6

2017
2018
2019

c) Resilience of Strategy

3

2017
2018
2019

a) Risk ID andAssessment Processes

11

2017
2018
2019

14%
19%
25%

b) R
 isk Management
Processes

9

2017
2018
2019

15%
21%
25%

c) Integration into
Overall Risk
Management

9

2017
2018
2019

a) Climate-Related
Metrics

6

2017
2018
2019

b) S
 cope 1, 2, 3
GHG Emissions

5

2017
2018
2019

c) Climate-Related
Targets

6

2017
2018
2019

Strategy

B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

0%

16%
21%
24%
20%
24%
28%
40%
42%
41%
29%
32%
35%
4%
5%
7%

8%
11%
17%
29%
32%
35%
22%
24%
26%
27%
30%
33%
20%

40%

60%

80%

100%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 201911

The Task Force on Climate-related Financial Disclosures

Disclosure of climate-related information
has increased since 2017, but continuing
progress is needed. The AI review found thedisclosure of climate-related information alignedwith the TCFD recommendations increased
by six percentage points, on average, acrossthe 11 recommended disclosures between
2017 and 2019; and the Task Force applauds
the improvements made — both in terms ofthe number of companies reporting and thequality of such reporting. However, companies’
disclosure of the potential financial impact ofclimate change on their businesses, strategies,
and financial planning remains low. The Task
Force recognizes the challenges associatedwith making such disclosures but encourages
continued efforts and faster progress.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

As shown in Figure A2 (p. 11), the greatest
increase in the percentage of companies
disclosing relevant information from 2017 to2019 — 11 percentage points — was for thedisclosure of processes for identifying andassessing climate-related risks (Risk Managementa); while the smallest increase across the
11 recommended disclosures was for thedisclosure of companies’ climate-related risks
and opportunities (Strategy a), which increased
by only one percentage point over the sametime period. In addition, while the percentage of
disclosure for the five recommended disclosuresrelated to governance and risk management
is lower than most of the other recommended
disclosures, the percentage point increases
for those five recommended disclosures arehigher than the increases for the recommended
disclosures related to strategy and metrics
and targets.
Disclosures are primarily made insustainability reports. Companies
disclosed information aligned with the TCFD
recommendations in multiple types of reports(e.g., financial filings, annual reports, integrated
reports, and sustainability reports), which isconsistent with the Task Force’s findings in its
2018 and 2019 status reports. The AI review
found that, on average, information aligned withthe recommended disclosures was over fourtimes more likely to be disclosed in sustainability
reports than in financial filings or annual reports.
However, disclosure of climate-related risks andopportunities in alignment with recommended

disclosure Strategy a) was nearly as likely to
be found in financial filings or annual reports
as it was in sustainability reports. The largest
difference in the percentage of disclosure
between annual reports and financial filings
versus sustainability reports was for the metrics
used by a company to assess climate-relatedrisks and opportunities in line with its strategy
and risk management process, (Metrics andTargets a), where the AI technology found 79%
of sustainability reports included informationaligned with Metrics and Targets a) compared toonly 15% of annual reports and financial filings.
One in 15 companies reviewed disclosed
information on the resilience of its strategy.
The AI review found that the percentage ofcompanies disclosing the resilience of theirstrategies, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario (Strategy c) was significantly
lower than that of any other recommended
disclosure in each year. At 7% in 2019, the levelof disclosure was 10 percentage points lower
than the next lowest recommended disclosure,
Risk Management c), which 17% of companies
disclosed. These results are consistent withfeedback the Task Force has received fromcompanies on the challenges of disclosing
such information.
Companies’ disclosure of their specificclimate-related issues held constant. The
percentage of companies disclosing the specificclimate-related risks and opportunities they
have identified (Strategy a) did not increasematerially in the years reviewed. Although thepercentage of companies disclosing the specificclimate-related risks and opportunities they
identified was the highest of any recommended
disclosure in all three years, it held relatively
constant between 2017 and 2019 at around40%. While reporting aligned with most otherrecommended disclosures increased between
five and 11 percentage points, reporting alignedwith Strategy a) saw the lowest increase at only
one percentage point. The constant percentage
of companies disclosing this information over
the three-year period may indicate that few
companies have revised their perspective on
whether climate-related risks and opportunities
are appropriate for inclusion in public reporting.

12The Task Force on Climate-related Financial Disclosures

Larger companies are more likely to disclose
TCFD-aligned information. The Task Force
divided the AI review population into three
categories to assess results by company size:
those with a market capitalization of less than
$2.8 billion, those with a market capitalization of$2.8 billion to $10 billion, and those with a market
capitalization of more than $10 billion. While
total annual revenue was used to categorize
companies by size in previous years, the resultsof the assessment by company size for 2017,2018, and 2019 based on market capitalization(Figure A3) are consistent with the Task Force’s
previous findings — the percentage of companies
disclosing TCFD-aligned information tends toincrease with company size.

The percentage of companies disclosing TCFDaligned information in 2019 increased for eachcompany size grouping. On average, 42% ofcompanies with a market capitalization of greaterthan $10 billion disclosed information alignedwith the TCFD recommendations in 2019, while
the average was 15% for companies with amarket capitalization less than $2.8 billion. When
comparing average increases in the percentage
of disclosure from 2017 to 2019 across allrecommended disclosures, however, companies
with a market capitalization of less than $2.8
billion nearly doubled their percentage of
disclosure, while the percentage of disclosure forcompanies with a market capitalization of morethan $2.8 billion increased by around half.

Figure A3

Disclosure by Company Size: 2019 ReportingA.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

Appendices$2.8­–10B Market
Capitalization(539)>$10B Market
Capitalization(549)

Recommendation

Recommended Disclosure

Governancea) Board Oversight

11%

23%

39%

b) Management’s Role

15%

26%

43%

a) Risks and Opportunities

31%

40%

53%

b) Impact on Organization

20%

30%

55%

c) Resilience of Strategy

2%

6%

12%

a) R
 isk ID and Assessment
Processes

12%

24%

41%

b) Risk Management Processes

13%

22%

40%

c) I ntegration into Overall
Risk Management

7%

16%

28%

a) Climate-Related Metrics

20%

30%

56%

b) Scope 1, 2, 3 GHG Emissions

16%

25%

40%

c) Climate-Related Targets

19%

28%

52%

Strategy

Risk Management

D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD<$2.8B Market
Capitalization(613)

Metrics
and Targets

The numbers in parentheses represent the size of the review population.

Legend: Low to high percentage of disclosure

13

The Task Force on Climate-related Financial Disclosures

Disclosure varies across regions. Companies
in the AI review population were categorized
into five regions based on the location of their
headquarters to consider potential regional
differences: Asia Pacific, Europe, Middle East
and Africa, North America, and Latin America.
As shown in Figure A4, companies in Europe
have the highest percentages of TCFD-aligned
disclosures for ten of the 11 recommended
disclosures. The higher percentages of TCFDaligned reporting in Europe may, in part, be dueto the European Commission’s integration of
the TCFD recommendations into its Guidelines
on Reporting Climate-Related Information.29 The
Asia Pacific region follows Europe with thesecond highest percentage of disclosure foreight of the 11 recommended disclosures. While
the North American region had the highest
percentage of disclosure of climate-relatedrisks and opportunities, Strategy a), the Latin
America, Middle East and Africa, and North
American regions otherwise have broadly
similar percentages of disclosure across therecommended disclosures. In the largest
difference between regional results, European
companies disclosed the impact of climaterelated issues on the company, Strategy b), at
more than three times the rate of companies
in Latin America. The lowest percentage ofcompanies disclosed Strategy c) across all regions,followed by Metrics and Targets c), consistent withthe overall AI review results.

Figure A4

Disclosure by Region: 2019 ReportingA.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Latin
America(52)

Recommended Disclosure

Governancea) Board Oversight

22%

36%

17%

18%

21%

b) Management’s Role

26%

47%

14%

20%

15%

a) Risks and Opportunities

24%

43%

22%

50%

38%

b) Impact on Organization

29%

60%

27%

25%

13%

c) Resilience of Strategy

7%

11%

4%

4%

10%

a) R
 isk ID and Assessment
Processes

25%

43%

14%

15%

27%

b) Risk Management Processes

25%

43%

18%

15%

15%

c) I ntegration into Overall
Risk Management

16%

30%

10%

10%

8%

a) Climate-Related Metrics

31%

58%

23%

25%

25%

b) Scope 1, 2, 3 GHG Emissions

29%

49%

17%

14%

12%

c) Climate-Related Targets

27%

52%

17%

27%

15%

Strategy

Risk Management

E.
Initiatives Supporting TCFD
Appendices

North
America(779)

Recommendation

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Europe(441)

MiddleEast andAfrica(83)

Asia
Pacific(346)

Metrics
and Targets

The numbers in parentheses represent the size of the review population.

Legend: Low to high percentage of disclosure

See Section E.4. Government and Regulatory Efforts for more information on the European Commission’s Guidelines on Reporting
Climate-Related Information.

29 

14

The Task Force on Climate-related Financial Disclosures

Separate from the Task Force’s AI review,
Moody’s Analytics and Vigeo Eiris, an affiliate of
Moody’s, conducted two independent studies
using internally developed review methodologies
to assess climate-related disclosures forthousands of companies from a wide range ofregions and sectors. Moody’s Analytics and Vigeo
Eiris shared the results of the two studies with
the Task Force (Box A1).

The studies’ findings are broadly consistent with
the Task Force’s AI review findings. Both studies
reinforce the Task Force’s conclusion from its
AI review that the disclosure of climate-related
financial information is low in general. The
Moody’s Analytics study reviewed reporting fromroughly 12,000 companies and found about 17%
reported climate-related information. Similarly, theVigeo Eiris analysts’ study, which reviewed almost
3,000 companies across regions and sectors,
found that most companies lag in terms of fullyaligning with the TCFD’s recommendations.

Box A1
Findings from Moody’s Review of TCFD-Aligned Disclosures
Moody’s Artificial Intelligence Study
Leveraging artificial intelligence algorithms, Moody’s Analytics conducted a study of reporting from roughly
12,000 companies. The study yielded a large digitized and searchable repository of TCFD-related reports (e.g.,sustainability reports) and applied machine learning techniques to analyze and score the collected reports foralignment with specific TCFD recommendations. The study found the following:• Only a minority (<20%, roughly 2,000) of companies
have reported climate-related information, whether
specific to the TCFD or closely related.

A.
State of Climate-Related
Financial Disclosures• Of the collected climate-related disclosure reports,
there is significant variation in terms of content,
specific details and focus, and quality across regions
and industries.

B.
Effective Climate-Related
Financial Disclosures• Some companies have published informative andcomprehensive reports, highlighting the growing
recognition and effort spent by the private sector
in addressing climate-related challenges.

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices• The AI analysis scored company reports against
a number of objective criteria and yielded
relatively higher scores on Governance, Climate
Strategy, Risk Management, and Emission Targets
and Metrics reporting.
• Scores were lower for the Financial Targets andMetrics and Product Strategy categories, revealing
room for improvement on reporting in these areas.

Vigeo Eiris Analysts’ Study
In a separate study, Vigeo Eiris applied its own unique assessment framework of the degree to which climaterelated risks and opportunities have been incorporated into Governance, Strategy, and Risk Management
structures for a given company and to see how they aligned with the TCFD recommendations. Each
TCFD recommendation was integrated in Vigeo Eiris’s environmental, social, and governance (ESG) rating
framework in the form of a list to provide a granular view of companies’ TCFD reporting. For this exercise,
Vigeo Eiris ESG analysts reviewed almost 3,000 companies across all regions and sectors between April 2019
and June 2020. Primary findings of the Vigeo Eiris study include the following:• About 20% of the companies identified at least oneof the climate-related risks that may affect theirbusiness and strategy over the short, medium,and long term. Physical risk is the most common
category of risks reported by companies, followedby policy and legal risk and market risk.
• Regarding Governance, only 11% of companies
disclosed at least one element that is recommended
by the TCFD in this pillar. Comparing across regions,a larger share of companies in Europe and North
America disclosed on Governance.

• From a Strategy perspective, the development of
low-carbon products or services that contribute to
the low-carbon economy was the most common
disclosure element, accounting for 12% of allcompanies assessed. Only 8% (out of a total of 811)
of European and 7% (out of a total of 617) North
American companies disclosed climate change asa factor in their financial planning.
• 30% of the energy companies reported using aninternal carbon price as part of Risk Management.
Enhanced due diligence applied to projects andtransactions is not commonly disclosed, with only
3% of companies disclosing such information.

The results of the Vigeo Eiris study illustrate that most companies lag in terms of fully aligning with the TCFD’s
recommendations. At the same time, the study’s findings indicate that the TCFD’s recommendations havestarted to be integrated in companies’ disclosure practices and that the framework has a global footprint.

15

The Task Force on Climate-related Financial Disclosures

TCFD-Aligned Reporting in Select Industries
This section summarizes the results of the AI
review of 2017, 2018, and 2019 disclosures forthe industries shown in Figure A5. In comparing
2019 results across industries, the Energy
industry had the highest percentages for nine

Figure A5

Disclosure by Industry: 2019 ReportingC.
Addressing
Implementation Issues

Energy(274)

Materials& Buildings(414)

Recommended Disclosure

Governancea) Board Oversight

23%

24%

42%

26%

b) Management’s Role

24%

35%

45%

31%

a) Risks and Opportunities

32%

49%

65%

39%

b) Impact on Organization

27%

21%

54%

43%

c) Resilience of Strategy

12%

8%

15%

4%

a) R
 isk ID and Assessment
Processes

25%

36%

39%

26%

b) Risk Management Processes

23%

28%

38%

26%

c) I ntegration into Overall
Risk Management

19%

26%

30%

14%

a) Climate-Related Metrics

27%

26%

41%

43%

b) Scope 1, 2, 3 GHG Emissions

21%

19%

27%

35%

c) Climate-Related Targets

19%

22%

44%

41%

Transportation(162)

Ag., Food& Forest(147)

Technology
and Media(113)

Consumer
Goods
(167)

Risk Management

B.
Effective Climate-Related
Financial Disclosures

Insurance(138)

Recommendation

Strategy

A.
State of Climate-Related
Financial Disclosures

Banking(286)

Metrics
and Targets

Recommendation

Recommended Disclosure

D.
Case Studies on
Implementation

Governancea) Board Oversight

16%

20%

6%

11%

b) Management’s Role

20%

21%

8%

17%

E.
Initiatives Supporting TCFD

Strategya) Risks and Opportunities

38%

41%

27%

27%

b) Impact on Organization

30%

35%

16%

25%

c) Resilience of Strategy

2%

1%

0%

2%

a) R
 isk ID and Assessment
Processes

15%

21%

7%

16%

b) Risk Management Processes

18%

26%

11%

14%

c) I ntegration into Overall
Risk Management

10%

14%

4%

7%

a) Climate-Related Metrics

37%

35%

23%

31%

b) Scope 1, 2, 3 GHG Emissions

27%

28%

19%

24%

c) Climate-Related Targets

35%

38%

19%

29%

Appendices
Risk Management

Metrics
and Targets

The numbers in parentheses represent the size of the review population.

Legend: Low to high percentage of disclosure

16

The Task Force on Climate-related Financial Disclosuresof the 11 recommended disclosures. Of the two
industries added to the review population in
2019, Consumer Goods had levels of disclosurethat were slightly higher than Technology andMedia but still lower than the other six industries
in most cases. An overview of AI review resultsfor each industry is provided in Appendix 3: AI
Review Results by Industry.
To better compare reporting across theeight industries, the Task Force averaged thepercentage of disclosure in 2019 across the 11
recommended disclosures for each industry.
The industries were then ranked from highest to
lowest average percentage of disclosure. A higher
average percentage of disclosure indicates thatan industry generally disclosed at a higher rate
across the 11 recommended disclosures.

A.
State of Climate-Related
Financial Disclosures

As shown in Figure A6, Energy companies had
the highest average at 40%. Energy companies
had the highest percentage of disclosure fornine of the 11 recommended disclosures, while
Materials and Buildings companies had thehighest percentage for two of the 11. Consumer
Goods and Technology and Media Companies
had the lowest percentage of disclosure inseveral areas and had the lowest averages at 18%
and 13%, respectively.

B.
Effective Climate-Related
Financial Disclosures

In addition, the percentage of companies
disclosing information in line with each TCFD
recommended disclosure can vary significantlyC.
Addressing
Implementation Issues

Figure A7

D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
AppendicesFigure A6
Average Percentage of Disclosure
by Industry
Industry%

Energy40%

Materials and Buildings

30%

Insurance Companies

27%

Ag., Food, and Forest Products

25%

Banks

23%

Transportation

23%

Consumer Goods

18%

Technology and Media

13%

across industries as shown in the two examples
in Figure A7. The Task Force believes thatcompanies in certain industries can learn fromthe disclosure practices of other industries,
particularly for recommended disclosures
under the Governance and Risk Management
recommendations that are not subject to amateriality threshold.

Percentage of Disclosure by Industry
for Recommended Disclosures
Recommended Disclosure: Governance a)42%Energy26%

Materials
and Buildings

0%
2017

2018

17%

Consumer Goods
Technology
and Media

20%

20%

Transportation

6%
10%

21%

Ag., Food, andForest Products

11%

Consumer Goods

24%

Banks

16%

Transportation

31%

Insurance
Companies

20%

Ag., Food, andForest Products

35%

Materials
and Buildings

23%

Banks

45%

Energy24%

Insurance
Companies

Technology
and Media

Recommended Disclosure: Governance b)

30%

40%

2019

50%

0%
2017

2018

8%
10%

20%

30%

40%

50%

2019

Note: Percentages of disclosure are included for only 2019.

17

The Task Force on Climate-related Financial Disclosures

2. TCFD-ALIGNED REPORTING BY ASSETMANAGERS AND ASSET OWNERS 30, 31
As noted previously, asset managers and asset
owners were excluded from the AI review
because, in many cases, the types of reports
needed for analysis are not publicly available.
In its 2017 report, the Task Force recommended
that companies provide climate-related financial
disclosures in their public annual financial filings(or other publicly available corporate reporting).
However, the Task Force recognized comparable
reporting by asset managers and asset owners
to their clients and beneficiaries, respectively,
would usually occur in other types of financial
reporting and may not be publicly available. For
purposes of adopting the recommendations,
the Task Force recommended asset managers
and asset owners use their existing channelsof financial reporting to their clients andbeneficiaries, respectively, where relevant
and feasible.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Given the wide range of reporting channels used byasset managers and asset owners (see Figure A8)
and the lack of a consistent set of public reports
in the two industries, the Task Force excluded
asset managers and asset owners from the AI
review. As a result, the Task Force explored othermeans of gaining insight on climate-related
financial reporting by asset managers and asset
owners and ultimately identified their reportingto the Principles for Responsible Investment as apossible means for gaining such insight.

Figure A8
Reporting by Asset Managers
Asset managers’ reporting to clients takes different
forms depending on a client’s requirements andthe types of investments made. For example, amutual fund investor might receive (or downloadfrom a website) a “fund fact sheet” that reports,
among other information, the top holdings byvalue, the top performers by returns, and thecarbon footprint of the portfolio against a statedbenchmark. An investor in a segregated accountmight receive more detailed climate-related
information, including the aggregate carbon
intensity of the portfolio compared witha benchmark and insight into portfolio positioning
under different climate scenarios.

Reporting by Asset Owners
The financial reporting requirements and practicesof asset owners vary widely and differ from what isrequired of companies with public debt or equity.
Some asset owners have no public reporting, whileothers provide extensive public reporting.

The Task Force reviewed aggregated reporting
results of asset manager and asset ownersignatories to the PRI for the 2018, 2019, and2020 reporting periods.32, 33 PRI signatories
are required to report on their responsible
investment activities on an annual basis by
responding to “indicators” in the PRI reporting
framework; and a subset of those indicators arealigned with the Task Force’s recommendations.
Importantly, PRI signatories’ responses to theindicators are self-reported; and a PRI signatory’s
responses to indicators aligned with the TCFD
recommendations do not imply the signatory
meets the recommendations or that thesignatory provides TCFD-aligned information
to its clients or beneficiaries.

The Task Force wishes to thank Ed Baker and Thalia Vounaki from the Principles for Responsible Investment for sharing aggregated reporting
results of signatories to the PRI for the 2018, 2019, and 2020 reporting periods as well as additional information and insights.

30 

Throughout this sub-section, we use the phrase “TCFD-aligned reporting” to refer to asset manager and asset owner PRI signatories’ reporting to
the PRI on climate-related indicators mapped to the Task Force’s 11 recommended disclosures.

31 

The PRI works with its international network of signatories to put its six Principles for Responsible Investment into practice. Its goals are tounderstand the investment implications of environmental, social, and governance issues and support signatories in integrating these issues into
investment and ownership decisions. Currently there are over 3,030 PRI signatories representing $103 trillion in assets.

32 

The “reporting period” refers to the nearly three-month timeframe at the beginning of a given reporting framework year in which signatories
provide information to the PRI. The “reporting year” is the 12-month period for which signatories provide information. The PRI recommends
signatories provide information for the 12 months ending on or after March of the year prior to the reporting period. The PRI’s Reporting for
Signatories page provides more information on the reporting process.

33 

18

The Task Force on Climate-related Financial Disclosures

Key Takeaways
TCFD-aligned reporting by asset managers and asset owners to the PRI increased
significantly between 2019 and 2020, driven by the PRI’s mandatory reporting
requirements for specific climate-related indicators in 2020.
While reporting by asset managers and asset owners to the PRI increased over thereporting periods, the Task Force believes reporting by asset managers and asset
owners to their clients and beneficiaries, respectively, may not be sufficient and that moreprogress may be needed to ensure those stakeholders have the right information to
make financial decisions.
One of the lowest levels of reporting for both asset managers and asset owners relates
to the weighted average carbon intensity metric (Metrics and Targets b), which is the
carbon footprinting metric recommended by the Task Force.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Background and Approach
Shortly after the Task Force issued its final
recommendations in June 2017, the PRI
integrated several climate-related indicators
based on the TCFD recommendations and the
supplemental guidance for asset managers
and asset owners into its 2018 reporting
framework.34 For its 2019 and 2020 reporting
frameworks, the PRI made adjustments to someof its climate-related indicators.35
To use signatories’ reporting to PRI as a proxy for
asset managers’ and asset owners’ TCFD-aligned
reporting, the Task Force mapped specific PRI
climate-related indicators to its 11 recommended
disclosures for each year — where possible — asshown in Appendix 4: Additional Information on
PRI Reporting (Figure A4-1, p. 90). In mapping
the PRI’s climate-related indicators to the Task
Force’s recommended disclosures, we attempted
to maintain consistency in the definition of the
PRI indicator mapped to a given recommended
disclosure across the three years. This was doneto allow year-over-year comparisons in reportinglevels for each recommended disclosure. We
were able to map a single PRI indicator to each
recommended disclosure with the exceptionof the following:• The Task Force did not map a PRI indicatorto Strategy b) for 2019 or 2020 because
the descriptions of the 2019 and 2020 PRI
indicators that most closely align with the2018 PRI indicator were modified andnot directly comparable.37
Importantly, for the 2020 reporting period, the
PRI made its governance and strategy climaterelated indicators mandatory for signatories
to report. For its remaining climate-related
indicators, the PRI noted those “will stayvoluntary with a view to becoming mandatory
as good practice develops.”38 In the figures
below on PRI signatories’ 2020 response rates on
indicators mapped to the TCFD’s recommended
disclosures, the Task Force distinguishes
between those indicators that became
mandatory to report and those that remained
voluntary to report.

•F or all three years, the Task Force mappeda single PRI indicator to the first two
recommended disclosures under the Risk
Management recommendation — Risk
Management a) and Risk Management b).
As a result, those two recommended
disclosures are combined in this section.36
See the Task Force’s Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, pp. 33–44.

34 

Adjustments refer to changes to the indicator name, its description, or the associated explanatory notes.

35 

For all three reporting periods, the relevant PRI indicator asks signatories to describe their risk management processes for identifying, assessing,and managing climate-related risks, whereas Risk Management a) asks organizations to describe processes for identifying and assessing climaterelated risks and Risk Management b) asks organizations to describe processes for managing climate-related risks.

36 

See Appendix 4: Additional Information on PRI Reporting for more information on the Task Force’s decision not to map a PRI indicator to Strategy b)
for the 2019 and 2020 reporting periods.

37 

PRI, “TCFD-Based Reporting to Become Mandatory for PRI Signatories In 2020,” February 18, 2019.

38 

19

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Demographics of PRI Signatories
Figure A9 provides information on the numberof asset manager and asset owner PRI
signatories reporting in each reporting period
reviewed as well as PRI signatories’ assets undermanagement (AUM). The chart on the upper left
shows the total number of signatories reportingto the PRI for the 2018, 2019, and 2020 reporting
periods; and the chart on the upper right shows
the number of signatories reporting on the PRI’s
climate-related indicators for the same years.
The 2020 numbers in the charts are the same
given the mandatory reporting requirement.
On assets under management, the chart on thelower left shows PRI signatories’ total assets
under management; and the chart on the lower
right shows the assets under management for
signatories that reported on the PRI’s climaterelated indicators. In terms of PRI signatories’
market coverage, asset manager signatories
cover almost 75% of global assets undermanagement by asset managers, and asset
owner signatories cover around 24% of global
assets under management by corporate andnon-corporate pensions, insurance companies,
and reserve/sovereign wealth funds.39

Appendices

As shown in Figure A10 (p. 21) for asset managers
and Figure A11 (p. 22) for asset owners, response
rates for most indicators mapped to the TCFD’s
recommended disclosures increased between
2018 and 2019, with the exception of Governanceb) — management’s role in assessing andmanaging climate-related issues. The response
rate on this indicator decreased slightly from 20%
to 19% for asset managers and stayed the sameat 30% for asset owners. For asset managers,
the largest increase in response rates between
the 2018 and 2019 reporting periods — 200% —related to Strategy c) and may be attributable tothe difference in descriptions of the 2018 and2019 PRI indicators.

Figure A9

Demographics of PRI Signatories by Year
Total Number Reporting
2020

Number Reporting on Climate Indicators
1,654

443

2019
2018

E.
Initiatives Supporting TCFD

Review of Asset Manager and Asset Owner
Reporting to the PRIThe Task Force reviewed PRI signatories’
aggregated reporting results for each reporting
period. The percentages shown in the figures
below are based on the number of asset
managers and asset owners that reported oneach mapped indicator and the total number ofasset managers and asset owners that reported
in each reporting period (see chart on the upper
left in Figure A9).40

1,326

379

2019

1,111

338

2018

Signatories’ Total AUM*
2020
2019
2018

$90
$73
$71

$19

Asset Managers

1,654

443
432

159

349

131

AUM* for Signatories Reporting on Climate

$21
$19

2020

2020
2019
2018

$90

$21
$11
$10

$38
$32

Asset Owners* AUM are in US$ trillions.
Source: Principles for Responsible Investment staff. AUM figures include double counting

Boston Consulting Group, Global Asset Management 2020: Protect, Adapt, and Innovate, May 2020; Organisation for Economic Co-operation andDevelopment (OECD), “Global Pension Statistics”; OECD, OECD Insurance Statistics 2019, 2020; and IE Foundation, Sovereign Wealth Funds 2018, 2019.

39 For climate-related indicators mapped to Governance a) and Governance b), the PRI adjusts the total number of asset manager and asset ownersignatories reporting in a given year (the denominator) based on whether the signatories have roles for board oversight (Governance a) and senior
management (Governance b). Please see Appendix 4: Additional Information on PRI Reporting for the denominators used.

40 

20

The Task Force on Climate-related Financial Disclosures

The 2018 PRI indicator for Strategy c) asked
signatories to describe the resilience of theirstrategies considering different future climate
scenarios, whereas the 2019 PRI indicator asked
signatories to describe how they are using
scenario analysis. Presumably, more signatories
would be able to describe how they use scenario
analysis than describe the resilience of theirstrategies under different climate-related
scenarios. For asset owners during this same
timeframe, the largest increase in response rates— over 200% — related to Metrics and Targets c),which increased from 4% to 13%.

As also shown in Figure A10 for asset managers
and Figure A11 (p. 22) for asset owners, there
was significant growth in the response rates for
all the “mandatory-to-report” indicators mapped
to the TCFD’s recommended disclosures, as
anticipated. The Task Force recognizes theincrease in response rates between 2019 and2020 should not be viewed as an increase inunderlying practices as only 35% of signatories
opted into climate change reporting in 2019.

Figure A10

Asset Managers’ TCFD-Aligned Reporting to PRI
Recommendation

Recommended Disclosure

Governancea) Board Oversight*b) Management’s Role*

20%
19%
48%

Strategya) Risks and Opportunities

18%
26%
70%

b) Impact on Organization

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

17%
20%
63%

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Percent Responding

13%
N/A
N/A

c) Resilience of Strategy

4%
12%
26%

Risk Management

E.
Initiatives Supporting TCFDa) and b) Risk ID,
Assessment andManagement Processes

21%
22%
64%

c) Integration into Overall
Risk Management

15%
16%

Appendices44%

Metrics
and Targetsa) Climate-Related Metrics

13%
14%
30%

b) S
 cope 1, 2, 3
GHG Emissions

4%
5%
11%

c) Climate-Related Targets

Base size: 1,111 (2018), 1,331 (2019), 1,655 (2020)
2018

2019

2020 Mandatory

4%
7%
9%
0%

20%

40%

60%

80%

100%

2020 Voluntary* Please see Appendix 4: Additional Information on PRI Reporting for information on the base sizes used for Governance a) and Governance b).

21

The Task Force on Climate-related Financial Disclosures

Interestingly, there were also significant
increases in the response rates on the“voluntary-to-report” indicators mapped to
the TCFD’s recommended disclosures, which
relate to the Risk Management and Metrics andTargets recommendations. For example, theaverage increase in the response rates between
2019 and 2020 for the indicators mapped to the
Risk Management recommendation was 183%
for asset managers and 108% for asset owners.

For those same indicators, the average increasein the response rates between 2018 and 2019
was around 6% for asset managers and a bitover 4% for asset owners. Based on PRI staff’s
analysis, many of the asset managers and asset
owners reporting on the “mandatory-to-report”
indicators also reported on the “voluntaryto-report” indicators, resulting in significant
increases in the response rates on climaterelated indicators overall in 2020.41

Figure A11

Asset Owners’ TCFD-Aligned Reporting to PRI
Recommendation

Recommended Disclosure

Governancea) Board Oversight*

Percent Responding
29%
32%
79%

b) Management’s Role*

A.
State of Climate-Related
Financial Disclosures

60%

Strategya) Risks and Opportunities

69%b) Impact on Organization

20%
N/A
N/A

c) Resilience of Strategy

9%
21%
43%

Risk Management

D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD

25%
36%

B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

30%
30%

a) and b) Risk ID,
Assessment andManagement Processes

28%
29%
64%

c) Integration into Overall
Risk Management

19%
20%
39%

Metrics
and Targetsa) Climate-Related Metrics

19%
22%
37%

Appendicesb) S cope 1, 2, 3
GHG Emissions

7%
9%
19%

c) Climate-Related Targets

4%
13%
12%

Base size: 338 (2018), 379 (2019), 444 (2020)
2018

2019

2020 Mandatory

0%

20%

40%

60%

80%

100%

2020 Voluntary* Please see Appendix 4: Additional Information on PRI Reporting for information on the base sizes used for Governance a) and Governance b).

While the PRI does not assess signatories’ responses to climate-related indicators, it does group signatories — based on their responses — into
four categories that may provide an indication of the level of maturity of TCFD-aligned reporting as shown in Figure A4-3 (p. 92).

41 

22

The Task Force on Climate-related Financial Disclosures

Of particular interest to the Task Force is asset
manager and asset owner reporting on theweighted average carbon intensity (WACI)
metric, which the Task Force recommends
these organizations disclose to their clientsand beneficiaries, respectively. Response rates
on this metric are reflected in the percentages
for Metrics and Targets b) and are the second
lowest for both asset managers and asset

owners across the three years. Furthermore, as
described in Box A2, the WACI metric has thelowest percentage of responses across a rangeof carbon footprinting and exposure metrics.
The Task Force is interested in understanding
asset managers’ and asset owners’ views on thebenefits and drawbacks of using the WACI metricas well as other metrics and plans to explore
this further.

Box A2
Reporting on Weighted Average Carbon Intensity
In the annex to its 2017 report, the Task Force recommends asset managers and asset owners disclose theweighted average carbon intensity metric, where data are available or can be reasonably estimated, for eachproduct, fund, and investment strategy. The annex also describes four other metrics asset managers andasset owners should consider reporting. All five metrics are summarized in the table below.
Common Carbon Footprinting and Exposure Metrics
MetricDescription

Weighted Average
Carbon Intensity

Portfolio’s exposure to carbon-intensive companies, expressed intons CO2e/$M revenue. Metric recommended by the Task Force.

Portfolio Carbon Footprint

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

Total Carbon Emissions

The absolute greenhouse gas emissions associated with a portfolio,
expressed in tons CO2e.

Carbon Intensity

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

D.
Case Studies on
Implementation

Exposure to Carbon-Related Assets

The amount or percentage of carbon-related assets in the portfolio,
expressed in $M or percentage of the current portfolio value.

E.
Initiatives Supporting TCFD

To gauge asset managers’ and asset owners’ reporting on the WACI metric relative to the four other carbon
footprinting and exposure metrics the Task Force highlighted in 2017, the Task Force reviewed PRI signatories’
responses on all five metrics. As the chart below shows, the WACI metric has the lowest percentage of
responses across all five metrics for each of the three reporting periods shown.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

Appendices

Percentage of Signatories Indicating Use of Metrics to Manage Climate-Related Issues*

12%

16%

22%

Weighted Average
Carbon Intensity

2018

2019

21%

28%

35%
14%

Portfolio Carbon
Footprint

2020

22%

27%

Total Carbon
Emissions

16%

23%

28%

CarbonIntensity

15%

23%

29%

Exposure to ClimateRelated Assets

TCFD Recommended Metric* This indicator was mandatory to report for all three reporting periods reviewed.

23

The Task Force on Climate-related Financial Disclosures

Asset Manager and Asset Owner Reportingto Clients and Beneficiaries
The appropriate pricing of risks and efficient
allocation of capital depends on all parties
in the investment chain providing sufficientdecision-useful information to one another.
Large asset managers and asset owners sit at
the top of the investment chain and, therefore,
have an important role to play in the allocationof capital and improving disclosures. Assetowners manage large pools of capital in-houseand through their external asset managers.
Investors with long-term liabilities — such aspension funds and those with implicit obligations
for intergenerational wealth transfers such as
sovereign wealth funds — have the capacity toinvest over long-term horizons and consider
the potential impact climate change may haveon such investments. Long-term investors havebeen among the first movers in influencing
the companies in which they invest to provide
better climate-related financial disclosuresand integrating climate-related risks andopportunities into their investment strategies
and processes.
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD

Reporting of climate-related risks andopportunities by asset managers and asset
owners to their respective stakeholders(i.e., clients and beneficiaries) allows thosestakeholders to better understand climaterelated issues and factor them into theirinvestment decisions. Where asset managers’
and asset owners’ stakeholders better
understand climate-related financial exposures,
this may prompt additional demand for suchreporting and further standard setting fordisclosures in this area. Increasing the level ofclimate-related financial disclosures by asset
managers and asset owners may encourage
better disclosures across the investment
chain — from asset owners to asset managers
to underlying companies — enabling betterinformed investment decisions.
Given the important role of asset manager andasset owner reporting to their stakeholders,the Task Force sought to better understandthe level of such reporting. To do this, the Task
Force considered responses on three specific
PRI indicators, as shown in Figure A12. These
indicators describe reporting on climate-related
indicators to three distinct audiences, as follows:• average response rate of asset managers
and asset owners to the PRI on climaterelated indicators mapped to the Task Force’s
recommended disclosures (e.g., on average,
asset managers responded to the PRI on 41%of the TCFD-aligned climate-related indicators);• the percent of asset managers and asset
owners that made at least one TCFD-aligned
climate-related indicator in its PRI report public;and• the percent of asset managers and asset
owners that responded to the PRI that theyreport emissions risk information (which
generally aligns with Metrics and Targetsb) to their clients, trustees, management, or
beneficiaries, as appropriate.

Figure A12

PRI Signatories’ 2020 Reportingon Climate-Related Information
Audience: Information Type

Appendices

Percent Responding or Reporting

PRI: C limate-Related Indicators

41%(average across indicators aligned
to TCFD recommended disclosures)

47%

Public:* Climate-Related Indicators18%(at least one indicator)

26%

Clients andEmissions Risks
Beneficiaries:^

Asset Managers

Asset Owners

20%
25%
0%

20%

40%

60%

80%

100%

* PRI, PRI Climate Snapshot 2020, 2020, p. 4.
^

PRI, PRI Climate Snapshot 2020, 2020, p. 14.

24

The Task Force on Climate-related Financial Disclosures

Assuming reporting by asset managers andasset owners to their clients and beneficiaries,
respectively, falls within the bounds of thepercentages shown in Figure A12 (p. 24) — 18%
to 41% for asset managers and 25% to 47% forasset owners — the Task Force believes reportingby asset managers and asset owners to theirclients and beneficiaries, respectively, may
not be sufficient. In this regard, the Task Forceencourages asset managers and asset owners
to explore resources — such as those on the
TCFD Knowledge Hub — aimed at supportingorganizations in implementing and disclosing
information in alignment with the Task Force’s
recommendations. Resources for asset managers
and asset owners on the TCFD Knowledge Hub
include, but are not limited to, the following:42• The Institutional Investors Group on Climate
Change’s Addressing Physical Climate Risks: Key
Steps for Asset Owners and Asset Managers andAddressing Climate Risks and Opportunities in theInvestment Process;43

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices•T he Investor Leadership Network’s TCFD
Implementation, Practical Insights andPerspectives from Behind the Scenes for
Institutional Investors;44 and• PRI’s Implementing the Task Force on
Climate-related Financial Disclosures (TCFD)
Recommendations: A Guide for Asset Owners.45

Conclusion
Overall, the Task Force is generally encouragedby the increase in asset manager and asset
owner reporting on TCFD-aligned information
to the PRI between the 2018 and 2020 reporting
periods, particularly in the context of thisincrease potentially indicating an increase in
asset manager and asset owner reporting totheir clients and beneficiaries, respectively.
However, the Task Force believes reporting byasset managers and asset owners to their clientsand beneficiaries, respectively, may not be
sufficient and that more progress may be needed
to ensure those stakeholders have the rightinformation to make financial decisions.
Although there are encouraging indications ofprogress in reporting, given that much of thefinancial reporting by asset managers and asset
owners is not in the public domain, the Task
Force has not completed a full assessment of theextent and quality of TCFD-aligned reporting at
this time. In advance of its next status report, theTask Force will consider ways to gain more direct
information on reporting practices by asset
managers and asset owners, such as a survey ofreporting practices, a comprehensive review ofthe largest asset managers’ and asset owners’
reporting to their clients and beneficiaries,
respectively, and other possible approaches.

In addition, the Task Force believes an important
aspect of asset manager and asset ownerreporting to their clients and beneficiaries,
respectively, relates to the metrics and targets
they provide on each product, fund, andinvestment strategy. Such metrics, ideally, would
provide an indication of the level of climaterelated risk associated with the products, funds,
and investment strategies to support financial
decisions. When the Task Force issued its 2017
report, it acknowledged the challenges andlimitations of existing metrics and encouraged
asset managers and asset owners to advance thedevelopment of decision-useful, climate-related
risk metrics. The Task Force acknowledges asset
managers and asset owners have undertaken
useful work in this regard and continues torecognize the challenges associated withidentifying decision-useful metrics, including
rolling up climate-related metrics and targets
at the total portfolio level.

See “Case Studies” on the TCFD Knowledge Hub.

42 

The Institutional Investors Group on Climate Change, Addressing Physical Climate Risks: Key Steps for Asset Owners and Asset Managers, May 27, 2020,
and Addressing Climate Risks and Opportunities in the Investment Process, June 11, 2018.

43 

Investor Leadership Network, TCFD Implementation, Practical Insights and Perspectives from Behind the Scenes for Institutional Investors, September 26, 2019.

44 

PRI, Implementing the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations: A Guide for Asset Owners, May 11, 2018.

45 

25

B.
Effective Climate-Related
Financial Disclosures

The Task Force on Climate-related Financial Disclosures

B. Effective Climate-Related
Financial Disclosures
In this section, the Task Force highlights
specific types of climate-related informationthat investors, lenders, and others (collectively
referred to as users) find the most usefulfor decision-making and includes examples
of disclosure of the most useful types of
information identified.
This work expands upon the Task Force’s two
previous status reports, which included several
examples of disclosure aligned with the Task
Force’s 11 recommended disclosures.46, 47 Those
examples were provided to help companies
generate ideas for their own disclosures, whereas
the examples of disclosure included in this section
are intended to help preparers develop more
effective climate-related financial disclosures.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

The Task Force wishes to emphasize there areseveral characteristics of effective climate-related
financial disclosures, and ensuring disclosurescontain decision-useful (or relevant) information
is just one. In fact, in its 2017 report, the Task
Force identified seven principles for effective
disclosure — which are summarized in Figure B1— and encouraged companies implementing

its recommendations to consider the principles
when developing climate-related financial
disclosures. The analysis in this section relates tothe first principle listed in Figure B1 — represent
relevant (or decision-useful) information — andis not meant to diminish the importance of theother six principles.

Figure B1
Principles for Effective Disclosure
Effective disclosures are those withthe following characteristics:
1.

Represent relevant information2.

Are specific and complete3.

Are clear, balanced, and understandable

4.

Are consistent over time5.

Are comparable

6.

Are reliable, verifiable, and objective

7.

Are provided on a timely basis

Key Takeaways
Expert users were nearly unanimous in rating a company’s description of how climaterelated issues have affected its business and strategy as extremely useful, making it the“most useful” piece of information for financial decision-making.

D.
Case Studies on
Implementation

In addition to the impact of climate change on a company’s business and strategy,
expert users also identified information about a company’s material climate-related
issues for each sector and geography and its key metrics as extremely useful for financial
decision-making.

E.
Initiatives Supporting TCFD

Expert users’ insights on the most useful information for decision-making may
provide a road map for preparers. Companies already disclosing their governanceand risk management processes for climate-related issues and working toward full
TCFD implementation might consider expert users’ relative ranking of specific typesof climate-related information — from most useful to least useful — as one factor toconsider in prioritizing their efforts.

Appendices46

 ee Section B.4. Observations by Group and Disclosure Examples in the Task Force’s 2018 status report and Section B.3. Climate-Related Financial
S
Disclosures for Select Industries 2016–2018 in the Task Force’s 2019 status report.

47

 s noted in the previous two status reports, the examples of disclosure were not intended to represent “best practice” nor demonstrateA
disclosures that fully meet the associated recommended disclosure. Instead, the examples were provided to help companies generate ideas fortheir own disclosures.

27

The Task Force on Climate-related Financial Disclosures

1. SCOPE AND APPROACH

and regularly use climate-related information in
making financial decisions.49 The expert usersthat provided feedback came from severalof the largest financial institutions, including
investors from organizations with over $5 trillion
in assets under management, lenders frombanks with more than $9 trillion in total assets,
and experienced analysts from the major credit
rating agencies and their subsidiaries.

To identify specific climate-related informationthat users find the most useful when making
financial decisions, the Task Force developed
a questionnaire and asked a group of expert
users to rate the usefulness of specific typesof information. The Task Force organized
the questionnaire by its 11 recommended
disclosures (see Table A1, p. 10) and thenidentified specific types of climate-related
information — referred to as disclosure
elements — for each recommended disclosure.
The disclosure elements were drawn from theguidance for all sectors included in the Task
Force’s 2017 report.48

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

To obtain feedback from users in a consistentand measurable form, the Task Force asked
expert users to rate the usefulness of specificdisclosure elements associated with the
11 recommended disclosures using a five-point
scale, with a rating of 1 representing the mostuseful information and a rating of 5 representing
the least useful information, as shown in Figure B2.
For purposes of analyzing and summarizing
users’ feedback on the usefulness of specifictypes of information for financial decisionmaking, the Task Force considered the averagerating across users for each disclosure element(referred to as a score).50 The Task Force also
looked at the amount of dispersion or variancein users’ ratings to understand how aligned users
were in their views on the usefulness of thedisclosure elements.51 Information on the scoreand variance for each of the disclosure elements
is provided and discussed in Appendix 5:User Feedback on Disclosure Elements; and asummary of users’ feedback and key findings
is provided below.

The disclosure elements cover baseline
information the Task Force believes is decisionuseful and generally applicable to different
types of companies across industries andregions. Importantly, disclosure elements
range from very specific information, such as
how a company defines short-, medium-, andlong-term timeframes, to broad concepts likemanagement’s role in assessing and managing
climate-related issues.
Because the Task Force sought practical insighton the usefulness of nearly 60 specific disclosure
elements from investors and other users, itsolicited feedback from a small group of expert
users. Users were considered expert if they
were well versed in the TCFD recommendations

Figure B2

Scale for Rating Usefulness
of Information for Decision-Making

E.
Initiatives Supporting TCFD
Appendices

Extremely Useful

Very UsefulSomewhat Useful

Slightly Useful

Not Useful

1

2

3

4

5

See Section C.3 Guidance for All Sectors in the Task Force’s 2017 report.

48 To ensure users met these conditions, we solicited feedback from Task Force members in the financial sector and their colleagues as well as otherusers who provided meaningful feedback on decision-useful information to industry-level groups working on TCFD implementation.

49 

50

When evaluating a disclosure element’s score in terms of how useful it is for decision-making, the Task Force used the scale in Figure A5-2 (p. 95).
Variance represents the measure of variability of users’ ratings for a given disclosure element. For example, if five users rated a disclosure element
as very useful (2) and another five rated the same disclosure element as somewhat useful (3), the score for that disclosure element would be 2.5
and the variance would be 0.3, indicating users were fairly aligned in their views. In comparison, if five users rated a disclosure element as extremely
useful (1) and another five rated the same disclosure element as slightly useful (4), the score for that disclosure element would also be 2.5, but thevariance would be 2.3, indicating users differed quite a bit in their views.

51 

28

The Task Force on Climate-related Financial Disclosures

2. S UMMARY OF USERS’ FEEDBACK
ON USEFULNESS OF DISCLOSURE
ELEMENTS
A key goal in seeking expert users’ feedbackon the disclosure elements was to understandwhich disclosure elements are viewed as themost useful for financial decision-making to help
preparers develop more effective climate-related
financial disclosures. To provide an overview ofusers’ feedback across the 11 recommended
disclosures, Figure B3 shows the distribution
or range of scores for the disclosure elements
associated with each recommended disclosure.
For a given recommended disclosure, thedisclosure element with the lowest score (min) isrepresented by the leftmost gray circle, and thedisclosure element with the highest score (max)is represented by the rightmost gray circle.

The rectangular, colored box between the graycircles represents the interquartile range —which indicates where the middle 50% of thescores fall — and the white diamond represents
the mean (or average) of the scores. Importantly,
Figure B3 also shows expert users view all thedisclosure elements as useful for decision-making.
In particular, the average rating across users (thescore) for the “least useful” disclosure element is
3.0 (see Governance a), indicating the disclosure
element is considered somewhat useful.52 All
but one of the other disclosure elements havea score between 1.1 (see Strategy b) and 2.5(see Strategy c), indicating users consider themextremely useful or very useful. As a result,comparing the usefulness of disclosure elements
is a relative comparison of usefulness rather
than an absolute comparison of useful versus
not useful.

Figure B3Users’ Average Ratings on Usefulness of Information
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

Range of Average Ratings (Scores) for Disclosure Elements by Recommended Disclosure
Recommended Disclosure (# of Elements)

Range of Scores for Disclosure Elements(more to less useful)a) Board Oversight (8)Governanceb) Management’s Role (5)a) Risks and Opportunities (5)Strategyb) Impact on Organization (5)D.
Case Studies on
Implementationc) Resilience of Strategy (8)Risk Management

E.
Initiatives Supporting TCFDa) R isk ID and Assessment
Processes (5)b) R isk Management
Processes* (1)c) I ntegration into Overall
Risk Management* (1)Appendicesa) Climate-Related Metrics (6)Metrics
and Targetsb) S cope 1, 2, 3
GHG Emissions (5)c) Climate-Related Targets (9)1.0Legend:

Min

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Interquartile Range
Max

Score:

Mean
Interquartile Ranges:

Governance

StrategyMore to less useful

Risk Management

Metrics and Targets* Risk Management b) and Risk Management c) each have only one disclosure element, so there is no interquartile range.

52

T he least useful disclosure element relates to describing the profile and capabilities of the Board on climate-related issues.

29

The Task Force on Climate-related Financial Disclosures

Figure B4 also provides an overview ofusers’ feedback across the 11 recommended
disclosures.53 This figure plots the score(horizontal axis) and variance (vertical axis)of each disclosure element to show how thedisclosure elements rated the most useful byusers also have the lowest variances (highestalignment in ratings). Given that a rating of 1
indicates a disclosure element is extremely
useful and a rating of 5 indicates the element
is not useful, the closer a disclosure element’s
score is to 1, the more useful it is for decisionmaking — based on the expert users’ ratings.

The most useful disclosure elements are locatedin the lower left corner of Figure B4 and the least
useful in the lower right corner. The disclosure
elements are color-coded according to therecommendation to which they relate. As noted
above, all but one of the disclosure elements thatthe expert users, on average, found extremely
useful for decision-making (score of 1.5 or less)are associated with the Strategy and Metrics andTargets recommendations — as indicated by thedark blue circles and gray diamonds shown in thelower left corner of the figure.

Figure B4Disclosure Elements Plotted by Score and Variance*
1.4

1.2

B.
Effective Climate-Related
Financial Disclosures

1.0

Variance

A.
State of Climate-Related
Financial Disclosures

0.8

0.6

0.4

C.
Addressing
Implementation Issues

0.2

D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

0.0
1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

Score
Legend:More to less useful
Governance

Strategy

Risk Management

Metrics and Targets* The horizontal axis is truncated at 3 (the outer bound of the disclosure element scores) to improve readability of the figure.

53

 his figure is meant to show the relationship between the score and variance for all disclosure elements by recommendation. Please refer toTAppendix 5: User Feedback on Disclosure Elements to see the score and variance for each disclosure element.

30

The Task Force on Climate-related Financial Disclosures

To better understand the specific information
expert users find the most useful for making
financial decisions, the Task Force rank-ordered
the disclosure elements from most useful to“least” useful. Figure B5 lists the top ten mostuseful disclosure elements. Notably, the top ten
disclosure elements all have a score of 1.5 or less,indicating users find them extremely useful for
decision-making.

Figure B5

Top Ten Most Useful Disclosure Elements
by Score and Variance
Recommended
Disclosure

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
AppendicesDisclosure Element

Score

Var.*

Rank

Strategy b)

How climate-related issues have affected business andstrategy

1.1

0.1

1

Metrics and Targets a)

Key metrics on climate-related issues for most recent
period and historical periods

1.3

0.2

2

Strategy a)

The material climate-related issues identified for eachsector and geography

1.3

0.3

3

Metrics and Targets b)

Scope 1 GHG emissions for the most recent period andhistorical periods

1.3

0.4

4

Metrics and Targets c)

Climate-related targets related to GHG emissions

1.3

0.4

5

Strategy a)

The material climate-related issues identified

1.4

0.2

6

Metrics and Targets b)

Scope 2 GHG emissions for the most recent period andhistorical periods

1.4

0.4

7

Metrics and Targets c)

The timeframes over which climate-related targets apply

1.4

0.4

8

Metrics and Targets c)

Key performance indicators used to assess progressagainst climate-related targets

1.5

0.4

9

Governance a)

Board consideration of climate-related issues for major
capital expenditures, acquisitions, and divestitures

1.5

0.6

10

* Var. refers to variance.

Overall, expert users identified the single mostuseful disclosure element as a company’s
description of how its climate-related risks andopportunities have affected its business andstrategy (Figure B5). Other disclosure elements
included in the top ten are information about
a company’s specific material climate-relatedrisks and opportunities, a range of climaterelated metrics and targets — including
Scope 1 and Scope 2 GHG emissions, andwhether a company’s board considers climaterelated issues for major capital expenditures,acquisitions, and divestitures.
In terms of information about a company’s
material climate-related risks and opportunities,
expert users are interested in this information

being broken down by sector and geography.
Such information is often needed by users toappropriately assess the risks to a company.
Sector-level information may be used toevaluate how government policy actions aimed
at constraining GHG emissions could affectdifferent aspects of a company’s businessactivities — as emission-intensive sectors would
likely be more affected than others. Geographic
information may be used to evaluate thepotential impact of climate-related physicalrisks on a company and its operations sincesuch risks can vary greatly depending on
location. In addition, such information may also
be relevant for climate-related transition risks,
as government policies such as carbon pricing
differ by jurisdiction.

31

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

As noted previously, Appendix 5: User Feedback
on Disclosure Elements contains information on
all the disclosure elements rated by the group of
expert users. The Task Force believes the scores
associated with the various disclosure elements,
when ordered from low to high (or most usefulto least useful), may provide valuable insightfor companies interested in prioritizing theirimplementation efforts. For example, if acompany has implemented the Governance andRisk Management recommendations — which areoften a starting point for TCFD implementation— and recently determined climate-relatedrisks are material to the company, that company
may find the relative ranking of the disclosure
elements associated with the Strategy andMetrics and Targets recommendations usefulas it develops a plan for reporting.54 The Task
Force encourages companies to use its Strategy
and Metrics and Targets recommendations fordisclosing the actual and potential impacts ofclimate-related issues on the company and themetrics and targets the company uses to assess
and manage relevant climate-related issues

where such information is material. In addition,companies interested in enhancing their existingclimate-related financial disclosures may findthe relative ranking of the disclosure elements
across all four recommendations useful inprioritizing enhancements. Figure B6 (p. 33)
shows a possible prioritization of information todisclose for a hypothetical company that wants
to enhance its existing reporting and expand
reporting to cover the Strategy and Metrics andTargets recommendations.
The first phase of the illustrative implementation
plan shown in Figure B6 (p. 33) describes
the starting point for many companies in
implementing the TCFD recommendations, which
is disclosing information on their governanceand risk management practices. For purposes of
the illustrative implementation plan, we assume
our hypothetical company has established thisfoundation for disclosure before implementing
the elements outlined in the second phase. In thesecond phase, our hypothetical company focuseson the top ten disclosure elements shown in
Figure B5 (p. 31) to prioritize the disclosure ofSince it issued its recommendations, the Task Force has consistently encouraged 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 to disclose information related
to the Governance and Risk Management recommendations. For companies with material climate-related risks, the Task Force recommends they
disclose information related to the Strategy and Metrics and Targets recommendations.

54 

32

The Task Force on Climate-related Financial Disclosures

Figure B6

Illustrative Implementation Plan Based onExpert Users’ Ratings

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

33

The Task Force on Climate-related Financial Disclosuresinformation identified as extremely useful for
financial decisions.55 Now that our hypotheticalcompany has disclosed information associatedwith ten of the TCFD’s 11 recommended
disclosures, it is ready to enhance its existing
disclosures and begin disclosing informationon the resilience of its strategy under different
climate-related scenarios as shown in the third
phase. The Task Force recognizes companies
may need time internally to work through using
scenario analysis and determining whether the
results of such analyses warrant disclosure.

3. E XAMPLES OF EFFECTIVE
CLIMATE-RELATED FINANCIALDISCLOSURESIn this section, the Task Force provides examples
of climate-related financial disclosures that
address the top ten most useful disclosure
elements based on expert users’ feedback.
The sub-headings below indicate the specificdisclosure element that each example (orexamples) represents, and the order of theexamples is based on the rank of the disclosure
elements shown in Figure B5 (p. 31), beginningwith the most useful element (rank of 1). In
addition, the examples included below may
not be applicable in all sectors and should beconsidered within the context of the sector
in which the company operates.

1. IMPACT OF MATERIAL CLIMATE-RELATED ISSUES ON BUSINESS AND STRATEGYA.
State of Climate-Related
Financial Disclosures

The most useful disclosure element identified by users relates to information on how climate-related
issues have affected a company’s business and strategy. Figure B7 provides an electric utilities
company’s description of its analysis of climate requirements and their impact on the business model.

Figure B7
B.
Effective Climate-Related
Financial Disclosures

Impact on Business and Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

EnBW, Integrated Annual Report 2019, pp. 33, 41, and 43
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

Three of the top ten disclosure elements have been combined with a related disclosure element, resulting in the seven items listed under Phase 2:
Enhancements and Additions in Figure B6 (p. 33).

55 

34

The Task Force on Climate-related Financial Disclosures

2. KEY METRICS ON CLIMATE-RELATED ISSUES
The second most useful disclosure element identified by users relates to key metrics on climaterelated issues for the most recent period and historical periods. Figure B8 provides a description of
why water preservation is important for a fertilizer company along with its water usage metrics.

Figure B8

Key Climate-Related Metrics

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Nutrien, 2020 Environmental, Social and Governance (ESG) Report, pp. 21, 24, and 55
Note: Some content was reformatted in order to fit the page.; and some content was removed, denoted by […].

35

The Task Force on Climate-related Financial Disclosures

3. MATERIAL CLIMATE-RELATED ISSUES IDENTIFIED FOR EACH SECTOR AND GEOGRAPHY
Closely following the second most useful disclosure element identified by users is information on
the material climate-related issues identified for each sector (see Figure B9) and geography (see Figure
B10, p. 37). The example shown in Figure B9 provides information on a bank’s climate-related risks for
specific sectors, including how sensitive each sector is to transition and physical climate-related risks.

Figure B9Climate-Related Risks by Sector

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
AppendicesRoyal Bank of Canada, Task Force on Climate-related Financial Disclosures Report 2019, pp. 10 and 16
Note: Some content was reformatted in order to fit the page.

36

The Task Force on Climate-related Financial Disclosures

The example shown in Figure B10 provides a metals and mining company’s description of its key
climate-related risks for a specific region. The company’s report also includes similar information forthree other regions — Australia, South Africa, and Peru (not included below).

Figure B10Climate-Related Risks by Region

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
AppendicesGold Fields, Our 2019 Climate Change Report, p. 6

37

The Task Force on Climate-related Financial Disclosures

4. SCOPE 1 GHG EMISSIONS FOR MOST RECENT AND HISTORICAL PERIODS
The next most useful disclosure element relates to the Metrics and Targets recommendation andis the reporting of a company’s Scope 1 GHG emissions for the most recent period and historicalperiods. The example included in Figure B11 is from a multinational aerospace and defense company.
In its 2019 annual report, the company provides its Scope 1 GHG emissions (and Scope 2 GHG
emissions) for the past five years. In addition, the company mentions it uses the GHG Protocol using
the operational control approach and emission factors from the Government of the United Kingdom.

Figure B11

Scope 1 (and Scope 2) GHG Emissions

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
AppendicesRolls-Royce Holdings plc, Annual Report 2019, p. 209
Note: Some content was reformatted in order to fit the page.

38

The Task Force on Climate-related Financial Disclosures

5. CLIMATE-RELATED TARGETS RELATED TO GHG EMISSIONSThe next most useful disclosure element also falls under the Metrics and Targets recommendation:
climate-related targets related to GHG emissions. The example included in Figure B12 is from thefinancial filing of a multinational integrated oil and gas company. The company has set specific targets
for reducing carbon dioxide equivalent (CO2e) emissions and outlines how it has performed against
its goals.

Figure B12Targets Related to GHG Emissions

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Total, Universal Registration Document 2019, p. 232

E.
Initiatives Supporting TCFD
Appendices

39

The Task Force on Climate-related Financial Disclosures

6. MATERIAL CLIMATE-RELATED RISKS AND OPPORTUNITIES IDENTIFIED
Expert users also identified information on a company’s material climate-related issues — even in
the absence of such information being provided by sector or geography — as one of the top ten
most useful disclosure elements (see 3. Material Climate-Related Issues Identified for Each Sector
and Geography, p. 36). Figure B13 provides a financial institution’s description of its material climaterelated transition risks and opportunities. The financial institution’s report includes additional climaterelated transition and physical risks and opportunities, which are not included in the figure below.

Figure B13

Material Climate-Related Risks and Opportunities

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Société Générale, Societe Generale’s Task Force on Climate-related Financial Disclosures Report, pp. 11 and 13
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

40

The Task Force on Climate-related Financial Disclosures

7. SCOPE 2 GHG EMISSIONS FOR MOST RECENT AND HISTORICAL PERIODS
The next most useful disclosure element users identified is Scope 2 GHG emissions for the mostrecent period and historical periods. The example shown in Figure B14 provides a food and staples
retailing company’s reporting of its Scope 2 GHG emissions (as well as Scope 1 and Scope 3 GHG
emissions) since 2014.

Figure B14

Scope 2 GHG Emissions (and Scope 1 and Scope 3)

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Walmart de México y Centroamérica, Financial and Corporate Responsibility Report 2019, p. 96
Note: Some content was reformatted in order to fit the page.

41

The Task Force on Climate-related Financial Disclosures

8. TIMEFRAMES OVER WHICH CLIMATE-RELATED TARGETS APPLYThe next most useful disclosure element identified by users is related to the timeframes over whichclimate-related targets apply. Figure B15 provides an example of the timeframes a technology
hardware, storage, and peripherals company has set around its targets to reduce water use.

Figure B15

Climate-Related Targets and Timeframes

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

Fujifilm Group, Sustainability Report 2019, p. 54

D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

42

The Task Force on Climate-related Financial Disclosures

9. KEY PERFORMANCE INDICATORS USED TO ASSESS PROGRESS AGAINSTCLIMATE-RELATED TARGETS
The group of expert users identified key performance indicators (KPIs) as the ninth most useful
disclosure element. Figure B16 provides an insurance company’s reporting of its climate-related
targets as well as its progress toward fulfilling those targets. The last column in the top half of the
figure provides references to the data tables in the company’s report where additional information(i.e., key performance indicators) can be found for each topic. The table in the bottom half of the figure
shows the KPIs used to measure progress of investments in renewable energy relative to the target.

Figure B16

KPIs Used to Assess Progress Against
Climate-Related Targets

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Allianz Group, Sustainability Report 2019, pp. 82 and 88
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

43

The Task Force on Climate-related Financial Disclosures

10. BOARD CONSIDERATION OF CLIMATE-RELATED EXPENDITURES, ACQUISITIONS,AND DIVESTITURES
On the Governance recommendation, users indicated that information on how the board or
its committees consider climate-related issues when overseeing major capital expenditures,acquisitions, and divestitures is extremely useful. Figure B17 provides a global chemical company’s
description of how investment decisions — capital expenditure above €10 million and acquisitions— made by the Executive Committee or the Board of Directors include a Sustainable Portfolio
Management (SPM) analysis of the potential investment. Earlier in the report referenced in Figure B17,
the company explains the SPM tool is used to review climate-related risks and opportunities for eachproduct in each market and includes climate-related criteria aligned to 2°C scenarios.56

Figure B17

Board Consideration of Expenditures,
Acquisitions, and Divestitures

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Solvay, 2019 Annual Integrated Report, p. 114
Solvay, 2019 Annual Integrated Report, March 31, 2020, p. 71.

56 

44

C.
Addressing
Implementation Issues

The Task Force on Climate-related Financial Disclosures

C. Addressing Implementation Issues
For its 2019 status report, the Task Force issued acomprehensive survey to better understand thestatus of implementation of its recommendations
and associated challenges and to obtainviews from users of climate-related financial
disclosures and others on the usefulness,availability, and quality of such disclosures. The
Task Force distributed the survey to over 3,000
companies and other organizations, resulting
in 485 responses.57, 58 Nearly 200 responses
came from preparers, about 50 responses camefrom users of disclosures, and the remaindercame from other interested parties, including
non-governmental organizations, consultants,

industry associations, academia, the public
sector, and stock exchanges.
A key area of interest for the Task Force in
conducting the survey was to better understandissues companies face in implementing therecommendations. Figure C1 describes the
top-reported implementation issues for each
recommendation. Of note, the top-cited issue
for both the Governance and Risk Management
recommendations was that for preparers withclimate-related issues integrated into existing
governance and risk management processes,
making a separate or explicit climate-related
financial disclosure is challenging.

Figure C1

Top Implementation Issues Identified
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Governance

Strategy

Risk Management

Metrics and Targets

Climate is embedded
in our processes so it ischallenging to discuss
separately in ourgovernance disclosures.
(49%, 89)

Disclosing scenario
analysis assumptions
is difficult because they
include confidential
business information.
(46%, 83)

Climate is integrated
into our risk management
processes and, therefore,
does not require
separate disclosure.
(36%, 65)

There is a lack ofstandardized metrics
for our industry.
(42%, 75)

Percent and Number of Responses

C.
Addressing
Implementation Issues

Base size: 180D.
Case Studies on
Implementation

In this section, the Task Force provides additional
information on the implementation issues noted
above, clarifies the intent of its recommendations

E.
Initiatives Supporting TCFD

as they relate to these issues, and describes work
undertaken by the Task Force to address theseand related issues, where applicable.

Key Takeaways

AppendicesCompanies with enterprise-wide governance or risk management processes that include
climate-related issues may find it helpful to provide a mapping of sections in their report
where the reader can find information that addresses the Task Force’s recommended
disclosures, as shown in Figure C3 (p. 49).
Companies concerned about disclosing certain information related to their scenario
analysis assumptions or resilience of their strategies should consider a stepwise
approach to disclosure (please see TCFD, Guidance on Scenario Analysis for Non-Financial
Companies, October 29, 2020).
Companies seeking standardized, industry metrics should look to industry associations,standard setters, and similar organizations as they may have published useful
information in this regard.

See Section C. Adoption and Use of the TCFD Recommendations in the Task Force’s 2019 status report for more information on the survey.

57 

The Task Force uses the term “organizations” when referring to a broad range of entity types.

58 

46

The Task Force on Climate-related Financial Disclosures

1. G OVERNANCE ANDRISK MANAGEMENT
To better understand preparers’ challenges
with disclosing information on their governanceand risk management practices for climaterelated issues, the TCFD Secretariat reached
out to nearly 30 respondents who selected thegovernance issue, the risk management issue,
or both issues in the survey and agreed to becontacted in the event the TCFD Secretariat had
follow-up questions.
Of the nearly 30 survey respondents (orpreparers) contacted by the TCFD Secretariat,
13 agreed to discuss their responses with us.
Twelve of the 13 preparers discussed issues
related to the Governance recommendation, andnine of the 13 preparers discussed issues related
to the Risk Management recommendation, witheight of the 13 discussing issues related to both
recommendations. Interviewees were nearly
equally split between the financial sector andnon-financial sectors and spanned the globe as
shown in Figure C2.
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Themes from Interviews
A few key themes emerged from the discussions
with preparers on issues related to implementing
the Governance and Risk Management
recommendations. First, over 80% of the
preparers interviewed were just beginningto implement the TCFD recommendations
and in the process of figuring out how todisclose information consistent with therecommendations when they completed
the survey in late 2018. Since our follow-up
discussions were held 12–14 months later, mostof those preparers indicated they had resolved
their issues. Some of them emphasized theimportance of educating board and senior
management on climate-related issues andgaining their support as critical for implementing
the recommendations.
The second theme related to a misinterpretation
or misunderstanding of the Governance andRisk Management recommendations. Over halfof the preparers interviewed interpreted therecommendations as indicating that companies
should have separate processes for governanceand risk management of climate-related issues
or that disclosure of these processes should be
separate from disclosure of broader governanceand risk management processes of which they
are a part. Some preparers indicated examples
of disclosure where a company’s governance orrisk management of climate-related issues areembedded or integrated into overall governanceor risk management processes would be helpful.
Clarifying the Recommendations
To address preparers’ concerns that
implementing the TCFD recommendations
requires separate governance and risk
management processes for climate-related issues
or the development of “standalone” disclosures,
the Task Force emphasizes it did not intend forcompanies with comprehensive governance andrisk management processes that include climaterelated issues to create separate processes or
duplicate existing disclosures. If a company’s
disclosures clearly describe its governance andrisk management processes and it is clear those
processes cover climate-related issues, then no
further disclosure may be needed.

Figure C2

Number of Interviewees by Sector and Region
Number of Interviewees by Sector
6

Financial

2

Materials

2

Industrials

2

Energy1Consumer Discretionary

Number of Interviewees by Region

Europe, 5Asia Pacific, 4Middle East and Africa, 1
North America, 3Total number of interviewees: 1347

The Task Force on Climate-related Financial Disclosures

Figure C3 (p. 49) provides an example of how
a company with comprehensive governanceand risk management processes that address
climate-related issues as well as a wide range ofother issues discloses information in alignment
with the TCFD recommendations. The example
shows how BHP includes a mapping of sectionsin its annual report where the reader can findinformation aligned with the Task Force’s 11
recommended disclosures. We have included
the mapping of the recommended disclosures
under the Risk Management recommendation(only) as well as an excerpt of one of thesections referenced. The Task Force provides
additional examples in its guidance on Risk
Management Integration and Disclosure.59

Task Force Member’s Experience“By acknowledging that climate change is a potential strategic risk to ourcompany, we decided to systematically address climate-related risks andopportunities in our management and supervisory board.”– Thomas Kusterer, Chief Financial Officer, EnBW AG

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

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

59 

48

The Task Force on Climate-related Financial Disclosures

Figure C3

Example of Mapping Information
to TCFD Recommendations

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

BHP, Annual Report 2019, pp. 65 and 31

49

The Task Force on Climate-related Financial Disclosures

2. STRATEGY
The top-cited issue on implementing theStrategy recommendation was concern about
disclosing scenario analysis assumptions
because such assumptions include confidential
business information (Figure C1, p. 46).60 For
context, this issue relates to the Task Force’s
recommended disclosure c) under the Strategy
recommendation (or Strategy c), which asks
companies to describe the resilience of
their strategies, taking into considerationdifferent climate-related scenarios, including
a 2°C or lower scenario. The Task Force briefly
discusses companies’ concerns about disclosing
confidential business information in its guidanceon Scenario Analysis for Non-Financial Companies,
and the key points are summarized below.61
The Task Force’s guidance on Scenario Analysis
for Non-Financial Companies emphasizes acompany should not assume scenario analysis
assumptions contain confidential businessinformation that would harm the company ifpublicly disclosed. When evaluating whether
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

particular aspects of a company’s intended
disclosure around scenario analysis assumptionsor the resilience of its strategy containconfidential business information, the company
should consider the following:• whether the information provides the company
with an economic benefit that translates into acompetitive advantage because the informationis unknown to its competitors and• whether making such information public
may cause a considerable economic loss forthe company.62
In situations where a company is not certain
information related to its scenario analysis
assumptions or the resilience of its strategy
contains confidential business information, theTask Force encourages the company to consider
a stepwise approach to disclosure — rather thandecide not to disclose. For example, a company
might start by disclosing broader, qualitative
information and move to more specific,
quantitative data and information over time.

Task Force Member’s Experience“Disclosing our scenario analysis assumptions has given us an opportunity to bea market leader in our sector and to act as a catalyst to others in similar industries
as many of the companies in our industry face the same risks from climate change
as we do. We want our peers to outline their assumptions so we can also develop
our scenario analysis further and continually drive for greater understanding of
the implications of climate change.”– Graeme Pitkethly, Chief Financial Officer, UnileverD.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

3. METRICS AND TARGETS
The top-cited issue by preparers on
implementing the Metrics and Targets
recommendation was the lack of standardized
industry metrics (Figure C1, p. 46). Over 60% of
the preparers selecting this issue in the survey
were from the financial sector; and several ofthem provided written comments to elaborate

60

on their specific concerns. The primary concern
raised related to the availability of reliable andconsistent data on which metrics could be
calculated. For the preparers from non-financial
sectors, only a few provided written comments.
Those comments were consistently focused on
the difficulty in identifying appropriate metrics
to disclose.

 onfidential business information may include trade secrets, business plans, new product plans, product pricing, investments, divestments, notes
Cassociated with patentable inventions, customer and supplier information, and financial data, as well as other information.
TCFD, Guidance on Scenario Analysis for Non-Financial Companies, October 29, 2020.

61 

IPR, Fact Sheet: How to Manage Confidential Business Information, June 2015, pp. 2–3.

62 

50

The Task Force on Climate-related Financial Disclosures

In its 2017 report, the Task Force highlighted
improving data quality and developing
standardized metrics as a key area for further
work. The Task Force also encouraged — andcontinues to encourage — sector and industry
experts to improve understanding andmeasurement of how climate-related issues
translate into potential financial impacts anddevelop standardized metrics.
Since the 2017 report was released, there havebeen several initiatives undertaken by industry
associations and similar organizations to support
their member companies in implementing the
TCFD recommendations, including addressing
data issues and identifying useful metrics formeasuring and managing climate-related risks
and opportunities. Many of these initiatives— which span the financial and non-financial
sectors — are described in the Task Force’s past
two status reports as well as this report.63

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Since the Task Force’s recommendations weredeveloped to apply broadly across sectors
and jurisdictions and to be flexible enough toaccommodate evolving practices, implementing
the Metrics and Targets recommendation
requires companies to identify those metrics
and targets most relevant to their specificproducts or services, operations, and climaterelated risks and opportunities. Furthermore,
for metrics and targets to be useful for investors
and other users, they should be defined andcalculated consistently within an industry toensure comparability.

As described in Section E. Initiatives Supporting
TCFD, several organizations have undertaken
efforts to help companies implement the
TCFD recommendations, including efforts to
identify relevant industry metrics. For example,
the World Business Council for Sustainable
Development has led several “preparer forums,”
which bring together peer companies in
specific industries who are implementing the
TCFD recommendations to discuss disclosure
practices and work that is needed to enhancethe effectiveness of disclosures. Each preparerforum issues a report that includes a section on
metrics the forum members consider relevant
for their industry.
The Task Force recognizes industry associations,standard setters, and similar organizations
are best positioned to undertake this work
and would like to emphasize the importanceof — and its appreciation for — their supportof companies implementing the Metrics andTargets recommendation, which are fundamental
inputs for investors and other users to evaluate
companies’ material climate-related risks andopportunities. The Task Force encourages suchorganizations to solicit and incorporate feedback
from investors and other users when identifying
or developing metrics and targets for a given
industry to help ensure those metrics and targets
will be useful for financial decision-making.

Task Force Member Organization’s Experience“Leveraging a comprehensive, facility-level physical risk assessment in our scenario analysis
enabled Moody’s to disclose metrics for physical climate risk more in line with those includedin the European Bank for Reconstruction and Development’s 2018 report “Advancing TCFD
Guidance on Physical Climate Risks and Opportunities”, reflecting Moody’s efforts to be
responsive to calls for more granular, quantitative reporting on physical risk exposure.”– Mark Kaye, Chief Financial Officer, Moody’s Corporation

See Section E. Initiatives Supporting TCFD in the Task Force’s 2018 status report and Section F. Initiatives Supporting TCFD in the Task Force’s 2019status report.

63 

51

D.
Case Studies
on Implementation

The Task Force on Climate-related Financial Disclosures

D. Case Studies on Implementation
This section includes case studies from threefinancial sector organizations — a global
risk assessment firm, an asset owner, andan asset manager. The case studies describe
the organizations’ respective experiences in
implementing the TCFD recommendations,which are intended to provide practical insights
on and considerations for implementing
the recommendations.

1. C ASE STUDY BY A GLOBALRISK ASSESSMENT FIRMPart one of this section provides a summaryof a global risk assessment firm’s — Moody’s— experience implementing the TCFD
recommendations, including some of thechallenges faced and lessons learned.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Introduction
Moody’s (NYSE:MCO) is a global integrated risk
assessment firm that empowers organizations
to make better decisions.64 Our data, analyticalsolutions, and insights help decision-makers
identify opportunities and manage the risksof doing business with others. We believe that
greater transparency, more-informed decisions,and fair access to information open the door toshared progress. With over 11,300 employees
in more than 40 countries, Moody’s combinesinternational presence with local expertise andover a century of experience in financial markets.
Moody’s response to the TCFD recommendations
followed the initial confirmation of support
signed by our Chief Executive Officer (CEO) and

Chief Financial Officer in June 2017 and ourongoing annual disclosure commitment of theorganization’s greenhouse gas inventory andclimate-related issues through CDP.65 Richard
Cantor, Chief Credit Officer of Moody’s, serves
as a member of the Task Force. We published
our third TCFD report in April 2020 as part ofour 2019 Corporate Social Responsibility Reportalongside other reporting frameworks including
the Global Reporting Initiative (GRI) and theSustainability Accounting Standards Board(SASB).66 Our TCFD report addresses the 11
recommendations the organization has set forthand builds upon past risk disclosure through CDP
and interviews with key internal risk personnel.
Moody’s Investors Service (MIS) — the credit
rating agency — has undertaken extensive
reviews to integrate scenario analysis into its
credit impact assessments. MIS incorporates
a forward-looking view of issues that canmaterially impact the credit quality of a given
sector or debt issuer, including those related toenvironmental, social, and governance (ESG). As
a company, Moody’s firmly believes in promoting
global ESG and climate risk measurement
standards for use by market participants andenhancing transparency in ESG and climate risk.
The content below details insights from ourexperience in enhancing our response to the
TCFD recommendations over the prior three
years. We aim to provide other preparers witha better understanding of the challenges they
may face in implementation efforts and how theymight address them based on our own learnings.

E.
Initiatives Supporting TCFD
Appendices

Moody’s, “Moody’s.”.”64 CDP, “CDP.”

65 

Moody’s, Better Decisions, Brighter Futures: 2019 Corporate Social Responsibility Report, April 2020.

66 

53

The Task Force on Climate-related Financial Disclosures

Key Takeaways
Approach the process as a marathon, not a sprint. Implementing the TCFD
recommendations will be an ongoing effort. As new data are produced over time andscience and research continue to evolve, we will work to integrate this information into
our strategy. Tracking and monitoring our progress against our proposed science-basedtargets will also serve as an important element in our future TCFD responses.
Organize for success. Successful implementation requires alignment among multiple
company functions. Establishing and enhancing our governance and strategies covering
ESG and climate-related risks and opportunities has strengthened our understanding,management, and reporting on these considerations.
Anticipate and prepare for situational challenges. Companies that operate globally,
like Moody’s, should expect to encounter hurdles aggregating the results of physicalclimate-related risks due to the geographic variability in costs and acceptable operating
limits. However, we found facility-specific data necessary for informing our contingency
planning, resilience building, and longer-term property management, as it improved ourunderstanding of where risks are concentrated.
Adapt existing Enterprise Risk Management (ERM) frameworks. To properly assess
the risks and opportunities associated with environmental factors, we employed a model
where current operational risks are considered on a prospective basis over a long-termhorizon. In addition, our ERM program is designed to prepare for events such as a natural
disaster or a severe weather event, so that our business units can continue essential
business operations as well as recover associated systems and technology.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Our Journey
Moody’s was an early adopter of the TCFD
recommendations beginning with our 2017
report, which we enhanced in 2019. This
year, following our regular engagementwith stakeholders, including members of
the Corporate Reporting Dialogue (CRD),
we streamlined our various disclosures andreporting efforts into one publication.67
Our annual Corporate Social Responsibility(CSR) report now includes our response
to GRI and SASB standards, as well as the
TCFD recommendations. This provides our
stakeholders with one consolidated point ofreference that exemplifies the spirit of the
Better Alignment Project.68
Scenario Analysis
The key enhancement of our TCFD response
in 2020 was the inclusion of scenario analysis,
which assessed the material impacts of climaterelated physical and transition risks acrossour global offices and operations. Comparing
the resiliency of our business strategy against
feasible alternate strategies helped us to better
prioritize our ESG investments and informplanning, as well as enabled us to better respondto new investor disclosure requests.
67

We began our journey to full implementation
by assessing exposure under two scenarios tounderstand the financial impact of transition andphysical risks: 1) high emissions scenario (up to
5°C of warming) associated with major physicalclimate impacts and 2) low emissions scenario(below 2°C of warming). Our transition analysis
focused on applying carbon pricing to various
elements of our greenhouse gas inventory to
determine the long-term financial impact of
this pricing. The International Energy Agency,
World Energy Outlook Sustainable Development
Scenario specifies carbon pricing across various
timeframes, scaling up to a price of $140 per
tonne for advanced economies in 2040.69
Further, we evaluated physical risk under theIntergovernmental Panel on Climate Change’s(IPCC’s) Representative Concentration Pathway(RCP) 8.5.70 This scenario assumes that there
will be few policy changes, resulting in highlevels of greenhouse gas emissions by theend of the century and significant associatedphysical impacts. Understanding our physicalrisk exposure over the long term (20–30 years)
and under the RCP8.5 provides insight into theseverity of risks we are likely to experience by
midcentury and informs our resilience planning.

CRD, “Corporate Reporting Dialogue.”
CRD, “Better Alignment Project.”68 International Energy Agency, World Energy Model, Scenario Analysis of Future Energy Trends, November 2019.

69 

Intergovernmental Panel on Climate Change, RCP 8.5 — A scenario of comparatively high greenhouse gas emissions, August 13, 2011.

70 

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The Task Force on Climate-related Financial Disclosures

Additional details on scenario analysis forphysical climate risk can be found in Four Twenty
Seven’s paper Demystifying Climate Scenario
Analysis for Financial Stakeholders.71

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

We engaged Four Twenty Seven, a Moody’s
affiliate and leading provider of data on physicalclimate and environmental risks, to evaluate
the physical climate risks for our global officelocations.72 Using its proprietary physical climate
risk scoring methodology, we assessed the riskof each property against heat and water stress,
sea level rise and flooding, and exposure tohurricanes and typhoons. Four Twenty Seven’s
analysis leverages peer-reviewed climate
models and environmental datasets from the
IPCC, the U.S. National Aeronautics and Space
Administration, and the National Oceanic andAtmospheric Administration, among others, andis supplemented by commercially available data
sources. The output includes hazard risk scoresand risk thresholds for each facility globally.
Hazard risk scores are comprised of several
science-driven indicators meant to capture
different dimensions of business risk presented
by each hazard, including both relative andabsolute risk. Risk thresholds indicate whether
an asset’s risk level is “no risk, low, medium, highor red flag (highest risk),” based on its score.
The detail helps us understand how Moody’s
operations are exposed to changing climate
conditions and informs our risk management.
Challenges and Lessons Learned
Our preparation of the current TCFD response
coincided with an internal review of ourenvironmental strategy, making it a favorable
time to improve both our strategy and disclosure
process. This review prioritized collaboration
between multiple internal stakeholders throughworkshops that addressed various topics acrossthe TCFD’s 11 recommended disclosures. These
workshops enabled us to share the strategy
elements of the TCFD recommendations
with members of the Reporting & Messaging
workstream of our CSR Working Group, as wellas helped members to interpret the scenario
analysis results. While challenges were faced incoordinating the workshops, our TCFD response
was strengthened by input from a wide range ofinternal stakeholders.

Governance and Strategy: Organizing for Success
In 2017, we established the Moody’s CSR
Council, which convenes senior management
team members and helps shape our overall
CSR strategy. The CSR Council also appoints
members to the CSR Working Group, whichhelps hone and implement our strategy. In 2019,
we adjusted our Enterprise Risk Management
governance structure, which enhanced ourenterprise-level approach to climate-relatedrisks and opportunities. During this period, we
also updated the Moody’s Board of Directors
Audit Committee charter to include oversight offinancial, risk, and other disclosures made in thecompany’s annual and quarterly reports related
to sustainability as the Governance & Nominating
Committee continues to have oversight more
broadly over sustainability issues. Additionally,
we added sustainability language to our Form
10-K and enhanced our business continuity risk
factor to add interruptions caused by weather
events, including due to climate change.
Establishing and enhancing our governanceand strategies covering ESG and climate-relatedrisks and opportunities has strengthened ourunderstanding, management, and reporting onthese considerations.
Risk Management: Adapting Existing
ERM Frameworks
To properly assess the risks and opportunities
associated with environmental factors, weemployed the principles of Moody’s Enterprise
Risk Management — which is based on the 2017
Committee of Sponsoring Organizations of theTreadway Commission framework, Enterprise
Risk Management — Integrating with Strategy and
Performance.73 In this model, current operationalrisks are considered on a prospective basis overa long-term (three-to-five-year) horizon.
However, to assess climate-related risks, we
extended the assessment timeframe to 20
years to capture potential cumulative impacts
under alternate scenarios. In addition, Moody’s
business continuity management program isdesigned to prepare for events such as a natural
disaster or severe weather event, so that ourbusiness units can continue essential business
operations as well as recover associated systems
and technology.

Four Twenty Seven, Demystifying Climate Scenario Analysis for Financial Stakeholders, December 2019.

71 
72

F our Twenty Seven, “Four Twenty Seven.”73

 ommittee of Sponsoring Organizations of the Treadway Commission, Enterprise Risk Management — Integrating with Strategy and Performance,C
June 2017.

55

The Task Force on Climate-related Financial Disclosures

Scenario Analysis: Quantifying Financial Impacts
Moody’s operates in over 100 facilities aroundthe world. Therefore, we needed to understandthe unique physical risks at each facility to assess
how our overall operations may be affected byclimate change. Our risk assessment identified
the level of risk exposure at each facility to eachclimate hazard, based on the facility’s precise
geographic location.
While we strongly believe these results canhelp to guide our ongoing allocation of capital
investment, aggregating the results of thephysical climate risks proved to be challenging
due to the geographic variability in costs andacceptable operating limits. However, this facilityspecific information improves our understandingof potential operation disruptions, increased
repair costs, and assets that are likely to become
stranded, as well as which facility’s exposure

could increase over time due to climate hazards
such as rising sea levels. Reviewing this data
by region informs our contingency planning,resilience building, and longer-term property
management by improving our understandingof where risks are concentrated.
We faced a similar challenge in reaching more
specific financial impacts of transition risks andopportunities, particularly in the medium andlong term. We also were challenged by how
best to report the results of our scenario analysis
in an easily digestible and decision-useful way
for stakeholders. After reviewing several otherreports and considering our own analysis, we felt
the tables shown in Figure D1 and Figure D2 (p. 57)
were effective communication of the results to ourstakeholders. More detail can be found in our full2020 TCFD report, and we welcome feedback.74

Figure D1

Results of Scenario Analysis: Physical Risks
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices74

Moody’s, TCFD Report, April 2020.

56

The Task Force on Climate-related Financial Disclosures

Figure D2

Results of Scenario Analysis:
Transition Risks and Opportunities

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

57

The Task Force on Climate-related Financial Disclosures

Metrics and Targets: Improving Methodologies
and Reporting
While the TCFD recommendations do not callfor specific metrics on physical climate risk,
investors are increasingly demanding moregranular, comparable disclosure of these
metrics. The metrics we used to disclose climate
risk are based on the percent of our global
facilities exposed to each climate hazard. We
also identified risk management strategies
alongside these numbers to indicate how
prepared we are to manage these impacts. These
metrics are included in best practices outlinedin the European Bank for Reconstruction andDevelopment and Global Center on Adaptation’sreport Advancing TCFD Guidance on Physical
Climate Risk and Opportunities.75

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
AppendicesIn 2019, we also took tangible steps to outline
empirical targets in our broader CSR strategy.
This included signing the United Nations Global
Compact’s “Business Ambition for 1.5°C Pledge,”for which we recently proposed science-basedtargets to reduce GHG emissions and reachnet-zero emissions by no later than 2050.76
We also improved our calculations for andreporting of our greenhouse gas inventory,
as well as procured renewable energy forour global operations.

Enhance Our Analysis by Expanding
Potential Scenarios
As previously mentioned, one of the challenges
in applying our scenario analysis was our ability
to quantify the financial implications of the risk
categories due to the interaction of direct andindirect climate change impacts. To overcome
this, we attempted to evaluate the financial
impact against direct elements such as our
calculated greenhouse gas inventory, energy
costs, business disruption costs, and relocation
estimates. Our plan for future years is toincrease the coverage of these impacts and the
granularity of estimations used in the scenarios,
as well as to attempt to incorporate a greaterlevel of indirect impacts in our analysis.
During our first iteration of the scenario
analysis, we focused on the expected extremesof physical and transition climate risks. Since
future emissions and socioeconomic outcomesare uncertain, we believed providing an
understanding of the extremes was fundamental
to assessing the resiliency of our strategy. Goingforward, we plan to include additional scenariosthat will allow us to assess the impact of a mix ofphysical and transition impacts. Additionally, we
intend to monitor the release of publicly available
scenarios and shifts in global climate goals to
examine if further scenarios will be needed.

Additionally, we worked to independently
verify our greenhouse gas inventory, which
improved the accuracy of the scenario analysis.
It expanded our accounting of indirect emissions(Scope 3) by allowing us to assess the impact ofcarbon pricing on purchased goods and services,which accounts for a large portion of our indirectemissions. Applying the scenario analysis
alongside our internal environmental strategy
review was logistically challenging but ultimately
allowed us to better position our approach andmaximize our resiliency to climate risk for thelong term.

Measure Our Progress Against
Science-Based Targets
As mentioned above, our proposed sciencebased targets cover our indirect emissions
through the purchase of goods and services.
We intend to have our targets formally validated
against the Science Based Targets initiative’s
criteria and plan to expand our reporting toinclude the tracking of progress against thesenumbers.77 We aim to lead by example throughour reporting processes and hope to identify
additional opportunities in the future.

Future Opportunities
Implementing the TCFD recommendations willcontinue to be an ongoing process for Moody’s.
As we produce new data over time, and as
science and research continue to evolve, wewill work to integrate this information into ourstrategy. Tracking and monitoring our progressagainst our proposed science-based targets will
also serve as an important element in our future
TCFD responses.

Increase Tracking of Climate-Related
Opportunities
Lastly, we plan to track the potential climaterelated opportunities we identified during thisprocess to produce more robust reportingon how these play out in the future. These
opportunities included strategic investmentin products and services; memberships andclimate change commitments; and researchand development.

European Bank for Reconstruction and Development, Advancing TCFD Guidance on Physical Climate Risks and Opportunities, May 2018.

75 

United Nations Global Compact, “Business Ambition for 1.5°C.”

76 

Science Based Targets, “Science Based Targets.”

77 

58

The Task Force on Climate-related Financial Disclosures

2. CASE STUDY BY AN ASSET OWNER
Part two of this section provides a summaryof an asset owner’s — CPP Investments —approach to incorporating climate change into
its investment decisions and how the TCFD
recommendations have informed this process.
CPP Investments has been a strong supporterof the TCFD and is one of two global pension
plan investors represented on the TCFD. CPP
Investments is aiming for full adoption of the
TCFD recommendations by the end of fiscal
year 2021.

“Our efforts to understand the implicationsof climate change on long-term investment
values have accelerated. We continue toprioritize key advances to ensure we are aleader among asset owners in understanding
the risks and opportunities presented byclimate change.”
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices– Mark Machin, President and CEO, CPP
Investments

Introduction
CPP Investments is a professional investment
management organization that invests theassets of the Canada Pension Plan not currently
needed to pay pension, disability, and survivor
benefits. As of March 31, 2020, total assets undermanagement stood at C$409.6 billion. CPP
Investments manages these assets in the bestinterests of more than 20 million contributors
and beneficiaries.
CPP Investments views climate change as oneof the world’s most significant physical, social,technological, and economic challenges. The
organization seeks to be a leader among asset
owners and managers in understanding theinvestment risks and opportunities presented
by climate change. This aligns with a legislative
objective to maximize returns without undue
risk of loss.
As a member of the TCFD, CPP Investments
helped to both produce the recommendations
and encourage their adoption. CPP Investments

is committed to full adoption of the TCFD’s
recommendations by the end of fiscal 2021.
In the following pages, we provide an overview
of steps we are taking to implement the TCFD
recommendations and our organization’s efforts
to actively address climate change to increase
and preserve economic value, in accordancewith our purpose.
Governance
CPP Investments’ efforts to understand thefinancial impacts of climate change started morethan a decade ago and will continue to accelerate
in the coming years. The evolution of our journey
toward better climate disclosure goes back tothe strong tone from the top set by our CEO andBoard more than two years ago. At that time,
climate change was defined as a leading issue
facing our organization as a long-term investor —one that must be considered and fully integrated
into our investment decisions.
Our Board of Directors oversees enterprise-wide
efforts to understand and manage climaterelated risks and opportunities. At least oncea year, Management provides a comprehensive
report to the Board about our activities related
to climate change, including the most material
investment risks and opportunities. Our Chief
Financial & Risk Officer and Risk group also report
regularly to the Risk Committee of the Board on
climate-related risks with updates that include
carbon footprint metrics and scenario analysis
results. The Board also reviews and approves
our most significant investments. The investment
recommendations the Board reviews on theseinvestments include a mandatory comprehensive
assessment of material climate change
considerations completed by investment teams.
As well, in 2018, we launched the Climate Change
Program, a cross-departmental, multiyear
initiative designed to position us as a leader
in understanding the investment risks andopportunities presented by climate change.
The Program is overseen by the Climate Change
Steering Committee (CCSC), which is mostly
made up of Senior Managing Directors wholead our various investment and operations
departments. The CCSC oversees our Climate
Change Management Committee (CCMC), which
in turn guides and supports the Program’s six
climate-related work streams. The CCMC is

59

The Task Force on Climate-related Financial Disclosurescomprised of managers from across investment
and operations departments (see Figure D3).
The presence of a dedicated effort with a defined
governance structure, coupled with having theinvestment and operations departments take thelead, supported by the tone and accountabilities
set from the top, has helped us embed climatechange deeper into our business.
Strategy: Integrating Climate Change into
the Investment Process
CPP Investments has dedicated employee
and other resources to understanding the risks
and opportunities brought on by climate change
from a financial point of view, both top-down
and bottom-up. Our enterprise-wide approach
integrates climate change considerations into
our risk framework and across relevant
investment activities to build and protect
long-term investment values. Guided by the
TCFD’s recommendation on Strategy, we aim
to disclose, where material, the actual andpotential impacts of climate-related risks andopportunities on our portfolio design andinvestment selection process.
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

Portfolio Design
The Total Portfolio Management (TPM)
department’s top-down approach seeks todirectly factor a full range of climate-relatedrisks and opportunities into CPP Investments’investment strategy and total portfolio design.
TPM works to understand potential climatechange and energy transition pathways forvarious countries as well as the resulting
economic and market impacts.
Security Selection Framework and Opportunities
From a bottom-up perspective, our security
selection framework incorporates considerationsof climate-related risks and opportunities into
our most material individual investments.
Launched in April 2019, and informed by the
TCFD recommendations, the framework requires
investment teams to include descriptions of
relevant climate-related risks and opportunities
that impact investment decisions at boththe initial screening and final investment
approval stages.
For CPP Investments, our climate change
work aims to both address risks and identify
opportunities. In 2017, CPP Investments createdthe Power & Renewables (P&R) group to better
position the organization to invest in climaterelated opportunities. Since then, the P&R group
has made significant investments in renewableenergy projects around the globe totaling morethan C$6 billion as of June 30, 2020. Also, since2019, we have been seeking to invest in earlystage investments aligned with the energy
transition through our Innovation, Technology,
and Services strategy; and our Thematic

Figure D3

Climate Change Program Framework

D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

60

The Task Force on Climate-related Financial Disclosures

Investing team has launched a new climatechange opportunities investing strategy.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Scenario Analysis
To better understand the risks posed andopportunities presented by climate change,
CPP Investments is developing a climate-related
scenario analysis framework.
Physical risks are captured using TPM’s internallyestimated damage function, which specifies
how physical risks affect economic activity
at various levels of warming. Transition risksarise from the potential shift to a low-carbon
economy, which is dependent on factors
including extensive changes in policy, technology,
and the development of carbon markets. The
range of uncertainty around transition risk isinherently wide. This year, we quantified thisrange using models and scenarios from theIntergovernmental Panel on Climate Change— the United Nations body for assessing thescience related to climate change.
TPM is also working to assess risks andopportunities related to climate change and theenergy transition using internally determined
scenarios and signposts, with particular focus
on the impact of long-term returns and asset
allocation. These scenarios will also help
each investment department determine themateriality of energy transition and climatechange scenarios on its activities.
Our Risk Group uses stress testing to assess
the impact and resilience of investments undera range of plausible scenarios including
extreme and tail events. The global warming
pathways assessed include an orderly anddisorderly transition to a 1.5°C warmer world,
an orderly transition to a 2°C warmer world,a gradual transition to a 4°C warmer world,
and a transition to a 4°C warmer world withsignificant extreme weather events.

Risk Management
Given our legislative objectives, managing
risk is central to all we do at CPP Investments.
Climate change is a key risk in CPP Investments’Integrated Risk Framework (IRF). The IRF
promotes clear lines of accountability acrossthree complementary levels:• Front-line investment and operations
management: Our Security Selection
framework (see p. 60) requires investment
teams to include descriptions of relevant
climate-related risks and opportunities at theinitial screening and final investment approvalstages.
• Oversight functions, including Risk: Our
Risk Group is using climate change scenariosand “bow-tie” risk and control assessments todetermine the risk of climate change on our
portfolio.
• Assurance and Advisory: Our Assurance andAdvisory Group has assessed our internallydeveloped carbon footprint tool.
Disclosure by our portfolio companies plays acritical role in helping us assess climate-relatedrisks. Because of this, we actively engage withcompanies to improve climate change-related
disclosures. Since July 2015, CPP Investments
has supported more than 130 climate changerelated shareholder resolutions. The TCFD
recommendations serve as a very usefulframework in our engagement activities.
These recommendations are proving to be
instrumental in improving companies’ climatechange-related disclosure.

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The Task Force on Climate-related Financial Disclosures

Metrics and Targets
CPP Investments developed an in-housemethodology to estimate our carbon footprint
metrics and published its first carbon footprintof its public equities portfolio in 2018, including
metrics on total carbon emissions andcarbon intensity. In 2019, we provided a morecomprehensive metric that includes both our
public and private investments.
We base our carbon footprint metrics on Scope
1 and Scope 2 GHG emissions, as we believe thedataset for Scope 1 and Scope 2 GHG emissions
is currently the most complete and robust
available (see Figure D4).

Looking Ahead
At CPP Investments we view climate change as
among the major challenges of our time. In themonths ahead, we will continue to refine ourtools and capabilities to assess climate changerelated impacts and will remain focused on
integrating them into our investment process.
The TCFD recommendations will continue toinform this process. We believe our support of
the TCFD recommendations will contribute toimproved global disclosure of climate-relatedrisks. This, in turn, should help asset owners,
including CPP Investments, better assess theserisks and make sounder investment decisions.

The Task Force’s supplemental guidance notesthat there are challenges and limitations withcarbon footprinting metrics and that theseshould not necessarily be interpreted as risk
metrics.78 It also notes that the TCFD expects thedisclosure of these metrics to prompt important
advancements. We agree with this position.

A.
State of Climate-Related
Financial Disclosures

Figure D4

Portfolio Carbon Footprint Metrics*

B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017, p. 37.

78 

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The Task Force on Climate-related Financial Disclosures

3. CASE STUDY BY AN ASSET MANAGER
Part three of this section provides a summaryof an asset manager’s — Generation Investment
Management — approach to implementing the
TCFD recommendations, especially the Metrics
and Targets recommendation.

A.
State of Climate-Related
Financial Disclosures

Introduction
Generation is a pure play sustainable investment
manager. We see long-term investing as bestpractice and sustainability as the organizing
construct of the global economy. We use
ESG factors as tools to evaluate the quality ofbusiness and management. We believe thisapproach reveals important and relevant insightsthat other investment frameworks may miss, andwhich ultimately leads to superior, risk-adjusted
investment results.79 Consideration of climatechange has always been integral to Generation’s
investment philosophy and process. Early in ourjourney, we recognized the need to build greaterawareness of climate-related assessment among
financial and non-financial companies alike. As
such, we have helped launch and support several
initiatives that accelerate the transition to a moresustainable economic system. In 2016, we werepart of the founding membership of the TCFD.

B.
Effective Climate-Related
Financial Disclosures

Key Takeaways

C.
Addressing
Implementation Issues

In recent years, Generation has used the TCFD
recommendations to refine its approach toevaluating climate-related risk and opportunity
across our investments, and our key takeaways
from those efforts are summarized below. The
TCFD recommendations formed the basis forimportant dialogue across our firm on how toprovide robust, best-in-class disclosure to ourinvestors. We have incorporated TCFD guidance
into our private equity impact reporting andreporting on overall firm alignment via the
PRI Climate Transparency Report. We are also
exploring forward-looking metrics such as
Implied Temperature Rise to build upon our use
of TCFD carbon footprinting metrics, to moredeeply inform risk management and strategy.80
Our reporting to investors in our public equity
funds includes metrics on Scope 1, Scope 2, andScope 3 GHG emissions as well as the numberof firms committed to science-based targets.
Our approach will continue to develop overtime, driven by insights from our investment
practice and developments in climate scienceand modeling.

Start where you are, with what you have. Implementing the TCFD guidance is aprocess, and we started first with the Metrics and Targets recommendation. Over time,
we have built up the additional in-house and external capability required to do additional
analyses and integrate TCFD guidance more broadly.

D.
Case Studies on
Implementation

The TCFD recommendations can form the basis for an ongoing dialogue. The TCFD
framework helped drive a conversation at Generation, and sheds light on where wealready have depth of climate consideration in our governance and strategy. It also
highlighted gaps where we could build even greater nuance, particularly in metrics andtarget setting.

E.
Initiatives Supporting TCFD

Build up the data and analytics underpinning the disclosure over time. For therichest and most relevant outputs, TCFD-aligned disclosures require time and myriad
inputs from companies. We have improved the quality and depth of our assessment
iteratively over time, with ongoing engagement of our public and private companies.

Appendices

Consider your audience. TCFD guidance is designed to drive consistency of disclosure
among companies, which enables the same among asset managers and ultimately
among asset owners. We recognize TCFD recommendations do not require an extensive
public report, but rather should shape our communications to our clients.

Although Generation seeks to provide superior investment performance, this is an aspiration and there is no guarantee that this goal will beachieved. Similarly, while we naturally hope to provide “outstanding” results, this outcome is not guaranteed, and loss of capital may occur.

79 

Implied Temperature Rise is a forward-looking metric that indicates the global temperature rise associated with the greenhouse gas emissionsof a single entity or a set of companies (i.e., in a portfolio or fund). The metric uses current emissions and other data to estimate expected future
emissions from these entities and then translates these into a projected increase in global average temperature.

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The Task Force on Climate-related Financial Disclosures

Implementing TCFD Guidance
We are conscious that the methods forevaluating climate exposure are still evolving,
and we are always looking to use the most robust
and forward-looking approaches. Incorporating
TCFD’s guidelines was a natural next step inour evolution toward best-in-class climate risk
assessment and reporting.
Where We Started
While we have always evaluated companies
with an environmental lens, we previously felt
it was hard to capture our view of sustainability(i.e., companies run by long-term-oriented
management teams making products societyneeds) in a score, and we felt such scoring mightreward companies with the resources to invest
in marketing. However, with the incredible
growth in ESG data and emissions data inparticular, beginning in 2018, we felt we could
report specific carbon exposure metrics togive a directional sense of how sustainable thebusinesses in our portfolio are.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

We first began incorporating TCFD guidance —specifically that around metrics and targets —in our quarterly letter to investors in the fourth
quarter of 2018. In this letter, we reported
our portfolio-level weighted average carbon
intensity for our public equity funds relative toa benchmark. Our team elected to report thismetric for several reasons: its relevance given
the nature of our business; its availability fromthird-party providers for both our portfolio andthe benchmark; and the availability of quality
data to make an accurate assessment. We also
report on the percentage of our companies that
contribute to CDP and the Science Based Targets
initiative. As this proportion continues to grow,we will be positioned to report on additional
TCFD-recommended metrics such as exposure
to carbon-related assets.

Broadening Our Disclosure
In the following months, we built upon our
metrics disclosure by introducing TCFD
principles to the disclosure activities of different
Generation teams in parallel. We began an
in-depth review of Scope 3 GHG emissions
intensity of the companies held by our public
equity portfolio; we introduced TCFD assessment
alongside our Sustainability Report for our
growth equity portfolio; and we documented ourwork in accordance to TCFD recommendations aspart of our voluntary PRI Climate Transparency
Report. To improve our ability to disclose how
our investment strategies might be affectedby a low-carbon transition and to build upon
our current carbon footprinting, we have also
begun evaluating the Implied Temperature Rise
associated with our public equities portfolio.
Ultimately, with the experience and processes
built in the last two years, we believe we will bewell positioned in 2021 to complete a rigorous,
firm-level TCFD disclosure.
Resourcing and Education
To drive our portfolio-level ESG and climate
risk assessment in 2018, we assembled a crossfunctional group, comprised of professionals
from our investment and client teams. This group
identified metrics and standards against which
Generation’s strategies could be assessed, with
an emphasis on how TCFD’s guidance on metrics
and targets might be incorporated into existing
disclosures. This process was an important firststep in building expertise and awareness around
TCFD principles across the firm. Moving forward,
we have designated a cross-functional team,which includes members of our Management
Committee, to guide the overall implementationof TCFD recommendations, and we will continue
to work to embed TCFD familiarity among all staff.

E.
Initiatives Supporting TCFD
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The Task Force on Climate-related Financial Disclosures

Our Design Choices and Challenges
As we develop comprehensive TCFD disclosure, wehave made several key choices in our approach.
No “One Size Fits All” Approach
We manage four strategies across two asset
classes. Teams share common principles but
ultimately vary in their specific assessment ofrisks and opportunities — each strategy has
different data sources and demands different
approaches to analysis. As such, we vary ourapproach to disclosure across teams; forinstance, we conducted portfolio-level analyses
for our public equities funds, and currently track
impacts and carbon emissions of our growthequity fund at the asset level. We will continue toevaluate these separately as appropriate as wemove toward a firm-level disclosure.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Gap Between Asset- and Portfolio-Level Tools
There remains a gap between the fine-grained,
context-rich analyses we conduct at the company
level and the portfolio-level tools required to
fully characterize the resilience of our investment
strategies to different climate scenarios.
We already have robust documentation ofclimate-related risks and opportunities acrosssectors, geographies, and timeframes within
our investment research roadmaps. However,further work is required to disclose portfoliolevel impacts across all teams.
In-House Assessments vs. Working with a Vendor
For many dimensions of TCFD disclosure,
we have the requisite expertise in-house:
assessment of governance, strategy and risk,
and climate-related issues are deeply integrated
into our philosophy and process.
In disclosing metrics, we elected to workwith vendors to assess portfolio-level carbon
footprinting metrics and newer measures suchas Implied Temperature Rise, a metric to help
us better understand forward-looking risks andopportunities associated with our portfolio. To
do so, we required portfolio-level data beyond
what is easily accessible to our teams as well as
access to expert modeling capabilities.81 In eachof our selections, we sought vendors who would81

be open to engaging in an ongoing dialogue.
We recognize both the datasets and methods
continue to evolve, and we sought partners with
an appetite to engage on challenging analyses
such as Scope 3 GHG emissions intensity and tocontinue pressure testing their models.
Data Availability
Although data providers continue to improve
quality and availability, data continues to be oneof the largest barriers to robust climate exposure
assessment. We used our assessment as anopportunity to engage our companies moredeeply on sustainability reporting. Based on our
analysts’ knowledge and research on each asset
in the portfolio, analysts engage and encouragecompanies to consider reporting against the
TCFD framework if they are not already doing so,or to enhance the reporting they already provide.
In addition, in 2018, we wrote to 44 of our Focus
List companies who had not yet responded tothe survey administered by CDP, and we wereencouraged that several quickly responded withpromises to do so in the following period.82 In
2020, we wrote to portfolio companies asking
them all to adopt Science Based Targets. We
intend for TCFD-guided disclosures to continue
to serve as an impetus to engage with our
public and privately held companies alike onsustainability reporting.
Scope and Scenario Selection
The interpretation of portfolio climate risk
exposure varies considerably with scenario
selection and the GHG emissions scopeincluded. For example, in our quarterly investor
disclosures of portfolio carbon intensity, we
did not limit our analysis to Scope 1 and Scope
2 GHG emissions. In our analysis of CDP data,
we determined that Scope 3 GHG emissions
are vastly larger than Scope 1 and Scope 2 GHG
emissions for companies on our Focus List;
indeed, Scope 3 GHG emissions accounts formore than 80% of total emissions. Engaging
on Scope 3 GHG emissions is complex, but data
availability continues to improve and there isa growing body of best practice.

In particular, we require access to the Integrated Assessment Model’s inputs that inform calculations of Implied Temperature Rise.
Our Focus List companies are those that meet our business quality and management quality criteria and which we would like to own over the longterm at the right price. There are about 125 companies on our Focus List as of May 31, 2020.

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Our Next Chapter
Aligning our disclosure to TCFD guidance has
provided an opportunity for us to reflect on
and refine how we assess climate-related risks
and opportunities. In the next phase of ourdisclosure, the work we conducted to date will
form the foundation of an integrated, firm-level
TCFD disclosure.
We must continue to refine our methods anddata quality — across Scope 1 and Scope 2 GHG
emissions but particularly Scope 3 GHG emissions
impacts — and integrate this data into our
Implied Temperature Rise assessment. We will
also look to extend our portfolio-level analyses
across all private and public strategies and to
conduct portfolio-level scenarios modeling.

In addition, we are exploring how these outputs
can inform our investing toolkit and engagementwith companies beyond what we do already.
However, there is also a need to adapt these tools
to better capture the potential for value creation
through alignment with net-zero pathways.
Our approach to investing has always explicitly
integrated climate considerations, but consistent
disclosure of this work is the key to enabling allcompanies, managers, and owners to assess theirown exposure and opportunity. Our ambition isfor our own disclosure to spur deeper and morerobust adoption among our companies andclients. We look forward to continuing to support
fellow stakeholders and aligned initiatives inaccelerating a long-term, sustainable transition.

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State of Climate-Related
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Effective Climate-Related
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Implementation Issues
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Case Studies on
Implementation
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Initiatives Supporting TCFD
Appendices66

E.
Initiatives Supporting TCFDThe Task Force on Climate-related Financial Disclosures

E. Initiatives Supporting TCFD
Amid growing momentum behind the Task Forceand its recommendations, nearly 700 companies
and other organizations have become supporters
since the Task Force released its 2019 status
report, bringing the total number of supporters
to over 1,500.83 Of these supporters, 1,344 arecompanies and 168 are other organizations (e.g.,industry associations, governments). These
supporters come from around the world, but
the majority — 75% — come from Asia Pacificand European countries, as shown in Figure E1.
Companies supporting the TCFD represent a
broad range of sectors with a combined market
capitalization of $12.6 trillion. This includes justover 700 financial firms, responsible for assets
of $150 trillion. In addition, nearly 60% of the
100 largest public companies support the TCFD,
report in line with the TCFD recommendations,or both.84
Support from market participants continues
to play an important role in the adoption ofA.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

the TCFD recommendations across industries
and regions as does the work of various groups
and organizations with initiatives that facilitate
implementation of the recommendations.
The Task Force’s last two status reports havehighlighted initiatives aimed at helping nonfinancial companies and financial institutions
report in line with the TCFD recommendations,and many of these continue today. The
global spread of these initiatives and wide
range of organizations implementing therecommendations may indicate the Task Force’s
framework is driving meaningful change inthe way companies think about and disclose
information on their climate-related risks
and opportunities.
This section provides updates on continuing
initiatives and outlines some of the new
initiatives that have been launched since theTask Force issued its previous status reportin early June 2019.85

Figure E1

Geographic Distribution of TCFD Supporters
Top Five Countries by
Number of Supporters

C.
Addressing
Implementation Issues

39%

20%

EuropeNorth
AmericaD.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD

3%

AppendicesSouth
America

Japan

310

United Kingdom

219

United States

219

Australia

76

Canada67

2%

Middle East
and Africa

36%

Asia Pacific

Importantly, not all organizations that support the TCFD recommendations implement them. Some organizations express support by convening
their members and facilitating consistency in implementation, while others — such as governments and regulators — express support byencouraging or requiring companies and other organizations to implement the recommendations.

83 Forbes, The World’s Largest Public Companies, May 13, 2020. In reviewing the 100 largest public companies, the Task Force identified whether acompany indicated it reported in line with the TCFD recommendations or planned to.

84 Given the significant number of references included in this section (denoted in light blue), footnote citations are not included. However, each of thereferences is included in Appendix 7: References.

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Key Takeaways
Support for the TCFD has increased significantly since the June 2019 status report wasissued — nearly 700 organizations have indicated their support for the TCFD, an increaseof over 85%.
The Task Force sees increased interest by policy makers and regulators in specificallyrequiring disclosure of climate-related financial information, often with references to
the TCFD.
Support for implementing the TCFD recommendations comes from a wide range oforganizations — from investors to industry associations to regulators — and spans
the globe — from Chile and Mexico to South Africa to Malaysia and New Zealand andmultiple countries in between.

1. IMPLEMENTATION INITIATIVES

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Case Studies on
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E.
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Appendices

As support for the TCFD has grown, manyorganizations have continued their efforts
to help companies implement the TCFD
recommendations. For example, building
on its previous work, such as guidance andimplementation workshops, to support
finance leaders in implementing the TCFD
recommendations, Accounting for Sustainability
published practical examples or case studies in
July 2019 to show how two different companies
used the results from scenario analysis to inform
decisions within their respective organizations.
The World Business Council for Sustainable
Development (WBCSD) has also continued
to support TCFD implementation for specificindustries through its TCFD Preparer Forums.
Through these forums, the WBCSD brings
together peer companies to implement the
TCFD recommendations and discuss disclosure
practices and work that is needed to enhancethe effectiveness of disclosures. Each forum
prepares a report highlighting examples ofeffective climate-related financial disclosures,perspectives from users of such disclosures,and challenges associated with implementing
the recommendations. In July 2019, the WBCSD
published reports on the electric utilities andchemical industries; in April 2020, it publisheda report on the food, agriculture, and forest
products industry; and in July 2020, it publisheda report on the construction and building
materials industry. In July 2020, the WBCSD alsoannounced it is initiating a TCFD Preparer Forumfor companies involved in the manufacturing andleasing of automobiles. In addition, in October
2019, the WBCSD released a checklist withpractical steps for companies to “future proof”
their businesses, one of which was to implement
the TCFD recommendations to provide investors
with decision-useful information.
In the financial sector, the United Nations
Environment Programme Finance Initiative (UNEP FI)
continued its work with financial institutions on
implementing the TCFD recommendations. In 2019,
UNEP FI published two guides for investors on
analyzing, evaluating, and testing methodologies
to enable 1.5°C, 2°C, and 3°C scenario-based
analysis of their portfolios in line with the TCFD
recommendations. The first guide (May 2019)
covers listed equities, corporate debt, and direct
real estate portfolios, and the second guide(November 2019) builds on the first, focusing on
modeling and analyses from the investigation into
direct real estate investments. In addition, UNEP FI
is working with insurers on developing analytical
tools to support insurance industry disclosures thatare in line with the TCFD recommendations.

Reports Referenced

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Also supporting financial institutions’implementation efforts, the Institute ofInternational Finance (IIF) released a reportin August 2019 intended to provide insight oncurrent leading practices among financial firms
in implementing TCFD recommendations. The
IIF noted this report will serve as a baseline
for tracking improvements in climate-related
financial disclosure through annual updates.

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The Investor Leadership Network (ILN),
launched in 2018, facilitates collaboration
among leading global investors on key issues
related to sustainability and long-term growth.
In September 2019, the ILN published a report— TCFD Implementation, Practical Insights andPerspectives from Behind the Scenes for Institutional
Investors — intended to assist asset owners
and fund managers in making better choices
to define their climate change strategies anddisclosures. The report describes how a group ofasset owners and asset managers approachedimplementing the TCFD recommendations andwhy they implemented them the way they did,including the process behind their choices, thechallenges they faced, and the lessons learned.
New initiatives on implementing the TCFD
recommendations have emerged as well. In
November 2019, the Banking Association ofSouth Africa hosted a workshop to provide
South African banks with training on therelevance of climate risk management anddisclosure and its integration into existing
decision-making processes, in line with the TCFD
recommendations.86 In January 2020, FEBRABAN,
the Brazilian Federation of Banks, publisheda progress report to follow up on its TCFD
implementation road map for Brazilian banks. The
report describes TCFD implementation progressin the Brazilian banking sector during 2019.
Additionally, in February 2020, the GovernanceInstitute of Australia released practical guidance
for Australian Securities Exchange (ASX)-listed

Appendicescompanies reporting against the ASX Corporate
Governance Council’s Corporate GovernancePrinciples and Recommendations. In February
2019, the Corporate Governance Council updated
its Corporate Governance Principles andRecommendations to include climate change risk
with the recommendation that organizations use
the TCFD recommendations to help determine
whether they are exposed to material risks fromclimate change. The Governance Institute ofAustralia’s practical guidance assists companies
with implementing the TCFD recommendations
to comply with the Corporate GovernancePrinciples and Recommendations.
On July 31, 2020, the industry-led TCFD
Consortium in Japan released an update toguidance first released in December 2018,
which provided detailed commentary on how
to implement the TCFD recommendations forfive industrial sectors. The updated guidance —Guidance on Climate-Related Financial Disclosures
2.0 — incorporates the latest knowledge on TCFD
disclosures and promotes TCFD disclosure ina broader range of industries.

2. INVESTOR INITIATIVES
Many investors are driving companies toimplement the TCFD recommendations. For
example, Climate Action 100+, comprised of morethan 500 investors with more than $47 trillion
in assets under management, is engaging theworld’s largest corporate greenhouse gas emittersto strengthen their climate-related disclosures byimplementing the TCFD recommendations.
The Transition Pathway Initiative (TPI) — led byasset owners and supported by asset managers— uses public disclosures to assess the qualityof companies’ management of their carbon
emissions and of risks and opportunities related
to the low-carbon transition, in line with the
TCFD recommendations.87

Reports Referenced

The Banking Association of South Africa hosted the workshop in collaboration with the Deutsche Gesellschaft für Internationale Zusammenarbeit’s(GIZ) Climate Support Programme (CSP). The GIZ implements the CSP as part of the International Climate Initiative. CSP supports the developmentof climate policy and governance, as well as the implementation thereof, in the areas of mitigation, adaptation, and monitoring and evaluation.

86 

Eighty investors globally have pledged their support to TPI, jointly representing $20.9 trillion combined assets under management and advice.

87 

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In March 2020, the TPI released its State ofTransition Report 2020, which describes the
progress of the most emissions-intensive
public companies on transitioning to a
low-carbon economy.
In October 2019, the United Nations SecretaryGeneral convened the Global Investors for
Sustainable Development (GISD) Alliance tosupport the implementation of the Sustainable
Development Goals (SDGs). In its July 2020
report to policy makers and other stakeholders,the GISD Alliance published recommendations
and strategic considerations for the public andprivate sectors to collaboratively work to achieve
the SDGs. The report emphasizes the importanceof standardized disclosures and recommends
policy makers “make sustainability reporting
mandatory for financial and non-financial
institutions, including TCFD disclosures.”

A.
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Financial Disclosures
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Effective Climate-Related
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C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

generally finding considerable alignment
among the frameworks and with the
TCFD recommendations.
Building on their May 2019 TCFD Implementation
Guide, CDSB and SASB published a TCFD Good
Practice Handbook (handbook) to provide
companies with examples of TCFD-aligned
disclosures. The handbook, published in
September 2019, includes mock TCFD
disclosures and accompanying narratives
to enhance companies’ understanding of
methods for disclosing in line with the
TCFD recommendations.

In September 2020, the ILN published a report— Climate Change Mitigation and Your Portfolio:
Practical Tools for Investors, which addresses
some of the challenges associated with climaterelated scenario analysis and offers a structured
approach for investors to evaluate companies’
scenario analysis disclosures, consistent with the
Task Force’s Strategy recommendation.

The global insurance companies that constituteClimateWise updated the ClimateWise Principles
to fully align with the TCFD recommendations in
December 2018. The ClimateWise Principles are areporting framework for the insurance industry
through which ClimateWise members reportand are benchmarked annually. Members
began reporting against the updated principles
in 2019; and in December 2019, ClimateWise
released The ClimateWise Principles Independent
Review 2019, which summarizes members’
reporting and describes challenges andopportunities for the industry in implementing
the TCFD recommendations.

3. A LIGNMENT OF REPORTING
FRAMEWORKS

4. G
 OVERNMENT AND REGULATORYEFFORTS

In its 2019 status report, the Task Forcenoted companies were increasingly
reporting information aligned with the TCFD
recommendations as a result of existing climaterelated reporting frameworks’ incorporationof the TCFD recommendations.88 Many of theefforts to promote alignment between reporting
frameworks mentioned in the 2019 status report
have continued or expanded.

While the TCFD remains a voluntary, marketled initiative, many government organizations,
including regulators, are taking steps toencourage or, in a few cases, mandate its
adoption. Over 110 regulators and governmentorganizations from around the world are
TCFD supporters, including the governmentsof Belgium, Canada, Chile, France, Japan, New
Zealand, Sweden, and the United Kingdom (UK).

One such effort is the Corporate Reporting
Dialogue’s Better Alignment Project launchedin November 2018 and undertaken by theInternational Integrated Reporting Council,
CDP, the Climate Disclosure Standards Board(CDSB), the Global Reporting Initiative, andSASB, collectively referred to as participatingorganizations. The Better Alignment Project
enables participating organizations to map theirframeworks to the TCFD recommendations
and where possible, align their climate-related
metrics across all the reporting frameworks. The
Better Alignment Project released its
first progress report in September 2019,

On a global level, the 26th UN Climate Change
Conference of the Parties (COP26) features TCFD
implementation in its private finance agenda. In
his speech at the February 2020 launch of the
COP26 private finance agenda, Mark Carney —former Governor of the Bank of England and
Finance Adviser to the Prime Minister for COP26— encouraged companies to report a full set of
TCFD disclosures in the 2021–2022 reporting cycle.

88

In June 2019, the European Commission (EC)published Guidelines on Reporting Climate-RelatedInformation. The guidelines, which integrate
the TCFD recommendations, are intended tosupport companies in disclosing climate-related
information under the EC’s Non-Financial
Reporting Directive.

See Section F.2. Alignment of Reporting Frameworks in the Task Force’s 2019 status report.

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The Network for Greening the Financial System(NGFS), a group of 72 central banks andsupervisors and 13 observers from internationalorganizations, published A Call for Action: Climate
Change as a Source of Financial Risk in April
2019. In the report, the NGFS encouraged allcompanies issuing public debt or equity as wellas financial sector institutions to disclose in linewith the TCFD recommendations. In July 2019,
the NGFS released a technical supplement to
the report in which it described quantitative
methods for central banks and supervisors toassess climate-related risk and established key
areas for further research. The NGFS expandedon its risk assessment guidance with the releaseof a set of climate scenarios in June 2020.

A.
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Initiatives Supporting TCFD
Appendices

In July 2020, the Financial Stability Board
published a stocktake of whether and how
financial authorities incorporate climate-relatedrisks into their financial stability monitoring.
Among other findings, the FSB noted that insetting supervisory expectations for banks andinsurance companies’ disclosure of climaterelated risks, some authorities explicitly referto the TCFD recommendations. The FSB alsomentioned some financial authorities havequantified or are working on quantifying
climate-related risks, but that such efforts arehindered by a lack of consistent data on financial
exposures to climate-related risks and the
difficulties translating climate change outcomes
into changes in financial exposure.
In June 2020, the Bank of England published its
own climate-related financial disclosure in linewith the TCFD recommendations. The reportcovers each of the TCFD recommendations,setting out how the Bank considers climaterelated risks across its governance, strategy,
and risk management activities and the metrics
the Bank uses to monitor and manage climaterelated risks. Also in June 2020, an industry
forum jointly convened by the Bank of England’s
Prudential Regulation Authority (PRA) and the UK
Financial Conduct Authority (FCA) — the Climate
Financial Risk Forum (CFRF) — published a guideon climate-related financial risk management,using the TCFD recommendations as part of its
foundation. The guide consists of a summary coproduced by the PRA and FCA and four industryproduced chapters on risk management,
scenario analysis, disclosures, and innovation.
In June 2020, the Hong Kong Monetary
Authority (HKMA) released a White Paperon Green and Sustainable Banking in which it
suggests authorized institutions take steps to“build climate resilience.” As part of its nine89

guiding principles, the HKMA recommended
that authorized institutions “take the TCFD
recommendations as the core reference” indeveloping an approach to disclose climaterelated financial information to enhancetransparency. Also in June 2020, the Monetary
Authority of Singapore issued Proposed Guidelines
on Environmental Risk Management (Banks) thatindicate banks should reference international
reporting frameworks, including the TCFD
recommendations, to guide their environmental
risk disclosure.
In May 2020, the European Central Bank (ECB)
released non-binding supervisory expectationsin its Guide on Climate-Related and Environmental
Risks: Supervisory Expectations Relating to Risk
Management and Disclosure. One of the ECB’s
expectations is for financial institutions to disclose
climate-related risks in line with the EC’s Guidelines
on Reporting Climate-Related Information.
In May 2020, the National Treasury of South
Africa published a draft technical paper— Financing a Sustainable Economy, which
recommends regulators and the financial
sector work together to establish standards
on identifying, monitoring, and reporting
environmental and social risks, including
climate-related risks, that incorporate the
TCFD recommendations.
In March 2020, Germany’s Sustainable
Finance Committee — which advises theGerman government on the development andimplementation of a sustainable finance strategy— released an interim report. The interim reportis intended to serve as a basis for discussion on
the sustainable finance strategy and encourages
the German federal government to introduce
legislation requiring all listed companies inGermany to apply the TCFD recommendations
beginning in 2022.
In March 2020, the UK’s FCA released a
consultation paper on enhancing climaterelated disclosure, including a requirement forpremium listed issuers to state in their annual
financial reports whether they made disclosuresconsistent with the TCFD recommendations
and, if so, where in the annual financial reports(or other relevant documents) the various
disclosures can be found.89 Also in March 2020,
building on the Green Finance Strategy releasedin July 2019, the UK’s Department for Work andPensions released a guide for public consultation— developed by the Pensions Climate Risk
Industry Group — for occupational pension
schemes on assessing, managing, and reportingin line with the TCFD recommendations.

A Premium Listing means that a company must meet standards that are over and above (often described as “super-equivalent”) those set forthin the EU legislation, including the UK’s corporate governance code.

72

The Task Force on Climate-related Financial Disclosures

In February 2020, the Banco de México (theCentral Bank of Mexico) released a reporton strategies and methodologies to mitigate
environmental and social risks in the Mexican
financial sector. In the report, the Banco deMéxico recommends providing a clear strategy
on how regulation and supervision will promote
disclosure of physical and transition risk analysis
of financial institutions and corporations,following the TCFD recommendations.
The Banco de México also mentions
consideration of “issuing disclosure guidance
to financial institutions in line with the TCFD
recommendations” as part of a comprehensive
strategy for sustainable finance.90

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

In February 2020, the International Associationof Insurance Supervisors, a standards-settingorganization of insurance supervisors
and regulators, in partnership with the
Sustainable Insurance Forum, issued an
Issues Paper on the Implementation of the
Recommendations of the Task Force on Climaterelated Financial Disclosures. The issues paper
provides an overview of practices that insurance
supervisors have considered in the developmentof climate-related disclosure requirements within
their jurisdictions.
The European Financial Reporting Advisory
Group (EFRAG) launched its Project Task Forceon Climate-related Reporting to assess thestate of climate-related reporting, with a
primary focus on the TCFD recommendations
in February 2019. In February 2020, EFRAG
published a report on improving climaterelated reporting along with two supplemental
documents. One of the supplemental documents— Supplement 1: Climate-Related Reporting
Practices — identifies good reporting practices
and assesses the level of maturity in theimplementation of the TCFD recommendations,with a primary focus on European companies.
The Colombian Climate Asset Disclosure
Initiative (CCADI) is a multiyear initiative tohelp Colombian investors incorporate climate
risks and opportunities into their investment
strategies. As part of the CCADI, 23 investors
received climate assessments in line with the
TCFD recommendations.
In December 2019, Malaysia’s central bank,
Bank Negara Malaysia (BNM), published a
discussion paper in which BNM recognizedclimate change as a material source of risk andencouraged supervised financial institutions topromote transparency by disclosing in line with
the TCFD recommendations.

90

In Japan, the Ministry of Economy, Trade andIndustry held the first TCFD Summit in October
2019, co-organizing the summit with the WBCSD
and the TCFD Consortium. Japan hosted thesummit during its G20 Presidency to advance
TCFD implementation and dialogue around
potential issues for companies implementing
the recommendations and ideas for addressing
identified challenges. Japan hosted the second
annual TCFD Summit online on October 9, 2020.
In October 2019, the New Zealand Ministry for
the Environment and the Ministry of Business,
Innovation and Employment (ministries) releaseda discussion paper that included a proposal torequire financial firms and listed companies toreport on their climate-related risks in line with
the TCFD recommendations. In September 2020,
the Ministry for the Environment announced thatthe government plans to make climate-related
financial disclosures mandatory for certain
publicly listed companies and large insurers,
banks, and investment managers and thatreporting would be against a standard developedin line with the TCFD recommendations.
In August 2019, the Australian Securities andInvestment Commission (ASIC) updated its
regulatory guide on Prospectuses: Effective
Disclosure for Retail Investors to “incorporate
the types of climate change risk developed by
the G20 Financial Stability Board’s [TCFD] into
the list of examples of common risks that may
need to be disclosed in a prospectus.” In theaccompanying press release, ASIC welcomed “thecontinuing emergence of the TCFD frameworkas the preferred market standard” and “strongly
encourage[d] listed companies with material
exposure to climate change to consider reporting
voluntarily under the TCFD framework.”
In June 2019, the Canadian Government’s Expert
Panel on Sustainable Finance released a report inwhich it recommends Canada’s public and private
sectors define and pursue a Canadian approachto implementing the TCFD recommendations. In
May 2020, the Canadian government furthered
TCFD implementation efforts through theLarge Employer Emergency Financing Facility(LEEFF), which was established in response to
economic strain from the COVID-19 pandemic.
LEEFF provides bridge financing to Canada’s
largest employers; and to be eligible for LEEFF
financing, companies are required to commit topublish annual climate-related disclosure reports
consistent with the recommendations.

 anco de México, Climate and Environmental Risks and Opportunities in Mexico’s Financial System: From Diagnosis to Action, February 2020,
B
pp. 14 and 52.

73

Appendices

The Task Force on Climate-related Financial Disclosures

Appendix 1: Task Force Members
CHAIRMAN AND VICE CHAIRSMichael Bloomberg
Chair
Founder
Bloomberg LP and Bloomberg Philanthropies
Denise Pavarina
Vice Chair
Senior Advisor
Aggrego Consultores

Graeme Pitkethly
Vice Chair
Chief Financial Officer
Unilever

Christian Thimann
Vice Chair
CEO and Chairman of the Management Board
Athora Germany

Yeo Lian Sim
Vice Chair
Special Adviser, Diversity
Singapore Exchange

MEMBERSA.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
AppendicesJane Ambachtsheer
Global Head of Sustainability
BNP Paribas Asset Management
Wim Bartels
Partner Corporate Value
KPMG
David Blood
Senior Partner
Generation Investment Management
Koushik Chatterjee
Executive Director & Chief Financial Officer
Tata Group
Mary Draves
Vice President, Environment, Health, Safety andSustainability
Dow
Takehiro Fujimura
General Manager, Corporate Sustainability & CSR
Mitsubishi Corporation
Alan Gómez
Vice President, Sustainability
Citibanamex
Diane Larsen
Assurance Audit Partner,
Global Professional Practice
EYMark Lewis
Global Head of Sustainability Research
BNP Paribas Asset Management

Matt Arnold
Head of ESG & Corporate Responsibility
Engagement
JPMorgan Chase & Co.
Bruno Bertocci
Managing Director, Head of Sustainable Equity
Investors
UBS Asset Management
Richard Cantor
Chief Credit Officer
Moody’s Corporation
Brian DeeseManaging Director, Global Head of Sustainable
InvestingBlackRock
Eric Dugelay
Partner, Sustainability Services
Deloitte
Rosanna Fusco
Vice President Environment
Eni
Thomas Kusterer
Chief Financial Officer
EnBW Energie Baden-Württemberg AG
Stephanie Leaist
Senior Advisor
CPP Investments
Eloy Lindeijer
Chief Investment Management, Member
Executive Committee
PGGM
75

The Task Force on Climate-related Financial Disclosures

Ruixia Liu
General Manager, Risk Management Department
Industrial and Commercial Bank of China

Martin Skancke
Chair, Risk Committee
Storebrand

Sylvain Vanston
Group Head, Climate & Environment
AXA

Steve Waygood
Chief Responsible Investment Officer
Aviva Investors

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

Fiona Wild
Vice President, Sustainability and Climate Change
BHP

Michael Wilkins
Managing Director, Sustainable Finance
S&P Global Ratings

Jon Williams
Partner, Sustainability and Climate Change
PwC

SPECIAL ADVISOR
Russell Picot
Chair, Trustee Board
HSBC Bank (UK) Pension Scheme
Former Group Chief Accounting
Officer, HSBC
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

SECRETARIAT
Mary Schapiro
Vice Chair for Global Public Policy andSpecial Advisor to the Founder and Chair
Bloomberg LP
Didem Nisanci
Global Head of Public Policy
Bloomberg LP

D.
Case Studies on
Implementation

Mara Childress
Director, Global Public Policy
Bloomberg LP

E.
Initiatives Supporting TCFD

Stacy Coleman
TCFD Secretariat

Curtis Ravenel
TCFD Secretariat
Jeff Stehm
TCFD Secretariat
Silvia Iancu
TCFD Secretariat
Julia Berthel
TCFD Secretariat

Appendices

OBSERVERS
Joe PerryMember of Secretariat
Financial Stability Board

Rupert Thorne
Deputy to the Secretary General
Financial Stability Board

76

The Task Force on Climate-related Financial Disclosures

Appendix 2: Company Selection and
AI Review Methodology
As summarized in Section A.1. TCFD-Aligned
Reporting by Public Companies, the Task
Force developed an approach using artificial
intelligence (AI) technology to review thealignment of information included in fiscal year
2017, 2018, and 2019 public reports with the TCFD
recommendations. This appendix describes the
Task Force’s process for selecting the companies
included in the review, the types of documents
reviewed, and the AI review methodology.

1. C
 OMPANIES INCLUDEDIN THE REVIEWA.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

The Task Force reviewed financial filings,
annual reports, integrated reports, andsustainability reports of 1,701 large companies
from 69 countries in eight industries. Six of theeight industries align with groups highlighted
in the Task Force’s 2017 report — Banking;Insurance; Energy; Materials and Buildings;
Transportation; and Agriculture, Food, and Forest
Products. To incorporate additional companies
that may be exposed to climate-related risks, two
industries were added to the review for the 2019status report and retained for this year’s status
report — Technology and Media and Consumer
Goods. The Task Force selected companies
included in the AI review using the following
methodology:• removed smaller companies from the
population to maintain focus on larger
companies. We retained banks and insurancecompanies with total assets of at least$10 billion and $1 billion, respectively, andcompanies in the six non-financial industries
with annual revenue of $1 billion or more. This
resulted in 4,446 total companies; and thebreakdown by industry and sub-industry is
shown in Figure A2-1 (p. 78);• removed companies that did not have reports
available in English; and• removed companies that did not have annual
reports available for review in all three years.
This was done to ensure a consistent populationof companies and comparable reporting
across all three years. Importantly, not all 2019
disclosures were available by the date that
documents were extracted for review(May 4, 2020).
This methodology resulted in a final review
population of 1,701 companies.91

2. DOCUMENTS REVIEWED• identified universe of public companies —companies with public debt or equity — in theeight selected industries using the 29 subindustries listed in Figure A2-1 (p. 78). The 29
sub-industries are loosely based on the Global
Industry Classification Standard sub-sectors
and industries;

The Task Force focused primarily on companies’
fiscal year 2017, 2018, and 2019 financial
filings, annual reports, integrated reports,and sustainability reports. These documents
were identified using the Bloomberg Terminal,and other relevant documents provided in the
Terminal were reviewed as available. The Task
Force only selected documents available in
English and documents were categorized by theyear of reporting.

• removed subsidiaries to avoid double countingof companies. Identified companies that shared
the same industry and ultimate parent forcapital structure purposes and retained thecompany with the largest annual revenue (fornon-financial industries) or the largest total
assets (for financial industries). We followed
this approach to avoid, as much as possible,
removing companies that published annual
reports separate from their parent company;• 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 governancestatements and management commentary.

The AI review population used in the 2019 status report included 1,126 companies compared to 1,701 companies this year. The Task Forcebroadened the coverage of the largest companies in each industry using the asset and revenue thresholds described above. While this approachled to a higher median market capitalization, the addition of 575 companies led to a drop in average market capitalization; it also led to a higher
concentration of companies in North America and Europe (71% this year versus 47% in the 2019 AI review population).

91 

77

The Task Force on Climate-related Financial Disclosures• Annual or Integrated Reports: Reports that
describe companies’ activities for the preceding
year (annual reports) or the broader range ofmeasures that contribute to companies’ longterm value and the role they play in society(integrated reports).

3. REVIEW METHODOLOGY• Sustainability Reports (including Corporate
Social Responsibility and Environmental, Social,and Governance reports): Reports that describe
companies’ impact on society, often addressing
environmental, social, and governance issues.

Trained the AI Technology
The AI technology was based on a set of
statistical language models that were trained
to identify responses to questions tied to therecommended disclosures, for companies in
the review population. The statistical language
models underlying the AI technology weretrained using passages of text or excerpts
identified as aligning with the Task Force’s 11
recommended disclosures — referred to aslabeled data. To collect this labeled data for
its 2018 status report, the Task Force formeda small group to manually review publicly
available reports from a sample of 150 “highdisclosing” companies. The small group agreed• Other Relevant Documents: Documents
available in the Bloomberg Terminal that areassociated with companies’ annual reportingor sustainability.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

The AI technology used to review company
reports was initially developed for the Task Force’s
2018 status report. The AI methodology wasrefreshed for use in 2020 as described below.92

Figure A2-1

Industry and Sub-Industry of Companies
Selected for Review
Industries

Sub-Industries

Banking
608 Companies• Regional Banks

Insurance
246 Companies• Multiline Insurance• Life and Health Insurance• Property and Casualty Insurance• Reinsurance

Energy483 Companies• Oil and Gas• Utilities

Transportation
456 Companies• Air Freight• Rail Transportation• Passenger Air Transportation• Trucking Services• Maritime Transportation• Automobiles• Chemicals• Metals and Mining• Construction Materials• Real Estate Management
and Development

Materials and Buildings
1,580 Companies• Large, Diversified Banks• Investment and AssetManagement Firms• Coal• Capital Goods
Agriculture, Food, and Forest
325 Companies• Beverages• Packaged Foods and Meats• Agriculture• Paper and Forest ProductsTechnology and Media
292 Companies• Technology Hardwareand Equipment• Interactive Media and Services

Consumer Goods
456 Companies• Consumer Retailing• Textiles and Apparel

Total: 4,446 Companies

Please refer to the Task Force’s 2018 status report for additional information on the development of the AI technology in 2018.

92 

78

The Task Force on Climate-related Financial Disclosures

to use a common standard for reviewing thereports, which included narrowing down each
recommended disclosure to a single yes-noquestion (Figure A2-2).
For example, recommended disclosure a) under
the Governance recommendation (Governance a)asks companies to describe the board’s oversightof climate-related risks and opportunities. The
yes-no question for Governance a), Question 1,
asked reviewers whether the company describes
the board’s or a board committee’s oversight ofclimate-related risks or opportunities. As part ofthe process the group performed multiple levelsof review to ensure consistency in approach.
In 2019 and 2020, additional labeled data wascollected following a similar approach in whicha small group applied a common standard forreview, and there was a peer review to ensure
consistency in approach.
The labeled data was then used to train the AI
technology to generalize these human judgments
to a much larger set of company reports beyond
the initial manually reviewed set. For the reports
reviewed by the AI technology, passages of text
were assigned a “yes” or “no” for each review
question using judgments that are consistent
with the training provided by the humanreviewers. Importantly, this approach was notdesigned to assess the quality of companies’
climate-related financial disclosures, but rather
to provide an indication of the alignment ofexisting disclosures with the Task Force’s 11
recommended disclosures.

Figure A2-2

AI Review Questions
A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation#

Question

Recommended Disclosure

1

Does the company describe the board’s or a board committee's oversightof climate-related risks or opportunities?

Governance a)2

Does the company describe management’s or a management committee'srole in assessing and managing climate-related risks or opportunities?

Governance b)

3

Does the company describe the climate-related risks or opportunities
it has identified?

Strategy a)

4

Does the company describe the impact of climate-related risks andopportunities on its businesses, strategy, or financial planning?

Strategy b)

5Does the company describe the resilience of its strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario?

Strategy c)

6

Does the company describe its processes for identifying and/or assessing
climate-related risks?

Risk Management a)

7

Does the company describe its processes for managing climate-related risks?

Risk Management b)

8Does the company describe how processes for identifying, assessing, andmanaging climate-related risks are integrated into overall risk management?

Risk Management c)

9Does the company disclose the metrics it uses to assess climate-relatedrisks or opportunities?

Metrics and Targets a)

10

Does the company disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas emissions?

Metrics and Targets b)

11

Does the company describe the targets it uses to manage climate-relatedrisks or opportunities?

Metrics and Targets c)

E.
Initiatives Supporting TCFD
Appendices

79

The Task Force on Climate-related Financial Disclosures

For the 2020 status report, the AI model
went through a second iteration of training tofurther improve performance and keep thisgeneralization of human judgments up to date.
For each recommended disclosure, passages oftext were extracted from the AI review process
at various score threshold levels (i.e., passages
predicted as “yes” with model scores ranging
from high to low, and “no” with model scores
ranging from high to low). Reviewers fromthe AI team then validated these passages by
providing “yes” or “no” judgments consistent withthe previous manual review process, resulting
in the identification of a specific threshold foreach disclosure. This generated thousands ofadditional labels that were used to retrain theinitial models and increase confidence in thevalidity of the results.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Processed Relevant Reports
The Task Force used an automated process to
extract passages of text from companies’ reports
for the AI technology to review. In cases where
none of a company’s reports were available in
English or where a company’s reports could
not be sufficiently converted into text format,
those companies were removed from thereview population. Ultimately, nearly 30 million
passages of text were converted for review.
Validated the AI Results
The AI technology allocated each passage of text
with a probability score for each recommended
disclosure that indicates the likelihood it would
be assigned a “yes” by a human reviewer. The
passages were then categorized as either positiveor negative results for each recommended
disclosure depending on whether that score wasover or under the disclosure-specific thresholdlevel. Each report was marked as having a
TCFD-aligned disclosure if at least one passage
was categorized as a positive result. Likewise,a company was then marked as having a TCFDaligned disclosure if at least one report was
categorized as a positive result.
To allow read-across between the 2020 and 2019
results, a process of calibration was required
to ensure that the revised 2020 AI model was
applying threshold levels in a way that would
yield outcomes that were broadly consistent
with the 2019 AI model. This was achieved byrunning the 2020 AI model on the reports of agroup of 462 companies that were included inboth the 2019 and 2020 AI review populations
and adjusting the model thresholds so the 2019

Figure A2-3
Paragraph-Level Model Accuracy(AUC Scores)
Recommended Disclosure

AUC

Governance a)

0.99

Governance b)

0.94

Strategy a)

0.93

Strategy b)

0.90

Strategy c)

0.81

Risk Management a)

0.88

Risk Management b)

0.85

Risk Management c)

0.91

Metrics and Targets a)

0.91

Metrics and Targets b)

0.99

Metrics and Targets c)

0.96

disclosure rates approximated those previously
published. Once this process of “re-thresholding”
was complete, the 2020 AI model was thenapplied to all 1,701 companies in the 2020 AI
review population, allowing for an “apples toapples” comparison for the 462 companies
across years.
Performance and predictive accuracy for each of
the models can be assessed by comparing what
the AI generates as predictions to the judgmentsfrom human reviewers. Two main sourcesof human reviews were available, the initialfull manual review of 150 companies and themanual reviews of individual passages identified
using the AI review results across a wider setof companies. The model accuracy for each
recommended disclosure class is presented in
Figure A2-3, and is measured at a paragraph level
using the Area Under the Curve (AUC) values
produced from the model training.93
Applied AI Models to Review Population
Finally, the revised AI models were applied to
excerpts from the reports of the 1,701 companies,
and the results were aggregated for analysis
by the 11 recommended disclosures, the eightindustries, the size of the companies, and theregions in which the companies were located.

Area Under the Curve is the metric used for optimizing model performance during training. AUC is calculated by measuring the area under aReceiver Operating Characteristic curve, which is an aggregate measure of performance across all possible classification thresholds; calculatedusing the true positive and false positive rates. AUC is the accepted standard accuracy measure for AI classification models.

93 

80

The Task Force on Climate-related Financial Disclosures

Appendix 3: AI Review Results by Industry
As summarized in Section A.1. TCFD-Aligned
Reporting by Public Companies, the Task
Force developed an approach using artificial
intelligence (AI) technology to review thealignment of information included in fiscal year
2017, 2018, and 2019 public reports with the
TCFD recommendations. This appendix provides

the results of the AI review for each of theeight industries included in the review —Banking; Insurance; Energy; Materials andBuildings; Transportation; Agriculture, Food,and Forest Products; Technology and Media;
and Consumer Goods.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

81

The Task Force on Climate-related Financial Disclosures

Banking
The AI technology reviewed reports from 286
banks in three sub-industries: investment andasset management banks, large and diversifiedbanks, and regional banks. The 286 banks ranged
in size from about $10 billion to $4.4 trillion in
assets, with a median asset size of nearly $54
billion in assets. The AI review results for banks
are shown in Figure A3-1.
For eight of the 11 recommended disclosures,the percentage of banks disclosing relevant
information was lower than the average acrossall companies reviewed. Banks’ disclosureof information in alignment with the TCFD

recommendations increased from 2017 to 2019
for all the recommended disclosures, and banks
had the largest increase in disclosure of climaterelated risks and opportunities between 2017and 2019 for any industry at nine percentage
points. The most significant increases indisclosure — 11 percentage points — were for
Risk Management b) and Metrics and Targets a),showing that banks are increasingly disclosing
their processes for managing climate-relatedrisks as well as the climate-related metrics theyuse. However, banks had the lowest percentage
of disclosure for climate-related targets (Metrics
and Targets c) of all industries in all three years.

Figure A3-1

Banking Review Results
Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

6

2017
2018
2019

17%
21%
23%

b) Management’s Role

5

2017
2018
2019

19%
23%
24%

a) Risks andOpportunities

9

2017
2018
2019

23%
23%
21%
25%
27%

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

32%b) Impact on
Organization

6

2017
2018
2019

c) Resilience of Strategy

8

2017
2018
2019

a) Risk ID andAssessment Processes

10

2017
2018
2019

15%
21%
25%

b) R
 isk Management
Processes

11

2017
2018
2019

13%
17%
23%

c) Integration into
Overall Risk
Management

10

2017
2018
2019

a) Climate-Related
Metrics

11

2017
2018
2019

16%
20%
27%

b) S
 cope 1, 2, 3
GHG Emissions

7

2017
2018
2019

13%
16%
21%

c) Climate-Related
Targets

7

2017
2018
2019

12%
15%
19%

0%

5%
9%
12%

9%
12%
19%

20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
82

The Task Force on Climate-related Financial Disclosures

Insurance
The AI technology reviewed reports from 138
insurance companies in four categories: multiline insurance, property and casualty insurance,
reinsurance, and life and health insurance. The
insurance companies reviewed ranged in size
from about $1 billion to $1.1 trillion in assets,with a median asset size of around $26 billion in
assets. The AI review results for these companies
are shown in Figure A3-2.
Based on 2019 reporting, the 138 insurancecompanies most often disclosed informationaligned with the TCFD recommended

disclosure Strategy a), climate-related risks andopportunities. The percentage of disclosurein 2019 was greater than or equal to the 2019average across all companies for six of the 11
recommended disclosures — and insurancecompanies exceeded the 2019 average by ten
or more percentage points for Risk Managementa) and Risk Management c). The insurancecompanies reviewed showed moderate increases
in the percentage of disclosure between 2017and 2019 for every recommended disclosure,with increases of nine or ten percentage points
between 2017 and 2019 for four of the 11
recommended disclosures.

Figure A3-2

Insurance Review Results
Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

2

2017
2018
2019

b) Management’s Role

9

2017
2018
2019

a) Risks andOpportunities

5

2017
2018
2019

b) Impact on
Organization

4

2017
2018
2019

c) Resilience of Strategy

4

2017
2018
2019

a) Risk ID andAssessment Processes

9

2017
2018
2019

b) R
 isk Management
Processes

9

2017
2018
2019

18%
24%
28%

c) Integration into
Overall Risk
Management

10

2017
2018
2019

16%
17%

a) Climate-Related
Metrics

6

2017
2018
2019

20%
22%
26%

b) S
 cope 1, 2, 3
GHG Emissions

1

2017
2018
2019

18%
18%
19%

c) Climate-Related
Targets

4

2017
2018
2019

18%
22%
22%

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

0%

22%
24%
24%
25%
29%
35%
44%
43%
49%
17%
17%
21%
4%
5%
8%
28%
29%
36%

26%

20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
83

The Task Force on Climate-related Financial Disclosures

EnergyThe AI technology reviewed reports from 274
energy companies in three categories: oil andgas, coal, and utilities. The energy companies
ranged in size from about $1 billion to $377
billion in annual revenue, with a median annual
revenue of nearly $5 billion. The AI review results
for these companies are shown in Figure A3-3.
For all three years, the energy companies
reviewed had the highest percentage of
disclosure across the eight industries for
information aligned with Strategy a), climaterelated risks and opportunities, and Strategy b),

the impact of climate-related risks andopportunities on the company. In 2019, theenergy companies reviewed disclosed TCFDaligned information at a higher rate than
the average across all industries for all 11
recommended disclosures. While the percentage
of energy companies disclosing information
on Strategy a) was the same in 2019 as it wasin 2017 — 65% — the percentage of thesecompanies reporting information aligned with
Risk Management c), the integration of climaterelated risks and opportunities into overall risk
management, more than doubled between 2017and 2019.

Figure A3-3

Energy Review Results
Recommendation

Recommended
Disclosure

Pt. Change
2017–2019

Governancea) Board Oversight

16

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosuresb) Management’s Role

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

11

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures
2017
2018
2019

27%
37%
42%

2017
2018
2019

33%
44%
45%

a) Risks andOpportunities

0

2017
2018
2019

b) Impact on
Organization

8

2017
2018
2019

c) Resilience of Strategy

4

2017
2018
2019

a) Risk ID andAssessment Processes

13

2017
2018
2019

26%
34%
39%

b) R
 isk Management
Processes

9

2017
2018
2019

29%
36%
38%

c) Integration into
Overall Risk
Management

16

2017
2018
2019

a) Climate-Related
Metrics

9

2017
2018
2019

b) S
 cope 1, 2, 3
GHG Emissions

5

2017
2018
2019

c) Climate-Related
Targets

3

2017
2018
2019
0%

65%
68%
65%
46%
52%
54%
11%
12%
15%

14%
22%
30%
32%
36%
41%
23%
26%
27%
42%
46%
44%
20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
84

The Task Force on Climate-related Financial Disclosures

Transportation
The AI technology reviewed reports from 162
transportation companies in six categories: air
freight, automobiles, maritime transportation,passenger air transportation, rail transportation,and trucking services. The transportationcompanies ranged in size from about $1 billion
to $276 billion in annual revenue, with a medianannual revenue of $4.3 billion. The AI review
results are shown in Figure A3-4.

Strategy a) and Metrics and Targets a) at 38% and37%, respectively; and the lowest percentage of
disclosure related to Strategy c) at 2%. Between
2017 and 2019, the largest increase in disclosure(seven percentage points) was for Governance b),
management’s role in assessing and managing
climate-related issues. However, disclosureof Strategy a) decreased by five percentage
points over the same period following a slightincrease in 2018. Overall, a smaller percentage oftransportation companies disclosed TCFD-aligned
information than the average across all industries
for seven of the 11 recommended disclosures.

For 2019, the 162 transportation companies
most often disclosed information aligned with

Figure A3-4

Transportation Review Results
Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

2

2017
2018
2019

14%
18%
16%

b) Management’s Role

7

2017
2018
2019

13%
19%
20%

a) Risks andOpportunities

-5

2017
2018
2019

b) Impact on
Organization

4

2017
2018
2019

c) Resilience of Strategy

1

2017
2018
2019

a) Risk ID andAssessment Processes

6

2017
2018
2019

9%
13%
15%

b) R
 isk Management
Processes

6

2017
2018
2019

12%
17%
18%

c) Integration into
Overall Risk
Management

4

2017
2018
2019

a) Climate-Related
Metrics

-3

2017
2018
2019

b) S
 cope 1, 2, 3
GHG Emissions

1

2017
2018
2019

c) Climate-Related
Targets

5

2017
2018
2019

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

43%
48%
38%
27%
27%
30%
1%
1%
2%

0%

6%
8%
10%
40%
36%
37%
26%
24%
27%
30%
30%
35%
20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
85

The Task Force on Climate-related Financial Disclosures

Materials and Buildings
The AI technology reviewed reports from 414
materials and buildings companies in fivecategories: capital goods, chemicals, construction
materials, metals and mining, and real estate
management and development. The materials
and buildings companies ranged in size from $1
billion to $219 billion in annual revenue, with a
median annual revenue of over $5.6 billion. The
AI review results for these companies are shownin Figure A3-5.
In 2019 reporting, the 414 materials and buildings
companies most often disclosed informationaligned with the TCFD recommended disclosures

Strategy b) and Metrics and Targets a). In addition,
the percentage of materials and buildings
companies disclosing information in alignment
with Metrics and Targets a) and Metrics and Targetsb) was greater than that for companies in any
other industry. However, disclosure of Strategya), climate-related risks and opportunities,
decreased slightly in 2019 after increasing
between 2017 and 2018. Between 2017 and 2019,the companies reviewed disclosed TCFD-aligned
information more frequently than the 2019average across industries for seven of the 11
recommended disclosures.

Figure A3-5

Materials and Buildings Review Results
Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

11

2017
2018
2019

b) Management’s Role

13

2017
2018
2019

a) Risks andOpportunities

1

2017
2018
2019

38%
43%
39%

b) Impact on
Organization

8

2017
2018
2019

34%
40%
43%

c) Resilience of Strategy

2

2017
2018
2019

a) Risk ID andAssessment Processes

14

2017
2018
2019

12%
17%

2017
2018
2019

14%

5%
8%
14%

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

14%
22%
26%
19%
25%
31%

2%
4%
4%

26%

b) R
 isk Management
Processes

11c) Integration into
Overall Risk
Management

9

2017
2018
2019

a) Climate-Related
Metrics

9

2017
2018
2019

b) S
 cope 1, 2, 3
GHG Emissions

6

2017
2018
2019

29%
32%
35%

c) Climate-Related
Targets

9

2017
2018
2019

32%
37%
41%

0%

24%
26%

34%
40%
43%

20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
86

The Task Force on Climate-related Financial Disclosures

Agriculture, Food, and Forest Products
The AI technology reviewed reports from 147
agriculture, food, and forest products companies
in four categories: beverages, packaged foods
and meats, agriculture, and paper and forest
products. The agriculture, food, and forest
products companies ranged in size from about$1 billion to $94 billion in annual revenue, witha median annual revenue of more than $3.8
billion. The AI review results for these companies
are shown in Figure A3-6.
In 2019, agriculture, food, and forest products
companies most frequently disclosed

information on Strategy a), climate-related risks
and opportunities, although the percentage of
disclosure fell seven percentage points between
2017 and 2019. The percentage of companies
disclosing Strategy c) was particularly low for the
agriculture, food, and forest products industry
and did not increase in any of the years reviewed.
However, there were notable increases for each
recommended disclosure associated with Risk
Management, with the percentage of disclosurefor both Risk Management a) and Risk Managementc) increasing by ten or more percentage points
across the three years.

Figure A3-6

Agriculture, Food, and Forest Products Review Results
Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

9

2017
2018
2019

11%
13%
20%

b) Management’s Role

3

2017
2018
2019

18%
14%
21%

a) Risks andOpportunities

-7

2017
2018
2019

b) Impact on
Organization

3

2017
2018
2019

c) Resilience of Strategy

0

2017
2018
2019

a) Risk ID andAssessment Processes

14

2017
2018
2019

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFDb) R isk Management
Processes

Appendices

Metrics
and Targets

9

48%
49%
41%
31%
31%
35%
1%
1%
1%
7%
12%
21%
17%
17%

2017
2018
2019

c) Integration into
Overall Risk
Management

10a) Climate-Related
Metrics

-1

2017
2018
2019

b) S
 cope 1, 2, 3
GHG Emissions

3

2017
2018
2019

c) Climate-Related
Targets

6

2017
2018
2019

2017
2018
2019

0%

26%
4%
7%
14%
35%
37%
35%
25%
25%
28%
32%
33%
38%
20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
87

The Task Force on Climate-related Financial Disclosures

Technology and MediaThe AI technology reviewed reports from
113 technology and media companies in two
categories: interactive media and services andtechnology hardware and equipment. The
technology and media companies ranged in size
from about $1 billion to $259 billion in annual
revenue, with a median annual revenue of $2.7
billion. The AI review results for these companies
are shown in Figure A3-7.
Technology and media companies had the lowest
levels of disclosure of the industries reviewed forall 11 recommended disclosures (see Figure A5, p.
16). For 2019, the percentage of disclosure for thesecompanies was between seven and 20 percentage
points lower than the percentage of disclosure
across all the companies in the industries
reviewed (represented by the vertical blue line).
While the percentage of technology and media
companies disclosing information aligned with
Strategy a) and Strategy c) decreased between 2017and 2019, the percentage disclosing informationaligned with Risk Management b), processes for
managing climate-related risks, increased by sevenpercentage points. In addition, over a quarter oftechnology and media companies disclosed theirclimate-related risks and opportunities (Strategya), and nearly a quarter disclosed climate-related
metrics (Metrics and Targets a).

Figure A3-7

Technology and Media Review Results
Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

3

2017
2018
2019

4%
5%
6%

b) Management’s Role

3

2017
2018
2019

5%
8%
8%

a) Risks andOpportunities

-5

2017
2018
2019

b) Impact on
Organization

4

2017
2018
2019

c) Resilience of Strategy-12017 1%2018 0%2019 0%a) Risk ID andAssessment Processes

4

2017
2018
2019

3%
5%
7%

b) R
 isk Management
Processes

7

2017
2018
2019

4%
7%
11%

c) Integration into
Overall Risk
Management

3

2017
2018
2019

a) Climate-Related
Metrics

4

2017
2018
2019

b) S
 cope 1, 2, 3
GHG Emissions

6

2017
2018
2019

12%
19%
19%

c) Climate-Related
Targets

5

2017
2018
2019

13%
19%
19%

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

0%

32%
34%
27%
12%
12%
16%

1%
3%
4%
19%
22%
23%

20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
88

The Task Force on Climate-related Financial Disclosures

Consumer Goods
The AI technology reviewed reports from 167
consumer goods companies in two categories:
consumer retailing and textiles and apparel. The
consumer goods companies ranged in size from
$1 billion to $518 billion in annual revenue, with a
median annual revenue of more than $6 billion.
The AI review results for these companies areshown in Figure A3-8.

the percentage of disclosure across all thecompanies reviewed (represented by the verticalblue line). The highest percentage of disclosurefor these companies was on climate-related
metrics (Metrics and Targets a), which was
31% in 2019. For ten of the 11 recommended
disclosures, the percentage of the 170 consumer
goods companies disclosing TCFD-aligned
information increased between 2017 and 2019.
Notably, the percentage of disclosure for Risk
Management a), processes for identifying andassessing climate-related risks, increased from
6% in 2017 to 16% in 2019.

Overall, the percentage of disclosure for all 11
recommended disclosures for the consumer
goods companies reviewed was lower thanFigure A3-8

Consumer Goods Review Results
Recommendation

Pt. Change
2017–2019

Governancea) Board Oversight

2

2017
2018
2019

b) Management’s Role

3

2017
2018
2019

a) Risks andOpportunities

-1

2017
2018
2019

b) Impact on
Organization

6

2017
2018
2019

c) Resilience of Strategy

1

2017
2018
2019

a) Risk ID andAssessment Processes

10

2017
2018
2019

b) R
 isk Management
Processes

5

2017
2018
2019

c) Integration into
Overall Risk
Management

2

2017
2018
2019

a) Climate-Related
Metrics

4

2017
2018
2019

b) S
 cope 1, 2, 3
GHG Emissions

6

2017
2018
2019

c) Climate-Related
Targets

5

2017
2018
2019

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Percent of Companies That Disclose
Information Aligned with TCFD
Recommended Disclosures

Recommended
Disclosure

Risk Management

E.
Initiatives Supporting TCFD
Appendices

Metrics
and Targets

0%

10%
8%
11%
14%
13%
17%
28%
28%
27%
19%
26%
25%
1%
2%
2%
6%
13%
16%
9%
11%
14%
4%
6%
7%
27%
30%
31%
18%
21%
24%
25%
23%
29%
20%

40%

Legend: Percentage of companies that disclosed information aligned with TCFD recommended disclosures in 2019

60%

80%

100%
89

The Task Force on Climate-related Financial Disclosures

Appendix 4: Additional Informationon PRI ReportingAs described in Section A.2. TCFD-Aligned
Reporting by Asset Managers and Asset
Owners, the Task Force used the Principles for
Responsible Investment’s (PRI) climate-related
indicators to gain insight on asset managers’
and asset owners’ TCFD-aligned reporting. Thisappendix provides additional information on the
Task Force’s approach.

1. P
 RI INDICATORS MAPPED TO
RECOMMENDATIONSThe Task Force mapped a single PRI indicator
to each of its 11 recommended disclosures foreach year — as shown in Figure A4-1 — with the
exception of the following:• For all three years, the Task Force mappeda single PRI indicator to the first two
recommended disclosures under the Risk

Figure A4-1

PRI Indicators Mapped to TCFD
Recommended Disclosures by YearA.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

TCFD
Recommendation

TCFD Recommended
Disclosure

2018 PRI
Indicator

2019 PRI
Indicator

2020 PRI
Indicator*

Governancea) D escribe the board’s oversight of climate-relatedrisks and opportunities.

SG 07.1a CC

SG 07.6 CC

SG 07.6 CCb) D escribe management’s role in assessing andmanaging climate-related risks and opportunities.

SG 07.1b CC

SG 07.7 CC

SG 07.7 CCa) D escribe the climate-related risks andopportunities the organization has identified
over the short, medium, and long term.

SG 14.2a CC

SG 01.6 CC

SG 01.6 CCb) D escribe the impact of climate-related risks andopportunities on the organization’s business,strategy, and financial planning.

SG 01.3b CC

N/A

N/A

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

SG 13.1a CC

SG 13.4 CC

SG 13.4 CC

SG 14.7 CC

SG 14.8 CC

SG 14.8 CCc) D escribe how processes for identifying, assessing,and managing climate-related risks are integrated
into the organization’s overall risk management.

SG 14.7 CC

SG 14.8 CC

SG 14.8 CCa) D isclose the metrics used by the organization
to assess climate-related risks andopportunities in line with its strategy
and risk management processes.

SG 14.4a CC

SG 14.6 CC

SG 14.6 CCb) D isclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions,and the related risks.

SG 14.4a CC

SG 14.6 CC

SG 14.6 CCc) D escribe the targets used by the organization
to manage climate-related risks andopportunities and performance against targets.

SG 14.4a CC

SG 14.6 CC

SG 14.6 CC

Strategy

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD

Risk Managementa) D escribe the organization’s processes for
identifying and assessing climate-related risks.
b) D escribe the organization’s processes for
managing climate-related risks.

Appendices

Metrics andTargets* 2020 PRI indicators shown in semi-bold, italicized text were mandatory for signatories to report.

90

The Task Force on Climate-related Financial Disclosures

Management recommendation — Risk
Management a) and Risk Management b).

2. B ASE SIZES USED FOR
GOVERNANCE INDICATORS•T he Task Force did not map a PRI indicatorto Strategy b) for 2019 or 2020 because
the descriptions of the 2019 and 2020 PRI
indicators that most closely align with the2018 PRI indicator were modified and notcomparable.94

For climate-related indicators mapped toGovernance a) and Governance b), the PRI adjusts
the total number of asset manager and asset
owner signatories reporting in a given year (thedenominator) based on whether the signatories
have roles for board oversight and senior
management, respectively. Figure A4-2 provides
the base sizes, or denominators, used to calculate
the percentages of reporting for indicators
mapped to the Governance recommendation.

Figure A4-2

Base Sizes (Denominators) for
PRI Governance Indicators by YearA.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

TCFD Recommended Disclosure

Year

Asset
Managers

Asset
OwnersGovernance a)
Describe the board’s oversight of climate-related risks and opportunities.

2018

744

304

2019

944

351

2020

1,146

417

2018

1,046

300

2019

1,137

315

2020

1,574

409

Governance b)
Describe management’s role in assessing and managing climate-relatedrisks and opportunities.

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

The Task Force’s supplemental guidance on Strategy b) for asset managers and asset owners asks these organizations to describe how climaterelated risks and opportunities are factored into relevant funds, products, and investment strategies. The 2018 PRI indicator mapped to Strategy b)
asks signatories to describe how climate-related risks and opportunities are factored into investment strategies and products, which matches the
Task Force’s supplemental guidance. The 2019 PRI indicator most closely aligned with the 2018 PRI indicator mapped to Strategy b) asks signatories
to indicate the climate-related risks and opportunities that have been identified and factored into the investment strategies and products, within
the organization’s investment time horizon. Since the 2019 PRI indicator does not ask signatories to describe how climate-related risks andopportunities are factored into investment strategies and products, it was not mapped to Strategy b). The 2020 indicator most closely aligned withthe 2018 indicator mapped to Strategy b) asks signatories to describe their identified climate-related issues — which relates to Strategy a) — andhow those issues have been factored into relevant funds, products, and investment strategies — which relates to Strategy b). Since responses
relevant to Strategy b) cannot be separated from those for Strategy a), the Task Force decided to map the 2020 indicator to Strategy a) only.

94 

91

The Task Force on Climate-related Financial Disclosures

3. I NTERPRETATION OF PRI SIGNATORYRESPONSES ON CLIMATE-RELATEDINDICATORSThe PRI does not assess signatories’ responses
to climate-related indicators, but it does group
signatories — based on their responses — into
four categories that may provide an indication of
the level of maturity of TCFD-aligned reporting.

Figure A4-3 shows the PRI’s four categories,
attributes of signatory reporting within eachcategory, and the percentage of signatories ineach category for the 2020 reporting period.
For example, 2% of PRI signatories’ responses
are categorized as “strategic,” which requires
signatories to provide complete information on
all climate-related indicators to the PRI and makesuch information public.

Figure A4-3

PRI Interpretation of Signatory
Responses by Category
Aware

Building Capacity
18%

74%

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

Reported to PRI on
the mandatory
climate-related
indicators in 2020

• Reported to PRI but
did not make all
climate-related
indicator responses
public• Responded partially tometrics, targets, and/or risk management• Performed scenario
analysis

Responsible

Strategic

6%2%• Reported to PRI andmade all responses
to climate-related
indicators public• Responded partially tometrics, targets, and/or risk management• Performed scenario
analysis• Provided complete
information on all
climate-related
indicators to PRI andmade responses
public• Publicly support the
TCFD• Had organization-wide
climate strategy• Considered climaterelated risks beyond
investment time
horizon• Set climate-related
targets• Performed scenario
analysis

E.
Initiatives Supporting TCFD
Appendices

92

The Task Force on Climate-related Financial Disclosures

Appendix 5: User Feedback
on Disclosure Elements
As described in Section B. Effective ClimateRelated Financial Disclosures, for this status
report, the Task Force sought to highlightspecific types of climate-related informationthat investors, lenders, and others (collectively
referred to as users) find the most useful for
decision-making, with the goal of helping
preparers develop more effective climate-related
financial disclosures.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

and long-term timeframes, to broad concepts likemanagement’s role in assessing and managing
climate-related issues.
In terms of the questionnaire itself, users wereasked to rate the usefulness of specific disclosure
elements associated with the 11 recommended
disclosures using a five-point scale, witha rating of 1 representing the most useful
information and a rating of 5 representing theleast useful, as shown in Figure A5-1. In addition,
recognizing the disclosure elements includedin the questionnaire may not be complete, theTask Force asked users to identify any missing
disclosure elements they find extremely usefulfor financial decision-making.

To identify specific climate-related informationthat users find the most useful when making
financial decisions, the Task Force developed
a questionnaire and asked a group of expert
users to rate the usefulness of specific typesof information. The Task Force organized
the questionnaire by its 11 recommended
disclosures and then identified specific typesof climate-related information — referred to as
disclosure elements — for each recommended
disclosure. The disclosure elements were drawn
from the guidance for all sectors included in
the Task Force’s 2017 report.95 The disclosure
elements cover baseline information the Task
Force believes is decision-useful and generally
applicable to different types of companies acrossindustries and regions. Importantly, disclosure
elements range from very specific information,such as how a company defines short-, medium-,

For purposes of analyzing and summarizing users’
feedback on the usefulness of specific types of
information for financial decision-making, theTask Force considered the average rating acrossusers for each disclosure element (referred to asa score). When evaluating a disclosure element’s
score in terms of how useful it is for decisionmaking, the Task Force used the scale in Figure
A5-2. The Task Force also looked at the amountof dispersion or variance in users’ ratings tounderstand how aligned users were in their viewson the usefulness of the disclosure elements.96

Figure A5-1
D.
Case Studies on
Implementation

Scale for Rating Usefulness of Information for Decision-Making
Extremely Useful

Very UsefulSomewhat Useful

Slightly Useful

Not Useful

1

2

3

4

5

E.
Initiatives Supporting TCFD
AppendicesFigure A5-2

Scale Applied to Average Ratings or Scores
Extremely
Useful1.0

1.5

Very Useful

2.0

Somewhat Useful

2.5

3.0

Not
UsefulSlightly Useful

3.5

4.0

4.5

5.0

See Section C.3 Guidance for All Sectors in the Task Force’s 2017 report.

95 

Variance represents the measure of variability of users’ ratings for a given disclosure element. Mathematically, variance is defined as the average ofthe squared differences from the mean.

96 

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The Task Force on Climate-related Financial Disclosures

The lower the variance for a given disclosure
element, the more aligned users are in their viewof the usefulness of the disclosure element.
In the remainder of this appendix, the Task
Force provides the score and variance for eachof the nearly 60 disclosure elements users rated
as well as additional information provided byusers. The disclosure elements are organized byrecommendation and recommended disclosureand are listed from most useful to least useful.

1. GOVERNANCE

whether these issues receive appropriate board
and management attention.
Governance a)
Table A5-1 shows that users, on average, rated
information on how the board or its committees
consider climate-related issues when overseeing
major capital expenditures, acquisitions, anddivestitures as extremely useful. All but one ofthe other disclosure elements for Governance a)are considered very useful by users; and thelast disclosure element listed — on the profileand capabilities of the board on climate-related
issues — is considered somewhat useful.

A company’s disclosure of how it oversees andmakes decisions about climate-related risks andopportunities provides users with insight on

Table A5-1

Usefulness of Information on Board Oversight#Disclosure Elements

Score

Var.

1

How the board or board committees consider climate-related issues whenoverseeing major capital expenditures, acquisitions, and divestitures

1.5

0.6

2

How the board or its committees consider climate-related issues whenreviewing and guiding strategy

1.7

0.5

3

How the board or its committees consider climate-related issues whensetting the organization’s performance objectives and monitoring
implementation and performance

1.9

0.4

4

1.9

0.4

D.
Case Studies on
Implementation

How the board monitors and oversees progress against goals
and targets for addressing climate-related issues

5

How the board or its committees consider climate-related issues
when reviewing and guiding business plans

1.9

0.5

E.
Initiatives Supporting TCFD

6

Processes and frequency by which the board or board committees
are informed about climate-related issues

2.0

0.6

7

How the board or its committees consider climate-related issues
when reviewing and guiding annual budgets

2.1

0.5

8

The profile and capabilities of the board on climate-related issues

3.0

0.9

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues

Appendices

In addition to the disclosure elements shown
above, users suggested the following information
would be extremely useful:• training received by the board to ensure
it remains adequately informed aboutclimate-related issues; and• the board’s confirmation that the company
has performed a detailed and quantified
assessment of all likely financial impacts ofclimate change on its activities and strategy;• the measures the board has taken to accessclimate change expertise.

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The Task Force on Climate-related Financial Disclosures

Governance b)
For Governance b), users found the descriptionof management’s role in assessing or managing
climate-related issues as the most useful ofthe five disclosure elements, as shown in Table
A5-2. While more than half of the users rated
this disclosure element as extremely useful,several others rated it as somewhat usefulor slightly useful.
In addition to the Governance b) disclosure
elements shown below, information on the
Chief Executive Officer’s commitment to andinvolvement in climate-related issues was
highlighted as extremely useful.

Table A5-2

Usefulness of Information on the Role of Management

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures#

Disclosure Elements

Score

Var.

1

Description of management’s role in assessing and managing
climate-related issues

1.7

0.8

2

Processes by which management is informed about or monitors climaterelated issues (through specific positions or management committees)

2.1

0.9

3

Description of management-level positions or committees withresponsibility for assessing and managing climate-related issues,
including whether they report to the board or a board committee

2.2

0.7

4

The organizational structure(s) for assessing and/or managing
climate-related issues

2.3

0.4

5

Information on whether the management-level positions or committees
that have climate-related responsibilities report to the board or
a committee of the board

2.3

0.5

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

2. STRATEGY
A company’s disclosure of its material climaterelated risks and opportunities and how thesehave affected or may affect the company’sbusinesses, strategy, and financial planning
are useful to investors and other users inunderstanding the company’s potential
future performance.

Strategy a)This recommended disclosure focuses on thematerial climate-related risks and opportunities
identified by a company. The majority of users
indicated that disclosures on a company’s
material climate-related risks and opportunities
for each sector and geography are extremely
useful as are disclosures on a company’s material
climate-related risks and opportunities —without the additional information on sector andgeography, as shown in Table A5-3 (p. 96).

95

The Task Force on Climate-related Financial Disclosures

Table A5-3

Usefulness of Information on Material Climate-Related Risks
and Opportunities

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices#Disclosure Elements

Score

Var.

1

The material climate-related risks and opportunities the organization
has identified for each sector and geography, as appropriate

1.3

0.3

2

The material climate-related risks and/or opportunities the organization
has identified

1.4

0.2

3

The material climate-related risks and opportunities the organization has
identified and the associated timeframes (short, medium, or long term)

1.6

0.5

4

The process(es) used to determine which climate-related risks and opportunities
could have a material financial impact on the organization

1.8

0.6

5

How the organization defines short-, medium-, and long-term timeframes

2.0

1.3

A few disclosure elements under the Strategy
recommendation included sub-elements inwhich users were asked to provide a rank orderof the relative usefulness of the sub-elements.
In these cases, the Task Force was interested inunderstanding whether users were generallyaligned in their views on the relative usefulnessof specific types of information. For example,
under Strategy a), the Task Force asked users
to rank-order the usefulness of companies’
disclosing the timeframes associated with thematerial climate-related risks and opportunities
they have identified. Users ranked three

timeframes — short term, medium term, andlong term — from 1 to 3, with 1 representing themost useful information and 3 the least useful.
As shown in Figure A5-3, the average ranking
across users for the long term was the lowest(1.7) of the three timeframes, but it was followed
closely by the medium term (1.8). The short term
has the highest average ranking (2.4), and someusers provided comments indicating the shortterm may be equally important depending on thespecific investment time horizon for transactions
and for assessing total portfolio exposures.

Figure A5-3

Average Ranking of Disclosure Sub-Elements for Strategy a)
The material climate-related risks and opportunities identified over
specific timeframes

Avg.
Rank

Var.

Long term

1.7

0.6

Medium term

1.8

0.4

Short term

2.4

0.7

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The Task Force on Climate-related Financial Disclosures

Strategy b)
This recommended disclosure focuses on
the actual impact of climate-related risks andopportunities on the company’s businesses,
strategy, and financial planning. As shownin Table A5-4, users rated information on

how climate-related issues have affected acompany’s business and strategy as the mostuseful disclosure element for this recommended
disclosure and the most useful disclosure
element overall — across all the recommended
disclosures.

Table A5-4

Usefulness of Information on Impact on Business, Strategy,
and Financial Plans

A.
State of Climate-Related
Financial Disclosures#

Disclosure Elements

Score

Var.

1

How material climate-related issues have affected the organization’s
business and strategy

1.1

0.1

2

How material climate-related issues have affected the organization’s
financial planning

1.6

0.4

3

The climate-related scenarios used to inform the organization’s
strategy or financial planning if such scenarios are used

1.7

0.5

4

How the organization prioritizes its climate-related risks and opportunities

2.1

0.7

5

The time period(s) used/covered in the organization’s financial planning process

2.3

0.9

B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

Users noted that common climate-related
scenarios across industries are needed to allow
for more comparable disclosures and that if
climate-related scenarios are not standardized
across industries, companies should provide
detailed descriptions of the scenarios, including
regulatory and energy-pricing assumptions used
and the associated timelines.
In addition, for Strategy b), users were asked
to rank-order sub-elements for two disclosure
elements: how material climate-related issues
have affected five specific aspects of businessand strategy and how material climate-related
issues have affected four specific aspects offinancial planning, as shown in Figure A5-4
(p. 98). For the five sub-elements related to

how climate-related issues have affected thecompany’s business and strategy, the mostuseful sub-element is products and services,with an average ranking of 1.8. All the othersub-elements have an average ranking of 2.8 orhigher and variances of 1.3 or higher, indicating
users have very different views on which subelements are most useful for decision-making.
For the four sub-elements related to how climaterelated issues have affected the company’s
financial planning, the most useful sub-element is
capital expenditures and capital allocation, withan average ranking of 1.3 and a variance of 0.4.
Users are closely aligned in their views on thissub-element, with the majority of users ranking
this as the most useful sub-element.

97

The Task Force on Climate-related Financial Disclosures

Figure A5-4

Average Ranking of Disclosure Sub-Elements for Strategy b)

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation

How material climate-related issues have affected specific aspectsof business and strategy

Avg.
Rank

Var.

Products and services

1.8

1.1

Operations including types of operations and location of facilities

2.8

1.6

Supply chain or value chain

3.1

1.3

Investment in research and development

3.6

1.9

Adaptation and mitigation activities

3.6

2.0

How material climate-related issues have affected specific aspectsof financial planning

Avg.
Rank

Var.

Capital expenditures and capital allocation

1.3

0.4

Operating costs and revenues

2.3

0.9

Acquisitions or divestments

2.9

0.7

Cost of or access to debt or equity financing

3.4

0.6

Strategy c)This recommended disclosure focuses on theresilience of a company’s strategy, taking into
consideration different climate-related scenarios,
including a 2°C or lower scenario. As shown in
Table A5-5 (p. 99), users rated information on

the resiliency of the company’s strategy under
different climate-related scenarios, including
a 2°C or lower scenario, as the most useful
disclosure element among the eight listed. Thiswas closely followed by the company’s sensitivity
to carbon pricing.

E.
Initiatives Supporting TCFD
Appendices

98

The Task Force on Climate-related Financial Disclosures

Table A5-5

Usefulness of Information on Strategy Resilience#

Disclosure Elements

Score

Var.

1

Description of the resiliency of the organization’s strategy to climate-related
issues, including an indication of the direction or ranges of potential financial
implications, under different climate-related scenarios, including a 2°C or
lower scenario

1.6

0.7

2

The organization’s sensitivity to carbon pricing, if applicable

1.7

0.5

3

How the organization’s strategy might be affected by or changed to address
potential climate-related issues

1.8

0.3

4

The climate-related scenarios and associated time horizon(s) considered

1.8

0.8

5

How resilient the organization’s strategy is to climate-related issues, taking
into consideration scenarios consistent with increased physical climate-relatedrisks (if applicable)

1.8

0.9

6

1.9

0.6

A.
State of Climate-Related
Financial Disclosures

Description of the resiliency of the organization’s strategy to climate-related
issues, including an indication of the direction or ranges of potential financial
implications, under different climate-related scenarios, including a 2°C scenario

7

2.0

1.1

B.
Effective Climate-Related
Financial Disclosures

Narrative, qualitative description of how resilient the organization’s strategy
is to climate-related issues under different climate-related scenarios, including
a 2°C or lower scenario

8

Description of the resiliency of the organization’s strategy to climate-related
issues, including an indication of the direction or ranges of potential financial
implications, under different climate-related scenarios, including a 1.5°C scenario

2.5

0.8

C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

For this recommended disclosure, the Task
Force included three disclosure elements on theresilience of a company’s strategy under different
climate-related scenarios. The disclosure
elements varied in only one respect, which was in
the description of the climate-related scenariosthat should be considered, as follows:• 2°C or lower scenario;

scenario. Based on the scores for each disclosure
element, users identified the disclosure element
focused on a 2°C or lower scenario more usefulthan the two focused on specific temperaturetargets. For the disclosure elements focused ona specific temperature target, users identified
analysis based on a 2°C scenario as more usefulthan analysis based on a 1.5°C scenario.

• 2°C scenario; andIn addition, users highlighted the following as
extremely useful information:• 1.5°C scenario.

• scenarios based on 2°C or higher temperatures;

The first type represents the language in the Task
Force’s recommended disclosure, while the othertwo represent specific temperature targets.
The Task Force was interested in understanding
whether users find scenario analysis based ona specific temperature target — 2°C or 1.5°C— more useful than analysis on a 2°C or lower• disclosures describing whether a company has
committed to the Science Based Targets; and• the Value-at-Risk calculation and themethodology underpinning a company’s
assessment of its resilience.

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The Task Force on Climate-related Financial Disclosures

3. RISK MANAGEMENT
A company’s disclosure of its processes for
identifying, assessing, and managing climaterelated risks helps users evaluate the company’s
overall risk profile and risk management
activities. In terms of the usefulness of thedisclosure elements included under thisrecommendation, none of the disclosure
elements had a score of 1.5 or lower. In otherwords, none of the disclosure elements is
considered extremely useful based on the
average of users’ ratings.

Risk Management a)This recommended disclosure focuses on acompany’s risk management processes for
identifying and assessing climate-related risks.
On average, users rated information describing
whether a company considers existing andemerging regulatory requirements related toclimate change as part of its risk assessment
processes as the most useful disclosure element(see Table A5-6). Commentary provided by users
emphasized the importance of information on
how a company’s risk management processes
link to its business decisions.

Table A5-6

Usefulness of Information on Risk Identification and Assessment

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices#Disclosure Elements

Score

Var.

1

Description of whether the organization considers existing and emerging
regulatory requirements related to climate change (e.g., limits on emissions) as
part of its risk assessment processes

1.6

0.4

2

The organization’s processes for identifying and assessing climate-related risks

1.7

0.6

3

The organization’s processes for prioritizing climate-related risks, including how
materiality determinations are made

2.0

0.8

4

Processes for assessing the potential size and scope of identified climate-related
risks

2.0

0.8

5

Definitions of risk terminology used or references to existing risk classification
frameworks used

2.6

0.7

Risk Management b) and Risk Management c)
These recommended disclosures focus on acompany’s processes for managing climaterelated risks and how a company’s processes for
identifying, assessing, and managing climaterelated risks are integrated into overall risk
management. Since each of these recommended
disclosures had only one disclosure element

each, they are combined in Table A5-7 (p. 101).
The scores for the disclosure elements
associated with Risk Management b) and Risk
Management c) are 1.7 and 1.8, respectively.
In addition, users highlighted disclosure of
the concrete measures taken by a company tomitigate the impact of extreme weather events
is extremely useful for decision-making.

100The Task Force on Climate-related Financial Disclosures

Table A5-7

Usefulness of Information on Risk Management and Integration#

Disclosure Elements

Score

Var.

—

The organization’s processes for managing climate-related risks, including
how it makes decisions to mitigate, transfer, accept, or control those risks

1.7

0.5

—

How the organization’s processes for identifying, assessing, and managing
climate-related risks are integrated into the organization’s overallrisk management

1.8

0.6

4. METRICS AND TARGETS

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

A company’s disclosure of the metrics andtargets it uses to measure and monitor its
climate-related risks and opportunities supports
users’ assessments of a company’s potential
risk-adjusted returns, ability to meet financial
obligations, general exposure to climate-related
issues, and progress in managing or adapting
to those issues. They also provide a basis uponwhich investors and other users can compare
companies within a sector or industry. Notably,
the scores for the 20 disclosure elements
associated with this recommendation range

from 1.3 to 1.9, indicating users view themas extremely useful or very useful in making
financial decisions.
Metrics and Targets a)
This recommended disclosure focuses on themetrics used by a company to assess its climaterelated risks and opportunities in line with its
strategy and risk management process. As
shown in Table A5-8, on average, users rated
the key metrics a company uses to measure andmanage climate-related risks and opportunities
as the most useful disclosure element.

Table A5-8

Usefulness of Information on Key Metrics#

Disclosure Elements

Score

Var.

1

The key metrics used to measure and manage climate-related risks
and opportunities for the most recent period and historical periods

1.3

0.2

2

Whether and how related performance metrics are incorporated into
remuneration policies, in cases where climate-related issues are material

1.6

0.4

3

Internal carbon prices used

1.7

0.7

4

Metrics on climate-related risks associated with water, energy, land use,
and waste management where relevant and applicable

1.8

0.7

5

A description of the methodologies used to calculate or estimate
climate-related metrics, where not apparent

1.8

0.7

6

Climate-related opportunity metrics such as revenue from products
and services designed for a lower-carbon economy

1.8

0.9

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The Task Force on Climate-related Financial Disclosures

In addition, users mentioned the importance ofusing consistent definitions of metrics so that the
metrics are comparable across companies. Users
also identified the following as extremely useful:• information on physical climate-related risks
such as the number and percent of facilities
exposed to certain hazards, the locations offacilities and the types of activities performed,
and the number and percent of facilities in eachlocation or region; and• information related to capital expenditures(amount spent and percent of total) on lowcarbon technologies.

Metrics and Targets b)
This recommended disclosure focuses
specifically on metrics related to Scope 1,
Scope 2, and Scope 3 GHG emissions. As shownin Table A5-9, the most useful disclosure element
for this recommended disclosure is Scope 1
GHG emissions, which is followed closely by
Scope 2 GHG emissions. With equal scoresand variance, the next most useful disclosure
elements are related to Scope 3 GHG emissions
and a description of the methodologies used
to calculate or estimate the metrics, if different
from the GHG protocol.
Users mentioned a breakdown of Scope 3 GHG
emissions by sector, rather than in aggregate,
would be extremely useful.

Table A5-9

Usefulness of Information on GHG Emissions

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation#

Disclosure Elements

Score

Var.

1

Scope 1 GHG emissions for the most recent period and historicalperiods (e.g., three years)

1.3

0.4

2

Scope 2 GHG emissions for the most recent period and historicalperiods (e.g., three years)

1.4

0.4

3

Scope 3 GHG emissions for the most recent period and historicalperiods (e.g., three years)

1.6

0.8

4

A description of the methodologies used to calculate or estimate
the metrics if different from the GHG protocol

1.6

0.8

5

Accepted industry-specific efficiency ratios if used by the organization

1.9

1.2

E.
Initiatives Supporting TCFD
Appendices

102

The Task Force on Climate-related Financial Disclosures

Metrics and Targets c)
This recommended disclosure focuses on thetargets used by a company to manage climaterelated risks and opportunities and how thecompany performs against those targets. On
average, users rated information on a company’s
climate-related targets related to GHG emissions
as the most useful. However, as shown in Table
A5-10, information on the timeframes over which

the company’s climate-related targets apply
and key performance indicators used to assess
progress against climate-related targets werealso rated as extremely useful.
In addition, users indicated information on
how climate-related targets are linked to
management’s compensation is extremely usefulfor decision-making.

Table A5-10

Usefulness of Information on Climate-Related Targets

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation#

Disclosure Elements

Score

Var.

1

Climate-related targets related to GHG emissions

1.3

0.4

2

The timeframes over which the organization's climate-related targets apply

1.4

0.4

3

Key performance indicators used to assess progress against climaterelated targets

1.5

0.4

4

Identification of the climate-related targets as absolute or intensity based

1.6

0.5

5

A description of the methodologies used to calculate or estimate theclimate-related targets

1.6

0.5

6

A description of the efficiency or financial goals, financial loss tolerances,avoided GHG emissions through the entire product lifecycle, net revenue
goals for products and services designed for a lower-carbon economy,or other goals with which the organization has aligned its targets

1.7

0.5

7

Climate-related targets related to water usage, energy usage, etc.

1.7

0.6

8

The base year from which progress is measured

1.8

1.1

9

A description of the anticipated regulatory requirements or market constraints
with which the organization has aligned its climate-related targets

1.9

0.6

E.
Initiatives Supporting TCFD
Appendices

103

The Task Force on Climate-related Financial Disclosures

Appendix 6: Glossary and Abbreviations
GLOSSARY
ANNUAL OR INTEGRATED REPORTS referto reports that describe companies’ activities
for the preceding year (annual reports) or thebroader range of measures that contribute tocompanies’ long-term value and the role theyplay in society (integrated reports).
BOARD OF DIRECTORS (OR BOARD) refers toa body of elected or appointed members who
jointly oversee the activities of a company ororganization. Some countries use a two-tiered
system where “board” refers to the “supervisoryboard” while “key executives” refers to the“management board.” 97

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

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.
CLIMATE-RELATED RISK refers to thepotential negative impacts of climate change
on a company or organization. Physical risks
emanating from climate change can be eventdriven (acute) such as increased severityof extreme weather events (e.g., cyclones,
droughts, floods, and fires). They can also relate
to longer-term shifts (chronic) in precipitationand temperature and increased variability inweather patterns (e.g., sea level rise). Climaterelated risks can also be associated with thetransition to a lower-carbon global economy, themost common of which relate to policy and legal
actions, technology changes, market responses,
and reputational considerations.
FINANCIAL FILINGS refer to the annual
reporting packages in which companies 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 otherinformation such as governance statements
and management commentary.98
FINANCIAL PLANNING refers to a company’s
consideration of how it will achieve and fund its
objectives and strategic goals. The process offinancial planning allows companies to assess
future financial positions and determine how
resources can be utilized in pursuit of shortand long-term objectives. As part of financial
planning, companies often create “financial
plans” that outline the specific actions, assets,
and resources (including capital) necessary toachieve these objectives over a one-to-five-year
period. However, financial planning is broader
than the development of a financial plan as
it includes long-term capital allocation andother considerations that may extend beyond
the typical three-to-five-year financial plan(e.g., investment, research and development,
manufacturing, and markets).
GOVERNANCE refers to “the system by which
an organization is directed and controlled
in the interests of shareholders and otherstakeholders.” 99 “Governance involves a setof relationships between an organization’s
management, its board, its shareholders, andother stakeholders. Governance provides the
structure and processes through which theobjectives of the organization are set, progressagainst performance is monitored, and results
are evaluated.”100
GREENHOUSE GAS (GHG) EMISSIONSSCOPE LEVELS101• Scope 1 refers to all direct GHG emissions.
• Scope 2 refers to indirect GHG emissions fromconsumption 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 andproduction of purchased materials and fuels,transport-related activities in vehicles not97Organisation for Economic Co-operation and Development (OECD), G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.

98

 ased on Climate Disclosure Standards Board, CDSB Framework for Reporting Environmental Information, Natural Capital and Associated Business
B
Impacts, April 2018.

99

Cadbury, A., Report of the Committee on the Financial Aspects of Corporate Governance, London, 1992.
OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.

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

101 

104

The Task Force on Climate-related Financial Disclosures

owned or controlled by the reporting entity,
electricity-related activities (e.g., transmission
and distribution losses), outsourced activities,
and waste disposal.102
MANAGEMENT refers to those positions acompany or organization views as executive
or senior management positions and that are
generally separate from the board.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

ABBREVIATIONS
2°C — 2° Celsius
AI — Artificial Intelligence
ASX — Australian Securities Exchange
AUM — Assets Under Management

RISK MANAGEMENT refers to a set ofprocesses that are carried out by a company’s
or organization’s board and management tosupport the achievement of its objectives byaddressing its risks and managing the combined
potential impact of those risks.

CDSB — Climate Disclosure Standards Board

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 anddevelop an understanding of how the physicaland transition risks of climate change may
impact its businesses, strategies, and financial
performance over time.

FCA — Financial Conduct Authority

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 businesstypes, while “industry” is used to describe more
specific groupings of companies within a sector.
STRATEGY refers to an organization’s desired
future state. An organization’s strategy
establishes a foundation against which it canmonitor and measure its progress in reachingthat desired state. Strategy formulation generally
involves establishing the purpose and scope ofthe organization’s activities and the nature ofits 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’s or organization’s impact
on society, often addressing environmental,social, and governance issues.

CFRF — Climate Financial Risk Forum
CRD — Corporate Reporting Dialogue
ESG — Environmental, Social, and Governance

FSB — Financial Stability Board
G20 — Group of 20
GHG — Greenhouse Gas
GICS — Global Industry Classification Standard
IPCC — Intergovernmental Panel on Climate
ChangeNGFS — Network for Greening the Financial
System
PRA — Prudential Regulation Authority (Bank ofEngland)
PRI — Principles for Responsible Investment
RCP — Representative Concentration Pathway
SASB — Sustainability Accounting Standards
Board
TCFD — Task Force on Climate-related Financial
Disclosures
UN — United Nations
UNEP FI — United Nations Environment
Programme Finance Initiative
WBCSD — World Business Council for
Sustainable Development

World Resources Institute and World Business Council for Sustainable Development, The Corporate Value Chain (Scope 3) Accounting and ReportingStandard, April 16, 2014.

102 

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Appendix 7: References
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ASX Corporate Governance Council. Corporate Governance Principles and Recommendations, 4th
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A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures

ASIC. Prospectuses: Effective Disclosure for Retail Investors. August 12, 2019. https://download.asic.gov.
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Banco de México. Climate and Environmental Risks and Opportunities in Mexico’s Financial System:
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C.
Addressing
Implementation Issues

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D.
Case Studies on
Implementation

BHP. Annual Report 2019. September 17, 2019. https://www.bhp.com/-/media/documents/investors/
annual-reports/2019/bhpannualreport2019.pdf?la=en.

E.
Initiatives Supporting TCFD
AppendicesBlackRock. BlackRock Investment Stewardship: Engagement Priorities for 2020. March 2020. https://www.
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Carney, Mark. “The Road to Glasgow.” February 27, 2020. https://www.bankofengland.
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A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

CFRF. Climate Financial Risk Forum Guide 2020: Risk Management Chapter. June 29, 2020. https://www.
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CFRF. Climate Financial Risk Forum Guide 2020: Summary. June 29, 2020. https://www.fca.org.uk/
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Deutsche Gesellschaft für Internationale Zusammenarbeit. “Addressing climate change in South
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Effective Climate-Related
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C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

European IPR Helpdesk. Fact Sheet: How to Manage Confidential Business Information. June 2015.
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Gold Fields. Our 2019 Climate Change Report. October 7, 2019. https://www.goldfields.com/reports/
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D.
Case Studies on
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E.
Initiatives Supporting TCFD
Appendices

IE Foundation. Sovereign Wealth Funds 2018. 2019. https://docs.ie.edu/cgc/SWF-CGC-2018.pdf.
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B.
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C.
Addressing
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D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

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B.
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Financial Disclosures
C.
Addressing
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D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

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supporters.
TPI. TPI State of Transition Report 2020. March 2020. https://www.transitionpathwayinitiative.org/tpi/
publications/50.pdf?type=Publication.
Total. Universal Registration Document 2019. March 20, 2020. https://www.total.com/sites/default/files/
atoms/files/2019_total_universal_registration_document.pdf.
United Nations Environment Programme Finance Initiative (UNEP FI). Changing Course. May 2019.
https://www.unepfi.org/wordpress/wp-content/uploads/2019/05/TCFD-Changing-Course-Oct-19.
pdf.
UNEP FI. Changing Course, Real Estate. November 2019. https://www.unepfi.org/wordpress/wpcontent/uploads/2019/11/TCFD-Real-Estate-Web_final_28112019.pdf.

A.
State of Climate-Related
Financial Disclosures
B.
Effective Climate-Related
Financial Disclosures
C.
Addressing
Implementation Issues
D.
Case Studies on
Implementation
E.
Initiatives Supporting TCFD
Appendices

UNEP FI. “Press Release: UNEP FI Working with 16 Global Insurers to Better Understand Risk &Implement TCFD Recommendations.” November 13, 2018. https://www.unepfi.org/news/
industries/insurance/unep-fi-working-with-16-global-insurers-to-better-understand-riskimplement-tcfd-recommendations/.
United Nations Global Compact. “Business Ambition for 1.5°C.” https://www.unglobalcompact.org/
take-action/events/climate-action-summit-2019/business-ambition.
Walmart de México y Centroamérica. Financial and Corporate Responsibility Report 2019. April 2020.
https://informes.walmex.mx/2019/descargas/eng/Walmart_2019_annual_report_complete.pdf.
World Business Council for Sustainable Development (WBCSD). Climate-Related Financial Disclosure by
Chemical Sector Companies: Implementing the TCFD Recommendations. July 16, 2019. https://docs.
wbcsd.org/2019/07/WBCSD_TCFD_Chemical_Sector_Preparer_Forum.pdf.
WBCSD. Communicating Collective and Individual Climate-Related Challenges and Action. July 1, 2020.
https://www.wbcsd.org/Programs/Redefining-Value/External-Disclosure/TCFD/Resources/
Construction-and-Building-Materials-share-TCFD-implementation-experience.
WBCSD. Disclosure in a Time of System Transformation: Climate-Related Financial Disclosure for Food,
Agriculture and Forest Products Companies. April 9, 2020. https://docs.wbcsd.org/2020/04/WBCSDTCFD-Food-Agriculture-and-Forest-Products%C2%AC-Preparer-Fourm-report.pdf.
WBCSD. Disclosure in a Time of Transition: Climate-Related Financial Disclosure and the Opportunity for
the Electric Utilities Sector. July 16, 2019. https://docs.wbcsd.org/2019/07/WBCSD_TCFD_Electric_
Utilities_Preparer_Forum.pdf.
WBCSD. Staying Competitive in a Fast-Changing World, Practical Steps for Future-Proofing Your Business.
October 14, 2019. https://docs.wbcsd.org/2019/10/WBCSD_Redefining_Value_Checklist_2019.pdf.
WBCSD. “TCFD Preparer Forums, Resources.” https://www.wbcsd.org/Programs/Redefining-Value/
External-Disclosure/TCFD/Resources.
World Resources Institute (WRI) and WBCSD. The Corporate Value Chain (Scope 3) Accounting andReporting Standard. April 16, 2013. https://ghgprotocol.org/sites/default/files/standards/
Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf.
WRI and WBCSD. The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised
Edition), March 2004. https://ghgprotocol.org/corporate-standard.

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For more information, please visit fsb-tcfd.org

Nothing in this document constitutes an offer or a solicitation of an offer to buy or sell a security or financial instrument 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 but does not guarantee its accuracy.
Copyright 2020 The Task Force on Climate-related Financial Disclosures.

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