CLIMATE DISCLOSURE
CONVERGENCETCFD, SEC, and ISSB

May 9, 2022

AgendaSectionPresenter(s)INTRODUCTION

Curtis Ravenel | TCFD Secretariat

OVERVIEW OF TCFD FRAMEWORKCurtis Ravenel | TCFD Secretariat

IFRS/ISSB S2 DRAFT AND LINK TO TCFD

Spencer Powell | Technical Staff, ISSBSEC PROPOSED RULE AND LINK TO TCFDErik Gerding | Deputy Director, Legal and Regulatory
Policy, Division of Corporation Finance, SEC

Q&A2

Introduction

Curtis Ravenel — TCFD Secretariat

3

Overview of TCFD Framework

Curtis Ravenel — TCFD Secretariat

4

The TCFD Recommendations
The TCFD collaborated with industry stakeholders to develop a voluntary disclosure framework
Development of the Recommendations

The TCFD Recommendations• Considered the challenges for preparersof disclosures as well as the benefits ofsuch disclosures to investors, lenders, andinsurance underwriters.

The recommendations are structured around four thematic areas thatrepresent core elements of how companies operate.

• Engaged in significant outreach andconsultation with users and preparers ofdisclosures and other stakeholders.
• Drew from existing climate-related
disclosure regimes and sought to develop
a decision-useful framework to align andsupplement existing disclosureframeworks.
• Emphasized disclosure of the financial
impacts of climate-related risks andopportunities on a company.

GovernanceRisk Management

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

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

Strategy

Metrics and Targets

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

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

Note: The four recommendations are supported by 11 recommended disclosures5

Overview of TCFD publications
Since 2017, TCFD has released a number of additional reports and guidance to measure progress
and aid implementation
Final
Recommendations
and RecommendedDisclosures

Provides details on the following:• Context and background on the need for climate-related financial disclosures• The Task Force’s remit from the Financial Stability Board• TCFD general framework, including recommendations and recommended disclosures
2017 ReportImplementation
Guidance

See slide 7

Provides guidance on the application of the recommendations as well as implementation guidance
for the following:• All sectors• Four financial industries• Four groups of non-financial companies the Task Force considers more likely to be affectedfinancially than others given their exposure to certain transition and physical risks
2021 Implementation
Guidance (Annex)
See slide 8

Additional
Supporting Materials

2017 Scenario Analysis 2020 Guidance on Risk Management 2020 Guidance on Scenario Analysis
Technical Supplement
Integration and Disclosure
for Non-Financial Companies

Status Reports

2018 Status Report2019 Status Report2020 Status Report

2021 Guidance on Metrics,Targets, and Transition Plans
2021 Status Report

Note: Visit fsb-tcfd.org/publications to access all of the Task Force’s reports, guidance, and other materials.

62021 Implementing Guidance (Annex)
In 2021, the Task Force updated key elements of its implementation guidance for the TCFD
recommendations
Updates to guidance for all sectors
Governance

Strategy

No changes from 2017 guidance• Revised to more explicitly address disclosure of actual financial impacts on organizations as well as key
information from organizations’ plans for transitioning to a low-carbon economy (transition plans).
• Revised to more explicitly address disclosure of potential financial impacts on organizations.

Risk Management

No changes from 2017 guidance• Revised to more explicitly address disclosure of metrics consistent with cross-industry, climate-related
metric categories for current, historical, and future periods, and added disclosure of targets consistent
with cross-industry, climate-related metric categories, where relevant.

Metrics and Targets• Revised disclosure of Scope 1 and Scope 2 GHG emissions to be independent of a materiality
assessment.
• Revised to encourage disclosure of Scope 3 GHG emissions.
• Added disclosure of interim targets, where available, for organizations disclosing medium-term or longterm targets.

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Guidance on Metrics, Targets, and Transition Plans

ExamplesKey characteristics

The Task Force developed guidance on metrics, targets, and transition plans to reflect evolution indisclosure since 2017Metrics

Targets

Transition Plans••••

Decision-useful
Clear and understandable
Reliable, verifiable, and objective
Consistent over time
– Current– Historical– Forward-looking• Aligned with strategy and risk
management goals• Linked to relevant metrics• Quantified and measurable• Clearly specified over time
– Baseline– Time horizon– Interim targets• Understandable and contextualized• Periodically reviewed and updated• Reported annually• Aligned with strategy• Anchored in quantitative
elements, including climaterelated metrics and targets• Subject to effective governanceprocesses• Actionable, specific initiatives• Credible• Periodically reviewed and updated• Reported annually to stakeholders• GHG Emissions: Absolute Scope 1,Scope 2, and Scope 3 GHG emissions• GHG emissions: Reduce net Scope 1and 2 GHG emissions to zero by 2050

• Transition Risk: Amount and extentof assets or business activities
vulnerable to transition risks• Capital Deployment: Invest at least
25% of annual capital expenditure
into electric vehicle manufacturing

Actions and activities to support
transition to net-zero Scope 1 and 2
GHG emissions by 2050, including:• Capital Deployment: Amount offinancing deployed toward climaterelated risks and opportunities1• Specific actions for reducing GHGemissions• Current GHG emissions
performance and targets• Impact of actions on businesses,strategy, and financial planning

1. For Metrics, these are examples of the seven metrics categories that companies should disclose as detailed in Guidance on Metrics,Targets, and Transition Plans (October 2021) (p.16-17).

8

Global Momentum of the TCFD Recommendations
Organizations around the world are increasingly expressing support for the TCFD recommendations
Jurisdictions Use of the TCFD Recommendations
April 2021: The European Commission issued a proposal calling for thedevelopment of sustainability reporting standards that take into account existing
frameworks including the TCFD
June 2021: Switzerland's Financial Market Supervisory Authority amended
disclosure rules for banks and insurers to include climate-related financial risks,
based on the TCFD
June 2021: The Tokyo Stock Exchange issued a revised Corporate Governance
Code that indicates certain companies should enhance disclosure based on theTCFD
October 2021: The Canadian Securities Administrators issued proposed
disclosure requirements for issuers aligned with the four recommendations of theTCFD
October 2021: New Zealand passed a law to require certain organizations to makeclimate-related financial disclosures in line with the TCFD recommendations. The
law is expected to go into effect in 2023, subject to the publication of reporting
standards
November 2021: Australian Prudential Regulatory Authority published TCFDaligned guidance on managing climate risks
December 2021: The Financial Conduct Authority issued a final rule requiring
issuers to make TCFD-aligned disclosures on a comply or explain basis
December 2021: The Hong Kong Monetary Authority issued a manual on climate
risk management and indicated the TCFD recommendations are “a desirableframework for [Authorized Institutions] to rely upon”

December 2021: The Brazilian Securities Exchange Commission amended its rules
to require issuers to indicate whether they disclose information based on theTCFD recommendations or another recognized source
December 2021: The Singapore Exchange amended its rules to require climate
reporting based on the TCFD by certain industries for FY2023 and additional
industries for FY2024
March 2022: The U.S. Securities and Exchange Commission published a proposed
rule on climate-related disclosures that incorporates key aspects of the TCFD
framework

Other Supporting Initiatives“We support moving towards mandatory climate-related
financial disclosures that provide consistent and decisionuseful information for market participants and that are
based on the Task Force on Climate-related FinancialDisclosures (TCFD) framework, in line with domestic
regulatory frameworks.”“We agree on the importance of promoting globallyconsistent, comparable high-quality standards ofdisclosure for sustainability reporting, building on therecommendations of the FSB’s Task Force on Climaterelated Financial Disclosures.”“The Commission supports initiatives by the G20, the G7,
the Financial Stability Board and others to generateinternational commitment to develop a baseline of global
sustainability reporting standards that would build on thework of the Task Force on Climate-related FinancialDisclosures.”“The FSB strongly encourages national or regional
authorities that are developing requirements or guidancefor climate-related disclosures to consider using the TCFD
recommendations as the basis.”
The International Sustainability Standards Board’s
proposed sustainability standards that "build upon therecommendations of the Task Force on Climate-Related
Financial Disclosures (TCFD)”.

9Additional Resources
Other resources on how to get started can be found on the TCFD website and the Knowledge Hub
TCFD Website

https://www.fsb-tcfd.org/

Find additional information on the TCFD website, including the recommendations and allother publications. Additional resources include the following:• The Workshops in a Box is a set of five presentations for use in introductory workshops
on the TCFD recommendations. Various parties can use these to support adoption andimplementation.
• The Overview Booklet provides a brief overview of the Task Force’s remit and work.
• The TCFD publications which include the following:– 2017 Final Report– 2021 Implementing Guidance (Annex)– 2017 Scenario Analysis Technical Supplement– 2020 Guidance on Risk Management Integration and Disclosure– 2020 Guidance on Scenario Analysis for Non-Financial Companies– 2021 Guidance on Metrics, Targets, and Transition Plans– All status reports since 2018

Knowledge Hub

https://www.tcfdhub.org/

Find additional TCFD-related resources curated by the CDP (free online courses, informationon the recommendations, alignment with other frameworks, etc).

10IFRS/ISSB S2 Draft and link to TCFDIFRS S2 Exposure Draft on Climate-related Disclosures (link)

Spencer Powell — Technical Staff, ISSB

11IFRS® Foundation

ISSB’s proposed
IFRS® Sustainability
Disclosure Standards
May 2022

The views expressed in this presentation are those of the presenter, not necessarily those of the IFRS Foundation, International Accounting Standards Board or the International Sustainability Standards
Board.
Copyright © 2022 IFRS Foundation. All rights reserved.

COP26 / ISSB announcement13

1. Establish International Sustainability Standards Board (ISSB)
2. Consolidate Climate Disclosure Standards Board and Value Reporting Foundation (IIRC and SASB)

3. Publish general disclosure and climate prototypes as a precursor to ISSB proposals (exposure drafts)

13

ISSB focus

14

Develop standards for global baseline of sustainability
disclosures and a digital taxonomy to enable electronictagging of disclosures

Focus on meeting the information needs of investors

Will enable companies to provide comprehensive
sustainability information for the global capital markets
Building blocks approach: facilitate the addition ofrequirements that are jurisdiction-specific or aimed at abroader group of stakeholders
14Significant progress since COP26

COP26 announcement

Developments since COP26•

1. Establish ISSB

2. Consolidate or align withother initiatives

3. Publication ofprototypes

15•

Current focus

Leadership appointments•

Emmanuel Faber (Chair)•

Sue Lloyd (Vice-Chair)•

Janine Guillot (Special Advisor)•••

Multi-location model•

MoU with Frankfurt, interim office inplace•

MoU with Montreal•

CDSB consolidation completed (Jan2022)•GRI cooperation agreement (MoU)•Jurisdictional working group set up•

Published proposals for inaugural IFRS
Sustainability Disclosure Standards

Appointments

Recruiting remaining ISSBmembers

Multi-location model•

Finalise arrangements for AsiaOceania presence•

Appoint advisory groups•

Preparing for VRF consolidation (June2022)•Outreach and consultation

15

Two proposed IFRS Sustainability
Disclosure Standards

General Requirements
Exposure Draft

16

ClimateExposure Draft

16

Standards architecture

Focus on investor audience and enterprise value

Governance
General Requirements Standard
Strategy
RiskManagementMetrics
andtargets

Common thread – four core elements
Taken from TCFD structure

Thematic / cross-industry
requirements

Industry-based
requirementsCore elements used across
IFRS Sustainability Disclosure Standards

17General Requirements Exposure Draft

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Requires companies to provide material information on all
significant sustainability-related risks and opportunities
necessary to assess enterprise value• Other IFRS Sustainability Disclosure Standards (eg Climate Standard)
set out specific disclosures• Points to other standards and frameworks in absence of a specific IFRS
Sustainability Disclosure Standard• Equivalent to IFRS Accounting Standards IAS 1 and IAS 818

Climate Exposure Draft

19

Requirements for disclosure of material information aboutsignificant climate-related risks and opportunities• Requires disclosure of information about;– physical risks (eg flood risk)– transition risks (eg regulatory change)– climate-related opportunities (eg new technology)

19

Relation to TCFD recommendations andSASB Standards

Consistent with TCFD
• Governance• Strategy• Risk management• Cross-industry metrics and targets• Illustrative guidance

Builds on SASB Standards• Industry-based disclosures inAppendix B derived from SASBStandards• Proposed changes to:• Internationalise metrics• Add financed emissions
disclosures

2020

Example: Link between TCFD and Climaterelated Disclosures Exposure Draft

TCFD Recommendation, RecommendedDisclosure and Guidance21

Climate-related Disclosures Exposure Draft

Strategy

Strategy

Disclose the actual and potential impacts of climate-relatedrisks and opportunities on the organization’s businesses,strategy, and financial planning where such information ismaterial.

Understand an entity’s strategy for addressing significant climate-related risks
and opportunities.

Recommended Disclosure c)

The Exposure Draft requires additional information regarding resiliency on:

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

•significant areas of uncertainty for strategy resilience;•an entity’s capacity to adjust and adapt its strategy over time; and•details on how any resilience analysis or assessment has been conducted.

21

Key features

22

Transition planning
Emissions targets and use of carbon offsets

Climate resilience
Resilience of business strategy in multiple
scenarios
Scope 1-3 emissions
Requirement to disclose GHG emissions

22

How to comment on the proposals?

23

SurveyorVisit:ifrs.org/projects/openfor-comment/Comment letter

Comments are published on ifrs.org

23

Next steps for the Exposure Drafts

24

31 MarApr-Jul29 JulAug˗Dec

End 2022

Proposals
published

Consultationand outreachConsultation
closesConsultation
feedback
analysis

Issue
Standards *ISSB
deliberations
Refine andfinaliseStandards* Dependent on feedback from theconsultation24

Adoption ecosystem

ISSB

Comprehensive
global baselineof standards &digital taxonomy

25

IOSCO

IAASB

Assess with aview torecommend
adoption

Enhance &developassurance
standards

Jurisdictions

Voluntary

Require byadopting thestandards &taxonomy

Market demanddriven

25

SEC proposed rule and link to TCFD
SEC proposed rule: The Enhancement and Standardization of Climate-Related Disclosures for
Investors (link)

Erik Gerding — Deputy Director, Legal and Regulatory Policy, Division ofCorporation Finance, SEC

26

Q&A27