DRAFT – FOR DISCUSSION PURPOSES ONLY

Final Report

Recommendations of
the Task Forceon Climate-related
Financial Disclosures

June 2017

Recommendations of the Task Force on Climate-related Financial DisclosuresiJune 15, 2017

Letter from Michael R. Bloomberg
Mr. Mark Carney
ChairmanFinancial Stability Board
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
Switzerland
Dear Chairman Carney,
On behalf of the Task Force on Climate-related Financial Disclosures, I am pleased to present this final reportsetting out our recommendations for helping businesses disclose climate-related financial information.
As you know, warming of the planet caused by greenhouse gas emissions poses serious risks to the global
economy and will have an impact across many economic sectors. It is difficult for investors to know which
companies are most at risk from climate change, which are best prepared, and which are taking action.
The Task Force’s report establishes recommendations for disclosing clear, comparable and consistent
information about the risks and opportunities presented by climate change. Their widespread adoption will
ensure that the effects of climate change become routinely considered in business and investment decisions.
Adoption of these recommendations will also help companies better demonstrate responsibility and foresightin their consideration of climate issues. That will lead to smarter, more efficient allocation of capital, and help
smooth the transition to a more sustainable, low-carbon economy.
The industry Task Force spent 18 months consulting with a wide range of business and financial leaders tohone its recommendations and consider how to help companies better communicate key climate-related
information. The feedback we received in response to the Task Force’s draft report confirmed broad support
from industry and others, and involved productive dialogue among companies and banks, insurers, andinvestors. This was and remains a collaborative process, and as these recommendations are implemented, we
hope that this dialogue and feedback continues.
Since the Task Force began its work, we have also seen a significant increase in demand from investors for
improved climate-related financial disclosures. This comes amid unprecedented support among companies foraction to tackle climate change.
I want to thank the Financial Stability Board for its leadership in promoting better disclosure of climate-related
financial risks, and for its support of the Task Force’s work. I am also grateful to the Task Force members andSecretariat for their extensive contributions and dedication to this effort.
The risk climate change poses to businesses and financial markets is real and already present. It is more
important than ever that businesses lead in understanding and responding to these risks—and seizing theopportunities—to build a stronger, more resilient, and sustainable global economy.
Sincerely,

Michael R. Bloombergr from Michael R. Bloomberg

Recommendations of the Task Force on Climate-related Financial DisclosuresiExecutive Summary
Financial Markets and Transparency
One of the essential functions of financial markets is to price risk to support informed, efficient
capital-allocation decisions. Accurate and timely disclosure of current and past operating andfinancial results is fundamental to this function, but it is increasingly important to understand thegovernance and risk management context in which financial results are achieved. The financial
crisis of 2007-2008 was an important reminder of the repercussions that weak corporate
governance and risk management practices can have on asset values. This has resulted inincreased demand for transparency from organizations on their governance structures,
strategies, and risk management practices. Without the right information, investors and others
may incorrectly price or value assets, leading to a misallocation of capital.

Increasing transparency makes markets more efficient andeconomies more stable and resilient.
—Michael R. Bloomberg
Financial Implications of Climate Change
One of the most significant, and perhaps most misunderstood, risks that organizations face today
relates to climate change. While it is widely recognized that continued emission of greenhousegases will cause further warming of the planet and this warming could lead to damaging
economic and social consequences, the exact timing and severity of physical effects are difficult toestimate. The large-scale and long-term nature of the problem makes it uniquely challenging,
especially in the context of economic decision making. Accordingly, many organizations
incorrectly perceive the implications of climate change to be long term and, therefore, notnecessarily relevant to decisions made today.
The potential impacts of climate change on organizations, however, are not only physical and do
not manifest only in the long term. To stem the disastrous effects of climate change within thiscentury, nearly 200 countries agreed in December 2015 to reduce greenhouse gas emissions andaccelerate the transition to a lower-carbon economy. The reduction in greenhouse gas emissions
implies movement away from fossil fuel energy and related physical assets. This coupled with
rapidly declining costs and increased deployment of clean and energy-efficient technologies could
have significant, near-term financial implications for organizations dependent on extracting,producing, and using coal, oil, and natural gas. While such organizations may face significant
climate-related risks, they are not alone. In fact, climate-related risks and the expected transition
to a lower-carbon economy affect most economic sectors and industries. While changes
associated with a transition to a lower-carbon economy present significant risk, they also create
significant opportunities for organizations focused on climate change mitigation and adaptation
solutions.
For many investors, climate change poses significant financial challenges and opportunities, now
and in the future. The expected transition to a lower-carbon economy is estimated to requirearound $1 trillion of investments a year for the foreseeable future, generating new investment
opportunities.1 At the same time, the risk-return profile of organizations exposed to climaterelated risks may change significantly as such organizations may be more affected by physicalimpacts of climate change, climate policy, and new technologies. In fact, a 2015 study estimatedthe value at risk, as a result of climate change, to the total global stock of manageable assets as
1

International Energy Agency, World Energy Outlook Special Briefing for COP21, 2015.

Recommendations of the Task Force on Climate-related Financial Disclosuresii

ranging from $4.2 trillion to $43 trillion between now and the end of the century.2 The study
highlights that “much of the impact on future assets will come through weaker growth and lower
asset returns across the board.” This suggests investors may not be able to avoid climate-relatedrisks by moving out of certain asset classes as a wide range of asset types could be affected. Bothinvestors and the organizations in which they invest, therefore, should consider their longer-term
strategies and most efficient allocation of capital. Organizations that invest in activities that may
not be viable in the longer term may be less resilient to the transition to a lower-carbon economy;
and their investors will likely experience lower returns. Compounding the effect on longer-term
returns is the risk that present valuations do not adequately factor in climate-related risks
because of insufficient information. As such, long-term investors need adequate information on
how organizations are preparing for a lower-carbon economy.
Furthermore, because the transition to a lower-carbon economy requires significant and, in somecases, disruptive changes across economic sectors and industries in the near term, financial
policymakers are interested in the implications for the global financial system, especially in termsof avoiding financial dislocations and sudden losses in asset values. Given such concerns and thepotential impact on financial intermediaries and investors, the G20 Finance Ministers and Central
Bank Governors asked the Financial Stability Board to review how the financial sector can takeaccount of climate-related issues. As part of its review, the Financial Stability Board identified theneed for better information to support informed investment, lending, and insurance underwriting
decisions and improve understanding and analysis of climate-related risks and opportunities.
Better information will also help investors engage with companies on the resilience of theirstrategies and capital spending, which should help promote a smooth rather than an abrupt
transition to a lower-carbon economy.

Task Force on Climate-related Financial Disclosures
To help identify the information needed by investors, lenders, and insurance underwriters toappropriately assess and price climate-related risks and opportunities, the Financial Stability
Board established an industry-led task force: the Task Force on Climate-related Financial
Disclosures (Task Force). The Task Force was asked to develop voluntary, consistent climaterelated financial disclosures that would be useful to investors, lenders, and insurance
underwriters in understanding material risks. The 32-member Task Force is global; its members
were selected by the Financial Stability Board and come from various organizations, including
large banks, insurance companies, asset managers, pension funds, large non-financial companies,
accounting and consulting firms, and credit rating agencies. In its work, the Task Force drew on
member expertise, stakeholder engagement, and existing climate-related disclosure regimes todevelop a singular, accessible framework for climate-related financial disclosure.
The Task Force developed four widelyadoptable recommendations on climaterelated financial disclosures that are
applicable to organizations across sectors
and jurisdictions (Figure 1). Importantly, theTask Force’s recommendations apply tofinancial-sector organizations, includingbanks, insurance companies, asset managers,
and asset owners. Large asset owners andasset managers sit at the top of theinvestment chain and, therefore, have an

2

Figure 1

Key Features of Recommendations
 Adoptable by all organizations
 Included in financial filings
 Designed to solicit decision-useful, forwardlooking information on financial impacts
 Strong focus on risks and opportunities
related to transition to lower-carbon economy



The Economist Intelligence Unit, “The Cost of Inaction: Recognising the Value at Risk from Climate Change,” 2015. Value at risk measures theloss a portfolio may experience, within a given time horizon, at a particular probability, and the stock of manageable assets is defined as thetotal stock of assets held by non-bank financial institutions. Bank assets were excluded as they are largely managed by banks themselves.

Recommendations of the Task Force on Climate-related Financial Disclosuresiii

important role to play in influencing the organizations in which they invest to provide betterclimate-related financial disclosures.
In developing and finalizing its recommendations, the Task Force solicited input throughout theprocess.3 First, in April 2016, the Task Force sought public comment on the scope and high-levelobjectives of its work. As the Task Force developed its disclosure recommendations, it continued
to solicit feedback through hundreds of industry interviews, meetings, and other touchpoints.
Then, in December 2016, the Task Force issued its draft recommendations and sought publiccomment on the recommendations as well as certain key issues, receiving over 300 responses.
This final report reflects the Task Force’s consideration of industry and other public feedback
received throughout 2016 and 2017. Section E contains a summary of key issues raised by theindustry as well as substantive changes to the report since December.
Disclosure in Mainstream Financial Filings
The Task Force recommends that preparers of climate-related financial disclosures provide suchdisclosures in their mainstream (i.e., public) annual financial filings. In most G20 jurisdictions,companies with public debt or equity have a legal obligation to disclose material information in
their financial filings—including material climate-related information. The Task Force believes
climate-related issues are or could be material for many organizations, and its recommendations
should be useful to organizations in complying more effectively with existing disclosure
obligations.4 In addition, disclosure in mainstream financial filings should foster shareholder
engagement and broader use of climate-related financial disclosures, thus promoting a more
informed understanding of climate-related risks and opportunities by investors and others. The
Task Force also believes that publication of climate-related financial information in mainstream
annual financial filings will help ensure that appropriate controls govern the production anddisclosure of the required information. More specifically, the Task Force expects the governanceprocesses for these disclosures would be similar to those used for existing public financial
disclosures and would likely involve review by the chief financial officer and audit committee, as
appropriate.
Importantly, organizations should make financial disclosures in accordance with their national
disclosure requirements. If certain elements of the recommendations are incompatible withnational disclosure requirements for financial filings, the Task Force encourages organizations todisclose those elements in other official company reports that are issued at least annually, widelydistributed and available to investors and others, and subject to internal governance processes
that are the same or substantially similar to those used for financial reporting.
Core Elements of Climate-Related Financial Disclosures
The Task Force structured its recommendations around four thematic areas that represent coreelements of how organizations operate: governance, strategy, risk management, and metrics andtargets (Figure 2, p. v). The four overarching recommendations are supported by recommended
disclosures that build out the framework with information that will help investors and others
understand how reporting organizations assess climate-related risks and opportunities.5 In
addition, there is guidance to support all organizations in developing climate-related financial
disclosures consistent with the recommendations and recommended disclosures. The guidanceassists preparers by providing context and suggestions for implementing the recommended
disclosures. For the financial sector and certain non-financial sectors, supplemental guidance wasdeveloped to highlight important sector-specific considerations and provide a fuller picture ofpotential climate-related financial impacts in those sectors.
3

See Appendix 2: Task Force Objectives and Approach for more information.

4

The Task Force encourages organizations where climate-related issues could be material in the future to begin disclosing climate-related
financial information outside financial filings to facilitate the incorporation of such information into financial filings once climate-related
issues are determined to be material.
5
See Figure 4 on p. 14 for the Task Force's recommendations and recommended disclosures.

Recommendations of the Task Force on Climate-related Financial Disclosuresiv

Figure 2

Core Elements of Recommended Climate-Related Financial Disclosures
Governance

Governance
Strategy
RiskManagement
Metrics
and Targets

The organization’s governance around climate-related risks
and opportunities
Strategy
The actual and potential impacts of climate-related risks andopportunities on the organization’s businesses, strategy,
and financial planning
Risk Management
The processes used by the organization to identify, assess,and manage climate-related risks
Metrics and Targets
The metrics and targets used to assess and manage relevant
climate-related risks and opportunities

Climate-Related Scenarios
One of the Task Force’s key recommended disclosures focuses on the resilience of anorganization’s strategy, taking into consideration different climate-related scenarios, including a
2° Celsius or lower scenario.6 An organization’s disclosure of how its strategies might change toaddress potential climate-related risks and opportunities is a key step to better understanding thepotential implications of climate change on the organization. The Task Force recognizes the use of
scenarios in assessing climate-related issues and their potential financial implications is relatively
recent and practices will evolve over time, but believes such analysis is important for improving
the disclosure of decision-useful, climate-related financial information.

Conclusion
Recognizing that climate-related financial reporting is still evolving, the Task Force’s
recommendations provide a foundation to improve investors’ and others’ ability to appropriately
assess and price climate-related risk and opportunities. The Task Force’s recommendations aim tobe ambitious, but also practical for near-term adoption. The Task Force expects to advance thequality of mainstream financial disclosures related to the potential effects of climate change onorganizations today and in the future and to increase investor engagement with boards andsenior management on climate-related issues.
Improving the quality of climate-related financial disclosures begins with organizations’willingness to adopt the Task Force’s recommendations. Organizations already reporting climaterelated information under other frameworks may be able to disclose under this framework
immediately and are strongly encouraged to do so. Those organizations in early stages of
evaluating the impact of climate change on their businesses and strategies can begin bydisclosing climate-related issues as they relate to governance, strategy, and risk management
practices. The Task Force recognizes the challenges associated with measuring the impact ofclimate change, but believes that by moving climate-related issues into mainstream annual
financial filings, practices and techniques will evolve more rapidly. Improved practices andtechniques, including data analytics, should further improve the quality of climate-related
financial disclosures and, ultimately, support more appropriate pricing of risks and allocation ofcapital in the global economy.
6

A 2° Celsius (2°C) scenario lays out an energy system deployment pathway and an emissions trajectory consistent with limiting the global
average temperature increase to 2°C above the pre-industrial average. The Task Force is not recommending organizations use a specific 2°C
scenario.

Recommendations of the Task Force on Climate-related Financial Disclosuresv

Contents
Letter from Michael R. Bloomberg ................................................................................................................... i
Executive Summary ........................................................................................................................................... ii
A Introduction.................................................................................................................................................... 1
1. Background ................................................................................................................................................................... 1
2. The Task Force’s Remit ................................................................................................................................................. 2

B Climate-Related Risks, Opportunities, and Financial Impacts ................................................................. 5
1. Climate-Related Risks ................................................................................................................................................... 5
2. Climate-Related Opportunities ................................................................................................................................... 6
3. Financial Impacts .......................................................................................................................................................... 8

C Recommendations and Guidance ............................................................................................................. 13
1. Overview of Recommendations and Guidance ....................................................................................................... 13
2. Implementing the Recommendations ..................................................................................................................... 17
3. Guidance for All Sectors ............................................................................................................................................. 19

D Scenario Analysis and Climate-Related Issues ........................................................................................ 25
1. Overview of Scenario Analysis .................................................................................................................................. 25
2. Exposure to Climate-Related Risks ........................................................................................................................... 26
3. Recommended Approach to Scenario Analysis ...................................................................................................... 27
4. Applying Scenario Analysis ........................................................................................................................................ 29
5. Challenges and Benefits of Conducting Scenario Analysis .................................................................................... 30

E Key Issues Considered and Areas for Further Work ............................................................................... 32
1. Relationship to Other Reporting Initiatives ............................................................................................................. 33
2. Location of Disclosures and Materiality ................................................................................................................... 33
3. Scenario Analysis ........................................................................................................................................................ 35
4. Data Availability and Quality and Financial Impact ................................................................................................ 35
5. GHG Emissions Associated with Investments ......................................................................................................... 36
6. Remuneration ............................................................................................................................................................. 37
7. Accounting Considerations ........................................................................................................................................ 37
8. Time Frames for Short, Medium, and Long Term ................................................................................................... 38
9. Scope of Coverage ...................................................................................................................................................... 38
10. Organizational Ownership ....................................................................................................................................... 39

F Conclusion .................................................................................................................................................... 41
Appendix 1: Task Force Members ................................................................................................................. 44
Appendix 2: Task Force Objectives and Approach ...................................................................................... 46
Appendix 3: Fundamental Principles for Effective Disclosure ................................................................... 51
Appendix 4: Select Disclosure Frameworks ................................................................................................. 54
Appendix 5: Glossary and Abbreviations ...................................................................................................... 62
Appendix 6: References .................................................................................................................................. 65

Recommendations of the Task Force on Climate-related Financial Disclosuresvi

A Introduction

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

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

Recommendations of the Task Force on Climate-related Financial Disclosure

7

A Introduction
1. Background
It is widely recognized that continued emission of greenhouse gases will cause further warming of
the Earth and that warming above 2° Celsius (2°C), relative to the pre-industrial period, could leadto catastrophic economic and social consequences.7 As evidence of the growing recognition of therisks posed by climate change, in December 2015, nearly 200 governments agreed to strengthen
the global response to the threat of climate change by “holding the increase in the global averagetemperature to well below 2°C above pre-industrial levels and to pursue efforts to limit thetemperature increase to 1.5°C above pre-industrial levels,” referred to as the Paris Agreement.8
The large-scale and long-term nature of the problem makes it uniquely challenging, especially inthe context of economic decision making. Moreover, the current understanding of the potential
financial risks posed by climate change—to companies, investors, and the financial system as awhole—is still at an early stage.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

There is a growing demand for decision-useful, climate-related information by a range ofparticipants in the financial markets.9 Creditors and investors are increasingly demanding accessto risk information that is consistent, comparable, reliable, and clear. There has also been
increased focus, especially since the financial crisis of 2007-2008, on the negative impact thatweak corporate governance can have on shareholder value, resulting in increased demand fortransparency from organizations on their risks and risk management practices, including thoserelated to climate change.
The growing demand for decision-useful, climate-related information has resulted in thedevelopment of several climate-related disclosure standards. Many of the existing standards,
however, focus on disclosure of climate-related information, such as greenhouse gas (GHG)
emissions and other sustainability metrics. Users of such climate-related disclosures commonlycite the lack of information on the financial implications around the climate-related aspects of anorganization's business as a key gap. Users also cite inconsistencies in disclosure practices, a lackof context for information, use of boilerplate, and non-comparable reporting as major obstacles
to incorporating climate-related risks and opportunities (collectively referred to as climate-related
issues) as considerations in their investment, lending, and insurance underwriting decisions overthe medium and long term.10 In addition, evidence suggests that the lack of consistent
information hinders investors and others from considering climate-related issues in their asset
valuation and allocation processes.11
In general, inadequate information about risks can lead to a mispricing of assets andmisallocation of capital and can potentially give rise to concerns about financial stability sincemarkets can be vulnerable to abrupt corrections.12 Recognizing these concerns, the G20 (Group of20) Finance Ministers and Central Bank Governors requested that the Financial Stability Board(FSB) “convene public- and private-sector participants to review how the financial sector can takeaccount of climate-related issues.”13 In response to the G20’s request, the FSB held a meeting of
public- and private-sector representatives in September 2015 to consider the implications ofclimate-related issues for the financial sector. “Participants exchanged views on the existing workof the financial sector, authorities, and standard setters in this area and the challenges they face,

Intergovernmental Panel on Climate Change, Fifth Assessment Report, Cambridge University Press, 2014.
United Nations Framework Convention on Climate Change, ”The Paris Agreement,” December 2015.
9
Avery Fellow, “Investors Demand Climate Risk Disclosure,” Bloomberg, February 2013.
10
Sustainability Accounting Standards Board (SASB), SASB Climate Risk Technical Bulletin#: TB001-10182016, October 2016.
11
Mercer LLC, Investing in a Time of Climate Change, 2015.
12Mark Carney, “Breaking the tragedy of the horizon—climate change and financial stability,” September 29, 2015.
13“Communiqué from the G20 Finance Ministers and Central Bank Governors Meeting in Washington, D.C. April 16-17, 2015,” April 2015.
7
8

Recommendations of the Task Force on Climate-related Financial Disclosures1

areas for possible further work, and the possible roles the FSB and others could play in taking
that work forward. The discussions continually returned to a common theme: the need for better
information.”14
In most G20 jurisdictions, companies with public debt or equity have a legal obligation to disclosematerial risks in their financial reports—including material climate-related risks. However, theabsence of a standardized framework for disclosing climate-related financial risks makes it
difficult for organizations to determine what information should be included in their filings andhow it should be presented. Even when reporting similar climate-related information, disclosures
are often difficult to compare due to variances in mandatory and voluntary frameworks. The
resulting fragmentation in reporting practices and lack of focus on financial impacts have
prevented investors, lenders, insurance underwriters, and other users of disclosures fromaccessing complete information that can inform their economic decisions. Furthermore, because
financial-sector organizations’ disclosures depend, in part, on those from the companies in which
they invest or lend, regulators face challenges in using financial-sector organizations’ existing
disclosures to determine system-wide exposures to climate-related risks.
In response, the FSB established the industry-led Task Force on Climate-related Financial
Disclosures (TCFD or Task Force) in December 2015 to design a set of recommendations forconsistent “disclosures that will help financial market participants understand their climaterelated risks.”15 See Box 1 (p. 3) for more information on the Task Force.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF

2. The Task Force’s Remit
The FSB called on the Task Force to develop climate-related disclosures that “could promote more
informed investment, credit [or lending], and insurance underwriting decisions” and, in turn,“would enable stakeholders to understand better the concentrations of carbon-related assets inthe financial sector and the financial system’s exposures to climate-related risks.”16,17 The FSB
noted that disclosures by the financial sector in particular would “foster an early assessment ofthese risks” and “facilitate market discipline.” Such disclosures would also “provide a source ofdata that can be analyzed at a systemic level, to facilitate authorities’ assessments of themateriality of any risks posed by climate change to the financial sector, and the channels throughwhich this is most likely to be transmitted.”18
The FSB also emphasized that “any disclosure recommendations by the Task Force would bevoluntary, would need to incorporate the principle of materiality and would need to weigh thebalance of costs and benefits.”19 As a result, in devising a principle-based framework for voluntary
disclosure, the Task Force sought to balance the needs of the users of disclosures with thechallenges faced by the preparers. The FSB further stated that the Task Force’s climate-related
financial disclosure recommendations should not “add to the already well developed body ofexisting disclosure schemes.”20 In response, the Task Force drew from existing disclosure
frameworks where possible and appropriate.

Conclusion
Appendices

The FSB also noted the Task Force should determine whether the target audience of users ofclimate-related financial disclosures should extend beyond investors, lenders, and insurance
underwriters. Investors, lenders, and insurance underwriters (“primary users”) are theappropriate target audience. These primary users assume the financial risk and reward of the
FSB, “FSB to establish Task Force on Climate-related Financial Disclosures,” December 4, 2015.
Ibid.
16
FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.
17
The term carbon-related assets is not well defined, but is generally considered to refer to assets or organizations with relatively high direct orindirect GHG emissions. The Task Force believes further work is needed on defining carbon-related assets and potential financial impacts.
18
FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.
19
Ibid.
20
Ibid.
14
15

Recommendations of the Task Force on Climate-related Financial Disclosures2

decisions they make. The Task Force recognizes that many other organizations, including credit
rating agencies, equity analysts, stock exchanges, investment consultants, and proxy advisors alsouse climate-related financial disclosures, allowing them to push information through the credit
and investment chain and contribute to the better pricing of risks by investors, lenders, andinsurance underwriters. These organizations, in principle, depend on the same types of
information as primary users.
This report presents the Task Force’s recommendations for climate-related financial disclosuresand includes supporting information on climate-related risks and opportunities, scenario analysis,
and industry feedback that the Task Force considered in developing and then finalizing its
recommendations. In addition, the Task Force developed a “stand-alone" document—
Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures(Annex)—for organizations to use when preparing disclosures consistent with therecommendations. The Annex provides supplemental guidance for the financial sector as well as
for non-financial groups potentially most affected by climate change and the transition to a lowercarbon economy. The supplemental guidance assists preparers by providing additional context
and suggestions for implementing the recommended disclosures.
A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion

The Task Force’s recommendations provide a foundation for climate-related financial disclosuresand aim to be ambitious, but also practical for near-term adoption. The Task Force expects thatreporting of climate-related risks and opportunities will evolve over time as organizations,investors, and others contribute to the quality and consistency of the information disclosed.
Box 1

Task Force on Climate-related Financial Disclosures
The Task Force membership, first announced on January 21, 2016, has international representation andspans various types of organizations, including banks, insurance companies, asset managers, pension
funds, large non-financial companies, accounting and consulting firms, and credit rating agencies—aunique collaborative partnership between the users and preparers of financial reports.
In its work, the Task Force drew on its members’ expertise, stakeholder engagement, and existing climaterelated disclosure regimes to develop a singular, accessible framework for climate-related financial
disclosure. See Appendix 1 for a list of the Task Force members and Appendix 2 for more information on
the Task Force’s approach.
The Task Force is comprised of 32 global members representing a broad range of economic sectors andfinancial markets and a careful balance of users and preparers of climate-related financial disclosures.

Appendices16
Experts from the
Financial Sector88Experts from
Non-Financial
Sectors

Other Experts

Recommendations of the Task Force on Climate-related Financial Disclosures

3

DRAFT – FOR DISCUSSION PURPOSES ONLY

B Climate-Related
Risks, Opportunities,
and Financial
Impacts

Recommendations of the Task Force on Climate-related Financial Disclosuresiv

B Climate-Related Risks, Opportunities, and Financial Impacts
Through its work, the Task Force identified a growing demand by investors, lenders, insurance
underwriters, and other stakeholders for decision-useful, climate-related financial information.
Improved disclosure of climate-related risks and opportunities will provide investors, lenders,insurance underwriters, and other stakeholders with the metrics and information needed toundertake robust and consistent analyses of the potential financial impacts of climate change.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further Work

The Task Force found that while several climate-related disclosure frameworks have emerged
across different jurisdictions in an effort to meet the growing demand for such information, there
is a need for a standardized framework to promote alignment across existing regimes and G20
jurisdictions and to provide a common framework for climate-related financial disclosures. An
important element of such a framework is the consistent categorization of climate-related risks
and opportunities. As a result, the Task Force defined categories for climate-related risks andclimate-related opportunities. The Task Force’s recommendations serve to encourageorganizations to evaluate and disclose, as part of their annual financial filing preparation andreporting processes, the climate-related risks and opportunities that are most pertinent to theirbusiness activities. The main climate-related risks and opportunities that organizations should
consider are described below and in Tables 1 and 2 (pp. 10-11).

1. Climate-Related Risks
The Task Force divided climate-related risks into two major categories: (1) risks related to thetransition to a lower-carbon economy and (2) risks related to the physical impacts of climatechange.
a. Transition Risks
Transitioning to a lower-carbon economy may entail extensive policy, legal, technology, andmarket changes to address mitigation and adaptation requirements related to climate change.
Depending on the nature, speed, and focus of these changes, transition risks may pose varying
levels of financial and reputational risk to organizations.
Policy and Legal Risks
Policy actions around climate change continue to evolve. Their objectives generally fall into two
categories—policy actions that attempt to constrain actions that contribute to the adverse effects
of climate change or policy actions that seek to promote adaptation to climate change. Some
examples include implementing carbon-pricing mechanisms to reduce GHG emissions, shiftingenergy use toward lower emission sources, adopting energy-efficiency solutions, encouraging
greater water efficiency measures, and promoting more sustainable land-use practices. The risk
associated with and financial impact of policy changes depend on the nature and timing of thepolicy change.21

F
Conclusion
Appendices

Another important risk is litigation or legal risk. Recent years have seen an increase in climaterelated litigation claims being brought before the courts by property owners, municipalities,
states, insurers, shareholders, and public interest organizations.22 Reasons for such litigation
include the failure of organizations to mitigate impacts of climate change, failure to adapt toclimate change, and the insufficiency of disclosure around material financial risks. As the value ofloss and damage arising from climate change grows, litigation risk is also likely to increase.

Organizations should assess not only the potential direct effects of policy actions on their operations, but also the potential second and thirdorder effects on their supply and distribution chains.
22Peter Seley, “Emerging Trends in Climate Change Litigation,” Law 360, March 7, 2016.
21

Recommendations of the Task Force on Climate-related Financial Disclosures

5Technology Risk
Technological improvements or innovations that support the transition to a lower-carbon, energyefficient economic system can have a significant impact on organizations. For example, thedevelopment and use of emerging technologies such as renewable energy, battery storage,energy efficiency, and carbon capture and storage will affect the competitiveness of certain
organizations, their production and distribution costs, and ultimately the demand for theirproducts and services from end users. To the extent that new technology displaces old systems
and disrupts some parts of the existing economic system, winners and losers will emerge fromthis “creative destruction” process. The timing of technology development and deployment,
however, is a key uncertainty in assessing technology risk.
Market Risk
While the ways in which markets could be affected by climate change are varied and complex,
one of the major ways is through shifts in supply and demand for certain commodities, products,
and services as climate-related risks and opportunities are increasingly taken into account.
Reputation Risk
Climate change has been identified as a potential source of reputational risk tied to changing
customer or community perceptions of an organization’s contribution to or detraction from thetransition to a lower-carbon economy.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusionb. Physical Risks
Physical risks resulting from climate change can be event driven (acute) or longer-term shifts(chronic) in climate patterns. Physical risks may have financial implications for organizations, suchas direct damage to assets and indirect impacts from supply chain disruption. Organizations’financial performance may also be affected by changes in water availability, sourcing, and quality;
food security; and extreme temperature changes affecting organizations’ premises, operations,
supply chain, transport needs, and employee safety.
Acute Risk
Acute physical risks refer to those that are event-driven, including increased severity of extreme
weather events, such as cyclones, hurricanes, or floods.
Chronic Risk
Chronic physical risks refer to longer-term shifts in climate patterns (e.g., sustained higher
temperatures) that may cause sea level rise or chronic heat waves.

Appendices2. Climate-Related Opportunities
Efforts to mitigate and adapt to climate change also produce opportunities for organizations, forexample, through resource efficiency and cost savings, the adoption of low-emission energy
sources, the development of new products and services, access to new markets, and building
resilience along the supply chain. Climate-related opportunities will vary depending on the region,
market, and industry in which an organization operates. The Task Force identified several areas ofopportunity as described below.
a. Resource Efficiency
There is growing evidence and examples of organizations that have successfully reduced
operating costs by improving efficiency across their production and distribution processes,
buildings, machinery/appliances, and transport/mobility—in particular in relation to energy
efficiency but also including broader materials, water, and waste management.23 Such actions can
23

UNEP and Copenhagen Centre for Energy Efficiency, Best Practices and Case Studies for Industrial Energy Efficiency Improvement, February 16,
2016.

Recommendations of the Task Force on Climate-related Financial Disclosures6

result in direct cost savings to organizations’ operations over the medium to long term andcontribute to the global efforts to curb emissions.24 Innovation in technology is assisting thistransition; such innovation includes developing efficient heating solutions and circular economy
solutions, making advances in LED lighting technology and industrial motor technology,
retrofitting buildings, employing geothermal power, offering water usage and treatment
solutions, and developing electric vehicles.25
b. Energy Source
According to the International Energy Agency (IEA), to meet global emission-reduction goals,
countries will need to transition a major percentage of their energy generation to low emission
alternatives such as wind, solar, wave, tidal, hydro, geothermal, nuclear, biofuels, and carbon
capture and storage.26 For the fifth year in a row, investments in renewable energy capacity haveexceeded investments in fossil fuel generation.27 The trend toward decentralized clean energy
sources, rapidly declining costs, improved storage capabilities, and subsequent global adoption ofthese technologies are significant. Organizations that shift their energy usage toward low
emission energy sources could potentially save on annual energy costs.28
A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusionc. Products and Services
Organizations that innovate and develop new low-emission products and services may improvetheir competitive position and capitalize on shifting consumer and producer preferences. Some
examples include consumer goods and services that place greater emphasis on a product’s
carbon footprint in its marketing and labeling (e.g., travel, food, beverage and consumer staples,
mobility, printing, fashion, and recycling services) and producer goods that place emphasis on
reducing emissions (e.g., adoption of energy-efficiency measures along the supply chain).
d. Markets
Organizations that pro-actively seek opportunities in new markets or types of assets may be able
to diversify their activities and better position themselves for the transition to a lower-carbon
economy. In particular, opportunities exist for organizations to access new markets throughcollaborating with governments, development banks, small-scale local entrepreneurs, andcommunity groups in developed and developing countries as they work to shift to a lower-carbon
economy.29 New opportunities can also be captured through underwriting or financing green
bonds and infrastructure (e.g., low-emission energy production, energy efficiency, gridconnectivity, or transport networks).
e. Resilience
The concept of climate resilience involves organizations developing adaptive capacity to respondto climate change to better manage the associated risks and seize opportunities, including theability to respond to transition risks and physical risks. Opportunities include improving efficiency,
designing new production processes, and developing new products. Opportunities related toresilience may be especially relevant for organizations with long-lived fixed assets or extensive
supply or distribution networks; those that depend critically on utility and infrastructure networks
or natural resources in their value chain; and those that may require longer-term financing andinvestment.

Appendices

Environmental Protection Agency Victoria (EPA Victoria), “Resource Efficiency Case Studies: Lower your Impact.”
As described by Pearce and Turner, circular economy refers to a system in which resource input and waste, emission, and energy leakage areminimized. This can be achieved through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling. This is
in contrast to a linear economy which is a “take, make, dispose” model of production.
26
IEA, “Global energy investment down 8% in 2015 with flows signaling move towards cleaner energy,” September 14, 2016.
27
Frankfurt School-United Nations Environmental Programme Centre and Bloomberg New Energy Finance, “Global Trends in Renewable Energy
Investment 2017,” 2017.
28
Ceres, “Power Forward 3.0: How the largest US companies are capturing business value while addressing climate change,” 2017.
29
G20 Green Finance Study Group. G20 Green Finance Synthesis Report. 2016. The proposal to launch the Green Finance Study Group was
adopted by the G20 Finance Ministers and Central Bank Deputies in December 2015.
24
25

Recommendations of the Task Force on Climate-related Financial Disclosures73. Financial Impacts
Better disclosure of the financial impacts of climate-related risks and opportunities on anorganization is a key goal of the Task Force’s work. In order to make more informed financial
decisions, investors, lenders, and insurance underwriters need to understand how climate-relatedrisks and opportunities are likely to impact an organization’s future financial position as reflected
in its income statement, cash flow statement, and balance sheet as outlined in Figure 1. While
climate change affects nearly all economic sectors, the level and type of exposure and the impact
of climate-related risks differs by sector, industry, geography, and organization.30
Figure 1

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

Opportunities
Resource Efficiency

Technology

Energy Source

MarketRisks

ReputationA
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

Opportunities

Products/Services
Markets

Physical Risks
Acute

Strategic Planning
Risk Management

Chronic

Resilience

Financial Impact

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion

Revenues
Expenditures

IncomeStatement

Cash Flow
Statement

Balance
Sheet

Assets & Liabilities
Capital & Financing

Fundamentally, the financial impacts of climate-related issues on an organization are driven by
the specific climate-related risks and opportunities to which the organization is exposed and its
strategic and risk management decisions on managing those risks (i.e., mitigate, transfer, accept,
or control) and seizing those opportunities. The Task Force has identified four major categories,
described in Figure 2 (p. 9), through which climate-related risks and opportunities may affect anorganization’s current and future financial positions.
The financial impacts of climate-related issues on organizations are not always clear or direct,
and, for many organizations, identifying the issues, assessing potential impacts, and ensuring
material issues are reflected in financial filings may be challenging. Key reasons for this are likely
because of (1) limited knowledge of climate-related issues within organizations; (2) the tendency
to focus mainly on near-term risks without paying adequate attention to risks that may arise in
the longer term; and (3) the difficulty in quantifying the financial effects of climate-related issues.31
To assist organizations in identifying climate-related issues and their impacts, the Task Forcedeveloped Table 1 (p. 10), which provides examples of climate-related risks and their potential
financial impacts, and Table 2 (p. 11), which provides examples of climate-related opportunities
and their potential financial impacts. In addition, Section A.4 in the Annex provides more
information on the major categories of financial impacts—revenues, expenditures, assets andliabilities, and capital and financing—that are likely to be most relevant for specific industries.

Appendices30

SASB research demonstrates that 72 out of 79 Sustainable Industry Classification System (SICS™) industries are significantly affected in some
way by climate-related risk.

31

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

Recommendations of the Task Force on Climate-related Financial Disclosures8

Figure 2

Major Categories of Financial Impact

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues

Income Statement

Balance Sheet

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

Assets and Liabilities. Supply and demandchanges from changes in policies, technology,
and market dynamics related to climate change
could affect the valuation of organizations’assets and liabilities. Use of long-lived assets
and, where relevant, reserves may beparticularly affected by climate-related issues. It
is important for organizations to provide anindication of the potential climate-related
impact on their assets and liabilities, particularly
long-lived assets. This should focus on existing
and committed future activities and decisions
requiring new investment, restructuring, writedowns, or impairment.

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

Capital and Financing. Climate-related risks
and opportunities may change the profile of anorganization's debt and equity structure, either
by increasing debt levels to compensate for
reduced operating cash flows or for new capital
expenditures or R&D. It may also affect theability to raise new debt or refinance existing
debt, or reduce the tenor of borrowing available
to the organization. There could also bechanges to capital and reserves from operating
losses, asset write-downs, or the need to raise
new equity to meet investment.

E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

The Task Force encourages organizations to undertake both historical and forward-looking
analyses when considering the potential financial impacts of climate change, with greater focus
on forward-looking analyses as the efforts to mitigate and adapt to climate change are without
historical precedent. This is one of the reasons the Task Force believes scenario analysis isimportant for organizations to consider incorporating into their strategic planning or risk
management practices.

Recommendations of the Task Force on Climate-related Financial Disclosures9

Table 1

Examples of Climate-Related Risks and Potential Financial Impacts
Type

Climate-Related Risks32

Potential Financial Impacts

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

Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C

Transition Risks

A

Recommendations andGuidance‒ Costs to transition to lower
emissions technology‒ Write-offs and early retirement of existing assets‒ Reduced demand for products and services‒ Research and development (R&D) expenditures in new andalternative technologies‒ Capital investments in technology development‒ Costs to adopt/deploy new practices and processes

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

D
Scenario Analysis andClimate-Related Issues‒ Change in revenue mix and sources, resulting in decreased
revenues‒ Re-pricing of assets (e.g., fossil fuel reserves, land valuations,securities valuations)E
Key Issues Considered andAreas for Further Work

Reputation

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

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

Physical Risks‒ Increased severity of extreme
weather events such as cyclones
and floods
Chronic‒ Changes in precipitation patterns
and extreme variability in weather
patterns‒ Rising mean temperatures‒ Rising sea levels

32‒ Reduced revenue from decreased production capacity (e.g.,transport difficulties, supply chain interruptions)‒ Reduced revenue and higher costs from negative impacts on
workforce (e.g., health, safety, absenteeism)‒ Write-offs and early retirement of existing assets (e.g., damage
to property and assets in “high-risk” locations)‒ Increased operating costs (e.g., inadequate water supply forhydroelectric plants or to cool nuclear and fossil fuel plants)‒ Increased capital costs (e.g., damage to facilities)‒ Reduced revenues from lower sales/output‒ Increased insurance premiums and potential for reduced
availability of insurance on assets in “high-risk” locations

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

Recommendations of the Task Force on Climate-related Financial Disclosures10

Table 2

Examples of Climate-Related Opportunities and Potential Financial Impacts

Resource Efficiency

Type

Climate-Related Opportunities33

Potential Financial Impacts‒ Use of more efficient modes of‒ Reduced operating costs (e.g., through efficiency gains andtransport‒ Use of more efficient production
and distribution processes‒ Use of recycling‒ Move to more efficient buildings‒ Reduced water usage andconsumption‒ Use of lower-emission sources ofIntroduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E‒ Increased value of fixed assets (e.g., highly rated energyefficient buildings)‒ Benefits to workforce management and planning (e.g.,
improved health and safety, employee satisfaction)
resulting in lower costs‒ Reduced operational costs (e.g., through use of lowest costabatement)‒ Use of supportive policy incentives‒ Reduced exposure to future fossil fuel price increases‒ Use of new technologies‒ Reduced exposure to GHG emissions and therefore less

‒ Participation in carbon market‒ Shift toward decentralized energy
generation

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

Markets‒ Development and/or expansion of
low emission goods and services‒ Development of climate adaptationand insurance risk solutions‒ Development of new products orservices through R&D andinnovation

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

Appendices33

revenues

goods/services

Key Issues Considered andAreas for Further WorkF
Conclusion‒ Increased production capacity, resulting in increased‒ Reputational benefits resulting in increased demand for

Products and Services

A

Energy Sourceenergycost reductions)programs and adoption of energyefficiency measures‒ Resource substitutes/diversification

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

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

Recommendations of the Task Force on Climate-related Financial Disclosures

11

A
Introduction

C Recommendationsand GuidanceB
Climate-Related Risks,
Opportunities, andFinancial Impacts
C

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

Recommendations of the Task Force on Climate-related Financial Disclosures

12

C Recommendations and Guidance
1. Overview of Recommendations and Guidance
To fulfill its remit, the Task Force developed four widely adoptable recommendations on climaterelated financial disclosures applicable to organizations across sectors and jurisdictions. In
developing its recommendations, the Task Force considered the challenges for preparers of
disclosures as well as the benefits of such disclosures to investors, lenders, and insurance
underwriters. To achieve this balance, the Task Force engaged in significant outreach andconsultation with users and preparers of disclosures and drew upon existing climate-related
disclosure regimes. The insights gained from the outreach and consultations directly informed
the development of the recommendations.
The Task Force structured its recommendations around four thematic areas that represent coreelements of how organizations operate—governance, strategy, risk management, and metrics
and targets. The four overarching recommendations are supported by key climate-related
financial disclosures—referred to as recommended disclosures—that build out the frameworkwith information that will help investors and others understand how reporting organizations think
about and assess climate-related risks and opportunities. In addition, there is guidance to support
all organizations in developing climate-related financial disclosures consistent with therecommendations and recommended disclosures as well as supplemental guidance for specificsectors. The structure is depicted in Figure 3 below, and the Task Force’s recommendations andsupporting recommended disclosures are presented in Figure 4 (p. 14).

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues

Figure 3

Recommendations and Guidance
RecommendationsE
Key Issues Considered andAreas for Further WorkF

Guidance for
All Sectors

Conclusion
Appendices

Recommended
Disclosures
Supplemental
Guidance for
Certain Sectors

Recommendations
Four widely adoptable recommendations tied to:governance, strategy, risk management, and metrics
and targets
Recommended Disclosures
Specific recommended disclosures organizations should
include in their financial filings to provide decisionuseful information
Guidance for All Sectors
Guidance providing context and suggestions for
implementing the recommended disclosures for allorganizations
Supplemental Guidance for Certain Sectors
Guidance that highlights important considerations forcertain sectors and provides a fuller picture of potential
climate-related financial impacts in those sectors
Supplemental guidance is provided for the financial
sector and for non-financial sectors potentially mostaffected by climate change

The Task Force’s supplemental guidance is included in the Annex and covers the financial sector
as well as non-financial industries potentially most affected by climate change and the transition
to a lower-carbon economy (referred to as non-financial groups). The supplemental guidance
provides these preparers with additional context and suggestions for implementing therecommended disclosures and should be used in conjunction with the guidance for all sectors.

Recommendations of the Task Force on Climate-related Financial Disclosures

13

Figure 4

Recommendations and Supporting Recommended Disclosures

Governance

Strategy

Risk Management

Metrics and Targets

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

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

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

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

Recommended Disclosures

Recommended Disclosures

Recommended Disclosures

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

a) Describe the climate-relatedrisks and opportunities theorganization has identified overthe short, medium, and longterm.

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

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

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

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

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

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

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

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

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

Recommendations of the Task Force on Climate-related Financial Disclosures

14

Figure 5 provides a mapping of the recommendations (governance, strategy, risk management,
and metrics and targets) and recommended disclosures (a, b, c) for which supplemental guidance
was developed for the financial sector and non-financial groups.
A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

Financial Sector. The Task Force developed supplemental guidance for the financial sector,
which it organized into four major industries largely based on activities performed. The fourindustries are banks (lending), insurance companies (underwriting), asset managers (asset
management), and asset owners, which include public- and private-sector pension plans,
endowments, and foundations (investing).34 The Task Force believes that disclosures by thefinancial sector could foster an early assessment of climate-related risks and opportunities,
improve pricing of climate-related risks, and lead to more informed capital allocation
decisions.
Non-Financial Groups. The Task Force developed supplemental guidance for non-financial
industries that account for the largest proportion of GHG emissions, energy usage, and water
usage. These industries were organized into four groups (i.e., non-financial groups)—Energy;
Materials and Buildings; Transportation; and Agriculture, Food, and Forest Products—basedon similarities in climate-related risks as shown in Box 2 (p. 16). While this supplemental
guidance focuses on a subset of non-financial industries, organizations in other industries
with similar business activities may wish to review and consider the issues and topics
contained in the supplemental guidance.

Figure 5C
Recommendations andGuidance

Supplemental Guidance for Financial Sector and Non-Financial
GroupsGovernance

D
Scenario Analysis andClimate-Related Issues

Industries and Groups

E
Key Issues Considered andAreas for Further Work

Insurance Companies

a)

b)

c)

Metrics andTargets

a)

a)

b)

c)

b)

c)

Asset Owners
Asset Managers

Appendices

EnergyNon-Financial

Conclusion

34

b)

Risk
Management

Banks

FinancialFa)Strategy

Transportation
Materials and Buildings
Agriculture, Food, andForest Products

The use of the term “insurance companies” in this report includes re-insurers.

Recommendations of the Task Force on Climate-related Financial Disclosures15

Box 2

Determination of Non-Financial Groups
In an effort to focus supplemental guidance on those non-financial sectors and industries with the highest
likelihood of climate-related financial impacts, the Task Force assessed three factors most likely to be affected byboth transition risk (policy and legal, technology, market, and reputation) and physical risk (acute and chronic)—
GHG emissions, energy usage, and water usage.
The underlying premise in using these three factors is that climate-related physical and transition risks will likely
manifest themselves primarily and broadly in the form of constraints on GHG emissions, effects on energy
production and usage, and effects on water availability, usage, and quality. Other factors, such as waste
management and land use, are also important, but may not be as determinative across a wide range of industries
or may be captured in one of the primary categories.
In taking this approach, the Task Force consulted a number of sources regarding the ranking of various sectors andindustries according to these three factors. The various rankings were used to determine an overall set of sectors
and industries that have significant exposure to transition or physical risks related to GHG emissions, energy, or
water. The sectors and industries were grouped into four categories of industries that have similar economic
activities and climate-related exposures.
These four groups and their associated industries are intended to be indicative of the economic activities
associated with these industries rather than definitive industry categories. Other industries with similar activities
and climate-related exposures should consider the supplemental guidance as well.
The Task Force validated its approach using a variety of sources, including:1

The TCFD Phase I report public consultation, soliciting more than 200 responses which ranked Energy, Utilities,
Materials, Industrials and Consumer Staples/Discretionary, in that order, as the Global Industry Classification
Standard (GICS) sectors most important for disclosure guidelines to cover.

2

Numerous sector-specific disclosure guidance documents to understand various breakdowns by economic
activity, sector, and industries, including from the following sources: CDP, GHG Protocol, Global Real Estate
Sustainability Benchmark (GRESB), Global Reporting Initiative (GRI), Institutional Investors Group on Climate
Change (IIGCC), IPIECA (the global oil and gas industry association for environmental and social issues), and theSustainability Accounting Standards Board (SASB).

3The Intergovernmental Panel on Climate Change (IPCC) report “Climate Change 2014 – Mitigation of Climate
Change” that provides an analysis of global direct and indirect emissions by economic sector. The IPCC analysis
highlights the dominant emissions-producing sectors as Energy; Industry; Agriculture, Forestry, and Other Land
Use; and Transportation and Buildings (Commercial and Residential).

4

Research and documentation from non-governmental organizations (NGOs) and industry organizations thatprovide information on which industries have the highest exposures to climate change, including those from
Cambridge Institute of Sustainability Leadership, China’s National Development and Reform Commission(NDRC), Environmental Resources Management (ERM), IEA, Moody’s, S&P Global Ratings, and WRI/UNEPFI.

Based on its assessment, the Task Force identified the four groups and their associated industries, listed in thetable below, as those that would most benefit from supplemental guidance.

EnergyTransportation

Materials andBuildings

Agriculture, Food,and Forest Products‒ Oil and Gas‒ Air Freight‒ Metals and Mining‒ Beverages‒ Coal‒ Passenger Air‒ Chemicals‒ Agriculture‒ Construction Materials‒ Packaged Foods and‒ Electric Utilities

Transportation‒ Maritime Transportation‒ Rail Transportation‒ Trucking Services‒ Automobiles and‒ Capital Goods‒ Real EstateManagement andDevelopment

Meats‒ Paper and Forest
Products

Components

Recommendations of the Task Force on Climate-related Financial Disclosures16

2. Implementing the Recommendations
a. Scope of Coverage
To promote more informed investing, lending, and insurance underwriting decisions, the Task
Force recommends all organizations with public debt or equity implement its recommendations.
Because climate-related issues are relevant for other types of organizations as well, the Task
Force encourages all organizations to implement these recommendations. In particular, the Task
Force believes that asset managers and asset owners, including public- and private-sector
pension plans, endowments, and foundations, should implement its recommendations so that
their clients and beneficiaries may better understand the performance of their assets, consider
the risks of their investments, and make more informed investment choices.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion

b. Location of Disclosures and Materiality
The Task Force recommends that organizations provide climate-related financial disclosures intheir mainstream (i.e., public) annual financial filings.35 In most G20 jurisdictions, publiccompanies have a legal obligation to disclose material information in their financial filings—
including material climate-related information; and the Task Force’s recommendations areintended to help organizations meet existing disclosure obligations more effectively.36 The Task
Force’s recommendations were developed to apply broadly across sectors and jurisdictions andshould not be seen as superseding national disclosure requirements. Importantly, organizations
should make financial disclosures in accordance with their national disclosure requirements. If
certain elements of the recommendations are incompatible with national disclosure
requirements for financial filings, the Task Force encourages organizations to disclose thoseelements in other official company reports that are issued at least annually, widely distributed
and available to investors and others, and subject to internal governance processes that are thesame or substantially similar to those used for financial reporting.
The Task Force recognizes that most information included in financial filings is subject to amateriality assessment. However, because climate-related risk is a non-diversifiable risk that
affects nearly all industries, many investors believe it requires special attention. For example, inassessing organizations’ financial and operating results, many investors want insight into thegovernance and risk management context in which such results are achieved. The Task Forcebelieves disclosures related to its Governance and Risk Management recommendations directly
address this need for context and should be included in annual financial filings.
For disclosures related to the Strategy and Metrics and Targets recommendations, the Task Forcebelieves organizations should provide such information in annual financial filings when theinformation is deemed material. Certain organizations—those in the four non-financial groups
that have more than one billion U.S. dollar equivalent (USDE) in annual revenue—should consider
disclosing such information in other reports when the information is not deemed material andnot included in financial filings.37 Because these organizations are more likely than others to befinancially impacted over time, investors are interested in monitoring how these organizations’strategies evolve.

Appendices35

Financial filings refer to the annual reporting packages in which organizations are required to deliver their audited financial results under the
corporate, compliance, or securities laws of the jurisdictions in which they operate. While reporting requirements differ internationally,financial filings generally contain financial statements and other information such as governance statements and management commentary.

36

The Task Force encourages organizations where climate-related issues could be material in the future to begin disclosing climate-related
financial information outside financial filings to facilitate the incorporation of such information into financial filings once climate-related
issues are determined to be material.
37
The Task Force chose a one billion USDE annual revenue threshold because it captures organizations responsible for over 90 percent of
Scope 1 and 2 GHG emissions in the industries represented by the four non-financial groups (about 2,250 organizations out of roughly
15,000).

Recommendations of the Task Force on Climate-related Financial Disclosures

17

The Task Force recognizes reporting by asset managers and asset owners is intended to satisfy
the needs of clients, beneficiaries, regulators, and oversight bodies and follows a format that is
generally different from corporate financial reporting. For purposes of adopting the Task Force’s
recommendations, asset managers and asset owners should use their existing means of financial
reporting to their clients and beneficiaries where relevant and where feasible. Likewise, asset
managers and asset owners should consider materiality in the context of their respective
mandates and investment performance for clients and beneficiaries.38
The Task Force believes that climate-related financial disclosures should be subject to appropriate
internal governance processes. Since these disclosures should be included in annual financial
filings, the governance processes should be similar to those used for existing financial reporting
and would likely involve review by the chief financial officer and audit committee, as appropriate.
The Task Force recognizes that some organizations may provide some or all of their climaterelated financial disclosures in reports other than financial filings. This may occur because theorganizations are not required to issue public financial reports (e.g., some asset managers andasset owners). In such situations, organizations should follow internal governance processes thatare the same or substantially similar to those used for financial reporting.
A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusionc. Principles for Effective Disclosures
To underpin its recommendations andhelp guide current and future
developments in climate-related financial
reporting, the Task Force developed
seven principles for effective disclosure(Figure 6), which are described more fullyin Appendix 3. When used byorganizations in preparing their climaterelated financial disclosures, theseprinciples can help achieve high-qualityand decision-useful disclosures thatenable users to understand the impact ofclimate change on organizations. The
Task Force encourages organizations to
consider these principles as they develop
climate-related financial disclosures.

Figure 6

Principles for Effective Disclosures
should represent
1 Disclosures
relevant information
should be specific
2 Disclosuresand completeshould be clear,
3 Disclosuresbalanced, and understandable
should be consistent
4 Disclosuresover timeshould be comparable
5 Disclosuresamong companies within a sector,
industry, or portfolio

6Disclosures should be reliable, verifiable,
The Task Force’s disclosure principles are
and objective
largely consistent with internationallyaccepted frameworks for financial
Disclosures should be provided
reporting and are generally applicable toon a timely basis
most providers of financial disclosures.
The principles are designed to assist
organizations in making clear the linkages between climate-related issues and their governance,
strategy, risk management, and metrics and targets.

Appendices

7

38

The Task Force recommends asset managers and asset owners include carbon footprinting information in their reporting to clients andbeneficiaries, as described in Section D of the Annex, to support the assessment and management of climate-related risks.

Recommendations of the Task Force on Climate-related Financial Disclosures183. Guidance for All Sectors
The Task Force has developed guidance to support all organizations in developing climate-related
financial disclosures consistent with its recommendations and recommended disclosures. The
guidance assists preparers by providing context and suggestions for implementing therecommended disclosures. Recognizing organizations have differing levels of capacity to disclose
under the recommendations, the guidance provides descriptions of the types of information thatshould be disclosed or considered.
a. Governance
Investors, lenders, insurance underwriters, and other users of climate-related financial
disclosures (collectively referred to as “investors and other stakeholders”) are interested inunderstanding the role an organization’s board plays in overseeing climate-related issues as wellas management’s role in assessing and managing those issues. Such information supports
evaluations of whether climate-related issues receive appropriate board and management
attention.

GovernanceA
Introduction

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

B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance

Recommended
Disclosure a)
Describe the board’s
oversight of climaterelated risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-related issues, organizations
should consider including a discussion of the following:‒ processes and frequency by which the board and/or board committees(e.g., audit, risk, or other committees) are informed about climate-related
issues,‒ whether the board and/or board committees consider climate-related
issues when reviewing and guiding strategy, major plans of action, riskDmanagement policies, annual budgets, and business plans as well as setting

Scenario Analysis andClimate-Related Issues

the organization’s performance objectives, monitoring implementation andperformance, and overseeing major capital expenditures, acquisitions, andE
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendicesdivestitures, and‒ how the board monitors and oversees progress against goals and targets
for addressing climate-related issues.
Recommended
Disclosure b)
Describe management’s
role in assessing andmanaging climaterelated risks andopportunities.

Guidance for All Sectors
In describing management’s role related to the assessment and managementof climate-related issues, organizations should consider including the following
information:‒ whether the organization has assigned climate-related responsibilities tomanagement-level positions or committees; and, if so, whether suchmanagement positions or committees report to the board or a committeeof the board and whether those responsibilities include assessing and/or
managing climate-related issues,‒ a description of the associated organizational structure(s),‒ processes by which management is informed about climate-related issues,
and‒ how management (through specific positions and/or management
committees) monitors climate-related issues.

Recommendations of the Task Force on Climate-related Financial Disclosures

19

b. Strategy
Investors and other stakeholders need to understand how climate-related issues may affect anorganization’s businesses, strategy, and financial planning over the short, medium, and long term.
Such information is used to inform expectations about the future performance of anorganization.

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

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

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

Guidance for All Sectors
Organizations should provide the following information:organization’s
businesses, strategy,
and financial planning.

Organizations should consider including the impact on their businesses and‒ a description of what they consider to be the relevant short-, medium-, andlong-term time horizons, taking into consideration the useful life of theorganization’s assets or infrastructure and the fact that climate-related
issues often manifest themselves over the medium and longer terms,

rotc(short, medium, and long term) that could have a material financial
l se impactlar
on the organization, andoce fwhich risks and er tona‒ a description of the process(es) used to determinefguid gimpact
ts on thee re dance.
opportunities could have a materialorganization.
ses financial
t
a
i
r
e
d
ui
Ta 1.ofPltheirda description
t gandateproviding
Organizations should consider
risks
s
n
2
d
e
a
0
p
t
2
ics beasrappropriate.
opportunities by rsector
e laIn describing
ce uand/or
trgeography,
h
e
t
o
o
t
F
r
M
o to Tables 1 and 2 (pp. 10-11).
climate-relatedorganizationscshould refer
ask issues,and ns in O nnex f
T
y
e
g
h
TGuidance
teAll Sectors
atio 2021 A
Recommended
trafordSns
it onmrecommended
Disclosure b)me rce'sdisclosure (a), organizations should discuss how
Buildingoc
Fo issues have affected their businesses, strategy, and
Describe the impact ofidentified
re climate-relatedask
Tclimate-related risks and financialeplanning.
thopportunities on the‒ a description of the specific climate-related issues for each time horizon
rs fo

strategy in the following areas:‒ Products and services‒ Supply chain and/or value chain‒ Adaptation and mitigation activities‒ Investment in research and development‒ Operations (including types of operations and location of facilities)
Organizations should describe how climate-related issues serve as an input totheir financial planning process, the time period(s) used, and how these risks
and opportunities are prioritized. Organizations’ disclosures should reflect aholistic picture of the interdependencies among the factors that affect theirability to create value over time. Organizations should also consider includingin their disclosures the impact on financial planning in the following areas:‒ Operating costs and revenues‒ Capital expenditures and capital allocation‒ Acquisitions or divestments‒ Access to capital
If climate-related scenarios were used to inform the organization’s strategy
and financial planning, such scenarios should be described.

Recommendations of the Task Force on Climate-related Financial Disclosures

20

Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information is material.
Recommended
Disclosure c)
Describe the resilienceof the organization’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.

A
Introduction

Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further Work

Conclusion

ors
sect

ll
or a
f
e
c increased physicalnwith
r to .
relevant to the organization, scenarios consistent
a
e
f
d
i
e
r
e
u
climate-related risks.
ts g argets lease uidancidPeOrganizations should considernd T 2021. atest gdatdiscussing:
a
p
s
u
l
c
‒ where they believerisks
rce theirMstrategies
bbeeraffected
hbye climate-related
etri cmay
t
o
o
t
F
r
o
k
f
d
O
and opportunities;snxain nnee T tstrategies
gy a tmightnschangeeo‒Th
how their
to address such potential risks and
i
a
a
21 A
tr eandd0Sn2s
opportunities;
itce's
mm Forscenarios
o
c
‒ the
climate-related
and associated time horizon(s) considered.
re
sk
a
T
Refer tohSection
D for information on applying scenarios to forward-looking
t erelated risks and opportunities, taking into consideration a transition to alower-carbon economy consistent with a 2°C or lower scenario and, where

analysis.

B

F

for

Guidance for All Sectors
Organizations should describe how resilient their strategies are to climate-c. Risk Management
Investors and other stakeholders need to understand how an organization’s climate-related risks
are identified, assessed, and managed and whether those processes are integrated into existingrisk management processes. Such information supports users of climate-related financial
disclosures in evaluating the organization’s overall risk profile and risk management activities.

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

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

Appendices

Organizations should also consider disclosing the following:‒ processes for assessing the potential size and scope of identified climaterelated risks and‒ definitions of risk terminology used or references to existing risk
classification frameworks used.
Recommended
Disclosure b)
Describe theorganization’s processes
for managing climaterelated risks.

Guidance for All Sectors
Organizations should describe their processes for managing climate-relatedrisks, including how they make decisions to mitigate, transfer, accept, or
control those risks. In addition, organizations should describe their processes
for prioritizing climate-related risks, including how materiality determinations
are made within their organizations.
In describing their processes for managing climate-related risks, organizations
should address the risks included in Tables 1 and 2 (pp. 10-11), as appropriate.

Recommendations of the Task Force on Climate-related Financial Disclosures21

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

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

d. Metrics and Targets
Investors and other stakeholders need to understand how an organization measures andmonitors its climate-related risks and opportunities. Access to the metrics and targets used by anorganization allows investors and other stakeholders to better assess the organization’s potential
risk-adjusted returns, ability to meet financial obligations, general exposure to climate-related
issues, and progress in managing or adapting to those issues. They also provide a basis uponwhich investors and other stakeholders can compare organizations within a sector or industry.

A
Introduction
B

Metrics and Targets

Climate-Related Risks,
Opportunities, andFinancial Impacts

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

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further Work

Recommended
Disclosure a)
Disclose the metrics
used by the organization
to assess climate-relatedrisks and opportunities
in line with its strategy
and risk management
process.

Guidance for All Sectors
Organizations should provide the key metrics used to measure and manage
climate-related risks and opportunities, as described in Tables 1 and 2 (pp. 1011). Organizations should consider including metrics on climate-related risks
associated with water, energy, land use, and waste management where
relevant and applicable.

rs
ecto

Where climate-related issues are material, organizations should consider

ll s

ra
e fo

for

describing whether and how related performance metrics are incorporatedoanc
er t e.
f
d
i
e
r
u
c
ts
ase products
its g suchwell as climate-related opportunity
metricsfromrgaserevenue
danand
e
i
l
a
d
u
P
T
e
g
t
services designed for a lower-carbon
nd 2021. atest
pda ics aeconomy.
ul trend analysis. Inerc
rprovided
Metrics should beforperiods
ber tor allow
he forethistorical
t
o
o
t
F
M
c
o
k
addition,awherend s organizations
x f provide a description of
aapparent,in O nneshould
T s gnot
y
e
n
h
the
methodologies
usedtocalculateorestimateclimate-related metrics.
eT
rat ndatio 2021 At
S
eSectorse's
its mGuidanceform
All
rc their Scope 1 and Scope 2 GHG emissions and, ifocFoprovide
Organizations
shouldkresTaappropriate,
the Scope 3 GHG emissions and the related risks.
into remuneration policies.

Where relevant, organizations should provide their internal carbon prices as

FConclusion
Appendices

Recommended
Disclosure b)
Disclose Scope 1, Scope2, and, if appropriate,
Scope 3 greenhouse gas(GHG) emissions, andthe related risks.

39

GHG emissions should be calculated in line with the GHG Protocol

methodology to allow for aggregation and comparability across organizations
and jurisdictions.40 As appropriate, organizations should consider providing
related, generally accepted industry-specific GHG efficiency ratios.41
GHG emissions and associated metrics should be provided for historical

Emissions are a prime driver of rising global temperatures and, as such, are a key focal point of policy, regulatory, market, and technology
responses to limit climate change. As a result, organizations with significant emissions are likely to be impacted more significantly bytransition risk than other organizations. In addition, current or future constraints on emissions, either directly by emission restrictions or
indirectly through carbon budgets, may impact organizations financially.
40
While challenges remain, the GHG Protocol methodology is the most widely recognized and used international standard for calculating GHG
emissions. Organizations may use national reporting methodologies if they are consistent with the GHG Protocol methodology.
41
For industries with high energy consumption, metrics related to emission intensity are important to provide. For example, emissions per unitof economic output (e.g., unit of production, number of employees, or value-added) is widely used. See the Annex for examples of metrics.
39

Recommendations of the Task Force on Climate-related Financial Disclosures22

Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material.
periods to allow for trend analysis. In addition, where not apparent,
organizations should provide a description of the methodologies used to
calculate or estimate the metrics.

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

A
Introduction

rs
ecto

for

s
r all
o
f
ce etc., in line wither tonusage,arelated to GHG emissions, water usage, energyfd.
i
regoals.
u constraints
s
g
t
e
nce
s
anticipated regulatory requirementsormarket
or
other
e
s
a
t
a
g
i
r
d
e
i
d
u
. Pl eloss
Other goals may include efficiency
d Ta goals,t gtolerances,ate orafinancial
1financial
s
n
2
d
0
p
t
s entireeproduct2 lifeecycle,
a or net revenue
avoided GHG emissionsicthee u throughrcand
bforra lower-carbon
h l economy.
etrdesigned
t
o
o
t
F
r
goals for products
servicesMck
nd s in O nex fo
atargets,
Tas theiryeInhdescribinggnorganizationsn should consider including theTfollowing:rate ndatio 2021 AtS's
its mthemetargetrisceabsolute‒ whetheror intensity based,
o
o
c
F
e
kover which the target applies,rsa‒ time framesTthe‒ base year from which progress is measured, andGuidance for All Sectors
Organizations should describe their key climate-related targets such as thoseB‒ key performance indicators used to assess progress against targets.

Climate-Related Risks,
Opportunities, andFinancial Impacts

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

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

Recommendations of the Task Force on Climate-related Financial Disclosures

23

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

D Scenario Analysis
and ClimateRelated Issues

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues

E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosures24

D Scenario Analysis and Climate-Related Issues
Some organizations are affected by risks associated with climate change today. However, formany organizations, the most significant effects of climate change are likely to emerge over the
medium to longer term and their timing and magnitude are uncertain. This uncertainty presents
challenges for individual organizations in understanding the potential effects of climate changeon their businesses, strategies, and financial performance. To appropriately incorporate thepotential effects in their planning processes, organizations need to consider how their climaterelated risks and opportunities may evolve and the potential implications under different
conditions. One way to do this is through scenario analysis.
Scenario analysis is a well-established method for developing strategic plans that are more
flexible or robust to a range of plausible future states. The use of scenario analysis for assessing
the potential business implications of climate-related risks and opportunities, however, isrelatively recent. While several organizations use scenario analysis to assess the potential impact
of climate change on their businesses, only a subset have disclosed their assessment of forwardlooking implications publicly, either in sustainability reports or financial filings.42

A
Introduction

The disclosure of organizations’ forward-looking assessments of climate-related issues isimportant for investors and other stakeholders in understanding how vulnerable individualorganizations are to transition and physical risks and how such vulnerabilities are or would be
addressed. As a result, the Task Force believes that organizations should use scenario analysis toassess potential business, strategic, and financial implications of climate-related risks andopportunities and disclose those, as appropriate, in their annual financial filings.

B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion

Scenario analysis is an important and useful tool for understanding thestrategic implications of climate-related risks and opportunities.
This section provides additional information on using scenario analysis as a tool to assess
potential implications of climate-related risks and opportunities. In addition, a technicalsupplement, The Use of Scenario Analysis in Disclosure of Climate-Related Risks andOpportunities, on the Task Force’s website provides further information on the types of climaterelated scenarios, the application of scenario analysis, and the key challenges in implementing
scenario analysis.

Appendices

1. Overview of Scenario Analysis
Scenario analysis is a process for identifying and assessing the potential implications of a range ofplausible future states under conditions of uncertainty. Scenarios are hypothetical constructs andnot designed to deliver precise outcomes or forecasts. Instead, scenarios provide a way fororganizations to consider how the future might look if certain trends continue or certain
conditions are met. In the case of climate change, for example, scenarios allow an organization to
explore and develop an understanding of how various combinations of climate-related risks, bothtransition and physical risks, may affect its businesses, strategies, and financial performance overtime.
Scenario analysis can be qualitative, relying on descriptive, written narratives, or quantitative,
relying on numerical data and models, or some combination of both. Qualitative scenario analysis
42

Some organizations in the energy sector and some large investors have made public disclosures describing the results of their climate-related
scenario analysis, including discussing how the transition might affect their current portfolios. In some instances, this information was
published in financial filings.

Recommendations of the Task Force on Climate-related Financial Disclosures25

explores relationships and trends for which little or no numerical data is available, whilequantitative scenario analysis can be used to assess measurable trends and relationships using
models and other analytical techniques.43 Both rely on scenarios that are internally consistent,
logical, and based on explicit assumptions and constraints that result in plausible future
development paths.
As summarized in Figure 7, there are several reasons why scenario analysis is a useful tool fororganizations in assessing the potential implications of climate-related risks and opportunities.
Figure 7

Reasons to Consider Using Scenario Analysis for Climate Change

1

Scenario analysis can help organizations consider issues, like climate change, that havethe following characteristics:‒ Possible outcomes that are highly uncertain (e.g., the physical response of the climate andecosystems to higher levels of GHG emissions in the atmosphere)‒ Outcomes that will play out over the medium to longer term (e.g., timing, distribution, andmechanisms of the transition to a lower-carbon economy)A
Introduction‒ Potential disruptive effects that, due to uncertainty and complexity, are substantial

B
Climate-Related Risks,
Opportunities, andFinancial Impacts

2

Scenario analysis can enhance organizations’ strategic conversations about the future byconsidering, in a more structured manner, what may unfold that is different frombusiness-as-usual. Importantly, it broadens decision makers’ thinking across a range ofplausible scenarios, including scenarios where climate-related impacts can besignificant.

3

Scenario analysis can help organizations frame and assess the potential range ofplausible business, strategic, and financial impacts from climate change and theassociated management actions that may need to be considered in strategic andfinancial plans. This may lead to more robust strategies under a wider range of
uncertain future conditions.

4

Scenario analysis can help organizations identify indicators to monitor the external
environment and better recognize when the environment is moving toward a different
scenario state (or to a different stage along a scenario path). This allows organizations
the opportunity to reassess and adjust their strategies and financial plans accordingly.44

5

Scenario analysis can assist investors in understanding the robustness of organizations’strategies and financial plans and in comparing risks and opportunities acrossorganizations.

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

2. Exposure to Climate-Related Risks
The effects of climate change on specific sectors, industries, and individual organizations arehighly variable. It is important, therefore, that all organizations consider applying a basic level ofscenario analysis in their strategic planning and risk management processes. Organizations moresignificantly affected by transition risk (e.g., fossil fuel-based industries, energy-intensive
manufacturers, and transportation activities) and/or physical risk (e.g., agriculture, transportation

For example, see Mark D. A. Rounsevell, Marc J. Metzger, Developing qualitative scenario storylines for environmental change assessment, WIREs
Climate Change 2010, 1: 606-619. doi: 10.1002/wcc.63, 2010 and Oliver Fricko, et. al., Energy sector water use implications of a 2o C climate
policy, Environmental Research Letters, 11: 1-10, 2016.
44
J.N. Maack, Scenario analysis: a tool for task managers, Social Analysis: selected tools and techniques, Social Development Papers, Number 36,
the World Bank, June 2001, Washington, DC.
43

Recommendations of the Task Force on Climate-related Financial Disclosures26

and building infrastructure, insurance, and tourism) should consider a more in-depth applicationof scenario analysis.
a. Exposure to Transition Risks
Transition risk scenarios are particularly relevant for resource-intensive organizations with highGHG emissions within their value chains, where policy actions, technology, or market changes
aimed at emissions reductions, energy efficiency, subsidies or taxes, or other constraints or
incentives may have a particularly direct effect.
A key type of transition risk scenario is a so-called 2°C scenario, which lays out a pathway and anemissions trajectory consistent with holding the increase in the global average temperature to
2°C above pre-industrial levels. In December 2015, nearly 200 governments agreed to strengthen
the global response to the threat of climate change by “holding the increase in the global averagetemperature to well below 2°C above pre-industrial levels and to pursue efforts to limit thetemperature increase to 1.5°C above pre-industrial levels,” referred to as the Paris Agreement.45
As a result, a 2°C scenario provides a common reference point that is generally aligned with theobjectives of the Paris Agreement and will support investors’ evaluation of the potential
magnitude and timing of transition-related implications for individual organizations; acrossdifferent organizations within a sector; and across different sectors.

A
Introduction

b. Exposure to Physical Risks
A wide range of organizations are exposed to climate-related physical risks. Physical climaterelated scenarios are particularly relevant for organizations exposed to acute or chronic climatechange, such as those with:B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

long-lived, fixed assets;

locations or operations in climate-sensitive regions (e.g., coastal and flood zones);reliance on availability of water; andvalue chains exposed to the above.

Physical risk scenarios generally identify extreme weather threats of moderate or higher risk
before 2030 and a larger number and range of physical threats between 2030 and 2050. Althoughmost climate models deliver scenario results for physical impacts beyond 2050, organizations
typically focus on the consequences of physical risk scenarios over shorter time frames thatreflect the lifetimes of their respective assets or liabilities, which vary across sectors andorganizations.

3. Recommended Approach to Scenario Analysis
The Task Force believes that all organizations exposed to climate-related risks should consider (1)using scenario analysis to help inform their strategic and financial planning processes and (2)disclosing how resilient their strategies are to a range of plausible climate-related scenarios. The
Task Force recognizes that, for many organizations, scenario analysis is or would be a largely
qualitative exercise. However, organizations with more significant exposure to transition risk
and/or physical risk should undertake more rigorous qualitative and, if relevant, quantitative
scenario analysis with respect to key drivers and trends that affect their operations.
A critical aspect of scenario analysis is the selection of a set of scenarios (not just one) that coversa reasonable variety of future outcomes, both favorable and unfavorable. In this regard, the Task
Force recommends organizations use a 2°C or lower scenario in addition to two or three other45

United Nations Framework Convention on Climate Change. ”The Paris Agreement,” December 2015.

Recommendations of the Task Force on Climate-related Financial Disclosures27

scenarios most relevant to their circumstances, such as scenarios related to Nationally
Determined Contributions (NDCs), physical climate-related scenarios, or other challenging
scenarios.46 In jurisdictions where NDCs are a commonly accepted guide for an energy and/or
emissions pathway, NDCs may constitute particularly useful scenarios to include in an
organization’s suite of scenarios for conducting climate-related scenario analysis.
For an organization in the initial stages of implementing scenario analysis or with limited
exposure to climate-related issues, the Task Force recommends disclosing how resilient,qualitatively or directionally, the organization’s strategy and financial plans may be to a range of
relevant climate change scenarios. This information helps investors, lenders, insurance
underwriters, and other stakeholders understand the robustness of an organization’s forwardlooking strategy and financial plans across a range of possible future states.
Organizations with more significant exposure to climate-related issues should consider disclosing
key assumptions and pathways related to the scenarios they use to allow users to understand theanalytical process and its limitations. In particular, it is important to understand the criticalparameters and assumptions that materially affect the conclusions drawn. As a result, the Task
Force believes that organizations with significant climate-related exposures should strive todisclose the elements described in Figure 8.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

Figure 8C

Organizations with more significant exposure to climate-related issues should consider
disclosing key aspects of their scenario analysis, such as the ones described below.

Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues

Disclosure Considerations for Non-Financial Organizations

1

The scenarios used, including the 2°C or lower scenario47

2

Critical input parameters, assumptions, and analytical choices for the scenarios used,
including such factors as:‒ Assumptions about possible technology responses and timing (e.g., evolution ofE

products/services, the technology used to produce them, and costs to implement)

Key Issues Considered andAreas for Further Work

‒ Assumptions made around potential differences in input parameters across regions, countries,

F
Conclusion‒ Approximate sensitivities to key assumptions

asset locations, and/or markets

Appendices

3

Time frames used for scenarios, including short-, medium-, and long-term milestones(e.g., how organizations consider timing of potential future implications under the
scenarios used)

4

Information about the resiliency of the organization’s strategy, including strategic
performance implications under the various scenarios considered, potential qualitative
or directional implications for the organization’s value chain, capital allocation decisions,research and development focus, and potential material financial implications for theorganization’s operating results and/or financial position

The Task Force’s technical supplement, The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities provides more
information on scenario inputs, analytical assumptions and choices, and assessment and presentation of potential impacts.
47
The objective of the Paris Agreement is to hold the increase in the global average temperature to well below 2°C above pre-industrial levels
and to pursue efforts to limit the temperature increase to 1.5°C. The IEA is developing a 1.5°C scenario that organizations may find useful.
46

Recommendations of the Task Force on Climate-related Financial Disclosures28

4. Applying Scenario Analysis
While the Task Force recognizes the complexities of scenario analysis and the potential resources
needed to conduct it, organizations are encouraged to use scenario analysis to assess climaterelated risks and opportunities. For organizations just beginning to use scenario analysis, aqualitative approach that progresses and deepens over time may be appropriate.48 Greater rigor
and sophistication in the use of data and quantitative models and analysis may be warranted fororganizations with more extensive experience in conducting scenario analysis. Organizations may
decide to use existing external scenarios and models (e.g., those provided by third-party vendors)
or develop their own, in-house modeling capabilities. The choice of approach will depend on anorganization’s needs, resources, and capabilities.
In conducting scenario analysis, organizations should strive to achieve:

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

transparency around parameters, assumptions, analytical approaches, and time frames;

comparability of results across different scenarios and analytical approaches;adequate documentation for the methodology, assumptions, data sources, and analytics;



consistency of methodology year over year;sound governance over scenario analysis conduct, validation, approval, and application; and

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues

effective disclosure of scenario analysis that will inform and promote a constructive
dialogue between investors and organizations on the range of potential impacts andresilience of the organization’s strategy under various plausible climate-related scenarios.

In applying scenario analysis, organizations should consider general implications for theirstrategies, capital allocation, and costs and revenues, both at an enterprise-wide level and at thelevel of specific regions and markets where specific implications of climate change for theorganization are likely to arise. Financial-sector organizations should consider using scenario
analysis to evaluate the potential impact of climate-related scenarios on individual assets orinvestments, investments or assets in a particular sector or region, or underwriting activities.

E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

The Task Force’s supplemental guidance recognizes that organizations will be at different levels of
experience in using scenario analysis. However, it is important for organizations to use scenario
analysis and develop the necessary organizational skills and capabilities to assess climate-relatedrisks and opportunities, with the expectation that organizations will evolve and deepen their useof scenario analysis over time. The objective is to assist investors and other stakeholders in better
understanding:






48

the degree of robustness of the organization’s strategy and financial plans under different
plausible future states of the world;
how the organization may be positioning itself to take advantage of opportunities and plans
to mitigate or adapt to climate-related risks; andhow the organization is challenging itself to think strategically about longer-term climaterelated risks and opportunities.

Organizations considering undertaking scenario analysis may wish to conduct various sensitivity analyses around key climate factors as aprecursor to scenario analysis, recognizing that sensitivity analysis and scenario analysis are different, but complementary, processes.

Recommendations of the Task Force on Climate-related Financial Disclosures29

5. Challenges and Benefits of Conducting Scenario Analysis
Scenario analysis is a well-established method for developing strategic plans that are more
flexible and robust to a range of plausible future states. As previously discussed (Figure 7, p. 26) it
is particularly useful for assessing issues with possible outcomes that are highly uncertain, thatplay out over the medium to longer term, and that are potentially disruptive. Scenario analysis
can help to better frame strategic issues, assess the range of potential management actions that
may be needed, engage more productively in strategic conversations, and identify indicators tomonitor the external environment. Importantly, climate-related scenario analysis can provide thefoundation for more effective engagement with investors on an organization’s strategic andbusiness resiliency.
Conducting climate-related scenario analysis, however, is not without challenges. First, mostscenarios have been developed for global and macro assessments of potential climate-related
impacts that can inform policy makers. These climate-related scenarios do not always provide theideal level of transparency, range of data outputs, and functionality of tools that would facilitate
their use in a business or investment context.
A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Second, the availability and granularity of data can be a challenge for organizations attempting toassess various energy and technology pathways or carbon constraints in different jurisdictions
and geographic locations.
Third, the use of climate-related scenario analysis to assess potential business implications is stillat an early stage. Although a handful of the largest organizations and investors are using climaterelated scenario analysis as part of their strategic planning and risk management processes,
many organizations are just beginning to explore its use. Sharing experiences and approaches toclimate-related scenario analysis across organizations, therefore, is critical to advancing the use ofclimate-related scenario analysis. Organizations may be able to play an important role in thisregard by facilitating information and experience exchanges among themselves; collectively
developing tools, data sets, and methodologies; and working to set standards. Organizations
across many different sectors will inevitably need to learn by doing. Some may seek guidancefrom other industry participants and experts on how to apply climate-related scenarios to makeforward-looking analyses of climate-related risks and opportunities.
Addressing these challenges and advancing the use of climate-related scenario analysis will
require further work. These challenges, however, are not insurmountable and can be addressed.
Organizations should undertake scenario analysis in the near term to capture the important
benefits for assessing climate-related risks and opportunities and improve their capabilities astools and data progress over time.

Recommendations of the Task Force on Climate-related Financial Disclosures

30

DRAFT – FOR DISCUSSION PURPOSES ONLY

AIntroduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

E Key Issues
Considered andAreas for Further
Work

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E

Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosuresxxxi

E Key Issues Considered and Areas for Further WorkThe diverse perspectives of Task Force members as well as outreach efforts, including two public
consultations, resulting in over 500 responses, hundreds of industry interviews, several focus
groups, and multiple webinars, provided valuable insight into the challenges that different
organizations—both financial and non-financial—may encounter in preparing disclosuresconsistent with the Task Force’s recommendations. The Task Force considered these issues andothers in developing and then finalizing its recommendations and sought to balance the burdenof disclosure on preparers with the need for consistent and decision-useful information for users(i.e., investors, lenders, and insurance underwriters). This section describes the key issues
considered by the Task Force, significant public feedback received by the Task Force related tothose issues, the ultimate disposition of the issues, and, in some cases, areas where further work
may be warranted. Figure 9 summarizes areas the Task Force identified, through its own analysis
as well as through public feedback, as warranting further research and analysis or thedevelopment of methodologies and standards.
A
Introduction

Figure 9

Key Areas for Further WorkB
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance

Relationship to
Other Reporting
Initiatives

Encourage standard setting organizations and others to actively work
toward greater alignment of frameworks and to support adoption

Scenario Analysis

Further develop applicable 2°C or lower transition scenarios andsupporting outputs, tools, and user interfaces
Develop broadly accepted methodologies, datasets, and tools for
scenario-based evaluation of physical risk by organizations

D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for Further
Work
F

Make datasets and tools publicly available and provide commonly
available platforms for scenario analysis
Data Availability
and Quality and
Financial Impact

Conclusion

Undertake further research and analysis to better understand andmeasure how climate-related issues translate into potential financial
impacts for organizations in financial and non-financial sectors
Improve data quality and further develop standardized metrics forthe financial sector, including better defining carbon-related assets
and developing metrics that address a broader range of climaterelated risks and opportunities

Appendices

Increase organizations’ understanding of climate-related risks andopportunities
ExampleDisclosures49

49

Provide example disclosures to assist preparers in developing
disclosures consistent with the Task Force’s recommendations

In response to the second consultation, organizations asked for example disclosures to gain a better understanding of how therecommended information may be disclosed. The Task Force acknowledges the development of these examples as an area of further work.

Recommendations of the Task Force on Climate-related Financial Disclosures32

1. Relationship to Other Reporting Initiatives
Through the Task Force’s outreach efforts, some organizations expressed concern that multiple
disclosure frameworks and mandatory reporting requirements increase the administrative
burden of disclosure efforts. Specifically, the additional time, cost, and effort required to analyze
and disclose new climate-related information could penalize those with less capacity to respond.
The Task Force considered existing voluntary and mandatory climate-related reporting
frameworks in developing its recommendations and provides information in the Annex on thealignment of existing frameworks, including those developed by the CDP (formerly the Carbon
Disclosure Project), Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative(GRI), the International Integrated Reporting Council (IIRC), and the Sustainability AccountingStandards Board (SASB), with the Task Force’s recommended disclosures. The Task Force expects
preparers disclosing climate-related information under other regimes will be able to use existingprocesses and content when developing disclosures based on the Task Force’s recommendations.
The Task Force’s recommendations provide a common set of principles that should help existing
disclosure regimes come into closer alignment over time. Preparers, users, and otherstakeholders share a common interest in encouraging such alignment as it relieves a burden forreporting entities, reduces fragmented disclosure, and provides greater comparability for users.
The Task Force also encourages standard setting bodies to support adoption of therecommendations and alignment with the recommended disclosures.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for Further
Work
F
Conclusion
Appendices2. Location of Disclosures and Materiality
In considering possible reporting venues, the Task Force reviewed existing regimes for climaterelated disclosures across G20 countries. While many G20 countries have rules or regulatory
guidance that require climate-related disclosure for organizations, most are not explicitly focusedon climate-related financial information.50 In addition, the locations of these disclosures varysignificantly and range from surveys sent to regulators to sustainability reports to annual financial
filings (see Appendix 4).
The Task Force also reviewed financial filing requirements applicable to public companies across
G20 countries and found that in most G20 countries, issuers have a legal obligation to disclosematerial information in their financial reports—which includes material, climate-related
information. Such reporting may take the form of a general disclosure of material information,
but many jurisdictions require disclosure of material information in specific sections of thefinancial filing (e.g., in a discussion on risk factors).51
Based on its review, the Task Force determined that preparers of climate-related financial
disclosures should provide such disclosures in their mainstream (i.e., public) annual financial
filings.52 The Task Force believes publication of climate-related financial information inmainstream financial filings will foster broader utilization of such disclosures, promoting an
informed understanding of climate-related issues by investors and others, and support
shareholder engagement. Importantly, in determining whether information is material, the Task
Force believes organizations should determine materiality for climate-related issues consistent
with how they determine the materiality of other information included in their financial filings. In
addition, the Task Force cautions organizations against prematurely concluding that climate-

Organization for Economic Co-operation and Development (OECD) and CDSB, Climate Change Disclosure in G20 Countries: Stocktaking ofCorporate Reporting Schemes, November 18, 2015.
51
N. Ganci, S. Hammer, T. Reilly, and P. Rodel, Environmental and Climate Change Disclosure under the Securities Laws: A Multijurisdictional Survey,
Debevoise & Plimpton, March 2016.
50

52

To the extent climate-related disclosures are provided outside of financial filings, organizations are encouraged to align the release of suchreports with their financial filings.

Recommendations of the Task Force on Climate-related Financial Disclosures33

related risks and opportunities are not material based on perceptions of the longer-term natureof some climate-related risks.
As part of the Task Force’s second public consultation, some organizations expressed concern
about disclosing information in financial filings that is not clearly tied to an assessment ofmateriality. The Task Force recognizes organizations’ concerns about disclosing information in
annual financial filings that is not clearly tied to an assessment of materiality. However, the Task
Force believes disclosures related to the Governance and Risk Management recommendations
should be provided in annual financial filings. Because climate-related risk is a non-diversifiablerisk that affects nearly all sectors, many investors believe it requires special attention. For
example, in assessing organizations’ financial and operating results, many investors want insight
into the governance and risk management context in which such results are achieved. The Task
Force believes disclosures related to its Governance and Risk Management recommendations
directly address this need for context andshould be included in annual financial filings.
Figure 10

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for Further
Work
F
Conclusion

For disclosures related to the Strategy andMetrics and Targets recommendations, the Task
Force believes organizations should provide
such information in annual financial filings
when the information is deemed material.
Certain organizations—those in the four nonfinancial groups that have more than one billion
USDE in annual revenue—should consider
disclosing information related to theserecommendations in other reports when theinformation is not deemed material and notincluded in financial filings.53,54 Because theseorganizations are more likely than others to beaffected financially over time due to theirsignificant GHG emissions or energy or water
dependencies, investors are interested inmonitoring how the organizations’ strategies
evolve.
In addition, the Task Force recognizes reportingby asset managers and asset owners to theirclients and beneficiaries, respectively, generally
occurs outside mainstream financial filings(Figure 10). For purposes of adopting the Task
Force’s recommendations, asset managers andasset owners should use their existing channelsof financial reporting to their clients andbeneficiaries where relevant and feasible.
Likewise, asset managers and asset owners
should consider materiality in the context of
their respective mandates and investment
performance for clients and beneficiaries.

Appendices

Reporting by Asset Owners
The financial reporting requirements and practicesof asset owners vary widely and differ from what isrequired of organizations with public debt orequity. Some asset owners have no public
reporting, while others provide extensive public
reporting. For purposes of adopting the Task
Force’s recommendations, asset owners should
use their existing channels of financial reporting totheir beneficiaries and others where relevant andfeasible.

Reporting by Asset Managers
Reporting to clients by asset managers also takes
different forms, depending on the requirements ofthe client and the types of investments made. For
example, an investor in a mutual fund might
receive quarterly, or download from the asset
manager’s 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 reporting, including
items such as the aggregate carbon intensity of theportfolio compared with a benchmark, theportfolio’s exposure to green revenue (and how
this changes over time), or insight into portfolio
positioning under different climate scenarios. The
Task Force appreciates that climate-related risk
reporting by asset managers is in the very earlystages and encourages progress and innovation by
the industry.

53

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

54“Other reports” should be official company reports that are issued at least annually, widely distributed and available to investors and others,
and subject to internal governance processes that are substantially similar to those used for financial reporting.

Recommendations of the Task Force on Climate-related Financial Disclosures34

3. Scenario Analysis
As part of the Task Force’s second public consultation, many organizations said scenario analysis
is a useful tool to help assess risks and understand potential implications of climate change;
however, they also identified areas where the Task Force’s recommendations and guidance could
be improved. In particular, organizations asked the Task Force to identify standardized climaterelated scenarios for organizations to use and clarify the information related to scenarios thatshould be disclosed. They also noted expectations around disclosures and climate-related
scenario analysis should be proportionate to the size of the reporting entity and not onerous forsmaller organizations. In addition, some organizations noted that the disclosures related to
strategy could put organizations at greater risk of litigation given the high degree of uncertainty
around the future timing and magnitude of climate-related impacts.
In finalizing its recommendations and guidance, the Task Force clarified organizations should
describe how resilient their strategies are to climate-related risks and opportunities, taking into
consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario
and, where relevant, scenarios consistent with more extreme physical risks. To address concerns
about proportionality, the Task Force established a threshold for organizations in the four nonfinancial groups that should perform more robust scenario analysis and disclose additional
information on the resiliency of their strategies.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for FurtherWork

On the issue of recommending specific standardized or reference climate-related scenarios fororganizations to use, Task Force members agreed that while such an approach is intuitively
appealing, it is not a practical solution at this time. Existing, publicly available climate-related
scenarios are not structured or defined in such a way that they can be easily applied consistently
across different industries or across organizations within an industry.
The Task Force recognizes that incorporating scenario analysis into strategic planning processes
will improve over time as organizations “learn by doing.” To facilitate progress in this area, theTask Force encourages further work as follows:F
Conclusion

Appendices

further developing 2°C or lower transition scenarios that can be applied to specific industries
and geographies along with supporting outputs, tools, and user interfaces;developing broadly accepted methodologies, data sets, and tools for scenario-based
evaluation of physical risk by organizations;making these data sets and tools publicly available to facilitate use by organizations, reduceorganizational transaction costs, minimize gaps between jurisdictions in terms of technicalexpertise, enhance comparability of climate-related risk assessments by organizations, andhelp ensure comparability for investors; andcreating more industry specific (financial and non-financial) guidance for preparers and usersof climate-related scenarios.

4. Data Availability and Quality and Financial Impact
The Task Force developed supplemental guidance for the four non-financial groups that accountfor the largest proportion of GHG emissions, energy usage, and water usage; and, as part of that
supplemental guidance, the Task Force included several illustrative metrics around factors that
may be indicative of potential financial implications for climate-related risks and opportunities. As
part of the second public consultation, several organizations provided feedback on the illustrative
metrics, and common themes included (1) improving the comparability and consistency of themetrics, (2) clarifying the links among the metrics, climate-related risks and opportunities, andpotential financial implications, (3) simplifying the metrics, and (4) providing additional guidanceon the metrics, including how to calculate key metrics. Organizations also raised concerns about

Recommendations of the Task Force on Climate-related Financial Disclosures35

the lack of standardized data and metrics in the financial sector, which complicates preparers’
ability to develop decision-useful metrics and users’ ability to compare metrics acrossorganizations.
The Task Force recognizes these concerns as well as broader challenges related to data
availability and quality, as described below.








A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for Further
Work
F
Conclusion
Appendices

The gaps in emissions measurement methodologies, including Scope 3 emissions andproduct life-cycle emissions methodologies, make reliable and accurate estimates difficult. 55,56
The lack of robust and cost-effective tools to quantify the potential impact of climate-relatedrisks and opportunities at the asset and project level makes aggregation across anorganization’s activities or investment portfolios problematic and costly.
The need to consider the variability of climate-related impacts across and within different
sectors and markets further complicates the process (and magnifies the cost) of assessing
potential climate-related financial impacts.
The high degree of uncertainty around the timing and magnitude of climate-related risks
makes it difficult to determine and disclose the potential impacts with precision.

In finalizing its supplemental guidance, the Task Force addressed the redundancy of the metrics;
simplified the non-financial illustrative metrics tables; ensured consistent terminology was used;and clarified the links between the metrics, climate-related risks and opportunities, and potential
financial implications. In addition, the Task Force encourages further research and analysis bysector and industry experts to (1) better understand and measure how climate-related issues
translate into potential financial impacts; (2) develop standardized metrics for the financial sector,
including better defining carbon-related assets; and (3) increase organizations’ understanding ofclimate-related risks and opportunities. As it relates to the broader challenges with data quality
and availability, the Task Force encourages preparers to include in their disclosures a descriptionof gaps, limitations, and assumptions made as part of their assessment of climate-related issues.

5. GHG Emissions Associated with Investments
In its supplemental guidance for asset owners and asset managers issued on December 14, 2016,
the Task Force asked such organizations to provide GHG emissions associated with each fund,product, or investment strategy normalized for every million of the reporting currency invested.
As part of the Task Force’s public consultation as well as in discussions with preparers, some asset
owners and asset managers expressed concern about reporting on GHG emissions related totheir own or their clients’ investments given the current data challenges and existing accounting
guidance on how to measure and report GHG emissions associated with investments. In
particular, they voiced concerns about the accuracy and completeness of the reported data andlimited application of the metric to asset classes beyond public equities. Organizations also
highlighted that GHG emissions associated with investments cannot be used as a sole indicator
for investment decisions (i.e., additional metrics are needed) and that the metric can fluctuatewith share price movements since it uses investors’ proportional share of total equity.57
In consideration of the feedback received, the Task Force has replaced the GHG emissions
associated with investments metric in the supplemental guidance for asset owners and asset
managers with a weighted average carbon intensity metric. The Task Force believes the weighted

Scope 3 emissions are all indirect emissions that occur in the value chain of the reporting company, including both upstream anddownstream emissions. See Greenhouse Gas Protocol, “Calculation Tools, FAQ.”
56
Product life cycle emissions are all the emissions associated with the production and use of a specific product, including emissions from raw
materials, manufacture, transport, storage, sale, use, and disposal. See Greenhouse Gas Protocol, “Calculation Tools, FAQ.”
57
Because the metric uses investors’ proportional share of total equity, increases in the underlying companies’ share prices, all else equal, will
result in a decrease in the carbon footprinting number even though GHG emissions are unchanged.
55

Recommendations of the Task Force on Climate-related Financial Disclosures36

average carbon intensity metric, which measures exposure to carbon-intensive companies,
addresses many of the concerns raised. For example, the metric can be applied across asset
classes, is fairly simple to calculate, and does not use investors’ proportional share of total equity
and, therefore, is not sensitive to share price movements.
The Task Force acknowledges the challenges and limitations of current carbon footprinting
metrics, including that such metrics should not necessarily be interpreted as risk metrics.
Nevertheless, the Task Force views the reporting of weighted average carbon intensity as a firststep and expects disclosure of this information to prompt important advancements in thedevelopment of decision-useful, climate-related risk metrics. In this regard, the Task Forceencourages asset owners and asset managers to provide other metrics they believe are useful for
decision making along with a description of the methodology used. The Task Force recognizes
that some asset owners and asset managers may be able to report the weighted average carbon
intensity and other metrics on only a portion of their investments given data availability andmethodological issues. Nonetheless, increasing the number of organizations reporting this type of
information should help speed the development of better climate-related risk metrics.
A
Introduction

6. Remuneration

B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for Further
Work
F
Conclusion
AppendicesIn the supplemental guidance for the Energy Group, the Task Force asked such organizations to
consider disclosing whether and how performance metrics, including links to remuneration
policies, take into consideration climate-related risks and opportunities. As part of its second
public consultation, the Task Force asked whether the guidance should extend to organizations
beyond those in the Energy group and, if so, to which types of organizations. The majority oforganizations that commented on this issue responded that the guidance should be extended toother organizations; and many suggested that the guidance should apply to organizations more
likely to be affected by climate-related risks. In consideration of the feedback received, the Task
Force revised its guidance to ask organizations, where climate-related risks are material, to
consider describing whether and how related performance metrics are incorporated into
remuneration policies.

7. Accounting Considerations
As part of its work, the Task Force considered the interconnectivity of its recommendations withexisting financial statement and disclosure requirements. The Task Force determined that the two
primary accounting standard setting bodies, the International Accounting Standards Board (IASB)
and the Financial Accounting Standards Board (FASB), have issued standards to address risks anduncertainties affecting companies. Both International Accounting Standard (IAS) 37 “Provisions,Contingent Liabilities and Contingent Assets” and Accounting Standards Codification (ASC) 450“Contingencies” provide guidance on how to account for and disclose contingencies. Additionally,
IAS 36 “Impairment of Assets” and ASC 360 “Long-lived Asset Impairment” provide guidance on
assessing the impairment of long-lived assets. The disclosures of both contingencies andmanagement’s assessment and evaluation of long-lived assets for potential impairment are
critically important in assisting stakeholders in understanding an organization’s ability to meet
future reported earnings and cash flow goals.
In most G20 countries, financial executives will likely recognize that the Task Force’s disclosure
recommendations should result in more quantitative financial disclosures, particularly disclosureof metrics, about the financial impact that climate-related risks have or could have on anorganization. Specifically, asset impairments may result from assets adversely impacted by theeffects of climate change and/or additional liabilities may need to be recorded to account for
regulatory fines and penalties resulting from enhanced regulatory standards. Additionally, cash
flows from operations, net income, and access to capital could all be impacted by the effects ofRecommendations of the Task Force on Climate-related Financial Disclosures37

climate-related risks (and opportunities). Therefore, financial executives (e.g., chief financial
officers, chief accounting officers, and controllers) should be involved in the organization’s
evaluation of climate-related risks and opportunities and the efforts undertaken to manage therisks and maximize the opportunities. Finally, careful consideration should be given to the linkage
between scenario analyses performed to assess the resilience of an organization’s strategy toclimate-related risks and opportunities (as suggested in the Task Force’s recommendations) andassumptions underlying cash flow analyses used to assess asset (e.g., goodwill, intangibles, andfixed assets) impairments.

8. Time Frames for Short, Medium, and Long Term
As part of the Task Force’s second public consultation, some organizations asked the Task Forceto define specific ranges for short, medium, and long term. Because the timing of climate-related
impacts on organizations will vary, the Task Force believes specifying time frames across sectors
for short, medium, and long term could hinder organizations’ consideration of climate-relatedrisks and opportunities specific to their businesses. The Task Force is, therefore, not defining timeframes and encourages preparers to decide how to define their own time frames according to thelife of their assets, the profile of the climate-related risks they face, and the sectors andgeographies in which they operate.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance

In assessing climate-related issues, organizations should be sensitive to the time frames used to
conduct their assessments. While many organizations conduct operational and financial planningover a 1-2 year time frame and strategic and capital planning over a 2-5 year time frame, climaterelated risks may have implications for an organization over a longer period. It is, therefore,
important for organizations to consider the appropriate time frames when assessing climaterelated risks.

D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for Further
Work
F
Conclusion
Appendices9. Scope of Coverage
To promote more informed investing, lending, and insurance underwriting decisions, the Task
Force recommends all financial and non-financial organizations with public debt and/or equity
adopt its recommendations.58 Because climate-related risks and opportunities are relevant fororganizations across all sectors, the Task Force encourages all organizations to adopt theserecommendations. In addition, the Task Force believes that asset managers and asset owners,
including public- and private-sector pension plans, endowments, and foundations, should
implement its recommendations. The Task Force believes climate-related financial information
should be provided to asset managers’ clients and asset owners’ beneficiaries so that they may
better understand the performance of their assets, consider the risks of their investments, andmake more informed investment choices.
Consistent with existing global stewardship frameworks, asset owners should engage with theorganizations in which they invest to encourage adoption of these recommendations. They
should also ask their asset managers to adopt these recommendations. Asset owners’
expectations in relation to climate-related risk reporting from organizations and asset managers
are likely to evolve as data availability and quality improves, understanding of climate-related riskincreases, and risk measurement methodologies are further developed.
The Task Force recognizes that several asset owners expressed concern about being identified as
the potential “policing body” charged with ensuring adoption of the Task Force’s
recommendations by asset managers and underlying organizations. The Task Force appreciatesthat expectations must be reasonable and that asset owners have many competing priorities, but

58

Thresholds for climate-related financial disclosures should be aligned to the financial disclosure requirements more broadly in thejurisdictions where a preparer is incorporated and/or operates and is required to make financial disclosures.

Recommendations of the Task Force on Climate-related Financial Disclosures38

encourages them to help drive adoption of the recommendations. Because asset owners andasset managers sit at the top of the investment chain, they have an important role to play ininfluencing the organizations in which they invest to provide better climate-related financial
disclosures.

10. Organizational Ownership
Some organizations have not formalized responsibility for climate-related risk assessment andmanagement. Even for organizations with clearly assigned responsibilities for climate-related
issues, the relationship between those responsible for climate-related risk (e.g., “environmental,social and governance” experts, chief investment officers) and those in the finance function canrange from regularly scheduled interactions and exchanges of information to minimal or nointeraction. According to some preparers, lack of clarity around responsibility for climate-related
risk assessments and management, compounded by a lack of integration into organizations’financial reporting processes, could adversely affect implementation of the recommendations.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

The Task Force believes that by encouraging disclosure of climate-related financial information in
public financial filings, coordination between organizations’ climate-related risk experts and thefinance function will improve. Similar to the way organizations are evolving to include cybersecurity issues in their strategic and financial planning efforts, so too should they evolve forclimate-related issues.

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Consideredand Areas for Further
Work
F
Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosures

39

F ConclusionA
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

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

Recommendations of the Task Force on Climate-related Financial Disclosures

40

F Conclusion
Figure 11

The Task Force’s recommendations are afoundation for improved reporting ofclimate-related issues in mainstream
financial filings with several resulting
benefits (outlined in Figure 11). The
recommendations aim to be ambitious,
but also practical for near-term adoption.
The Task Force expects that reporting ofclimate-related risks and opportunities will
evolve over time as organizations,investors, and others contribute to thequality and consistency of the information
disclosed.

Benefits of Recommendations
 Foundation for immediate adoption and flexible
enough to accommodate evolving practices
 Promote board and senior management
engagement on climate-related issues
 Bring the “future” nature of issues into thepresent through scenario analysis
 Support understanding of financial sector’s
exposure to climate-related risks
 Designed to solicit decision-useful, forwardlooking information on financial impacts

A
Introduction

1. Evolution of Climate-Related Financial Disclosures

B
Climate-Related Risks,
Opportunities, andFinancial Impacts

The Task Force recognizes that challenges exist, but all types of organizations can develop
disclosures consistent with its recommendations. The recommendations provide a foundation for
immediate adoption and are flexible enough to accommodate evolving practices. As
understanding, data analytics, and modeling of climate-related issues become more widespread,
disclosures can mature accordingly.

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion

Organizations already reporting climate-related financial information under other frameworks
may be well positioned to disclose under this framework immediately and are encouraged to doso. For such organizations, significant effort has gone into developing processes and collecting
information needed for disclosing under these regimes. The Task Force expects theseorganizations will be able to use existing processes when providing disclosures in annual financial
filings based on the Task Force’s recommendations.59,60 Those with less experience can begin byconsidering and disclosing how climate-related issues may be relevant in their current
governance, strategy, and risk management practices. This initial level of disclosure will allow
investors to review, recognize, and understand how organizations consider climate-related issues
and their potential financial impact.
Importantly, the Task Force recognizes organizations need to make financial disclosures inaccordance with their national disclosure requirements. To the extent certain elements of therecommendations are incompatible with national disclosure requirements for financial filings, theTask Force encourages organizations to disclose those elements through other reports. Suchother reports should be official company reports that are issued at least annually, widelydistributed and available to investors and others, and subject to internal governance processes
that are the same or substantially similar to those used for financial reporting.

Appendices2. Widespread Adoption CriticalIn the Task Force’s view, the success of its recommendations depends on near-term, widespread
adoption by organizations in the financial and non-financial sectors. Through widespread
adoption, financial risks and opportunities related to climate change will become a natural part of59

The Task Force recognizes the structure and content of financial filings differs across jurisdictions and, therefore, believes organizations arein the best position to determine where and how the recommended disclosures should be incorporated in financial filings.

60

The Task Force encourages organizations where climate-related issues could be material in the future to begin disclosing climate-related
financial information outside financial filings to facilitate the incorporation of such information into financial filings once climate-related
issues are determined to be material.

Recommendations of the Task Force on Climate-related Financial Disclosures41

organizations’ risk management and strategic planning processes. As this occurs, organizations’and investors’ understanding of the potential financial implications associated with transitioning
to a lower-carbon economy and physical risks will grow, information will become more decisionuseful, and risks and opportunities will be more accurately priced, allowing for the more efficient
allocation of capital. Figure 12 outlines a possible path for implementation.
Widespread adoption of the recommendations will require ongoing leadership by the G20 and its
member countries. Such leadership is essential to continue to make the link between theserecommendations and the achievements of global climate objectives. Leadership from the FSB isalso critical to underscore the importance of better climate-related financial disclosures for thefunctioning of the financial system.

Figure 12

Implementation Path (Illustrative)
Broad understanding of the concentration ofcarbon-related assets in the financial system andthe financial system’s exposure to climate-relatedrisks

AIntroduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Adoption Volume

C
Recommendations andGuidance

Greater adoption, further development of
information provided (e.g., metrics andscenario analysis), and greater maturity inusing information

Organizations begin todisclose in financial filings

Final TCFD
Report Released

More complete, consistent, andcomparable information for market
participants, increased transparency,
and appropriate pricing of climaterelated risks and opportunities

Climate-related issues viewed as
mainstream business and investment
considerations by both users andpreparersCompanies already reporting under other frameworks implement the Task
Force’s recommendations. Others consider climate-related issues within
their businesses

Five Year Time Frame

The Task Force is not alone in its work. A variety of stakeholders, including stock exchanges,
investment consultants, credit rating agencies, and others can provide valuable contributions
toward adoption of the recommendations. The Task Force believes that advocacy for thesestandards will be necessary for widespread adoption, including educating organizations that will
disclose climate-related financial information and those that will use those disclosures to makefinancial decisions. To this end, the Task Force notes that strong support by the FSB and G20
authorities would have a positive impact on implementation. With the FSB’s extension of the Task
Force through September 2018, the Task Force will work to encourage adoption of therecommendations and support the FSB and G20 authorities in promoting the advancement ofclimate-related financial disclosures.

Recommendations of the Task Force on Climate-related Financial Disclosures

42

TCFD Report – DRAFT as of May 27, 2017

AppendicesA
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

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

Recommendations of the Task Force on Climate-related Financial Disclosuresxliii

Appendix 1: Task Force Members
Chairman and Vice Chairs
Michael Bloomberg
Chair
Founder
Bloomberg LP and Bloomberg Philanthropies

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance

Denise Pavarina

Graeme Pitkethly

Vice Chair
Executive Director
Banco Bradesco

Vice Chair
Chief Financial Officer
Unilever

Christian Thimann

Yeo Lian Sim

Vice ChairGroup Head of Regulation, Sustainability, andInsurance Foresight
AXA

Vice Chair
Special Adviser, Diversity
Singapore Exchange

Members
Jane Ambachtsheer

Matt Arnold

Partner, Chair – Responsible Investment
MercerManaging Director and Global Head of Sustainable
Finance
JPMorgan Chase & Co.

Wim Bartels

Bruno Bertocci

D
Scenario Analysis andClimate-Related Issues

Partner Corporate Reporting
KPMG

Managing Director, Head of Sustainable Investors
UBS Asset Management

David Blood

Richard Cantor

E

Senior Partner
Generation Investment Management

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

Key Issues Considered andAreas for Further Work

Koushik Chatterjee

Eric Dugelay

F
Conclusion

Group Executive Director, Finance and Corporate
Tata Group

Global Leader, Sustainability Services
Deloitte

Appendices

Liliana Franco

Udo Hartmann

Director, Accounting Organization and Methods
Air Liquide Group

Senior Manager, Group Environmental Protection& Energy Management
Daimler

Neil Hawkins

Thomas Kusterer

Corporate Vice President and Chief Sustainability
Officer
The Dow Chemical Company

Chief Financial Officer
EnBW Energie Baden-Württemberg AG

Diane Larsen

Stephanie Leaist

Audit Partner, Global Professional Practice
EYManaging Director, Head of Sustainable Investing
Canada Pension Plan Investment Board

Mark Lewis

Eloy Lindeijer

Managing Director, Head of European Utilities
Equity Research
Barclays

Chief, Investment Management, member
Executive Committee
PGGM

Recommendations of the Task Force on Climate-related Financial Disclosures

44

Members (continued)

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Ruixia Liu

Masaaki Nagamura

General Manager, Risk Department
Industrial and Commercial Bank of China

Head, Corporate Social Responsibility
Tokio Marine Holdings

Giuseppe Ricci

Martin Skancke

Chief Refining and Marketing Officer
ENI

Chair, Risk Committee
StorebrandAndreas Spiegel

Steve Waygood

Head Group Sustainability Risk
Swiss Re

Chief Responsible Investment Officer
Aviva Investors

Fiona Wild

Michael Wilkins

Vice President, Sustainability and Climate Change
BHP Billiton

Managing Director, Environmental & Climate Risk
Research
S&P Global Ratings

Jon Williams

Deborah Winshel

Partner, Sustainability and Climate Change
PwC

Managing Director, Global Head of Impact
InvestingBlackRockSpecial Adviser
Russell Picot
Chair, Audit and Risk Committee, LifeSight
Board Chair, HSBC Bank (UK) Pension Scheme
Trustee
Former Group Chief Accounting Officer, HSBC

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

Curtis Ravenel

Didem Nisanci

Global Head, Sustainable Business & FinanceBloomberg LP

Managing Director
Promontory Financial Group, an IBM Company

Stacy Coleman

Jeff Stehm

Managing Director
Promontory Financial Group, an IBM Company

Director
Promontory Financial Group, an IBM Company

Mara Childress

Veronika Henze

Principal
Promontory Financial Group, an IBM Company

Head of Communications
Bloomberg New Energy FinanceObservers
Susan Nash

Joe PerryMember of Secretariat
Financial Stability Board

Member of Secretariat
Financial Stability Board

Rupert Thorne
Deputy to the Secretary General
Financial Stability Board

Recommendations of the Task Force on Climate-related Financial Disclosures

45

Appendix 2: Task Force Objectives and Approach
1. Objectives
The Task Force engaged with key stakeholders throughout the development of its
recommendations to ensure that its work would (1) promote alignment across existing disclosure
regimes, (2) consider the perspectives of users and the concerns of preparers of climate-related
financial disclosures, and (3) be efficiently implemented by organizations in their financial
reporting.

2. Approach
In addition to the expertise of its members, a broad range of external resources informed theTask Force’s recommendations, including existing voluntary and mandatory climate-related
reporting frameworks, governance and risk management standards, government reports andresearch, expert resources, and various other stakeholders such as industry participants, tradeassociations, and non-governmental organizations (NGOs).

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendicesa. Leveraging Expertise
Task Force members come from a range of companies, including large financial companies, large
non-financial companies, accounting and consulting firms, and credit rating agencies, andbrought a range of practical experience, expertise, and global perspectives on preparing andusing climate-related financial disclosures. Through eight plenary meetings, Task Force members
contributed significantly to developing a consensus-based, industry-led approach to climaterelated financial disclosure.
Due to the technically challenging and broad focus of its work, the Task Force also sought input
from experts in the field of climate change, particularly in relation to scenario analysis. The Task
Force engaged Environmental Resources Management (ERM) to inform its work by developing atechnical paper on scenario analysis—The Use of Scenario Analysis in Disclosure of ClimateRelated Risks and Opportunities. Several members of the Task Force, joined by representatives
from 2° Investing Initiative (2°ii), Bloomberg New Energy Finance (BNEF), Bloomberg Quantitative
Risk Experts, Carbon Tracker, CDP, and the London School of Economics and Political Science led
a working group to oversee ERM’s technical considerations. A workshop was also held withexperts from Oxford Martin School. Additionally, the International Energy Agency (IEA) provided
input regarding how scenario analysis can be conducted and used.
b. Research and Information Gathering
The Task Force’s work drew on publications and research conducted by governments, NGOs,
industry participants, as well as disclosure regimes with a focus on climate-related issues. The
Task Force reviewed existing mandatory and voluntary reporting regimes for climate-related
disclosure to identify commonalities and gaps across existing regimes and to determine areas
meriting further research and analysis by the Task Force. The work of organizations regarded as
standard setters, as well as several organizations active in developing reporting mechanisms forclimate-related issues, served as the primary references for the Task Force in developing its
recommendations and supporting guidance. The Task Force also considered resources related to
sector-specific climate issues in the development of the supplemental guidance.

Recommendations of the Task Force on Climate-related Financial Disclosures46

c. Outreach and Engagement
Engagement with users, preparers, and other stakeholders in relevant industries and sectors
across G20 countries and other countries was important in developing the Task Force’s
recommendations. The Task Force conducted five types of engagement to support this effort:
public consultation, industry interviews, focus groups, outreach events, and webinars.
Such engagement served two primary purposes: (1) to raise the level of awareness and educate
stakeholders on the Task Force’s work and (2) to solicit feedback from stakeholders on the Task
Force’s proposed recommended disclosures and supplemental guidance for specific sectors. In
total, more than 2,700 individuals in 43 countries were included in the Task Force’s outreach andengagement (Figure A2.1).

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance

Public Consultations
The Task Force conducted two public consultations. The first followed the April 1, 2016 publicationof the Task Force’s Phase I Report, which set out the scope and high-level objectives for the Task
Force’s work. The Task Force solicited input to guide the development of its recommendations forvoluntary climate-related financial disclosures. In total, 203 participants from 24 countries
responded to the first public consultation. Respondents represented the financial sector, nonfinancial sectors, NGOs, and other organizations. Public consultation comments indicated support
for disclosures on scenario analysis as well as disclosures tailored for specific sectors. Key themes
from the first public consultation, which informed the Task Force’s recommendations andguidance, are included in Table A2.1 (p. 48).
Figure A2.1

Outreach and Engagement

D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosures47

Table A2.1

Key Themes of First Public Consultation (Scope of Work)Key Themes

Survey Response

Components
of Disclosures

The majority of respondents were in agreement that disclosures should:‒ be forward-looking,‒ address the ability to achieve targets, with strategies for achievement, and‒ align with material risks.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

66%

C
Recommendations andGuidance

62%

D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Sector-Specific
Disclosures

Respondents were in favor of
disclosures for specific sectors

62%

Scenario
Analysis

Respondents see scenario analysis
as a key component of disclosure

96%

62%
A second public consultation followed the release of the Task Force’s report in December 2016.
The Task Force conducted the second consultation through an online questionnaire designed to96%
gather feedback on the recommendations, guidance, and key issues identified by the Task Force.
The Task Force received 306 responses to its online questionnaire and 59 comment letters on therecommendations and guidance from a variety of organizations in 30 countries.61 The majority of
responses came from Europe (57 percent), followed by North America (20 percent), Asia Pacific(19 percent), South America (four percent), and the Middle East/Africa (less than one percent).
Fourty-five percent of respondents provided perspective as users of disclosure, 44 percent as
preparers of disclosure, and 11 percent as “other.” Respondents came from the financial sector(43 percent), non-financial sectors (18 percent), or other types of organizations (39 percent).62
Table A2.2

Responses to Second Public Consultation Questions
Questions

Respondent

Percent Responding “Useful”

How useful are the recommendations andguidance for all sectors in preparing
disclosures?

Preparers

75%

How useful is the supplemental guidance inpreparing disclosures?

Preparers

66%

If organizations disclose the recommended
information, how useful would it be fordecision making?

Users

77%

How useful is a description of potential
performance across a range of scenarios tounderstanding climate-related impacts on anorganization’s businesses, strategy, andfinancial planning?

Financial

74%
74%

Non-Financial

17%

Other

86%
62%

How useful are the illustrative examples of
metrics and targets?

Financial

74%

Non-Financial

33%
33%

Other

72%

Financial

68%
62%

Other

74%

How useful would the disclosure of GHG
emissions associated with investments befor economic decision-making?

61

Of the 59 respondents that submitted comment letters, 45 also completed the online questionnaire, resulting in a total of 320 unique
responses.
62
The other types of organizations included research and advocacy NGOs; standard setting NGOs; data analytics, consulting, and researchorganizations; academia; and accounting associations.

Recommendations of the Task Force on Climate-related Financial Disclosures

48

Overall, respondents were generally supportive of the Task Force’s recommendations as shown in
Table A2.2 (p. 48); however, several provided specific and constructive feedback on the report.
The key themes from this feedback are included in Table A2.3. For additional information
regarding the results of the second public consultation, please view the TCFD Public Consultation
Summary 2017 on the Task Force’s website.
Table A2.3

Key Themes of Second Public Consultation (Recommendations)
Key Themes
Materiality and Location ofDisclosures

Clarifying which recommended disclosures depend on materiality
assessment and providing flexibility for organizations to provide
some or all disclosures in reports other than financial filings.

Scenario Analysis

Improving ease of implementation, and comparability of scenario
analysis by specifying standard scenario(s) and providing additional
guidance and tools.

Metrics for the Financial Sector

Encouraging further development and standardization of metrics
for the financial sector.

Metrics for Non-Financial
Sectors

Improving comparability and consistency of the illustrative metrics
for non-financial sectors, clarifying the links to financial impact andclimate-related risks and opportunities.

Implementation

Providing disclosure examples to support preparers in developing
relevant climate-related financial disclosures.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
AppendicesIndustry Interviews and Focus Groups
Prior to the December 2016 release of the Task Force’s report for public consultation, the Task
Force conducted 128 industry interviews with users and preparers of financial statements togather feedback regarding the Task Force’s draft recommendations, supplemental guidance forcertain sectors, and other considerations. Industry interview participants included chief financial
officers, investment officers, other finance and accounting officers, risk officers, sustainability
officers, and others. Forty-three percent of the participants held finance, legal, or risk positions
and 39 percent held environmental or sustainability roles.
Task Force representatives conducted two rounds of industry interviews. The initial round ofinterviews focused on the recommendations and guidance; the second round emphasized
specific recommendations and sector-specific guidance. Organizations invited to participate in theinterviews met two primary criteria: (1) represented industry and sector leaders likely to be
impacted by climate-related risks and opportunities and (2) provided geographic diversity toensure coverage from each G20 and Financial Stability Board (FSB) represented country.
The interviews provided valuable information that informed the Task Force’s recommendations
and guidance as reflected in the report issued for public consultation in December 2016. Industry
interview themes were consistent with those identified in the second public consultation.
Preparers raised concerns about the relationship of the Task Force’s recommendations to otherreporting initiatives and the accuracy and reliability of information requested. Users commented
that establishing consistency in metrics would be beneficial, acknowledged data quality
challenges, and provided thoughts on scenario analysis (e.g., would like preparers to use of arange of scenarios, interested in knowing how scenario analysis is used in the organization).
Subsequent to the December 2016 release of the Task Force’s report for public consultation, theTask Force conducted five focus groups with 32 individuals from six countries representing
organizations in specific sectors and industries to solicit feedback on scenario analysis and carbon
footprinting metrics. In the two focus groups for the financial sector, participants expressed
support for the Task Force’s work, noting current challenges related to quality and consistency in

Recommendations of the Task Force on Climate-related Financial Disclosures49

reported climate-related information. Asset owners and asset managers also provided feedbackon the benefits and limitations of different carbon footprinting metrics. In the three focus groups
for non-financial sectors, participants in oil and gas and utilities industries provided specificfeedback on their use of scenario analysis and challenges related to disclosing certain informationin financial filings.
Outreach Events
The Task Force sponsored 18 public outreach events in 13 countries, and Task Force memberspresented the recommendations at 91 other events including conferences, forums, and meetingssponsored by industry associations, NGOs, government agencies, corporations, and otherorganizations. The 18 Task Force-sponsored events informed stakeholders of the Task Force’s
work and recommendations and included panel discussions and keynote speeches by prominentclimate-risk and financial experts. Attendees included representatives of financial and nonfinancial organizations who spanned a variety of corporate functions, including strategy, risk,
accounting, portfolio and investment management, corporate sustainability, as well as
representatives from industry associations, NGOs, government agencies, research providers,
academia, accounting and consulting firms, and media.
A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E

Webinars
Prior to the release of the report in December 2016 for public consultation, the Task Force offered
seven webinars to educate and increase awareness of the Task Force’s efforts as well as to collectadditional feedback. Of the seven webinars, the Task Force hosted four webinars and participatedin three additional webinars by partnering with the following organizations: Business for Social
Responsibility, Global Financial Markets Association, and the National Association of Corporate
Directors. These webinars served to supplement the in-person outreach events and offeredglobal stakeholders, regardless of location, an opportunity to engage with the Task Force. The
webinars included 538 attendees representing 365 organizations across 23 countries. After the
release of the report, the Task Force held three webinars to present its recommendations and tosolicit additional feedback. The three webinars included 255 attendees representing 209
organizations across 25 countries. In total, the Task Force offered ten webinars, reaching 793
attendees across 30 countries.

Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosures50

Appendix 3: Fundamental Principles for Effective Disclosure
To underpin its recommendations and help guide current and future developments in climaterelated financial reporting, the Task Force developed a set of principles for effective
disclosure.63 As understanding of, and approaches to, climate-related issues evolve over time,
so too will climate-related financial reporting. These principles can help achieve high-qualityand decision-useful disclosures that enable users to understand the impact of climate change
on organizations. The Task Force encourages organizations adopting its recommendations to
consider these principles as they develop climate-related financial disclosures.
The Task Force’s disclosure principles are largely consistent with other mainstream,internationally accepted frameworks for financial reporting and are generally applicable tomost providers of financial disclosures. They are informed by the qualitative and quantitative
characteristics of financial information and further the overall goals of producing disclosuresthat are consistent, comparable, reliable, clear, and efficient, as highlighted by the FSB inestablishing the Task Force. The principles, taken together, are designed to assist
organizations in making clear the linkages and connections between climate-related issues
and their governance, strategy, risk management, and metrics and targets.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

Principle 1: Disclosures should present relevant information

C
Recommendations andGuidance

The organization should provide information specific to the potential impact of climate-relatedrisks and opportunities on its markets, businesses, corporate or investment strategy, financial
statements, and future cash flows.


D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices





63

Disclosures should be eliminated if they are immaterial or redundant to avoid obscuring
relevant information. However, when a particular risk or issue attracts investor andmarket interest or attention, it may be helpful for the organization to include astatement that the risk or issue is not significant. This shows that the risk or issue has
been considered and has not been overlooked.
Disclosures should be presented in sufficient detail to enable users to assess theorganization’s exposure and approach to addressing climate-related issues, while
understanding that the type of information, the way in which it is presented, and theaccompanying notes will differ between organizations and will be subject to change overtime.
Climate-related impacts can occur over the short, medium, and long term. Organizations
can experience chronic, gradual impacts (such as impacts due to shifting temperaturepatterns), as well as acute, abrupt disruptive impacts (such as impacts from flooding,drought, or sudden regulatory actions). An organization should provide informationfrom the perspective of the potential impact of climate-related issues on value creation,
taking into account and addressing the different time frames and types of impacts.
Organizations should avoid generic or boilerplate disclosures that do not add value tousers’ understanding of issues. Furthermore, any proposed metrics should adequately
describe or serve as a proxy for risk or performance and reflect how an organization
manages the risk and opportunities.

These principles are adapted from those included in the Enhanced Disclosure Task Force’s “Enhancing the Risk Disclosures of Banks.”

Recommendations of the Task Force on Climate-related Financial Disclosures51

Principle 2: Disclosures should be specific and complete








A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts

E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

To be sufficiently comprehensive, disclosures should contain historical and futureoriented information in order to allow users to evaluate their previous expectations
relative to actual performance and assess possible future financial implications.
For quantitative information, the disclosure should include an explanation of thedefinition and scope applied. For future-oriented data, this includes clarification of the
key assumptions used. Forward-looking quantitative disclosure should align with data
used by the organization for investment decision making and risk management.
Any scenario analyses should be based on data or other information used by theorganization for investment decision making and risk management. Where appropriate,
the organization should also demonstrate the effect on selected risk metrics or
exposures to changes in the key underlying methodologies and assumptions, both inqualitative and quantitative terms.

Principle 3: Disclosures should be clear, balanced, and understandable

C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues

An organization’s reporting should provide a thorough overview of its exposure topotential climate-related impacts; the potential nature and size of such impacts; theorganization’s governance, strategy, processes for managing climate-related risks, andperformance with respect to managing climate-related risks and opportunities.



Disclosures should be written with the objective of communicating financial informationthat serves the needs of a range of financial sector users (e.g., investors, lenders,insurers, and others). This requires reporting at a level beyond compliance withminimum requirements. The disclosures should be sufficiently granular to informsophisticated users, but should also provide concise information for those who are lessspecialized. Clear communication will allow users to identify key information efficiently.
Disclosures should show an appropriate balance between qualitative and quantitative
information and use text, numbers, and graphical presentations as appropriate.
Fair and balanced narrative explanations should provide insight into the meaning ofquantitative disclosures, including the changes or developments they portray over time.
Furthermore, balanced narrative explanations require that risks as well as opportunities
be portrayed in a manner that is free from bias.
Disclosures should provide straightforward explanations of issues. Terms used in thedisclosures should be explained or defined for a proper understanding by the users.

Principle 4: Disclosures should be consistent over timeDisclosures should be consistent over time to enable users to understand thedevelopment and/or evolution of the impact of climate-related issues on theorganization’s business. Disclosures should be presented using consistent formats,language, and metrics from period to period to allow for inter-period comparisons.
Presenting comparative information is preferred; however, in some situations it may be
preferable to include a new disclosure even if comparative information cannot be
prepared or restated.
Changes in disclosures and related approaches or formats (e.g., due to shifting climaterelated issues and evolution of risk practices, governance, measurement methodologies,
or accounting practices) can be expected due to the relative immaturity of climaterelated disclosures. Any such changes should be explained.

Recommendations of the Task Force on Climate-related Financial Disclosures52

Principle 5: Disclosures should be comparable among organizations within a sector,
industry, or portfolioDisclosures should allow for meaningful comparisons of strategy, business activities,risks, and performance across organizations and within sectors and jurisdictions.
The level of detail provided in disclosures should enable comparison and benchmarkingof risks across sectors and at the portfolio level, where appropriate.
The placement of reporting would ideally be consistent across organizations—i.e., infinancial filings—in order to facilitate easy access to the relevant information.

Principle 6: Disclosures should be reliable, verifiable, and objectiveAIntroduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance





E



F
Conclusion
Appendices

Future-oriented disclosures will inherently involve the organization’s judgment (whichshould be adequately explained). To the extent possible, disclosures should be based on
objective data and use best-in-class measurement methodologies, which would include
common industry practice as it evolves.
Disclosures should be defined, collected, recorded, and analyzed in such a way that the
information reported is verifiable to ensure it is high quality. For future-oriented
information, this means assumptions used can be traced back to their sources. This
does not imply a requirement for independent external assurance; however, disclosures
should be subject to internal governance processes that are the same or substantiallysimilar to those used for financial reporting.

Principle 7: Disclosures should be provided on a timely basis

D
Scenario Analysis andClimate-Related Issues

Key Issues Considered andAreas for Further Work

Disclosures should provide high-quality reliable information. They should be accurate
and neutral—i.e., free from bias.

Information should be delivered to users or updated in a timely manner using
appropriate media on, at least, an annual basis within the mainstream financial report.
Climate-related risks can result in disruptive events. In case of such events with amaterial financial impact, the organization should provide a timely update of climaterelated disclosures as appropriate.

Reporters may encounter tension in the application of the fundamental principles set out above.
For example, an organization may update a methodology to meet the comparability principle,
which could then result in a conflict with the principle of consistency. Tension can also arise within
a single principle. For example, Principle 6 states that disclosures should be verifiable, but
assumptions made about future-oriented disclosures often require significant judgment bymanagement that is difficult to verify. Such tensions are inevitable given the wide-ranging andsometimes competing needs of users and preparers of disclosures. Organizations should aim tofind an appropriate balance of disclosures that reasonably satisfy the recommendations andprinciples while avoiding overwhelming users with unnecessary information.

Recommendations of the Task Force on Climate-related Financial Disclosures

53

Appendix 4: Select Disclosure Frameworks
To the extent there is corporate reporting of climate-related issues, it happens through amultitude of mandatory and voluntary schemes. Although a complete and comprehensive surveyof existing schemes is beyond the scope of this report, the Task Force on Climate-related Financial
Disclosures (TCFD or Task Force) considered a broad range of existing frameworks, both voluntaryand mandatory. The tables in Appendix 4 outline select disclosure frameworks considered by the
Task Force and describe a few key characteristics of each framework, including whether
disclosures are mandatory or voluntary, what type of information is reported, who the target
reporters and target audiences are, where the disclosed information is placed, and whether there
are specified materiality standards.64 These disclosure frameworks were chosen to illustrate thebroad range of disclosure regimes around the world; the tables are broken out into disclosure
frameworks sponsored by governments, stock exchanges, and non-governmental organizations(NGOs).
The information presented in the tables below (A4.1, A4.2, and A4.3) is based on information
released by governments, stock exchanges, and standard setters and is supplemented by theUnited Nations Environment Programme (UNEP), “The Financial System We Need: Aligning the
Financial System with Sustainable Development,” October 2015, and the Organization for
Economic Co-operation and Development (OECD), “Report to G20 Finance Ministers and Central
Bank Governors,” September 2015.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

64

These tables were originally included in the Task Force’s Phase I Report and have been updated where appropriate.

Recommendations of the Task Force on Climate-related Financial Disclosures

54

Table A4.1

Select Disclosure Frameworks: Governments
Region:Framework

TargetReporter

Australia:

Financial andGeneral public
non-financial
firms that meetemissions orenergyproduction or
consumption
thresholds

National Greenhouseand Energy Reporting
Act (2007)

European Union (EU):

TargetAudience

Mandatory
Materiality
or Voluntary Standard

Types of ClimateRelated Information

Disclosure
Location

External Assurance
Required

Mandatory if
thresholds are
met

Based on emissions
above a certain
threshold

GHG emissions,energy consumption,and energy production

Report to
government

Regulator may, by written
notice to corporation,require an audit of its
disclosures

Mandatory;
applicable forthe financial
year startingon Jan. 1, 2017or during the2017 calendar
year

None specified

Land use, water use, GHG Corporate financial
emissions, use ofreport or separate
materials, and energy use report (publishedwith financial reportor on website six
months after thebalance sheet dateand referenced infinancial report)

Member States must requirethat statutory auditor checks
whether the non-financial
statement has been
provided

Financial andnon-financial
EU Directive 2014/95
firms that meetregarding disclosure of
size criteria
non-financial and(i.e., have morediversity information
than 500(2014)
employees)

Investors,
consumers,
and otherstakeholders

France:Investors,
general public

Mandatory

None specified

Risks related to climate
Annual report andchange, consequences of website
climate change on thecompany's activities anduse of goods and services
it produces. Institutional
investors: GHG emissions
and contribution to goalof limiting global warming

Mandatory review on theconsistency of the disclosureby an independent third
party, such as a statutory
auditorInvestors,
general public

Voluntary

None specified

Significant risk, goals andtargets for improving
performance, materials,
energy consumption,water, discharge of
effluents, GHG emissions,and biodiversity

Guidelines include thirdparty assurance as a"leadership indicator" ofcompany's progress in
implementing the principles

Article 173, Energy
Transition Law (2015)

Listed financial
and nonfinancial firms
Additional
requirements
for institutional
investors

India:
National Voluntary
Guidelines on Social,
Environmental, andEconomicResponsibilities ofBusiness (2011)

Financial andnon-financial
firms

Recommendations of the Task Force on Climate-related Financial Disclosures

Not specified;companies may
furnish a report orletter fromowner/chief
executive officer

Member States may require
independent assurance for
information in non-financial
statement55

Table A4.1

Select Disclosure Frameworks: Governments (continued)
Region:Framework

TargetReporterTargetAudience

Mandatory
Materiality
or Voluntary Standard

Types of ClimateRelated Information

United Kingdom:

Financial andnon-financial
firms that are"QuotedCompanies," asdefined by theCompanies Act
2006

Investors /shareholders(“members of
the company”)

Mandatory

The main trends andStrategic Report andfactors likely to affect the Directors’ Reportfuture development,
performance, andposition of the company’sbusiness, environmental
matters (including theimpact of the company’sbusiness on theenvironment), and GHG
emissionsCompanies Act 2006
(Strategic Report andDirectors’ Report)
Regulations 2013

United States:

Insurers
Regulators
meeting certain
NAICs, 2010 Insurer
premium
Climate Risk Disclosure
thresholds Survey$100M in 2015
United States:
Financial andInvestors
non-financial
SEC Guidance
firms subject toRegarding Disclosure
Securities andRelated to Climate
Exchange
ChangeCommission(SEC) reporting
requirements

Mandatory if
thresholds are
met

Mandatory

Information is material
if its omission or
misrepresentation
could influence theeconomic decisions
shareholders take on
the basis of the annual
report as a whole(section 5 of the UK
FRC June 2014
Guidance on theStrategic Report)
None specified

US securities law
definition

Recommendations of the Task Force on Climate-related Financial Disclosures

General disclosuresabout climate changerelated risk management
and investment
management
Climate-related material
risks and factors that canaffect or have affected
the company’s financial
condition, such as
regulations, treaties andagreements, businesstrends, and physicalimpacts

Disclosure
Location

Survey sent to state
regulators

Annual and otherreports required tobe filed with SEC

External Assurance
Required
Not required, but statutory
auditor must state in reporton the company’s annual
accounts whether
in the auditor’s opinion theinformation given in theStrategic Report and the
Directors’ Report for thefinancial year for which theaccounts are prepared isconsistent with thoseaccounts
Not specified

Depends on assurance
requirements for
information disclosed

56

Table A4.2

Select Disclosure Frameworks: Exchange Listing Requirements and Indices
Region:Framework

TargetReporterTargetAudience

Mandatory
Materiality
or Voluntary Standard

Australia:

Listedfinancial andnon-financial
firms

Investors

Mandatory(comply or
explain)A real possibility that the General disclosure ofrisk in question could
material environmental
substantively impact the risks
listed entity’s ability tocreate or preserve value
for security holders overthe short, medium orlong term

Annual report must
Not specified, may depend
include either theon assurance requirements
corporate governancefor annual reportstatement or company
website link to thecorporate governancestatement on company's
websiteListedfinancial andnon-financial
firms

Investors,
regulator

Voluntary(comply or
explain)

Criteria explained in
Reference Form (Annex24) of the Instruction
CVM nº 480/09

Discretion of company

Not specified

Listedfinancial andnon-financial
firms

Investors

Voluntary:socialresponsibilities
Mandatory:
pollutantdischarge

None specified

Social and environmental
information including
methodology used, if
audited/reviewed by anindependent entity, andlink to information (i.e.,
webpage)
Waste generation,
resource consumption,and pollutants

Not specified

Listedfinancial andnon-financial
firms

Investors

Mandatory(comply or
explain)

Guidance provided in
the Guide, paragraphs
4.7-4.11

Material environmental,social, and governancefactors, performance,
targets, and related
information specified in
the Guide

Annual report or
standalone report,
disclosed through
SGXNet reporting
platform and company
websiteNot specified; companies
shall allocate dedicatedhuman resources for regularinspection of
implementation ofenvironmental protection
policies
Not required

Australia Securities
Exchange
Listing Requirement
4.10.3; Corporate
Governance Principles
and Recommendations(2014)

Brazil:Stock Exchange(BM&FBovespa)
Recommendation ofreport or explain(2012)
China:
Shenzhen Stock
Exchange
Social Responsibility
Instructions to Listed
Companies (2006)
Singapore:
Singapore Exchange
Listing Rules 711A &711B and Sustainability
Reporting Guide (2016)(“Guide”)

Recommendations of the Task Force on Climate-related Financial Disclosures

Types of ClimateRelated Information

Disclosure Location

External Assurance
Required57

Table A4.2

Select Disclosure Frameworks: Exchange Listing Requirements and Indices (continued)
Region:Framework

TargetReporterTargetAudience

Mandatory
Materiality
or Voluntary Standard

Types of ClimateRelated Information

Disclosure Location

External Assurance
RequiredSouth Africa:

Listedfinancial andnon-financial
firms

Investors

Mandatory;(comply or
explain)None specified

General disclosure
regarding sustainability
performance

Annual report

RequiredFinancial andnon-financial
firms

Investors

Voluntary

None specified

GHG emissions, SOxemissions, energy
consumption, water,
waste generation,
environmental violations,electricity purchased,biodiversity, and mineralwaste management

Nonpublic

Disclose whether external
assurance was provided andwhether it was pursuant to arecognized standard

Johannesburg Stock
Exchange
Listing Requirement
Paragraph 8.63;
King Code ofGovernance Principles(2009)
World, regional, andcountry-specificindices:S&P Dow Jones IndicesSustainability Index,
Sample Questionnaires

Recommendations of the Task Force on Climate-related Financial Disclosures

58

Table A4.3

Select Disclosure Frameworks: Non-Governmental Organizations
Framework

TargetReporterTargetAudience

Mandatory
Materiality
or Voluntary Standard

Global:Pension funds,
insurers,
sovereign
wealth funds>$2bn AUM

Asset
managers,
investment
industry,
government

Voluntary

Financial andnon-financial
firms

Investors

Voluntary

Financial andnon-financial
firms

Investors

Voluntary

Asset Owners
Disclosure Project2017 Global Climate
Risk Survey

Global:CDP
Annual Questionnaire(2016)
Global:CDSBCDSB Framework for
Reporting
Environmental
Information & Natural
CapitalNone specified

Types of ClimateRelated Information

Information on whether
climate change issues areintegrated in investment
policies, engagement
efforts, portfolio
emissions intensity forscope 1 emissions,climate change-related
portfolio risk mitigation
actions
None specified
Information on risk
management procedures
related to climate changerisks and opportunities,
energy use, and GHG
emissions (Scope 1-3)
Environmental
Environmental policies,
information is material if strategy, and targets,(1) the environmental
including the indicators,
impacts or results it
plans, and timelines useddescribes are, due toto assess performance;
their size and nature,material environmental
expected to haverisks and opportunities
a significant positive oraffecting the organization;negative effect on thegovernance oforganization’s current,
environmental policies,
past or future financial
strategy, and information;
condition andand quantitative andoperational results andqualitative results on
its ability to execute its
material sources ofstrategy or (2) omitting, environmental impact
misstating, or misinterpreting it could
influence decisions thatusers of mainstream
reports make about theorganization

Recommendations of the Task Force on Climate-related Financial Disclosures

Click for November 2018 Update
Disclosure Location External Assurance
Required
Survey responses;
respondents are asked
whether responses may
be made public

Disclose whether external
assurance was provided

CDP database

Encouraged; information
requested about verificationand third party certification

Annual reporting
packages in whichorganizations are
required to deliver theiraudited financial results
under the corporate,compliance or securities
laws of the country inwhich they operate

Not required, but disclose if
assurance has been
provided over whether
reported environmental
information is inconformance with the CDSB
Framework

59

Table A4.3

Select Disclosure Frameworks: Non-Governmental Organizations (continued)

Click for November 2018 Update

Framework

TargetReporterTargetAudience

Mandatory
Materiality
or Voluntary Standard

Types of ClimateRelated Information

Disclosure Location

External Assurance
Required

Global:Financial andnon-financial
firms

Investors

Voluntary

Allow “investors to see
major trends andsignificant events
related to climatechange that affect orhave the potential toaffect the company’s
financial condition
and/or its ability toachieve its strategy"

The extent to which
performance is affectedby climate-related risks
and opportunities;
governance processes foraddressing those effects;
exposure to significant
climate-related issues;
strategy or plan toaddress the issues; andGHG emissions

Annual reporting
packages in whichorganizations are
required to deliver theiraudited financial results
under the corporate,compliance or securities
laws of the territory or
territories in which they
operateNot required unlessInternational Standards on
Auditing 720 requires theauditor of financial
statements to read
information accompanying
them to identify materialinconsistencies between theaudited financial statements
and accompanying
information

Real estate
asset/portfolio
ownersInvestors andindustry
stakeholders

Voluntary

None specified

Real estate sector-specificrequirements related tofuel, energy, and water
consumption andefficiencies as well as lowcarbon products

Data collected throughNot required, but disclose
the GRESB Real Estate
whether external assurance
Assessment disclosed to was provided
participants themselves
and:

CDSB
Climate Change
Reporting Framework,
Ed. 1.1 (2012)

Global:GRESBInfrastructure Asset
Assessment & Real
Estate Assessment• for non-listed property
funds and companies, tothose of that company
or fund’s investors thatare GRESB Investor
Members;• for listed real estatecompanies, to all GRESB
Investor Members thatinvest in listed realestate securities.

Global:GRI
Sustainability
Reporting Standards(2016)

Organizationsof any size,
type, sector, or
geographic
locationAllstakeholders

Voluntary

Topics that reflect thereporting organization’s
significant economic,
environmental, andsocial impacts or
substantively influence
the decisions ofstakeholders

Recommendations of the Task Force on Climate-related Financial Disclosures

Materials, energy, water,
biodiversity, emissions,effluents and waste,environmental
compliance, and supplierenvironmental
assessment

Stand-alone
Not required, but advised
sustainability reports orannual reports or otherpublished materials that
include sustainability
information

60

Table A4.3

Select Disclosure Frameworks: Non-Governmental Organizations (continued)

Click for November 2018 Update

Framework

TargetReporterTargetAudience

Mandatory
Materiality
or Voluntary Standard

Types of ClimateRelated Information

Disclosure Location

External Assurance
Required

Global:Oil and gas
industries

Investors

Voluntary

None specified

GHG emissions and clean
technologies data

Not specified

Not specified

Automotive
industry

Investors

Voluntary

None specified

GHG emissions and clean
technologies data

Company’s discretion

Not specified

Electricalutilities

Investors

Voluntary

None specified

GHG emissions andelectricity production

Company’s discretion

Disclose how GHG emissions
information was verified

Publiccompanies
traded oninternational
exchanges

Investors

Voluntary

Substantively affect thecompany’s ability tocreate value over the
short, medium, and longterm

General challenges
Standalone
related to climate change, sustainability or
loss of ecosystems, andintegrated reportresource shortages

Oil and gas
industries

All
stakeholders

Voluntary

Material sustainability
Energy consumption
issues are those that, inthe view of company
management and its
external stakeholders,affect the company’s
performance or strategy
and/or assessments or
decisions about thecompany

Sustainability reporting

Not required, but
encouraged

Investors

Investors

Voluntary

None specified

Investor practices

Transparency report

Not specified

Investors

Voluntary

A substantial likelihoodthat the disclosure of
the omitted fact would
have been viewed by thereasonable investor as
having significantly
altered the “total mix” ofthe information madeavailable

Information onsustainability topics thatare deemed material,standardized metrics
tailored by industry

SEC filings

Depends on assurance
requirements for
information disclosed

IIGCC
Oil & Gas (2010)
Automotive (2009)
Electric Utilities (2008)
Global:IIRC
International
Integrated Reporting
Framework (2013)
Global:IPIECAOil and gas industry
guidance on voluntarysustainability reporting

Global:Not specified; discussion
paper released on issues
relating to assurance

PRI
Reporting Framework(2016)
United States:

Publiccompanies
traded on US
Conceptual Framework exchanges(2013) and SASB
Standards (Various)
SASB

Recommendations of the Task Force on Climate-related Financial Disclosures61

Appendix 5: Glossary and Abbreviations
Glossary
BOARD OF DIRECTORS (or BOARD) refers to a body of elected or appointed members who
jointly oversee the activities of a company or organization. Some countries use a two-tiered
system where “board” refers to the “supervisory board” while “key executives” refers to the“management board.”65
CLIMATE-RELATED OPPORTUNITY refers to the potential positive impacts related to climatechange on an organization. Efforts to mitigate and adapt to climate change can produce
opportunities for organizations, such as through resource efficiency and cost savings, theadoption and utilization of low-emission energy sources, the development of new products andservices, and building resilience along the supply chain. Climate-related opportunities will varydepending on the region, market, and industry in which an organization operates.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
Appendices

CLIMATE-RELATED RISK refers to the potential negative impacts of climate change on anorganization. Physical risks emanating from climate change can be event-driven (acute) such asincreased severity of extreme weather events (e.g., cyclones, droughts, floods, and fires). They canalso relate to longer-term shifts (chronic) in precipitation and temperature and increased
variability in weather patterns (e.g., sea level rise). Climate-related risks can also be associatedwith the transition to a lower-carbon global economy, the most common of which relate to policy
and legal actions, technology changes, market responses, and reputational considerations.
FINANCIAL FILINGS refer to the annual reporting packages in which organizations are required
to deliver their audited financial results under the corporate, compliance, or securities laws of thejurisdictions in which they operate. While reporting requirements differ internationally, financial
filings generally contain financial statements and other information such as governancestatements and management commentary.66
FINANCIAL PLANNING refers to an organization’s consideration of how it will achieve and fundits objectives and strategic goals. The process of financial planning allows organizations to assess
future financial positions and determine how resources can be utilized in pursuit of short- andlong-term objectives. As part of financial planning, organizations often create “financial plans” thatoutline the specific actions, assets, and resources (including capital) necessary to achieve theseobjectives over a 1-5 year period. However, financial planning is broader than the development ofa financial plan as it includes long-term capital allocation and other considerations that may
extend beyond the typical 3-5 year financial plan (e.g., investment, research and development,
manufacturing, and markets).
GOVERNANCE refers to “the system by which an organization is directed and controlled in theinterests of shareholders and other stakeholders.”67 “Governance involves a set of relationships
between an organization’s management, its board, its shareholders, and other stakeholders.
Governance provides the structure and processes through which the objectives of theorganization are set, progress against performance is monitored, and results are evaluated.”68

OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.
Based on Climate Disclosure Standards Board, “CDSB Framework for Reporting Environmental Information and Natural Capital,” June 2015.
67
A. Cadbury, Report of the Committee on the Financial Aspects of Corporate Governance, London, 1992.
68
OECD, G20/OECD Principles of Corporate Governance, OECD Publishing, Paris, 2015.
65
66

Recommendations of the Task Force on Climate-related Financial Disclosures

62

GREENHOUSE GAS (GHG) EMISSIONS SCOPE LEVELS69

Scope 1 refers to all direct GHG emissions.
Scope 2 refers to indirect GHG emissions from consumption of purchased electricity, heat, or
steam.
Scope 3 refers to other indirect emissions not covered in Scope 2 that occur in the value
chain of the reporting company, including both upstream and downstream emissions. Scope
3 emissions could include: the extraction and production of purchased materials and fuels,transport-related activities in vehicles not owned or controlled by the reporting entity,
electricity-related activities (e.g., transmission and distribution losses), outsourced activities,
and waste disposal. 70

INTERNAL CARBON PRICE is an internally developed estimated cost of carbon emissions.
Internal carbon pricing can be used as a planning tool to help identify revenue opportunities andrisks, as an incentive to drive energy efficiencies to reduce costs, and to guide capital investment
decisions.
MANAGEMENT refers to those positions an organization views as executive or senior
management positions and that are generally separate from the board.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkNATIONALLY DETERMINED CONTRIBUTION (NDC) refers to the post-2020 actions that acountry intends to take under the international climate agreement adopted in Paris.
ORGANIZATION refers to the group, company, or companies, and other entities for which
consolidated financial statements are prepared, including subsidiaries and jointly controlled
entities.
PUBLICLY AVAILABLE 2°C SCENARIO refers to a 2°C scenario that is (1) used/referenced andissued by an independent body; (2) wherever possible, supported by publicly available datasets;(3) updated on a regular basis; and (4) linked to functional tools (e.g., visualizers, calculators, andmapping tools) that can be applied by organizations. 2°C scenarios that presently meet thesecriteria include: IEA 2DS, IEA 450, Deep Decarbonization Pathways Project, and International
Renewable Energy Agency.
RISK MANAGEMENT refers to a set of processes that are carried out by an organization’s board
and management to support the achievement of the organization’s objectives by addressing its
risks and managing the combined potential impact of those risks.

F
Conclusion
Appendices

SCENARIO ANALYSIS is a process for identifying and assessing a potential range of outcomes of
future events under conditions of uncertainty. In the case of climate change, for example,
scenarios allow an organization to explore and develop an understanding of how the physical andtransition risks of climate change may impact its businesses, strategies, and financial
performance over time.
SECTOR refers to a segment of organizations 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 organizations within asector.
STRATEGY refers to an organization’s desired future state. An organization’s strategy establishes
a foundation against which it can monitor and measure its progress in reaching that desired
state. Strategy formulation generally involves establishing the purpose and scope of theWorld Resources Institute and World Business Council for Sustainable Development, The Greenhouse Gas Protocol: A Corporate Accounting andReporting Standard (Revised Edition), March 2004.
70
IPCC, Climate Change 2014 Mitigation of Climate Change, Cambridge University Press, 2014.
69

Recommendations of the Task Force on Climate-related Financial Disclosures63

organization’s activities and the nature of its businesses, taking into account the risks andopportunities it faces and the environment in which it operates.
SUSTAINABILITY REPORT is an organizational report that gives information about economic,
environmental, social, and governance performance and impacts. For companies andorganizations, sustainability —the ability to be long-lasting or permanent—is based on
performance and impacts in these four key areas.
VALUE CHAIN refers to the upstream and downstream life cycle of a product, process, or service,including material sourcing, production, consumption, and disposal/recycling. Upstream activities
include operations that relate to the initial stages of producing a good or service (e.g., material
sourcing, material processing, supplier activities). Downstream activities include operations that
relate to processing the materials into a finished product and delivering it to the end user (e.g.,transportation, distribution, and consumption).

Abbreviations
A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion

2°C —2° Celsius

IEA—International Energy Agency

ASC—Accounting Standards Codification

IIGCC—Institutional Investors Group on Climate Change

BNEF—Bloomberg New Energy Finance

IIRC—International Integrated Reporting Council

CDSB—Climate Disclosure Standards Board

IPCC—Intergovernmental Panel on Climate Change

ERM—Environmental Resources Management

NGO—Non-governmental organization

EU—European Union

OECD—Organization for Economic Co-operation and Development

FASB—Financial Accounting Standards Board

R&D—Research and development

FSB—Financial Stability Board

SASB—Sustainability Accounting Standards Board

G20—Group of 20

TCFD—Task Force on Climate-related Financial Disclosures

GHG—Greenhouse gas

UN—United Nations

GICS—Global Industry Classification Standard

UNEP—United Nations Environment Programme

GRI—Global Reporting Initiative

USDE—U.S. Dollar Equivalent

IAS—International Accounting Standard

WRI—World Resources Institute

IASB—International Accounting Standards Board

Appendices

Recommendations of the Task Force on Climate-related Financial Disclosures64Appendix 6: References“Communiqué from the G20 Finance Ministers and Central Bank Governors Meeting in Washington, D.C.
April 16-17, 2015.” April 2015.
www.g20.org.tr/wp-content/uploads/2015/04/April-G20-FMCBG-Communique-Final.pdf.
Cadbury, A. Report of the Committee on the Financial Aspects of Corporate Governance. London, 1992.
www.ecgi.org/codes/documents/cadbury.pdf.
Carney, Mark. “Breaking the tragedy of the horizon—climate change and financial stability.” September 29,
2015. www.bankofengland.co.uk/publications/Pages/speeches/2015/844.aspx.
Ceres. “Power Forward 3.0: How the largest US companies are capturing business value while addressing
climate change.” 2017. https://www.worldwildlife.org/publications/power-forward-3-0-how-the-largestus-companies-are-capturing-business-value-while-addressing-climate-change.
Climate Disclosure Standards Board (CDSB). “CDSB Framework for Reporting Environmental Information
and Natural Capital.” June 2015. www.cdsb.net/sites/cdsbnet/files/cdsb_framework_for_reporting_environmental_information_natural_capital.pdf.
Economist Intelligence Unit. “The Cost of Inaction: Recognising the Value at Risk from Climate Change.”
2015. https://www.eiuperspectives.economist.com/sustainability/cost-inaction.

A
Introduction

Enhanced Disclosure Task Force. Enhancing the Risk Disclosures of Banks. October 2012.
www.fsb.org/wp-content/uploads/r_121029.pdf.

B
Climate-Related Risks,
Opportunities, andFinancial Impacts

Environmental Protection Agency Victoria (EPA Victoria). “Resource Efficiency Case Studies, Lower yourimpact.” www.epa.vic.gov.au/business-and-industry/lower-your-impact/resource-efficiency/casestudies.

C
Recommendations andGuidance

Fellow, Avery. “Investors Demand Climate Risk Disclosure.” Bloomberg, February 2013.
www.bloomberg.com/news/2013-02-25/investors-demand-climate-risk-disclosure-in-2013proxies.html.

D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF
Conclusion
AppendicesFrankfurt School-United Nations Environmental Programme Centre and Bloomberg New Energy Finance.
“Global Trends in Renewable Energy Investment 2017.” 2017. fs-unep-centre.org/sites/default/files/
publications/globaltrendsinrenewableenergyinvestment2017.pdf.
Fricko, Oliver et. al. Energy sector water use implications of a 2° C climate policy. Environmental Research
Letters, 11: 1-10, 2016. www.cd-links.org/wp-content/uploads/2016/06/Fricko-et-al-2016.pdf.
FSB. “FSB to establish Task Force on Climate-related Financial Disclosures.” December 4, 2015. www.fsbtcfd.org/wp-content/uploads/2016/01/12-4-2015-Climate-change-task-force-press-release.pdf.
FSB. “Proposal for a Disclosure Task Force on Climate-Related Risks.” November 9, 2015. www.fsb.org/wpcontent/uploads/Disclosure-task-force-on-climate-related-risks.pdf.
G20 Green Finance Study Group. G20 Green Finance Synthesis Report. 2016. unepinquiry.org/wpcontent/uploads/2016/09/Synthesis_Report_Full_EN.pdf.
Ganci, N., S. Hammer, T. Reilly, and P. Rodel. Environmental and Climate Change Disclosure under the
Securities Laws: A Multijurisdictional Survey. Debevoise & Plimpton, March 2016.
www.debevoise.com/insights/publications/2016/03/environmental-and-climate-change-disclosure.
Greenhouse Gas Protocol. “Calculation Tools, FAQ.” ghgprotocol.org/calculationg-tools-faq.
Intergovernmental Panel on Climate Change (IPCC). Fifth Assessment Report (AR5), Cambridge University
Press, 2014. http://www.ipcc.ch/report/ar5/.
IPCC. Climate Change 2014 Mitigation of Climate Change. Cambridge University Press, 2014.
International Energy Agency (IEA). “Global energy investment down 8% in 2015 with flows signaling movetowards cleaner energy.” September 14, 2016. www.iea.org/newsroom/news/2016/september/globalenergy-investment-down-8-in-2015-with-flows-signalling-move-towards-clean.html.
IEA. World Energy Outlook Special Briefing for COP21. 2015.
www.iea.org/media/news/WEO_INDC_Paper_Final_WEB.PDF.
Maack, J. Scenario Analysis: A Tool for Task Managers. Social Analysis: selected tools and techniques, Social
Development Papers, Number 36, the World Bank, June 2001, Washington, DC.
siteresources.worldbank.org/INTPSIA/Resources/ 490023-1121114603600/13053_scenarioanalysis.pdf.

Recommendations of the Task Force on Climate-related Financial Disclosures65Mercer LLC. Investing in a Time of Climate Change. 2015.
www.mercer.com/our-thinking/investing-in-a-time-of-climate-change.html.
Organization for Economic Co-operation and Development (OECD) and Climate Disclosure Standards
Board (CDSB). Climate Change Disclosure in G20 Countries: Stocktaking of Corporate Reporting Schemes.
November 18, 2015. www.oecd.org/investment/corporate-climate-change-disclosure-report.htm.
OECD. G20/OECD Principles of Corporate Governance. OECD Publishing, Paris, 2015.
dx.doi.org/10.1787/9789264236882-en.
Pearce, David W. and R. Kerry Turner. “Economics of Natural Resources and the Environment.” Johns
Hopkins University Press. 1989. ISBN 978-0801839870.
Rounsevell, Mark D. A. and Marc J Metzger. Developing qualitative scenario storylines for environmental
change assessment. WIREs Climate Change 2010, 1: 606-619. doi: 10.1002/wcc.63, 2010.
wires.wiley.com/WileyCDA/WiresArticle/wisId-WCC63.html.
Seley, Peter. “Emerging Trends in Climate Change Litigation.” Law 360. March 7, 2016.
www.law360.com/articles/766214/emerging-trends-in-climate-change-litigation.
Sustainability Accounting Standards Board (SASB). SASB Climate Risk Technical Bulletin#: TB001-10182016.
October, 2016. library.sasb.org/climate-risk-technical-bulletin.
Task Force on Climate-related Financial Disclosures. Phase I Report of the Task Force on Climate-related
Financial Disclosures. March 31, 2016.
www.fsb-tcfd.org/wp-content/uploads/2016/03/Phase_I_Report_v15.pdf.

A
Introduction
B
Climate-Related Risks,
Opportunities, andFinancial Impacts
C
Recommendations andGuidance
D
Scenario Analysis andClimate-Related Issues
E
Key Issues Considered andAreas for Further WorkF

United Nations Environment Programme (UNEP). The Financial System We Need: Aligning the Financial
System with Sustainable Development. 2015.
http://unepinquiry.org/wp-content/uploads/2015/11/The_Financial_System_We_Need_EN.pdf.
UNEP and Copenhagen Centre for Energy Efficiency. Best Practices and Case Studies for Industrial Energy
Efficiency Improvement. February 16, 2016.
www.energyefficiencycentre.org/Nyheder/Nyhed?id=b2bedb2b-05a3-444f-ae5e-55ee3c8f1a68.
United Nations Framework Convention on Climate Change. ”The Paris Agreement,” December 2015.
unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf.
World Business Council for Sustainable Development. “Sustainability and enterprise risk management:
The first step towards integration.” January 18, 2017.
www.wbcsd.org/contentwbc/download/2548/31131.
World Resources Institute and World Business Council for Sustainable Development. The Greenhouse Gas
Protocol: A Corporate Accounting and Reporting Standard, (Revised Edition). March 2004.
www.ghgprotocol.org/standards/corporate-standard.

Conclusion
Appendices

Recommendations of the Task Force on Climate-related Financial Disclosures66