1

Mr. Klaas Knot
Chair
Financial Stability Board
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
Switzerland

September 15, 2022

Dear Chair Knot,
It is my pleasure to present the fifth annual status report of the Task Force on Climate-related Financial
Disclosures (TCFD), which reflects on milestones related to the implementation of our recommendations
since they were released in 2017 and other encouraging developments in climate-related disclosure since
our last report in October 2021.
While global ambition to address climate change has increased over the last five years, recent extreme
weather events around the world have amplified the need for even greater concerted action and fasterprogress. It is encouraging to see that consideration of the implications of climate change has become far
more mainstream throughout financial markets since 2017, and that an increasing number of companies
are publicly committing to net-zero emissions transition plans.
Over the last five years, the Task Force has made great contributions toward its goal of bringing better
understanding of the impacts of climate-related risks and opportunities to the global financial system.
Since 2017, the Task Force has seen significant momentum around adoption of and support for its
recommendations as detailed in previous status reports as well as in this report.
Since our last report, our number of supporters has increased to more than 3,800, companies havecontinued to increase their TCFD-aligned reporting, and there have been important actions by regulators,
jurisdictions, and international standard-setters to use the TCFD recommendations in developing climaterelated reporting requirements and standards — including but not limited to proposals released earlier
this year by the U.S. Securities and Exchange Commission, the International Sustainability Standards
Board, and the European Financial Reporting Advisory Group. This public sector action is vital to reinforce
the importance and urgency of climate action guided by data.
To help make comparable and reliable data available to all, I joined French President Macron to form a
new Climate Data Steering Committee that will bring together international organizations, regulators,
policy makers and data service providers. We are working to create a public open data platform that willcollect, aggregate, and standardize certain elements of companies’ climate-related disclosures. I lookforward to updating you as this collaboration continues.
Even with the significant progress made over the past five years, this report makes clear that moreurgent progress is needed. Supporting market efficiency and stability is paramount as we look to build amore sustainable and resilient future. We are grateful for your continued commitment to this work.

Sincerely,

Michael R. Bloomberg

The Task Force on Climate-related Financial Disclosures

Executive Summary
In June 2017, the Financial Stability Board’s
Task Force on Climate-related Financial
Disclosures (Task Force or TCFD) released its final
recommendations (2017 report), which provide aframework for companies and other organizations
to develop more effective climate-related financial
disclosures through their existing reporting
processes (see Figure ES1).1,2 In its 2017 report,
the Task Force emphasized the importance oftransparency in pricing risk — including risk
related to climate change — to support informed,
efficient capital-allocation decisions.
Since the release of its 2017 report and at therequest of the Financial Stability Board (FSB),
the Task Force has issued five annual status
reports — including this report — describing thealignment of companies’ reporting with the TCFD
recommendations. Recognizing this year marks
five years since its final recommendations were
published, the Task Force reflected on significant
developments and progress made in terms ofclimate-related financial disclosures broadly andrelative to milestones included in its 2017 report.
These milestones — developed when the Task
Force was finalizing its recommendations but still
relevant today — were based on the Task Force’s
view of success of its recommendations over a
five-year period, as summarized in Figure ES2.

Figure ES1

The Task Force’s Remit
In April 2015, the G20 Finance Ministers andCentral Bank Governors asked the Financial
Stability Board (FSB) to convene public- andprivate-sector participants to review how thefinancial sector can take account of climaterelated issues. As part of its review, the FSB
identified the need for better information to
support informed investment, lending, andinsurance underwriting decisions and improveunderstanding of climate-related risks.
To help identify the information needed toassess and price climate-related risks, the FSB
established an industry-led task force — theTCFD. The FSB asked the TCFD to develop
voluntary climate-related financial disclosuresthat would be useful to investors and others inunderstanding material risks.

Over the past five years, the Task Force has
seen significant momentum around adoptionof and support for its recommendations as
detailed in previous status reports as wellas in this report. In particular, the percent ofcompanies disclosing information in line with
the Task Force’s recommendations has steadily
increased each year as has the amount of
TCFD-aligned information companies disclose.3

Figure ES2

Success of the TCFD Recommendations
and Milestones from 2017
View of Success

Milestones Over Five-Year Period“Through widespread adoption, financial risks andopportunities related to climate change will becomea natural part of companies’ risk management andstrategic planning processes. As this occurs, companies’
and investors’ understanding of the potential financial
implications associated with climate change will grow,information will become more decision-useful, andrisks and opportunities will be more accurately priced,
allowing for the more efficient allocation of capital.”

1

Companies increasingly disclose climate-related
information in financial filings

2

Preparers and users of disclosure increasingly viewclimate-related issues as mainstream business andinvestment considerations

3

The number of companies implementing therecommendations grows, and the types of
information disclosed are further developed

4

Disclosures become more complete, and there ismore appropriate pricing of climate-related issues— 2017 Report12
3

In this report, the Task Force uses the term “companies” to refer to entities with public debt or equity as well as asset managers and asset owners,
including public- and private-sector pension plans, endowments, and foundations.
Financial Stability Board, “FSB to Establish Task Force on Climate-related Financial Disclosures,” December 4, 2015.
The percent of companies disclosing information in line with the Task Force’s 11 recommended disclosures (see Table A1, p. 11) is basedon a sample of large companies drawn from eight industries as described in Section A.1. TCFD-Aligned Reporting by Public Companies.

2

The Task Force on Climate-related Financial Disclosures

In addition, since the publication of the 2021
status report, there have been further significant
actions by regulators and international standard
setters to use the TCFD recommendations
in developing climate-related reporting
requirements and standards — including but notlimited to proposals released earlier this year by
the U.S. Securities and Exchange Commission,
the International Sustainability Standards Board,and the European Financial Reporting Advisory
Group.4,5 The Task Force considers these positive
developments as entirely consistent with views
expressed in its 2017 report, as follows:“The Task Force’s recommendations provide
a common set of principles that should help
existing disclosure regimes come into closeralignment over time. Preparers, users, andother stakeholders share a common interestin encouraging such alignment as it relieves
a burden for reporting entities, reduces
fragmented disclosure, and provides greatercomparability for users. The Task Force also
encourages standard setting bodies to support
adoption of the recommendations andalignment with the recommended disclosures.”
The Task Force believes a key driving factor of thismomentum is the continuing growth in investor
demand for companies to report informationin line with the TCFD recommendations. For
example, as part of Climate Action 100+, 700
investors with over $68 trillion in assets undermanagement are engaging the world’s largest
corporate greenhouse gas emitters to strengthen
their climate-related disclosures by implementing
the TCFD recommendations.6 In addition, earlier
this year, CDP announced that over 680 financial
institutions with more than $130 trillion in assets
have asked over 10,000 companies to disclose
through CDP, which has aligned its climate change
disclosures with the TCFD recommendations.7

4
5

6
7
8
9
10
11
12
13

Even with the significant progress made overthe past five years, the Task Force believes
more urgent progress is needed in improving
transparency on the actual and potential impact
of climate change on companies, especially when
considered within the broader global focus on
climate change.

GLOBAL FOCUS ON CLIMATE CHANGEIn December 2015, nearly 200 governments
agreed to address climate change by holding
the increase in the global average temperature
to well below 2°C above pre-industrial levels
and pursuing efforts to limit the increase to
1.5°C (referred to as the Paris Agreement).8
Subsequent to the Paris Agreement, theIntergovernmental Panel on Climate Change(IPCC) issued a report in 2018 indicating the
global temperature increase needs to be limited
to 1.5°C above pre-industrial levels to avoid
long-lasting or irreversible consequences ofglobal warming.9
In its April 2022 report, the IPCC indicatedlimiting global warming to around 1.5°C requires
greenhouse gas (GHG) emissions to peak
before 2025 at the latest and be reduced by
43% by 2030 to reach “net zero” by 2050.10,11 The
press release announcing the report emphasizedthat “without immediate and deep emissions
reductions across all sectors, limiting global
warming to 1.5°C is beyond reach.”12 Despite
this warning, the world is heading to a warmingof well above 2°C based on current policies andcommitments — even when taking into accountthe nearly 130 countries and self-governing
territories and close to 8,000 companies
making commitments to achieve net zero
GHG emissions by 2050.13
Furthermore, the recent IPCC report highlighted
concerns that directly tie to climate-related
financial disclosure. The report highlighted

See Section D. Initiatives Supporting TCFD for additional developments since October 2021.
U.S. Securities and Exchange Commission, “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosuresfor Investors,” March 21, 2022; International Sustainability Standards Board, “Press Release: ISSB Delivers Proposals That Create
Comprehensive Global Baseline of Sustainability Disclosures,” March 31, 2022; and European Financial Reporting Advisory Group, “Press
Release: EFRAG Launches a Public Consultation on the Draft ESRS EDs,” April 29, 2022.
See Climate Action 100+.
CDP, “More than 680 Financial Institutions with US $130+ Trillion in Assets Call on Nearly 10,400 Companies to Disclose Environmental Datathrough CDP,” March 14, 2022.
United Nations Framework Convention on Climate Change, “The Paris Agreement,” December 12, 2015.
The IPCC is a group convened by the United Nations to assess the science related to climate change. See IPCC, Summary for Policymakers: Global
Warming of 1.5°C, October 8, 2018.
IPCC, Climate Change 2022: Mitigation of Climate Change-Working Group III Contribution to the IPCC Sixth Assessment Report, April 4, 2022
Net zero refers to a state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere. The term net
zero is important because this is the state at which global warming stops. See Net Zero Climate, “What is Net Zero?,” June 28, 2020.
IPCC, “Press Release: Climate Change 2022-Mitigation of Climate Change,” April 4, 2022.
See Climate Action Tracker, Despite Glasgow Climate Pact 2030 Climate Target Updates Have Stalled, June 3, 2022; Net Zero Tracker, Net Zero
Stocktake 2022, June 12, 2022; and Race to Zero, “Who’s In?,” July 13, 2022.

3

The Task Force on Climate-related Financial Disclosuresthat finance is a critical enabling factor forthe low carbon transition, but progress onaligning financial flows with low GHG emissions
pathways remains slow. The report further
indicated that climate-related financial risks
remain greatly underestimated by financial
institutions and markets — limiting the capitalreallocation needed for the low-carbon
transition — and noted that support andguidance for enhancing transparency could
promote capital markets’ climate financing by
providing quality information to price climaterelated risks and opportunities. Notably,
the IPCC report referenced the TCFD as an
example of such guidance.

CLIMATE-RELATED FINANCIALDISCLOSURE PRACTICES“There is a climate financing gap whichreflects a persistent misallocation of
global capital.” 14

To better understand current climate-related
financial disclosure practices and how they
have evolved, the Task Force reviewed — using
artificial intelligence technology — publicly
available reports for over 1,400 large companies
in specific sectors around the world over a threeyear and five-year period. In addition, the Task
Force conducted two surveys in 2022 — one
to gain insight on asset managers and asset
owners’ TCFD-aligned reporting practices and theother on companies’ efforts to implement the
TCFD recommendations as well as investors andother users’ views on the usefulness of climaterelated financial disclosures for decision-making.
The Task Force found the results of its disclosure
review and surveys encouraging but believes
more urgent progress is necessary to achieve
the milestones identified in the Task Force’s
2017 report. Table ES1 (p. 5) summarizes the
key themes and findings from the Task Force’s
disclosure review, survey results, and otheranalyses. Additional themes and findings areincluded in Box ES1 (p. 6).

Now more than ever it is critical for companies
to consider the impact of climate change
and associated mitigation and adaptation
efforts on their strategies and businesses anddisclose related material information. Last
year, in recognition of the growing emphasison companies setting net-zero targets andthe demand by investors and others for
decision-useful information on companies’
plans and progress to meet such targets, theTask Force published Guidance on Metrics,
Targets, and Transition Plans.15 The guidance
outlines considerations for developing atransition plan and highlights key informationfrom such plans to include in climate-related
financial disclosures.

Similar to previous status reports, this reportprovides an overview of current disclosure
practices in terms of their alignment with the
Task Force’s recommendations. It also highlights
progress associated with implementation of
the TCFD recommendations over the past five
years — including progress relative to key
milestones identified in 2017, implementation
trends and challenges that may be usefulfor companies beginning to implement therecommendations, and investors and otherusers’ views on the usefulness of climate-related
financial disclosures and improvements needed.

14 IPCC, Climate Change 2022: Mitigation of Climate Change-Working Group III Contribution to the IPCC Sixth Assessment Report, April 4, 2022.
15 TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021.

4

The Task Force on Climate-related Financial Disclosures

Table ES1

Key Takeaways and Findings
AI Review 1

The percent of companies disclosing TCFD-aligned information continues to grow, butmore urgent progress is needed. For fiscal year 2021 reporting, 80% of companies disclosed
in line with at least one of the 11 recommended disclosures; however, only 4% disclosed in linewith all 11 recommended disclosures and only around 40% disclosed in line with at least five.
All regions have significantly increased their levels of disclosure over the past three years.
In particular, the average level of disclosure across the 11 recommended disclosures for
European companies was 60% for fiscal year 2021, growing 23 percentage points since fiscal year
2019; 36% for Asia Pacific companies — an increase of 11 percentage points; and 29% for North
America companies — an increase of 12 percentage points.

Reporting
Practices
Survey2

A majority of asset managers and asset owners report to their clients and beneficiaries.
Over 60% of asset managers and over 75% of asset owners surveyed indicated they currently
report climate-related information to their clients and beneficiaries, respectively. The majorityof asset managers report through sustainability reports or directly to clients, while the majorityof asset owners report through annual, sustainability, or climate-specific reports.
Nearly 50% of asset managers and 75% of asset owners reported information alignedwith at least five of the 11 recommended disclosures. Based on survey responses, 60% ofasset managers and nearly 80% of asset owners indicated they report information aligned withat least one recommended disclosure; and 10% of asset managers and 36% of asset owners
indicated they report on all 11 recommended disclosures.

TCFDSurvey3

The percent of companies disclosing the TCFD recommendations in financial filings orannual reports has increased each year. Based on the TCFD survey, over 70% of companies
implementing the TCFD recommendations disclosed climate-related information in financial
filings or annual reports (including integrated reports) for fiscal year 2021 compared to 45% forfiscal year 2017.
The availability and quality of climate-related financial disclosures has increased sinceJune 2017. Ninety-five percent (95%) of survey respondents saw an increase in the availabilityof climate-related financial disclosures since the release of the TCFD recommendations, with
88% of respondents citing improvements in the quality of disclosures.
Investors and others use disclosures in decision-making and pricing. Based on the TCFD
survey, 90% of investors and other users incorporate climate-related financial disclosures infinancial decision-making, and 66% of these indicated such disclosures factor into the way they
price financial assets.16 In addition, based on a literature review, there is a growing body ofevidence that climate-related risks are beginning to affect prices for certain types of assets.

1
2
3

Based on the AI review of disclosure practices.
Based on the survey of asset managers and asset owners’ TCFD-aligned reporting practices.
Based on the TCFD implementation and use survey. Given the composition and number of survey respondents, the Task Force cautions
readers on extrapolating these results to broader populations of companies disclosing climate-related financial information and users ofsuch disclosures.
On November 3, 2022, the TCFD Secretariat revised the end of this sentence to correct an error in the calculation of the percent of asset
managers and asset owners that indicated they report on all 11 recommended disclosures.

CONCLUSION AND NEXT STEPSOverall, the Task Force is encouraged bycompanies’ progress in disclosing climaterelated financial information aligned with the
TCFD recommendations and by the supportof regulators and standard setters in using
the recommendations as a basis to develop
laws, rules, and standards on climate-related
financial disclosure. Nevertheless, the Task
Force remains concerned that not enoughcompanies are disclosing decision-useful climaterelated financial information, which may hinder

investors, lenders, and insurance underwriters’
efforts to appropriately assess and price climaterelated risks. This is supported by the analysis
summarized in this report as well as broader
assessments on the state of climate change,
including those in the IPCC’s April 2022 report.
Over the next several months, the Task Forcewill continue to monitor companies’ progress indisclosing climate-related financial informationaligned with the TCFD recommendations andwill prepare another status report for the
Financial Stability Board in October 2023.

16 The Task Force received 42 survey responses from investors and other users of climate-related financial disclosures. Given the relatively
small sample size, the Task Force recognizes the results may not be representative of the broader population of users of climate-related
financial disclosures.

5The Task Force on Climate-related Financial Disclosures

Box ES1

2022 TCFD Status Report: Additional Themes and Findings
TCFD-Aligned Disclosure Practices
Findings from Al Review of
Public Company Reports

Findings from Survey of Asset Managers
and Asset Owners

Based on the Al review, the average number ofrecommended disclosures addressed per company
has increased over the past ﬁve years.

Percent of Asset Managers Surveyed
Implementing the TCFD recommendations

Average Number of Recommended Disclosures
per Company by Fiscal Year
Average Annual Growth
Rate of 32%

1.4
2017

2018

Reporting TCFD-Aligned Information
Currently report to clients

62%

Plan to report to clients37%

Do not plan to report to clients1%
Base size: 151

4.2

3.6
2.2

95%

93%

Reporting TCFD-Aligned Information

2.6

2019

Percent of Asset Owners Surveyed
Implementing the TCFD recommendations

2020

2021

Currently report to beneﬁciaries

77%

Plan to report to beneﬁciaries

20%

Do not plan to report to beneﬁciaries

3%

Base size: 1,370

Base size: 78

Implementation of the TCFD Recommendations and Use of Climate-Related Disclosures
The Task Force received 399 survey responses,
including 226 from companies preparing disclosures,
42 from investors and other users of climate-related
ﬁnancial disclosure, and 131 from other organizations.
The 226 companies identiﬁed several challenges in
implementing TCFD.
Conducting climate-related scenario analysis, including
selecting relevant scenarios and identifying key inputs
and parameters
Estimating Scope 3 GHG emissions, including challenges
with data collection across the value chain
Developing processes for identifying, assessing, andmanaging climate-related risks and integrating suchrisks into existing processes
The 42 users identiﬁed speciﬁc improvements
companies could make to increase the usefulnessof climate-related ﬁnancial disclosures.

Have implemented or are
implementing the TCFD
recommendations

91%

Implement because
climate related issues
are material for company

85%

Implement because
investors are requestingsuch information

77%

Implement because
TCFD is required bylaw or regulation

26%
Base size: 226

Top Survey Findings for Users andOther Respondents1

Disclose the actual and potential ﬁnancial
impacts of climate-related issues on theirbusinesses, strategies, or ﬁnancial planning

Cited an increase in theavailability of climate
related ﬁnancial
disclosures (173)

Use a standard scenario to assess the resilienceof their strategies to climate change

Use climate-related
ﬁnancial disclosures indecision-making (42)90%

Cited improvements
in quality of disclosures
(173)

88%

Report climate-related targets in a consistent way
across companies
Increase the number of companies disclosing
climate-related ﬁnancial information

1

Top Survey Findings for Preparers
Implementing TCFD

Use disclosures toprice assets or
determine rates (42)

95%

66%

The numbers in parentheses represent the base size.
6

Contents
Letter from Michael R. Bloomberg

1

Executive Summary

2

A. State of Climate-Related Financial Disclosures8

1. TCFD-Aligned Reporting by Public Companies

9

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

30

B. Review of Five Years of TCFD Implementation

52

1. Adoption and Use of the TCFD Recommendations

54

2. Implementation Paths over Time68

3. Summary of Research on Pricing of Climate-Related Risks

74

C. Case Studies on Board Oversight79

1. Case Study by a Telecommunications Company

80

2. Case Study by an Insurance Company

83

3. Case Study by a Financial Services Company

85

4. Case Study by an Energy Company

87

5. Case Study by an Energy Company

89

6. Case Study by a Materials and Buildings Company

91

7. Case Study by a Pension Plan Investor

93

D. Initiatives Supporting TCFD

97

1. Governmental and Regulatory Efforts

100

2. International and Regional Standard Setting

103

3. Stock Exchange Developments

103

4. Industry-Led Initiatives

104

Appendix 1: Task Force Members

107

Appendix 2: Company Selection and AI Review Methodology

109

Appendix 3: AI Review Results by Industry

114

Appendix 4: Asset Manager and Asset Owner Metrics Reporting

123

Appendix 5: Studies Reviewed on Pricing of Climate-Related Risk

127

Appendix 6: Glossary and Abbreviations

131

Appendix 7: References

133

A.
State of Climate-Related
Financial Disclosures

The Task Force on Climate-related Financial Disclosures

A. State of Climate-Related Financial
Disclosures

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Consistent with previous status reports, theTask Force undertook a review of hundredsof public companies’ reports for climaterelated financial information using artificial
intelligence (AI) technology.17 The AI technology
was used to determine whether the reports
include information that appears to alignwith the Task Force’s recommendations. The
Task Force has received feedback that thebaseline information on climate-related financial
disclosures coming out of its AI reviews is
helpful for companies implementing the TCFD
recommendations in understanding current
practices. In addition, users, preparers, and others
have expressed interest in understanding changes
in climate-related financial disclosures over time,
particularly as many companies have now had
five full reporting cycles to implement the TCFD
recommendations since their release in June
2017. To assess the current state and evolutionof climate-related financial disclosures, the Task
Force reviewed the reports of over 1,400 publiccompanies over a three-year period — fiscal years
2019, 2020, and 2021 — as described in Section
A.1. TCFD-Aligned Reporting by Public Companies.
In addition, to support the Task Force’s
assessment of progress in the disclosure ofclimate-related financial information over the past

five years, the AI technology was also applied toa subset of companies included in the three-year
review (see Box A1, p. 19).18
The Task Force also collected information onreporting by asset managers and asset owners
to their clients and beneficiaries, respectively, as
well as to a broader range of stakeholders. These
organizations were excluded from the AI review
because, in some cases, the types of reports
needed for analysis are not publicly available.
Instead, the Task Force conducted a survey togain insight on these organizations’ climaterelated reporting practices. The results of thesurvey are described in Section A.2. TCFD-Aligned
Reporting by Asset Managers and Asset Owners.

1. TCFD-ALIGNED REPORTING BY
PUBLIC COMPANIESThis subsection summarizes the scope andapproach used to review the alignment of publiccompanies’ reporting for fiscal years 2019, 2020,
and 2021 with the Task Force’s 11 recommended
disclosures as well as the results and key findings
from the review.

Appendices

Key Takeaways
The percent of companies disclosing TCFD-aligned information continues to grow, but more urgent progressis needed. For fiscal year 2021 reporting, 80% of companies disclosed in line with at least one of the 11
recommended disclosures; however, only 4% disclosed in line with all 11 recommended disclosures and onlyaround 40% disclosed in line with at least five.
Public companies remain more likely to disclose information on their climate-related risks and opportunities(Strategy a) than on any other recommended disclosure, with just over 60% of companies reviewed including
such information in their 2021 fiscal year reports.
Disclosure of the resilience of companies’ strategies under different climate-related scenarios (Strategy c)continues to have the lowest level of disclosure across the 11 recommended disclosures.
Several industries covered by the AI review have average levels of disclosure of over 40%. For fiscal year 2021
reporting, industries with average disclosure levels across the 11 recommended disclosures of more than
40% include energy companies (43%), materials and buildings companies (42%), banks (41%), and insurancecompanies (41%).
All regions have significantly increased their levels of disclosure over the past three years. In particular, theaverage level of disclosure across the 11 recommended disclosures for European companies was 60% for fiscal
year 2021, growing 23 percentage points since fiscal year 2019; 36% for Asia Pacific companies — an increase of
11 percentage points; and 29% for North America companies — an increase of 12 percentage points.

17 The Task Force gratefully acknowledges the work of Richard Cantor, Burcu Guner, Ashit Talukder, Sankalp Gaur, Pablo Pastore, Hasan Cerhozi,
Amanda Lebic, Mariia Moriashova, and Alexis Petrovski from Moody’s Corporation on the AI technology review. Moody’s contribution has been
prepared only for the TCFD. Moody’s accepts no liability (including for negligence) to anyone else in connection with the Moody’s contents ofthis report.
18 The population of companies used in the five-year review is smaller than the population used in the three-year review because not allcompanies included in the three-year review had annual reports for fiscal years 2017 and 2018.

9

The Task Force on Climate-related Financial Disclosures

Scope and Approach
The Task Force reviewed financial filings,
annual reports, integrated reports, sustainability
reports, and other related reports of 1,434
public companies from five regions in eightindustries (Figure A1). Six of the eight industriesalign with groups highlighted in the Task Force’s
2017 report: Banking, Insurance, Energy,
Materials and Buildings, Transportation, andAgriculture, Food, and Forest Products.19 To
incorporate other large companies that may be
exposed to climate-related risks, two additional
industries — Technology and Media andConsumer Goods — are also included.

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

For this status report and the previous one,
the Task Force sought to maintain as muchconsistency as possible with the final review
population used in the 2020 status report.20
As such, the Task Force began with an initial
review population of 1,651 companies thatwere included in the AI review for the 2021
status report.21 The final population used forthis year’s AI review was reduced to 1,434 after
accounting for companies that no longer existed
or did not have reports available in English for
all three years.22 More information on the Task
Force’s methodology is provided in Appendix 2:
Company Selection and AI Review Methodology.
To maintain consistency in its review of climaterelated financial disclosures, the Task Forceused the same AI technology that was used forthe 2021 status report.23 The AI technology wasused to review over 15,000 reports from the
1,434 companies and determine whether thereports included information that appeared
to align with one or more of the Task Force’s
11 recommended disclosures (see Table A1,
p. 11). Importantly, this approach was notdesigned to assess the quality of companies’
climate-related financial disclosures, but rather
to provide an indication of the alignment of

Figure A1

AI Review Population Size
Industry

NumberBanking

248

Insurance

118

Energy223

Materials and Buildings

353

Transportation

136

Ag., Food, and Forest Products

123Technology and Media

96

Consumer Goods

137

Total

1,434

existing disclosures with the Task Force’s 11
recommended disclosures.24

Summary of AI Review Resultsand Findings
This subsection summarizes the results andfindings from the Task Force’s AI review of publiccompanies’ reports for fiscal years 2019, 2020,
and 2021 in terms of alignment with the Task
Force’s 11 recommended disclosures.25 The AI
review results and findings are discussed for
four different categorizations of the AI review
population as follows: across all companies,
by the eight industries from which companies
were pulled, by region based on companies’
headquarters, and by size using market
capitalization. It is important to note that while
this year’s AI review population was derived fromthe AI review population used last year, it has
around 215 fewer companies. As a result, theAI review results in this report are not directlycomparable to those included in the 2021
status report; however, they are directionallyconsistent, as expected.

19
20
21
22

TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017.
TCFD, 2020 Status Report, September 22, 2020.
TCFD, 2021 Status Report, October 14, 2021.
Because the AI technology cannot process reports in languages other than English, the AI review population has a higher representation ofinternational companies and companies with large English-speaking populations than it would if non-English reports could be assessed. The
regional distribution of companies in the AI review population is provided in Figure A5 (p. 16).
23 The Task Force used AI technology to perform an automated review of more than 1,400 companies’ public reports. Performing such a review“manually” or through human reviewers would take thousands of hours, which would not be feasible for the Task Force.
24 It is important to recognize the confidence of the AI technology in identifying disclosures that align with the Task Force’s 11 recommended
disclosures varies for each recommended disclosure, as described in Appendix 2: Company Selection and AI Review Methodology.
25 In this report, the use of year(s) followed by a specific year(s) refers to fiscal year reporting unless the context indicates otherwise.

10

The Task Force on Climate-related Financial Disclosures

Table A1

TCFD Recommendations and Supporting Recommended
Disclosures

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Governance

Strategy

Risk Management

Metrics and Targets

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

Disclose the actual andpotential impacts ofclimate-related risks
and opportunities
on the company’sbusinesses, strategy,
and financial planningwhere such information
is material.

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

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

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

a) D escribe the climaterelated risks andopportunities
the company has
identified over the
short, medium, andlong term.

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

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

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

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

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

b) D isclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas (GHG)
emissions, and therelated risks.

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

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

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

TCFD-Aligned Reporting Across
All Companies Reviewed
The Task Force assessed the percentage of
disclosure for each of the Task Force’s 11
recommended disclosures for all companies in
the review population. Figure A2 (p. 12) shows
the AI review results across all companies
by fiscal year as well as the percentage pointchange between fiscal year 2019 and fiscal
year 2021 results. The trends and findings arebroadly consistent with those included in the
Task Force’s previous status reports.

Disclosure of climate-related information
has increased since 2019. The AI review foundthe levels of disclosure for all 11 recommended
disclosures increased each year; however, thesize of the increases varied significantly from
5 to 20 percentage points. On average acrossthe 11 recommended disclosures, the percent ofcompanies disclosing TCFD-aligned information
increased by 14 percentage points between fiscal
years 2019 and 2021.

11

The Task Force on Climate-related Financial Disclosures

Figure A2

TCFD-Aligned Disclosures by Fiscal Year for 2019–2021
Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight

16

13%

b) Management’s Role

12

10%
18%
22%

a) Risks andOpportunities

19b) Impact on
Organization

16c) Resilience of Strategy

10a) Risk ID andAssessment Processes

14

19%
29%
33%

b) Risk Management
Processes

1717%c) Integration into
Overall Risk
Management

20a) Climate-Related
Metrics

5

42%
46%
47%

b) Scope 1, 2, 3
GHG Emissions

10

34%
40%
44%

c) Climate-Related
Targets

18

Strategy

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation

Risk Management

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices
Metrics
and Targets

Percent of Companies Disclosing
25%
29%

42%
53%
61%
31%
40%
47%
6%
12%
16%

28%
34%
17%
27%
37%

27%

0%
Legend:FY 2019

FY 2020

FY 2021

20%

38%
45%

40%

60%

80%

100%

Base size: 1,434aAs shown in Figure A2, the greatest increase
in reporting from 2019 to 2021 — 20 percentage
points — was for the integration of climaterelated risks into overall risk management
processes (Risk Management c). Disclosureof climate-related risks and opportunities(also referred to as climate-related issues) —Strategy a) — and climate-related targets —Metrics and Targets c) — increased by 19 and 18
percentage points, respectively. The smallest
increase across the 11 recommended disclosures
was for companies’ disclosure of climate-related

12

The Task Force on Climate-related Financial Disclosures

metrics (Metrics and Targets a), which increased
by only 5 percentage points over the sametime period. Notably, climate-related metrics
are one of the top two most useful disclosure
elements for decision-making identified byinvestors and other users based on a previous
survey conducted by the Task Force, and
90% of user respondents from a more recent
survey indicated such information is useful for
decision-making.26

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Reporting on climate-related risks andopportunities (Strategy a) is higher than any
other recommended disclosure. Just over 60%of the companies reviewed included information
on climate-related issues in their fiscal year 2021
reports, and the 19 percentage points in growth
between 2019 and 2021 indicates that reportingin line with Strategy a) continues to be an area of
focus for preparers.
Reporting on risk management processes
is below average but steadily improving.
While companies increasingly disclosed theirclimate-related risks and opportunities, theprocesses through which they manage suchrisks are disclosed at a much lower rate.
The level of disclosure on Risk Managementa) — processes for identifying and assessing
climate-related risks — was 33% for 2021
reporting; Risk Management b) — processes for
managing climate-related risks — was 34%;
and Risk Management c) — whether processes
are integrated into overall risk management —was 37%. Despite the relatively low levels of
disclosure for all three of these recommended
disclosures, they have shown strong growthcompared to the other recommended
disclosures, ranging between 14 and 20
percentage points between 2019 and 2021.
Disclosure of the resilience of companies’
strategies under different climate-related
scenarios (Strategy c) increased from 6% to
16% over the three-year period. The percent ofcompanies disclosing Strategy c) continues to be
the lowest of all recommended disclosures. The
Task Force recognizes the challenges associatedwith making such disclosures as describedin previous reports as well as in Section B.1.
Adoption and Use of TCFD Recommendations,where over 80% of TCFD implementation survey
respondents rated Strategy c) as somewhat
difficult or very difficult to implement. Given
the challenges associated with this disclosureand the relatively low starting point, the10 percentage point growth in disclosure
represents an encouraging improvement.

While the levels of disclosure of climaterelated metrics and targets is relatively high,growth related to metrics has slowed. The
levels of disclosure on Metrics and Targets a),b), and c) for 2021 reporting range from 44% to47%. While reporting on climate-related targets
increased by more than 15 percentage points
since 2019 to 45%; the year-over-year increase indisclosure of climate-related metrics (Metrics andTargets a) was four percentage points between
2019 and 2020, dropping to just one percentage
point between 2020 and 2021. This represents
the slowest growth of any of the recommended
disclosures over the last year.
Governance remains the least disclosed
recommendation. The two Governancerecommended disclosures were the second
and third least disclosed of the Task Force’s
11 recommended disclosures, with 29% ofcompanies reviewed disclosing information
on board oversight of climate-related issues(Governance a), and 22% disclosing informationon the role of management on such issues(Governance b). Notably — as discussed
in Section B.1. Adoption and Use of TCFD
Recommendations, nearly three quarters of theapproximately 200 preparers that responded to
the Task Force’s implementation survey indicatedthat both (Governance a) and (Governance b)
are very or relatively easy to disclose, which
seems inconsistent with their relatively low
levels of disclosure. While it is unclear why these
disclosures are relatively low, possible reasons
might be difficulty gaining support from theboard and senior management on including these
disclosures in publicly available reports or the way
in which the AI technology identifies relevant text
for these recommended disclosures.
The majority of companies do not disclose
information on specific scenarios. Given
generally low levels of disclosure around theresilience of a company’s strategy to climaterelated issues (Strategy c), this year the Task Forceused the AI technology to better understandwhether companies are discussing different
climate-related scenarios in their reporting. The
Task Force believes it is important for companies
to include multiple scenarios when assessing
their resilience to climate-related issues. While
only 20% of companies mentioned a below 2°C
scenario in their fiscal year 2021 reporting, theTask Force recognizes this was higher than
the 16% that described information alignedwith Strategy c). The percentage of companies
referencing below 2°C scenarios more thandoubled with 12 percentage point growth

26 TCFD, 2020 Status Report, October 29, 2020, pp. 29-32, and Section B.1. Adoption and Use of TCFD Recommendations.

13

The Task Force on Climate-related Financial Disclosures

between 2019 and 2021. Only 9% of companies
mentioned a 2°C scenario in 2021, and the review
found even fewer references to scenarios with a
trajectory exceeding 2°C, with only 3% and 4% ofcompanies referencing 2°C to 3°C scenarios andgreater than 3°C scenarios, respectively.
TCFD-Aligned Reporting by the Eight Industries

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesThis section summarizes the AI review results
for fiscal year 2021 for companies in each of
the eight industries reviewed. To better compare
reporting across the eight industries, the Task
Force averaged the percentage of disclosure in
2021 across the 11 recommended disclosures foreach industry. The industries were then ranked
from highest to lowest average percentage
of disclosure. A higher average percentage
of disclosure indicates that an industry
generally disclosed at a higher rate across the
11 recommended disclosures. Figure A3 shows
the average percentage of disclosure across the
11 recommended disclosures by industry forfiscal year 2021 reporting. The AI review resultsfor each industry for the past three reporting
cycles are provided in Appendix 3: AI Review
Results by Industry.
Several industries covered by the AI review
now have average levels of disclosure ofover 40%. For fiscal year 2021 reporting,industries with average disclosure levels acrossthe 11 recommended disclosures of more than
40% include energy companies (43%), materials
and buildings companies (42%), banks (41%),and insurance companies (41%). Notably, theincrease between 2019 and 2021 reporting forbanks was 20 percentage points. The increase
for materials and buildings and insurancecompanies was 16 percentage points and
10 percentage points for energy companies.
Leading industry varies by recommended
disclosure. As shown in Figure A4 (p. 15),companies reviewed in the Energy industry
had the highest levels of disclosure for threeof the recommended disclosures — 73%
for information on climate-related risks andFigure A3

Average Percentage of Disclosure
by Industry
Industry

Percent

Energy43%

Materials and Buildings

42%

Banking

41%

Insurance

41%

Ag., Food, and Forest Products

37%

Consumer Goods

33%

Transportation

32%

Technology and Media

15%

opportunities in fiscal year 2021, 54% on theimpact of climate-related issues on the company,
and 40% on board oversight. Companies
in the Insurance industry had the highest
levels of disclosure on the Risk Management
recommendation, closely followed by banks.
This may be attributable to insurance andbanking regulators’ general emphasis on risk
management processes. In terms of climaterelated metrics and targets, companies in the
Materials and Buildings industry have the highest
levels of disclosure on all three recommended
disclosures under the Metrics and Targets
recommendation, with Metrics and Targets a) andb) at 58% and Metrics and Targets c) at 57%.
Companies in the Technology and Media
industry disclose less than other groups
reviewed. These companies had the lowest
average level of disclosure in fiscal year 2021
at 15% and the lowest level of disclosure for eachof the 11 individual recommended disclosures.
In addition, companies in the Technology andMedia industry had the smallest increase — atfour percentage points — in the average levelof disclosure across the 11 recommended
disclosures between fiscal years 2019 and 2021.
Transportation companies had the second lowest
average level of disclosure at 32% — nearly
double the rate of companies in Technology
and Media.

14

The Task Force on Climate-related Financial Disclosures

Figure A4

Disclosure by Industry: 2021 Fiscal Year Reporting
Materials& Buildings(353)

Governancea) Board Oversight

33%

36%

40%

32%

b) Management’s Role

28%

31%

21%

25%

a) Risks and Opportunities

64%

58%

73%

67%

b) Impact on Organization

54%

46%

54%

51%

c) Resilience of Strategy

19%

25%

18%

16%

a) Risk ID and Assessment
Processes

47%

45%

37%

31%

b) Risk Management Processes

47%

49%

36%

31%

c) Integration into Overall
Risk Management

49%

52%

42%

36%

a) Climate-Related Metrics

42%

38%

51%

58%

b) Scope 1, 2, 3 GHG Emissions

35%

33%

48%

58%

c) Climate-Related Targets

32%

33%

56%

57%

Transportation(136)

Ag., Food& Forest(123)

Technology& Media(96)

Consumer
Goods
(137)

A.
State of Climate-Related
Financial Disclosures

Metrics
and Targets

C.
Case Studies on Board
Oversight

Appendices

Energy(223)

Recommended Disclosure

Risk Management

D.
Initiatives Supporting TCFD

Insurance(118)

Recommendation

Strategy

B.
Review of Five Years of
TCFD Implementation

Banking(248)1

Recommendation

Recommended Disclosure

Governancea) Board Oversight

21%

22%

6%

23%

b) Management’s Role

18%

20%

4%

20%

a) Risks and Opportunities

54%

61%

31%

54%

b) Impact on Organization

39%

45%

22%

43%

c) Resilience of Strategy

12%

17%

6%

11%

a) R
 isk ID and Assessment
Processes

24%

30%

10%

27%

b) Risk Management Processes

24%

30%

8%

28%

c) Integration into Overall
Risk Management

24%

32%

7%

36%

a) Climate-Related Metrics

43%

51%

24%

49%

b) Scope 1, 2, 3 GHG Emissions

41%

51%

22%

39%

c) Climate-Related Targets

49%

49%

27%

38%

Strategy

Risk Management

Metrics
and Targets

1

The numbers in parentheses represent the size of thereview population.

Legend:Low to high percentage of reporting

15

The Task Force on Climate-related Financial Disclosures

TCFD-Aligned Reporting by Region

Figure A5

Companies in the AI review population werecategorized into one of five regions based on
the location of their headquarters to consider
potential regional differences. Similar to theapproach taken for industries, Figure A5 shows
the average percentage of disclosure acrossthe 11 recommended disclosures by region forfiscal year 2021 reporting. Figure A6 shows thepercentage of disclosure by region for each of
the 11 recommended disclosures for fiscal year
2021 reporting.

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Europe remains the leading region fordisclosure. The European companies includedin the AI review disclosed at 60% on average
across the 11 recommended disclosures,
which is 24 percentage points higher than thenext highest region (Asia Pacific). In addition,
the European companies reviewed have thehighest level of disclosure for each of the
11 recommended disclosures as shown in
Figure A6. In particular, 81% of European
companies disclosed their climate-related

Average Percentage of Disclosure
by Region
RegionPercent

Europe60%

Asia Pacific36%

North America

29%

Latin America

28%

Middle East and Africa

25%

metrics (Metrics and Targets a), 75% disclosed
information on their climate-related risks andopportunities (Strategy a) and GHG emissions(Metrics and Targets b), and 74% disclosed theirclimate-related targets (Metrics and Targets c),which is 37 percentage points higher than thenext closest region. Europe’s leadership is likely
driven by increasing public sector attention
to climate-related issues and requirements
for climate-related reporting, as outlined in
Section D. Initiatives Supporting TCFD.

Figure A6

Disclosure by Region: 2021 Fiscal Year Reporting
Recommendation

Recommended Disclosure

Asia
Pacific(273)1Governancea) Board Oversight

30%

42%

29%

15%

24%

b) Management’s Role

23%

40%

14%

18%

14%

a) Risks and Opportunities

51%

75%

52%

36%

61%

b) Impact on Organization

38%

63%

33%

30%

45%

c) Resilience of Strategy

16%

35%

14%

10%

7%

a) R
 isk ID and Assessment
Processes

35%

59%

26%

34%

20%

b) Risk Management Processes

34%

55%

29%

29%

23%

c) Integration into Overall
Risk Management

35%

58%

31%

27%

29%

a) Climate-Related Metrics

56%

81%

33%

26%

30%

b) Scope 1, 2, 3 GHG Emissions

46%

75%

24%

26%

30%

c) Climate-Related Targets

36%

74%

24%

26%

37%

Strategy

Risk Management

Metrics
and Targets

1

The numbers in parentheses represent the size of thereview population.

Europe(359)

Latin
America(42)

Middle East
and Africa
(73)

North
America(687)

Legend:Low to high percentage of reporting

16

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

There has been encouraging growth inother regions. In North America, the averagelevel of disclosure for the companies reviewed
was 29% for fiscal year 2021 reporting, growing
12 percentage points since 2019. Notably, thenumber of North American companies wasmuch larger than the number of companies inother regions (687, versus 42 in Latin America forexample) and incorporated a higher percentage
of smaller companies and Media and Technology
companies compared to other regions. The
highest area of disclosure for North Americancompanies was on information on their climaterelated risks and opportunities (Strategy a) at 61%,
which was higher than all other regions except
Europe. In addition, North American companies
disclosed their climate-related targets at a higher
rate than climate-related metrics, which was the
opposite of most other regions where metrics
were disclosed at a higher rate than targets.
The average level of disclosure across the
11 recommended disclosures for Asia Pacificwas 36% for fiscal year 2021 reporting, growing
11 percentage points since 2019. Over half of thecompanies in the Asia Pacific region disclosed
their climate-related metrics (Metrics andTargets a), but only 36% disclosed their climaterelated targets (Metrics and Targets c), whichis 20 percentage points lower than climaterelated metrics. The average level of disclosure
by companies in Latin America and the Middle
East and Africa increased 9 percentage points(each) since 2019, bringing the average levelsof disclosure to 28% and 25%, respectively. The
highest level of disclosure for companies in Latin
America and the Middle East and Africa was on
Strategy a) at 52% and 36%, respectively.
TCFD-Aligned Reporting by Company Size
To assess reporting results by company size, theTask Force divided the AI review population into

Figure A7

Average Percentage of Disclosure byCompany Size
Market Capitalization

Percent<$3.4B29%$3.4-12.2B

37%>$12.2B

49%

thirds based on market capitalization as follows:
those with a market capitalization of less than
$3.4 billion, those with a market capitalization
between $3.4 billion and $12.2 billion, andthose with a market capitalization of morethan $12.2 billion. Figure A7 shows theaverage percentage of disclosure across the
11 recommended disclosures by company sizefor 2021 reporting. Figure A8 (p. 18) shows thepercentage of disclosure by company size foreach of the 11 recommended disclosures forfiscal year 2021 reporting.
Larger companies are more likely to disclose
TCFD-aligned information than smaller ones.
Forty-nine percent (49%) of the companies
reviewed with a market capitalization greaterthan $12.2 billion disclosed information alignedwith the TCFD recommendations for fiscal
year 2021. Meanwhile, 29% of companies witha market capitalization in the bottom third(less than $3.4 billion) disclosed in line with the
TCFD recommendations.
Disclosure from larger companies grew thefastest, with a 16 percentage point increase
between 2019 and 2021 reporting. There has
also been encouraging growth in reporting bycompanies with a market capitalization between$3.4 billion and $12.2 billion and those withless than $3.4 billion at 15 and 14 percentage
points, respectively.

17

The Task Force on Climate-related Financial Disclosures

Figure A8Disclosure by Company Size: 2021 Fiscal Year Reporting

B.
Review of Five Years of
TCFD Implementation>$12.2B Market
Capitalization(472)

Recommended Disclosure

Governancea) Board Oversight

21%

27%

41%

b) Management’s Role

20%

20%

27%

a) Risks and Opportunities

50%

61%

73%

b) Impact on Organization

38%

44%

60%

c) Resilience of Strategy

9%

16%

24%

a) R
 isk ID and Assessment
Processes

25%

32%

43%

b) Risk Management Processes

25%

36%

40%

c) Integration into Overall
Risk Management

26%

37%

49%

a) Climate-Related Metrics

38%

45%

60%

b) Scope 1, 2, 3 GHG Emissions

32%

43%

58%

c) Climate-Related Targets

32%

43%

61%

Risk Management

Metrics
and Targets

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

$3.4–12.2B
MarketCapitalization(455)

Recommendation

Strategy

A.
State of Climate-Related
Financial Disclosures<$3.4B Market
Capitalization(507)1

1

The numbers in parentheses represent the size of thereview population.

Legend:Low to high percentage of reporting

Appendices

18

The Task Force on Climate-related Financial Disclosures

Box A1

Review of Five Years of TCFD-Aligned Disclosures
To support the Task Force’s assessment of companies’
progress in disclosing climate-related financial
information over the past five annual reporting cycles,
the AI technology was applied to a subset of the
1,434 companies included in the three-year review.
Overall, companies have made progress in disclosing
TCFD-aligned information; however, the majority
of companies reviewed disclosed less than five of
the 11 recommended disclosures.

FY 2017, only 9% of companies disclosed at least
five recommended disclosures compared to
43% for FY 2021. Similarly, the average number ofrecommended disclosures addressed per company
increased from 1.4 in 2017 to 4.2 in 2021. While thisgrowth is encouraging, the Task Force believes moreurgent progress is needed.
Disclosure of TCFD-aligned information increased
by 26 percentage points, on average, across the
11 recommended disclosures between fiscal years
2017 and 2021. In addition, progress was incremental
in each of the intermediate years — consistent withthe three-year AI review results.

In its 2017 report, the Task Force recommended
companies disclose the five recommended disclosuresrelated to governance and risk management
independent of a materiality assessment.1 For

Reporting Aligned with the 11 Recommended Disclosures

A.
State of Climate-Related
Financial Disclosures

At least 1
80%
52%

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Average Number of Disclosures Per Company

Percent of Companies Disclosing
At least 1
80%

At least 4
51%

52%

At least 7
30%

13%
1

3

5

3%
7

9

All 114%
0%
11

FY 2017

FY 2018

FY 2017

Number of Recommended Disclosures
Legend:

2.2

1.4

4.2

3.6

2.6
FY 2019

FY 2020

FY 2021

Average Number of Recommended Disclosures

FY 2021
Base size: 1,370

Base size: 1,370

TCFD-Aligned Disclosures for Fiscal Years 2017 and 2021
Recommendation Recommended Disclosure
Governance

Strategy

Risk Management

Metrics
and Targets

Pt. Change Percent of Companies Disclosinga) Board Oversight255%b) Management’s Role185%a) Risks and Opportunities

35b) Impact on Organization

29c) Resilience of Strategy

14a) Risk ID andAssessment Processes

259%b) Risk Management Processes

268%c) Integration into Overall
Risk Management

326%a) Climate-Related Metrics

23b) Scope 1, 2, 3 GHG Emissions

26

18%

c) Climate-Related Targets

30

16%

1

FY 2017

FY 2021

23%
27%

62%

19%
2%

48%

16%
34%
34%
38%
25%

0%
Legend:

30%

20%

48%
44%
46%
40%

60%

80%

100%

Base size: 1,370

In 2021, the Task Force updated its Annex to indicate disclosure of Scope 1 and Scope 2 GHG emissions should be independent of amateriality assessment.
19

The Task Force on Climate-related Financial Disclosures

Examples of Climate-Related Financial
Disclosures
This section includes examples of disclosurethat provide information aligned to one of
the 11 recommended disclosures. The Task
Force sought to include examples from ageographically diverse set of companies andcover all 11 recommended disclosures. The
examples included are not intended to represent“best practice” nor demonstrate disclosuresthat fully meet the associated recommended

disclosure.27 Instead, the examples are provided
because they may help companies generate
ideas for their own disclosures.
Governance Recommendation
Governance a) asks companies to describe theboard’s oversight of climate-related risks andopportunities. Figure A9 describes the board’s
roles and responsibilities related to climaterelated issues at a transportation company.

Figure A9

Board OversightA.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Governancea) Board’s Oversight of Climate-related Risks and Opportunities
Toyota addresses climate-related issues at its Board of Directors’ Meeting. Through thisToyota assures eﬀective strategy formulation and implementation in line with latest societal
trends. Furthermore, the board is guiding and reviewing relevant action and businessplans together with monitoring progress for qualitative and quantitative targets addressing
climate issues.
As part of the monitoring, the Board considers climate-related issues, including risks/
opportunities related to products, such as fuel eﬃciency/emission regulations, and risks/
opportunities related to low-carbon technology development, as well as the ﬁnancial impact
thereof. We use these governance mechanisms in formulating its long-term strategy,
including the Toyota Environmental Challenge 2050, and in formulating and reviewing its
medium- to long-term targets and action plans.
Cases of decision making at the Board of Directors Meeting in 2021 include the following. The
Board decided to invest in Toyota Green Energy, which was established jointly by Toyota,
Chubu Electric Power Co., Inc. and Toyota Tsusho Corporation. Toyota Green Energy is a newcompany that will obtain and manage renewable energy sources in Japan. It is expected tosupply electric power to the Toyota Group in the future.
Toyota, Sustainability Data Book 2022, p. 10

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

20

The Task Force on Climate-related Financial Disclosures

Governance b) asks companies to describe
management’s role in assessing and managing
climate-related risks. Figure A10 describes amaterials and buildings company’s management

committee structure as well as eachcommittee’s role in assessing and managing
climate-related risks.

Figure A10

Management’s Role

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

African Rainbow Minerals, Report on Climate Change and Water 2021, p. 14

Appendices

21

The Task Force on Climate-related Financial Disclosures

Strategy Recommendation
Strategy a) asks companies to describe theclimate-related risks and opportunities they
have identified over the short, medium, andlong term. Figure A11 describes a bank’s
climate-related risks, including risk types, risk
drivers, and time horizons.

Figure A11

Climate-Related Risks and Opportunities
Climate Risk
Type
Climate Drivers

Main aﬀected
Time Horizon→ Change in consumer behaviours including deliberate move to more sustainableproducts

Market &Customers→ Poten�al loss of compe��ve advantage with our green product proposi�on or pricing
risks

Short - Medium
Term→ Increased market vola�lity and cost, sourcing restric�ons for carbon heavy raw
materials

Policy-Making

A.
State of Climate-Related
Financial Disclosures

Technology &Data

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

Transi�on
Risk

Regulatory
Pressure→ More demanding policy environment aﬀec�ng our customer's business opera�ons→ Increased green house gas (GHG) emissions pricing to foster movement to renewablesources→ Investment in technology to reduce emissions or improve energy eﬃciency ra�ngs

Short - Medium Long Term

Medium Term
→ Lack of procedures and systems to obtain and store reliable data for risk assessments
and disclosure→ New public disclosure products which increase the risk of misrepresenta�on, increased
regulatory requirements which increases the poten�al of non-compliance, increased
use of external analy�cs providers which increases the poten�al for data privacy
breaches, all of which could result in ﬁnes, payment of damages and the voiding of
Short - Medium
contracts
Term→ Increasingly demanding banking regula�on (disclosure, stress tes�ng, taxonomies, etc)→

Ineﬃciencies as consequence of diﬀerent climate regula�ons, with special a�en�on in
those ﬁnancial en��es with interna�onal scope→ Risk of slow, lack or not suﬃcient reac�on from ﬁnancial en��es impac�ng its
reputa�on; extreme events that would cause damages to ﬁnancial en��es andemployees own sites could challenge, if readiness response plans fail, the ability ofthe banks to prompt react to restora�on of service and customers a�en�on invulnerable situa�ons due to the damages

D.
Initiatives Supporting TCFD
Appendices
Reputa�onal→ Increased scru�ny from diﬀerent stakeholders (e.g. supervisors, regulators,
media, NGO's, shareholders, investors, etc)
→ Perceived not to be mee�ng, suﬃciently progressing, or providing transparency
on climate-related commitments and transi�oning

Short - Medium Long Term

→ Liability implica�ons as an intermediary in several value chain (e.g. data,
products, ﬁnancial services)

Acute
Physical Risk

Chronic→ Reputa�onal impact from poten�al misalignment of emissions reduc�oncommitments with performance in speciﬁc por�olios→ More frequent and severe climate events such as ﬂooding, drought, etc, that
could aﬀect ﬁnanced assets and the value of the collaterals→ Altera�ons in weather pa�erns and stability of local ecosystems aﬀec�ng foodproduc�on and living environment.
→ Rising temperatures aﬀec�ng working condi�ons, living condi�ons and local
infrastructure.

Short - Medium Long TermLong Term→ Rising sea levels aﬀec�ng local ecosystems, increasing subsidence and ﬂood risks

Banco Santander, Annual Report 2021, p. 500

22The Task Force on Climate-related Financial Disclosures

Strategy b) asks companies to describe the impact
of climate-related risks and opportunities on theirbusinesses, strategies, and financial planning.
Figure A12 describes the financial impact ofclimate-related risks under different climate-

related scenarios for a technology hardware
company. It also describes the company’s
achievements in terms of climate-related
opportunities.

Figure A12

Impact of Climate-Related Risk and Opportunities

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Ricoh, Integrated Report 2021, p. 43

23

The Task Force on Climate-related Financial Disclosures

Strategy c) asks companies to describe theresilience of their strategies under different
climate-related scenarios, including a 2°C or
lower scenario. Figure A13 provides the resultsof a materials and buildings company’s scenario

analysis under three different scenarios —including two scenarios under 2°C. It provides
a summary of the probabilities and impact ofcertain climate-related risks and opportunities
based on three scenarios.

Figure A13

Resilience of Strategy under Different Climate-Related
Scenarios
SCENARIO NAMESTATED POLICIESSUSTAINABLE DEVELOPMENT

NET ZERO EMISSIONS BY 2050

Short name – external reference scenarios

STEPS

SDS

NZE

STRATEGY EFFECTIVENESS: RISKS AND OPPORTUNITIESPROBABILITY

RISKS

LOW

MED

IMPACT
HIGH

LOW

MED

PROBABILITY
HIGH

LOW

MED

IMPACT
HIGH

LOW

MED

PROBABILITY
HIGH

LOW

MED

IMPACT
HIGH

LOW

MED

HIGH

Reduced market demand for higher- carbon
products/commodi�esA.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation

Physical: Increased business interrup�onand damage across opera�ons and supply
chains with consequences for input costs,
revenues, asset values, and insurance
claimsIncreased input/opera�ng costs for highcarbon ac�vi�es under regulated markets(even threats to securing license to operate)

Risk of stranded assets: plants that cannot
be easily upgraded and close to end of theirlife�meOPPORTUNITIESC.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Increased demand for energy-eﬃcient,-carbon products and services
New technologies available at compe��vecost that disrupt markets
Access to compe��ve energy sources(AF cost)
Opportunity to enhance reputa�on andbrand value

The results of the analysis conﬁrm that CEMEX’s
carbon strategy is in general robust. CEMEX isaware that climate ac�on is the biggest
challenge of our �mes. With the Future inAc�on program, we remain commi�ed to
becoming a net-zero CO₂ company by 2050. We
will provide greener products and services for amore sustainable and circular world.

We will con�nue working to achieve 2030 targets of reducing our net speciﬁc CO₂ emissions by 35%
compared to our 1990 baseline; mid-term performance valida�on to guarantee achievement
While working to reach our goal of delivering net-zero CO₂ concrete by 2050, in 2022 we willvalidate our 2050 climate targets to be in line with the Science Based Targets ini�a�ve

Also, CEMEX will con�nue inves�ng in research and development to deliver
innova�ve building materials and solu�ons to build climate-smart urban
projects, sustainable buildings, and climate-resilient infrastructures, while
capitalizing on CX Ventures, Urbaniza�on Solu�ons, and strategic
partnerships.
We remain commi�ed to iden�fying and inves�ng in new technologies
needed to achieve our 2050 target, and it will be strengthened in the mostcarbon-constrained scenarios.

CEMEX, Integrated Report 2021, p. 268

24

The Task Force on Climate-related Financial Disclosures

Risk Management Recommendation
Risk Management a) asks companies to describe
their processes for identifying and assessing

climate-related risks. Figure A14 describes
the processes an insurance company uses to
identify and assess climate-related risks.

Figure A14

Risk Identification and Assessment
Climate risk management framework
Cathay established the ESG Risk Management Policy and Guidelines in 2020, and integrated it with its Enterprise
Risk Management Framework (ERMF) to enhance its ESG and climate-related risk management abilities.
Enterprise Risk Management Framework (ERMF)
Risk management policy

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

Market risk
management

Credit risk
Operation risk
management management

Liquidity risk
management

Capitaladequacy
RiskManagement

Reputationrisk
management

Emerging risk
management

ESG RiskManagement

Society
Risks

Corporate
governancerisk

ESG Risk Management Guidelines
Climate-related risks
Environmental
risks

Transition risk
The risk of policy, law, technological,
and market changes brought about by
the low-carbon economy

Physical risks
The risk of ﬁnancial losses
caused by extreme weather
eventsBasis for climate risk management and measures

Cathay integrated climate-related risk management with its

D.
Initiatives Supporting TCFD
Appendicesexisting risk management framework, and adopted the ThreeLines of Defense Model. Each line of defense performs its duties
by identifying and assessing climate-related risks, analyzing
the relevance of risks, evaluating the impact on the Company's
operations and business, and formulating control measuresand response strategies. Cathay continues to strengthen
the management of climate-related risks associated with
its investment, loan, and insurance products, and developed

Business Continuity Management (BCM), obtaining ISO
22301 Business Continuity Management System Certiﬁcation
to strengthen emergency response abilities for major
contingencies such as natural disasters. Please see Chapter
2 Sustainable Finance and Chapter 6 Sustainable Operation
Management for details.

Climate risk management
Enterprise Risk Management Framework (ERMF)
ESG Risk Management Guidelines
Three Lines of Defense Model
Risk
identiﬁcation

Risk
assessment
Investingand lending

Insurance
product

Daily
Operation
Risk
reportRisk
response

Cathay Financial Holdings, Sustainability Report 2021, p. 59

25

The Task Force on Climate-related Financial Disclosures

Risk Management b) asks companies to describe
their processes for managing climate-relatedrisks. The example shown in Figure A15 describes
an energy company’s processes for managing
climate-related risks, including the different
levels at which risk management occurs as wellas the use of mandatory standards and manuals.
It also discusses how the company manages
climate-related risks at the project level,
specifically in setting GHG-intensity standards for
proposed projects.

Figure A15

Risk Management

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesClassiﬁca�ons of risks

Project-level risk management processes

We iden�fy and assess risks across the Group in terms of threedis�nct categories:
 strategic risks: we consider current and future por�olio issues,
examining parameters such as country concentra�on or
exposure to higher risk countries. We also consider long-range
developments in order to test key assump�ons or beliefs inrela�on to energy markets.
 opera�onal risks: we consider material opera�onal exposuresacross Shell’s en�re value chain which provides a moregranular assessment of key risks that the organisa�on is facing.
 conduct and culture risks: we consider alignment of ourpolicies, prac�ces and behaviours against our purpose andcore values.
The four sub-components of risk related to climate change and
GHG emissions commercial, regulatory, societal includingli�ga�on, and physical risk – are assessed using the above
categories to ensure that we maintain strategic resilience, haverobust day-to-day opera�onal risk responses and that
responses align with Shell’s purpose and core values.

At a project level, assessing climate-related risks is an important partof making ini�al investment decisions. To support project-level risk
management, projects of a certain size or which carry unusual risks
are required to follow Shell’s Opportunity Realisa�on Standard, whichsets out the rules for managing and delivering opportuni�es in theorganisa�on. Each project is assisted by experts from our global subjectma�er groups during their development, implementa�on and opera�on.

SHELL’S PROCESSES FOR MANAGING
CLIMATE-RELATED RISKS

Projects under development that are expected to have a material
greenhouse gas impact must meet our internal carbon performancestandards or industry benchmarks. This indicates that they will be able
to compete and prosper in a future where society aims to limit overall
carbon emissions.
Our performance standards are used for measuring a project’s
average life�me GHG-intensity or energy eﬃciency per asset type.
Applying these criteria ensures that our projects can compete andprosper in the energy transi�on. An excep�on process is in place
to manage speciﬁc incidental cases. The repor�ng year 2021 was
the ﬁrst full year of implementa�on of performance standards across
our Upstream and Transi�on pillars. The performance standards
for the Growth businesses are under development.

Our climate-related risk management process is carried out at Grouplevel, at business, func�on and asset level which includes projects.

The performance standards are approved by the Execu�ve Vice President
accountable for implementa�on in the relevant businesses, and by the
Execu�ve Vice President Safety, Environment and Asset Management.

We apply the Shell Control Framework to ensure that we eﬀec�vely
manage our climate-related risks at all these levels. The framework
includes: mandatory risk standards and manuals;
 project-level risk management processes;
 management and Board review; internal audits and inves�ga�ons; and annual a�esta�on processes.

Projects with a material greenhouse gas footprint that meet theperformance standards or industry benchmarks will o�en set moreambi�ous emissions targets for themselves that then are approved by
the Execu�ve Vice President Safety, Environment and Asset Management
at certain deﬁned stages. The respec�ve project’s GHG abatement plan
helps to determine the nature of these targets, and we assess the eﬀects
of a project’s emissions alongside economic and technical design factors.

Mandatory risk standards and manuals

We have mandatory standards and manuals which establish therequirements on how to eﬀec�vely manage material risks including
the opera�on of appropriate controls. Our standards and manuals
also provide guidance on how to monitor, communicate and reportchanges in the risk environment. These documents aim to: ensure consistent management and assessment of climate risk
across Shell; clarify expecta�ons for risk management and repor�ng, includingroles and responsibili�es of the risk owners;
 clarify types of assurance ac�vi�es that may be applicable; strengthen decision-making by ensuring that businesses have be�erawareness and understanding of climate risks (including their likelihood
and poten�al impact) and mi�ga�on plans; and enable integra�on of Shell’s repor�ng.
We periodically review and, if necessary, update our standards andmanuals in light of developments in risks associated with climate change.
Our approach con�nues to evolve as we increase our understandingof changing policies and the diﬀering pace of energy transi�on in
diﬀerent regions.

We es�mate the future GHG emissions of projects in two ways. We apply
the performance standards, and we consider the GHG emissions from theuse of the products that are to be manufactured. These assessments canlead to projects being stopped or designs being changed.
We expect the performance standards to evolve as our por�olio changes
in the energy transi�on.

Management and Board reviews

Management and the Board perform regular reviews of the risk ofclimate change and GHG emissions to ensure awareness of emerging
issues that impact our strategy and to ensure the eﬀec�veness of our
responses in managing this risk at a more granular, opera�onal level.
For example, as part of the annual strategic planning cycle, the Execu�veCommi�ee and the Board assess how climate and GHG emissions may
aﬀect the pace of the energy transi�on and the long-term implica�ons
for Shell’s current por�olio.

Shell, Annual Report 2021, p. 87

26

The Task Force on Climate-related Financial Disclosures

Risk Management c) asks companies to describe
how processes for identifying, assessing, andmanaging climate-related risks are integrated
into the company’s overall risk management.

Figure A16 describes an energy company’s
enterprise risk management process and its
inclusion of climate-related risks.

Figure A16

Integration of Climate-Related Risks into Overall
Risk Management
Enterprise Risk
Management
Process
A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

The ERM process is centered on ﬁve
key components as depicted in thegraphic below:

The ERM process identiﬁes and assesses
both enterprise risks and opportunities,
including those relating to theemerging impacts of climate change.

• Ensure appropriate risk governanceacross all levels of our organization;• Promote a risk-aware culture where
all employees have a responsibility in
identifying and communicating risks;• Enable risk-informed decision-making
and objective-setting;• Manage execution risk through regular
identiﬁcation and assessment of risks,
as well as risk response review andmonitoring; and• Report and communicate risks
appropriately.

PSEG enterprise risk management process components and top risk categories
ERM process
Risk GovernanceRisk-Aware Culture

Risk-Informed
Decision-Making

Managing
Execution Risk

Risk Reporting andCommunication

PSEG risk categories

Illustrative examples of risks associated with climate change for each risk category

Operational

Environment
Health & Safety

Strategic

Legal &
Compliance

Reputational

Financial• Ability to maintainreliable service
despite more
extreme andfrequent weather
events• Environmental orsafety impacts
from operational
incidents caused
climate change(e.g., ﬂooding,storms)• Diﬃcultiesaligning
regulatory
constructs withclimate goals• Evolving liability
landscape forclimate events• Ability to meetcustomer andstakeholder
clean energy
expectations• Energy andcapacity priceimpacts due tochanging climate
policies andgeneration mix

PSEG, Sustainability and Climate Report 2021, p. 33

27

The Task Force on Climate-related Financial Disclosures

Metrics and Targets Recommendation
Metrics and Targets a) asks companies to disclosethe metrics they use to assess climate-relatedrisks and opportunities in line with their strategy

and risk management processes. Figure A17
shows the metrics disclosed by a consumer
goods company.

Figure A17

Climate-Related Metrics
Metric

Unit

2019

2020

Environmental Stewardship
EnergyTotal energy consump�on*

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesMWh4,996,720

4,956,351

Energy use intensity

kWh per Metric Ton of Product

643

629

Total purchased electricity

MWh1,565,580

1,546,046

Total consump�on of fuel (excluding feedstock)MWh

3,262,568

3,285,281

Greenhouse Gas Emissions
Gross scope 1 emissions*

Metric Tons CO2e595,918

592,463

Gross scope 2 emissions (loca�on-based)*

Metric Tons CO2e713,955

697,565

Gross scope 2 emissions (market-based)*

Metric Tons CO2e

Not reported

704,689

Outside of scopes (biogenic emissions)

Metric Tons CO2e77,186

92,955

Scope 1 & 2 intensity

Metric Tons CO2e per
Metric ton of product

0.17

0.16

Total scope 3 emissions*

Metric Tons CO2e23,277,493

25,026,531

Category 1: Purchased goods and services*

Metric Tons CO2e18,282,750

18,537,494

Category 2: Capital goods*

Metric Tons CO2e397,604

351,878

Category 3: Fuel and energy-related ac�vi�es*

Metric Tons CO2e717,229

711,945

Category 4: Upstream transporta�on and distribu�on*

Metric Tons CO2e

1,366,415

1,748,423

Category 5: Waste generated in opera�ons*

Metric Tons CO2e

52,06655,658Category 6: Business travel*

Metric Tons CO2e18,9884,383

Category 7: Employee commu�ng*

Metric Tons CO2e

105,897

93,618Category 9: Downstream transporta�on and distribu�on*

Metric Tons CO2e

1,307,392

1,339,067

Category 11: Use of sold products*

Metric Tons CO2e

Not Reported

1,102,744

Category 12: End of life treatment of sold products*

Metric Tons CO2e

1,029,152

1,081,321

Water
Total water withdrawals*

Thousand Cubic Meters

41,59841,253

Total water withdrawals at water-stressed manufacturing sites

Thousand Cubic Meters

12,956

12,329Water use intensity

Cubic Meters Per Metric Tons of Product

5.39

5.24

Water use intensity at water-stressed manufacturing sites

Cubic Meters Per Metric Tons of Product

7.70

7.30

100,595

96,450

0.013

0.012

Waste
Waste to landﬁll*

Metric Tons

Waste to landﬁll intensity

Metric Tons Waste per Metric Tons of Product

The Kraft Heinz Company, 2021 ESG Report, p. 72

28

The Task Force on Climate-related Financial Disclosures

Metrics and Targets b) asks companies
to disclose their Scope 1, Scope 2, and,if appropriate, Scope 3 GHG emissions.
The example shown in Figure A18 provides amaterials and buildings company’s disclosureof Scope 1, Scope 2, and Scope 3 GHG
emissions over a three-year period basedon location and market. It also provides
a breakdown of Scope 3 GHG emissions
by category.

Figure A18

Scope 1, Scope 2, and Scope 3 GHG Emissions

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesLandsec, Sustainability Performance and Data Report 2021, pp. 21 and 22

Metrics and Targets c) asks companies to describe
the targets used to manage climate-related risks
and opportunities and performance against
such targets. The example shown in Figure A19

describes an energy company’s climate-related
targets and associated time frames along withthe company’s 2021 performance against
those targets.

Figure A19

Targets and Progress against Targets
Aim

2021 ③ Net zero sales
2025 target
performance① Net zero opera�ons

35%a ④ Reducing methane
20%a② Net zero produc�on

a
16%a ⑤ More $ for new
20%energies③ Net zero sales

0%ca④ Reducing methane

b g
0.07%

⑤ More $ for new energies

d i$2.2bnc

5%d2030 aim

0%c 2050, or
sooner, aim

50%a,b0.07%g Net zero
35-40%a$2.2bni Net zero

15-20%d,e

Net zerof

Cumula�ve reduc�ons against the 2019 baseline on an absolute basis.
Previously 30-35%.
0.20%h50% reduc�onh
Cumula�ve impact on average emissions intensity of marketed energy
products against the 2019 baselinen energy products weCumula�ve reduc�onof the$3-4bnin the carbon intensity~$5bsell against the 2019 baseline.

5%15-20%Net zerod reduc�ons against the 2019 d,ea Cumula�vebaseline on an absolute basis. f i
b Previously 30-35%.
c Cumula�ve impact on average emissions intensity of marketed energy
productshagainst the 2019 baselinehd Cumula�ve reduc�on in the carbon intensity of the energy products wesell against the 2019 baseline.
e Previously >15%.
nnf Previously 50% cumula�ve reduc�on in the average emissions intensity ofmarketed energy products against the 2019 baseline.
g The 2021 methane intensity is calculated using exis�ng methodology and,it reﬂects
progress in reducing
methanewillincreased
not directly
i whileIn 2021,
capital expenditureagainst ouraim 5 emissions,ac�vi�es hasfrom$750 million in 2020 to nearly $2.2 billion, the majority of which related toinvestments in oﬀshore wind, electric vehicle charging infrastructure and solar.

0.20%

50% reduc�on

$3-4b

~$5b

BP, Annual Report 2021, p. 51

29

The Task Force on Climate-related Financial Disclosures

2. TCFD-ALIGNED REPORTING BY ASSETMANAGERS AND ASSET OWNERS

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

When the Task Force published its
recommendations in 2017, it highlighted theimportant role large asset managers and asset
owners play in the investment chain in termsof influencing the companies in which they
invest to provide better climate-related financial
disclosures.28 It also recognized reporting byasset managers and asset owners is intended
to satisfy the needs of clients, beneficiaries,
regulators, and oversight bodies and follows aformat that is generally different from corporate
financial reporting (see Figure A20). For purposesof adopting the recommendations, the Task
Force focused on these organizations’ reportingto their clients and beneficiaries, respectively,
and recommended they use their existing
channels of financial reporting, where relevant
and feasible.
While the Task Force focused on asset managers
and asset owners’ reporting to their clients andbeneficiaries, respectively, it also recognizedthese organizations may have a broader rangeof stakeholders to whom they report climaterelated financial information.29 In particular, theTask Force recognized an asset manager thatis a public company has two distinct audiences
for its climate-related financial disclosures.
The first audience is its shareholders, who
need to understand enterprise-level risks andopportunities and how these are managed;
and the second is its clients, for whom
product-, investment strategy-, or client-specificdisclosures are more relevant.
For asset owners, the Task Force recognizedthat they sit at the top of the investment chain
and their disclosure of climate-related issues —to the extent possible given existing data andmethodology constraints — allows beneficiaries
and other audiences to assess the asset owner’s
investment considerations and approach
to climate change. The Task Force strongly
encouraged asset owners to make climaterelated financial disclosures, so as to provide
beneficiaries and other stakeholders withinformation to better understand exposures toclimate-related risks and opportunities. Further,climate-related financial disclosures by asset
owners may encourage better disclosures acrossthe investment chain — from asset owners toasset managers to underlying companies — thus
enabling a wide range of stakeholders to makebetter-informed investment decisions.

Figure A20

Asset Managers and Asset Owners
Asset Managers
Asset managers, also known as investment
managers, are hired by clients to invest assets
on their behalf. In this role, asset managers act
as fiduciaries. Asset managers invest within theguidelines specified by their clients for a given
mandate set out in an investment managementagreement or product specification. Importantly,
the investment results, whether positive or
negative, belong to the client.
Asset managers’ reporting to clients takes
different forms depending on a client’s
requirements and the types of investments
made. For example, a mutual fund investor
might receive (or download from a website) a“fund fact sheet” that reports, among otherinformation, the top holdings by value, the top
performers by returns, and the carbon footprintof the portfolio against a stated benchmark. An
investor in a segregated account might receive
more detailed, climate-related information,
including the aggregate carbon intensity ofthe portfolio compared with a benchmark
and insight into portfolio positioning under
different climate scenarios.

Asset Owners
Asset owners are a diverse group that
include public- and private-sector pension
plans, re-/insurance companies, endowments,and foundations and invest assets on theirown behalf or on behalf of their beneficiaries.
Asset owners invest according to a mandate orinvestment strategy set out by their oversight
body or their beneficiaries. Asset owners havevarious investment horizons that influence theirrisk tolerance and investment strategies. Many
asset owners have broadly diversified investment
portfolios across investment strategies,
asset classes, and regions and portfolios withthousands of underlying individual company andgovernment exposures. Asset owners may hireasset managers to invest on their behalf.
The financial reporting requirements andpractices of asset owners vary widely anddiffer from what is required of companies
with public debt or equity. Some asset owners
have no public reporting, while others provide
extensive public reporting.

28 TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017.
29 TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, October 14, 2021, pp. 37 and 41-42.

30

The Task Force on Climate-related Financial Disclosures

As noted previously, asset managers and asset
owners were excluded from the AI review
because the types of reports needed for analysis
may not be publicly available. In its previous
status reports, the Task Force has used reportingby asset manager and asset owner signatories to
the Principles for Responsible Investment (PRI)
as a proxy for these organizations’ TCFD-aligned
reporting.30 For the 2021 reporting period,
the PRI piloted a new reporting framework on
which it received significant signatory feedback.
PRI decided to delay the opening of the nextreporting period until 2023 to allow sufficient

time to address the feedback on the pilot.31
As a result, the latest aggregate TCFD-aligned
reporting to the PRI is for the 2021 reporting
period, which is summarized in the Task Force’s
2021 status report.32 To gain insight on asset
managers and asset owners’ current reportingof climate-related financial information to theirclients and beneficiaries, respectively, as well asa broader range of stakeholders, the Task Force
conducted a survey in the first quarter of 2022.
This subsection describes the survey’s scope andapproach, summarizes the survey results, andhighlights key findings related to the results.

Key Takeaways
A.
State of Climate-Related
Financial Disclosures

The vast majority — 93% — of asset managers and asset owners responding to the survey indicated they
had implemented the TCFD recommendations or planned to in the future.
Over 60% of asset managers and over 75% of asset owners indicated they currently report climate-related
information to their clients and beneficiaries, respectively.

B.
Review of Five Years of
TCFD Implementation

Nearly 50% of asset managers and 75% of asset owners indicated they report information aligned with atleast five of the 11 recommended disclosures. In addition, 60% of asset managers and nearly 80% of asset
owners indicated they report information aligned with at least one recommended disclosure; and 10% ofasset managers and 36% of asset owners report on all 11.

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Asset managers and asset owners report to their clients and beneficiaries, respectively, through multiple
channels. Most asset managers report through sustainability reports or directly to clients, while most asset
owners report through annual, sustainability, or climate-specific reports.
1

On November 3, 2022, the TCFD Secretariat revised the end of this sentence to correct an error in the calculation of the percent of asset
managers and asset owners that indicated they report on all 11 recommended disclosures.

Scope and Approach
In February 2022, the Task Force issued a survey
to better understand TCFD-aligned reporting
practices by asset managers and asset owners.33
The Task Force believes it is important tohighlight the survey was distributed primarily
to companies that signed up for updates on the
Task Force’s website, which means most survey
respondents were familiar with the Task Force’s
work.34 In fact, 93% of the survey respondents
indicated they had implemented the TCFD
recommendations or planned to in the future.
Given the composition of survey respondents,
the Task Force recognizes the survey results

should not be extrapolated to a broader
population of asset managers and asset owners.
The Task Force distributed the survey to around3,000 financial institutions, resulting in 229
responses.35 The survey asked asset managers
and asset owners about their reporting to clientsand beneficiaries, respectively, as well as theirreporting practices in general on informationaligned with the Task Force’s 11 recommended
disclosures along with associated challenges.
In addition, as part of the questions alignedwith the three recommended disclosuresrelated to metrics and targets, the survey
incorporated specific metrics that are included

30 PRI signatories are required to report on their responsible investment activities on an annual basis by responding to “indicators” in the PRI
reporting framework. A subset of those indicators is aligned with the Task Force’s 11 recommended disclosures.
31 PRI, “Reporting Framework Pilot: Next Steps for Signatories,” August 2, 2021.
32 TCFD, 2021 Status Report, October 14, 2021, pp. 50-54.
33 The Task Force recognizes asset owners represent a wide range of organizations with different types of stakeholders. For ease of reference,
we refer to these stakeholders as beneficiaries.
34 In addition to distributing the survey to companies that signed up for updates on the Task Force’s website, the TCFD Secretariat also sent thesurvey to the Principles for Responsible Investment and requested the survey be shared with its signatories.
35 The TCFD Secretariat recognized many of the companies and organizations receiving the survey were not asset managers or asset owners andincluded a gating question so that only organizations identifying as asset managers or asset owners received the survey questions.

31

The Task Force on Climate-related Financial Disclosuresin the Task Force’s guidance for all sectors andsupplemental guidance for asset managers andasset owners.36 Other topics covered included
the types of reports in which asset managers
and asset owners report climate-related financial
information, when these organizations begansuch reporting, their assets under management,

and the types of assets held. In addition,interviews with industry practitioners — including
Task Force members — were conducted togather additional insights and context for thesurvey results. Box A2 provides an overview of
the composition of the asset managers and asset
owners that responded to the survey.

Box A2Composition of Asset Manager and Asset Owner
Survey Respondents
Percent of Respondents1

Implementing TCFD

A.
State of Climate-Related
Financial Disclosures

Organization Type93%
Legend:Yes (212)

7%

66%
Legend:No (17)

Asset Managers (151)Base size: 229

Geographic Distribution of Respondents

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

34%

Top 5 Countries by Number of Respondents

48%
Europe23%
North
America26%
Asia
Pacific
1%
South
AmericaD.
Initiatives Supporting TCFD

Asset Owners (78)Base size: 229

United Kingdom

46

United States of America

32

Canada

16

Japan

15

Australia

122%Middle East
and Africa

Appendices
Legend:

1

2–3

4–9

10–19

20–39

>40

Number of respondents by country

Distribution by Assets under Management2
94%

Types of Assets3
100%
65%

79%
51%
22%
6%
3%

12%

<$100M

Legend:85%54%

95% 92% 100%

76%

73%

59%

67%

56%

49%

45%

100%

42%

44%

74%

68%
33%

46%

72%
38%

23% 21%<$999M

<$9B

<$99B

Asset Managers (151)<$499BAll

ListedEquities

Fixed
Income:Corporate

Asset Owners (78)

Legend:Asset Managers (151)

All Respondents (229)
1
2
3

53%

Fixed
Income:Government

PrivateEquity or
Debt

Property or
Infrastructure

Asset Owners (78)

All Respondents (229)

The numbers in parentheses represent the number of respondents.
The percentages in this chart are cumulative percentages.
Respondents could select multiple types of assets.

36 In addition to GHG emissions and climate-related targets — which are part of the 11 recommended disclosures, the survey asked about fiveother specific metrics as follows: weighted-average carbon intensity, the extent to which assets under management or assets owned are alignedwith a well below 2°C scenario, metrics used to assess climate-related physical risks, metrics used to assess climate-related transition risks, andmetrics used to assess climate-related opportunities.

32

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

Asset managers represented 66% (151) of the
responses, and asset owners represented
34% (78). The geographic distribution of thesurvey respondents — as shown in Box A2(p. 32) — spans five regions and 38 countries.
Nearly a majority (48%) of respondents were
headquartered in Europe while 26% were
headquartered in Asia Pacific and 23% in North
America. In addition, over 50% of respondents
were headquartered in five countries, with46 respondents headquartered in the United
Kingdom and 32 in the United States. In terms of
the size of survey respondents overall, 79% held
$99 billion or less in assets under management.
When viewed by organization type, a different
picture emerges where 85% of asset manager
respondents held $99 billion or less in assets
compared to 67% of asset owner respondents.
The survey also asked respondents to indicate
the types of assets they held based on a list of
five types — listed in the bottom right chart in

Box A2 (p. 32). Respondents could select morethan one type; and, on average, asset manager
respondents indicated holding two types of assets
while asset owner respondents, on average,
indicated holding four types.
Summary of Reporting to Clients andBeneficiaries37
With the Task Force’s focus on asset manager
and asset owner reporting to their clients or
beneficiaries, respectively, respondents wereasked whether they currently report, plan toreport, or do not plan to report to their clientsor beneficiaries. As shown in the top charts in
Box A3, the majority of respondents indicatedthey currently report to their clients andbeneficiaries — 62% of asset managers and 77%
of asset owners, and most of the remainder
indicated they plan to report.

Box A3

Reporting of Climate-Related Information to Clientsand Beneficiaries
Percent of Respondents1

Status of ReportingD.
Initiatives Supporting TCFD
Appendices

All Respondents (229)

67%

31%

Asset Managers (151)

62%

37%

Asset Owners (78)77%

Legend:Currently Report

Plan to Report

2%
1%
20%

3%

Do Not Plan to Report

Reasons for Reporting or Planning to Report2
84% 79%72% 58%
Requests from Clientsor Beneﬁciaries
Legend:61% 55%

Climate-Related
Risks are Material

Currently Report (154)62%

Required by Regulators(or Will Be)

73% 55%39%

Senior Management
Priority

Peers Report
Information

Plan to Report (71)Year Reporting Began or Will Begin by Fiscal Year3
Currently Report

22%
16%

33%

2017 or
Earlier
Legend:

1
2
3

29%

22%

43%

By 2018

37%
57%
28%
By 2019

Asset Managers (149)

49%

42%

63%

By 2020

68%

63%

Plan to Report
96%82%
Not Sure

56%

75%

63%

79%

80% 86%

95% 99% 4% – All Respondents
5% – Asset Managers
1% – Asset Owners

By March2022

By 2021

Asset Owners (76)

By Endof 20222023 or
Later

All Respondents (225)

The numbers in parentheses represent the number of respondents.
Respondents could select multiple reasons.
The percentages in this chart are cumulative percentages.

37 The summary of survey results is based on the 149 asset managers and 76 asset owners that indicated they currently reportor plan to report climate-related information to their clients and beneficiaries, respectively.

33

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Respondents that indicated they do not plan
to report climate-related financial information
to their clients and beneficiaries (2%) were
not asked to complete questions about theirreporting practices on information aligned with
the Task Force’s 11 recommended disclosures.
When asked what would lead these organizations
to report climate-related financial informationin the future, all of them indicated regulatory
requirements to report climate-related
information and half of them indicated requests
from clients or beneficiaries or if their peers werereporting such information. For the respondents
currently reporting climate-related informationor planning to report such information, themost often cited reason for reporting was thatclimate-related risks are material followed bysenior management made it a priority for asset
managers and requests from beneficiaries for
asset owners, as shown in the middle right chartin Box A3 (p. 33).
The bottom chart in Box A3 (p. 33) shows
the year respondents began or plan to begin
reporting climate-related financial information.
Overall, 22% of respondents indicated they
began reporting such information for fiscal year2017 or earlier; and 63% of all respondents
began reporting before fiscal year 2022. Whenviewed by organization type, 16% of asset
managers and 33% of asset owners began
reporting for fiscal year 2017 or earlier, and 56%
of asset managers and 75% of asset owners
began reporting before fiscal year 2022. Notethat the year 2022 shows up twice in the chart— once under the “currently report” section of
the chart and once under the “plan to report”
section. This reflects whether respondents
indicated they were currently reporting orplanning to report this year. Once theseorganizations have reported for fiscal year 2022,
the Task Force anticipates an additional 19%of all respondents will have reported to theirclients or beneficiaries, which brings the overall
total to 82% of respondents. When viewed byorganization type, an additional 24% of the asset
managers and 11% of the asset owners will havereported, bringing the overall totals to 80% and86%, respectively.
Asset Managers
To better understand the level at which
respondents report climate-related financial
information, the survey asked asset managers
that currently report to their clients (94) toindicate the level — entity or aggregate portfolio
level, fund level, asset class level, or mandate
level — at which they report publicly and directly
to their clients.38 The survey also asked asset
managers that indicated they report directly
to their clients (58) about the frequency ofsuch reporting. As shown in Figure A21, asset
managers generally disclose climate-related
information at an entity or aggregate portfolio
level publicly (64%), with reporting directly toclients often done at a fund level (66%).

Figure A21

Asset Managers: Reporting of Climate-Related Information
to Clients
Percent of Respondents Currently Reporting

Frequency of Reporting Directly to Clients 2

Level of Reporting Publicly and Directly
to Clients 1
Do NotReport at
Level

Publicly

Directly to
Clients

Total
Portfolio

15%

64%

48%

Fund

10%

44%

66%

Asset Class

54%

28%

26%

Mandate

51%

10%

45%
Base size: 94

Legend:Low to high percentage of reporting

48%

34%
9%

7%
Annually

Semi-Annually

QuarterlyMonthly

Base size (respondents that report directly to clients): 58

1
2

On the level of reporting, respondents could select multiplelevels
under publicly and directly to clients.
The sum across reporting frequencies equals 98% because2%of respondents indicated they report on an ad hoc basis.

38 In Figure A21 and other figures in this subsection, “entity or aggregate portfolio” is referred to as “total portfolio” for ease of reference.

34

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

In terms of frequency of reporting, public
reporting tends to occur on an annual basis while
34% of the asset managers reporting directly toclients indicated they report on a quarterly basis,
9% on a monthly basis and 7% on a semi-annual
basis.39,40 In addition, 45% of asset manager
respondents indicated they disclose climaterelated information at a mandate level directly
to their clients, and 10% do so publicly. Nearly
70% of the asset managers that disclose climaterelated information at a mandate level publicly
also disclose at that level directly to clients. In
interviews, industry practitioners indicated thetype of climate-related information disclosed
may depend on whether the disclosure is madepublicly or directly to clients. For instance,
climate-related metrics are often reported directly
to clients at levels specified in an investment
management agreement or product specification,
while other climate-related information, such as
governance, is generally disclosed publicly at anenterprise level.
Asset Owners
As discussed above for asset managers,
Figure A22 provides asset owners’ responses on
the levels — entity or aggregate portfolio level,
fund level, or asset class level — at which theyreport publicly and directly to their beneficiaries.
The majority of asset owner respondents
indicated they report at a total portfolio andasset class level publicly — at 87% and 72%,

respectively. In addition, industry practitioners
interviewed indicated most reporting from asset
owners to their beneficiaries is done publicly.
In terms of the frequency of reporting directly
to beneficiaries, 58% of the asset owners that
do such reporting indicated it occurs on anannual basis, 17% indicated a quarterly basis,and 17% indicated a monthly basis.41 The
Task Force recognizes these percentages are
based on a relatively small number of asset
owners (12) and may not be representativeof a broader population. Notably, industry
practitioners indicated certain types of asset
owners — especially those that are large, thosewith specific investing activities such as bondissuance, or those directly or indirectly related
to government entities — are facing additional
scrutiny on their exposure to climate-relatedrisks and tend to disclose climate-related
information publicly.
The next subsection describes the survey
responses primarily tied to the Task Force’s 11
recommended disclosures, including several
specific climate-related metrics. These questions
did not ask respondents to indicate whether theyreported each of the recommended disclosure
elements to their clients or beneficiaries.
Nevertheless, the Task Force believes providing
this level of detail for each of the recommended
disclosures may be useful for other asset
managers and asset owners as they implement
the TCFD recommendations.

AppendicesFigure A22

Asset Owners: Reporting of Climate-Related Information
to Beneficiaries
Percent of Respondents Currently Reporting

Level of Reporting Publicly and Directly
to Beneﬁciaries1

Frequency of Reporting Directly
to Beneﬁciaries2

Do NotReport at
Level

Publicly

Directly to
Beneﬁciaries

Total
Portfolio

5%

87%

17%

Fund

32%

32%

15%

Asset Class

12%

72%

20%
Base size: 60

Legend:Low to high percentage of reporting

58%

Annually

17%

17%

QuarterlyMonthly

Base size (respondents that report directly to beneﬁciaries): 121
2

On the level of reporting, respondents could select multiple levels
under publicly and directly to beneficiaries.
The sum across reporting frequencies equals 92% because8%of respondents indicated they report on an ad hoc basis.

39 Two percent (2%) of asset managers responded that they report directly to clients on an ad-hoc basis.
40 While some asset managers indicated they report directly to clients multiple times a year, the Task Force recognizes some climate-related
information included in such reports may be updated on only an annual basis.
41 While some asset owners indicated they report directly to beneficiaries multiple times a year, the Task Force recognizes some climaterelated information included in such reports may be updated on only an annual basis.

35

The Task Force on Climate-related Financial Disclosures

Summary of TCFD-Aligned Reporting
Asset Managers
Figure A23 provides asset managers’ responses
for each of the 11 recommended disclosures.
Of those currently reporting, the highest level ofreporting — at 53% — is for the metrics used toassess climate-related risks and opportunities(Metrics and Targets a), which is closely followedby reporting on Governance b) at 51% and Risk
Management a) at 50%. The lowest level ofreporting — at 19% — is for the resilience ofstrategy under different climate-related scenarios(Strategy c), which is followed by Metrics andTargets c) at 25%.42

Figure A23

Asset Managers: Status of TCFD-Aligned Reporting
Recommendation

Recommended Disclosure

Governancea) Board Oversight

44%
40%

4%

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation

Percent for Each Reporting Option12%b) Management’s Role
3%
5%

45%
46%

a) Risks and Opportunities

Strategy

2%
7%
36%

b) Impact on Organization

C.
Case Studies on Board
Oversight

50%

5%
9%
19%

c) Resilience of Strategy

D.
Initiatives Supporting TCFD

11%
Risk Management

Appendices

47%

23%

a) Risk ID andAssessment Processes

39%

2%

46%
42%

1%

11%
44%
44%

c) Integration into Overall

Metrics
and Targets

3%9%a) Climate-Related
Metrics

41%

1%
5%

b) Scope 1, 2, 3
GHG Emissions

39%

5%
7%
25%

c) Climate-Related
Targets

8%0%

Legend:42

Currently Report

Plan to Report

50%

9%

b) Risk Management Processes

Risk Management

51%

41%

Do Not Plan to Report

53%

49%

37%

30%
20%

40%

Undecided

60%

80%

100%
Base size: 149

See Table A1 (p. 11) for descriptions of each of the Task Force’s 11 recommended disclosures

36

The Task Force on Climate-related Financial Disclosures

Notably, 11% of asset managers indicatedthey do not plan to report information related
to Strategy c), and 23% indicated they are
undecided. For Metrics and Targets c), 8% ofasset managers indicated they do not plan toreport such information, and 30% indicated they
are undecided. It is unclear why nearly one thirdof asset managers are undecided on reporting
information on climate-related targets but
may relate to concerns about data availability
and methodologies for calculating metrics
as highlighted in Figure A26 (p. 38), which
describes the top challenges for asset managers
in reporting climate-related information.

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

The survey also included a few additionalquestions related to Strategy c) to gain
additional insight on whether asset managers
conduct climate-related scenario analysis and,if so, whether they use such analysis in theirdecision-making. Figure A24 shows that 28%

of asset manager respondents indicated they
conduct scenario analysis and use the resultsin decision-making, which is nine percentage
points higher than those that indicated they
disclose Strategy c). It also shows that another
23% indicated they conduct scenario analysis
but are not using the results in decisionmaking. The table on the right in Figure A24
provides additional information from the subset
of asset managers indicating they conduct
scenario analysis on whether they report theresults of their scenario analyses. Forty-fourpercent (44%) of asset managers that conduct
scenario analysis responded that they report
the results, with 25% reporting qualitative
results, 7% reporting quantitative results, and
12% reporting both qualitative and quantitative
results. Additionally, 46% of the same subset
of asset managers mentioned that they do notcurrently report their scenario analysis results,
but plan to do so.

Figure A24

Asset Managers: Using Scenario Analysis and Reportingon Results
Percent of Respondents
Conduct Scenario Analysis and Use Results in Decision-Making
3% 2%Conduct and Use
Conduct Only

Appendices28%
44%

Status of Reporting on Scenario Analysis Results

Do Not Conduct

Report qualitative results

25%

Report quantitative results

7%

Plan to Conduct

Report qualitative and quantitative results

12%

Undecided

Plan to report scenario analysis results

46%

Do not plan to report scenario analysis results 10%

23%
Base size: 149

Base size (respondents that conduct scenario analysis): 76

The survey also asked respondents about specificclimate-related metrics. In addition to GHG
emissions and climate-related targets — which
are part of the 11 recommended disclosures, thesurvey asked about five other specific metrics.
Figure A25 (p. 38) lists all seven metrics alongwith the percent of asset managers that indicatedthey currently report on these metrics. The
most reported is GHG emissions associated withassets under management at 42%, and the least
reported at 15% is the extent to which assets

under management, products, and investment
strategies align with a well below 2°C scenario.
Respondents were also asked how theyhandle reporting when they are missing data
for specific assets or asset classes. Over halfindicated they report metrics based on available
data and acknowledge any gaps in their reports.
See Appendix 4: Asset Manager and Asset
Owner Metrics Reporting for more information
on asset managers’ reporting on metrics.

37

The Task Force on Climate-related Financial Disclosures

Figure A25

Asset Managers: Currently Report on Select Metrics
Metrics and Targets

Percent Responding1a) Alignment with <2°C Scenario

15%

Physical Risk

21%

Transition Risk

24%

Climate-Related Opportunities

19%
42%

b) GHG Emissions of AUM
Weighted Average Carbon Intensity

35%c) Targets

26%
0%

20%

40%

60%

80%

100%

Base size: 149

A.
State of Climate-Related
Financial Disclosures

1.
1 The
Thepercentages
percentagesfor
forMetrics
Metricsand
andTargets
Targetsa)a)andandb)b)ininFigure
FigureA23
A23(p.(p.36)
36)arearehigher
higherthan
thanthethepercentages
percentagesfor
forspeciﬁc
specificmetrics
metricsassociatedassociatedwith
with
Metrics and Targets a) and b) in this ﬁgure because respondents were identiﬁed as currently reporting if they indicated reporting at least one of
Metrics and Targets a) and b) in this figure because respondents were identified as currently reporting if they indicated reporting at least one
the metrics listed.
of the metrics listed.

C.
Case Studies on Board
Oversight

In addition to asking respondents about how
they handle reporting of metrics when they are
missing data for specific assets or asset classes,
the survey asked respondents about generalchallenges they face in reporting climate-related
information. Figure A26 provides the results inorder of the most often selected challenge to theD.
Initiatives Supporting TCFD

Figure A26

B.
Review of Five Years of
TCFD Implementation

Appendicesleast. Two thirds of asset manager respondents
indicated that obtaining sufficient informationfrom the companies in which their clients invest
is a significant challenge for their reporting; andover 50% identified the lack of methodologies forcalculating climate-related metrics and the lackof resources as significant challenges.

Asset Managers: Challenges Reporting Climate-RelatedInformation
Challenge (from highest to lowest)

Percent Responding1

Insuﬃcient information from investee companies

65%

Lack of methodologies to calculate metrics

57%

Lack of resources

54%

Insuﬃcient information from other sources2

45%

No signiﬁcant challenges

8%

Issues related to data or analytical tools

4%

Other

3%
0%

20%

40%

60%

80%

100%

Base size: 149
1
2

Respondents could select multiple options.
Insufficient information from sources other than investee companies.

38

The Task Force on Climate-related Financial Disclosures

The Task Force also reviewed asset managers’
reporting on information aligned with the 11
recommended disclosures based on their assets
under management (AUM). Asset manager
respondents were divided into four categories
based on their size; and Figure A27 shows thepercent of asset managers in each category thatindicated they currently report the associatedrecommended disclosure. The largest asset
managers — those with more than $100 billion in
AUM — have the highest percentage of reportingfor each of the 11 recommended disclosures,
which is generally consistent with the AI review

results for public companies where a higher
percentage of large companies disclosed TCFDaligned information than smaller companies.
An interesting difference between the AI review
results and these survey results is that thepercentage of the smallest asset managers —those with less than $1 billion in AUM — reporting
TCFD-aligned information is generally consistent,
and in some cases higher, than that of asset
managers with between $10 and $99 billion
in AUM and higher for all 11 recommended
disclosures compared to asset managers with
between $1 and $9 billion in AUM.

Figure A27

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Asset Managers: Currently Report TCFD-Aligned
Information by Size (AUM)
Percent of Respondents> $100B(23)1$10-99B
(46)

$1-9B
(46)

< $1B
(34)

a) Board Oversight

52%

48%

37%

44%

b) Management’s Role

65%

52%

43%

50%

a) Risks and Opportunities

61%

43%

35%

50%

b) Impact on Organization

52%

35%

26%

41%

c) Resilience of Strategy

39%

15%

13%

18%

a) R
 isk ID and Assessment
Processes

65%

54%

41%

47%

b) Risk Management Processes

57%

48%

37%

47%

c) Integration into Overall
Risk Management

61%

43%

35%

47%

a) Climate-Related Metrics

70%

50%

50%

53%

b) Scope 1, 2, 3 GHG Emissions

65%

46%

43%

53%

c) Climate-Related Targets

39%

22%

17%

32%

Recommendation

Recommended Disclosure

Governance

Strategy

Appendices
Risk Management

Metrics
and Targets

1

The numbers in parentheses represent the numberof respondents.

Legend:Low to high percentage of reporting

39

The Task Force on Climate-related Financial Disclosures

Figure A28 provides a breakdown of the typesof reports for fiscal years 2017 through 2021
in which asset managers indicated they reportclimate-related information. With the exceptionof 2017, a plurality of respondents reported insustainability reports, followed by client reports
and annual or integrated reports. Beginning with2019 reporting, the majority of asset managers
reported in sustainability reports; and, for the
past two reporting cycles, a majority reported

in sustainability reports and client reports.
Interestingly, the largest growth during theperiod — at 35 percentage points — was forreporting in climate-specific reports, closely
followed by reporting in sustainability reports
at 31 percentage points. For other types ofreports, asset managers’ responses were varied
and included reporting to the PRI, CDP, GRESB,
and a few other reporting frameworks as well asreporting through websites and fund factsheets.

Figure A28

Asset Managers: Location of Reporting for Fiscal Years
2017-2021
A.
State of Climate-Related
Financial Disclosures

Percent of Respondents
Report Type1FY2017(24)2FY2018(33)

FY2019(41)

FY2020(62)

FY2021(84)

B.
Review of Five Years of
TCFD Implementation

Financial Filing

13%

12%

12%

8%

11%

Annual Report or Integrated
Report

38%

36%

37%

39%

35%

Sustainability Report

42%

48%

59%

66%

73%

D.
Initiatives Supporting TCFD

Climate-Specific Report

8%

9%

15%

26%

43%

Appendices

Client Report

46%

39%

49%

56%

62%

Other

13%

12%

15%

15%

17%

Average # of Reports per
Respondent

1.6

1.6

1.9

2.1

2.4

Respondents could select multiple report types.
The numbers in parentheses represent the numberof respondents.

Legend:C.
Case Studies on Board
Oversight

1
2

Low to high percentage of reporting40

The Task Force on Climate-related Financial Disclosures

While most of the survey questions asked
respondents about their reporting practices
in terms of their alignment with the TCFD
recommendations, the survey also specificallyasked respondents about their implementationof the four TCFD recommendations. Figure A29
provides the percent of asset managers
that indicated they have implemented therecommendations, are in the process of
implementing the recommendations, do notplan to implement the recommendations,and are undecided. With the exception of theGovernance recommendation, over 50% ofasset managers responding indicated they
were in the process of implementing
the recommendations.

Figure A29

Asset Managers: Implementation of the
TCFD Recommendations
Recommendation

A.
State of Climate-Related
Financial Disclosures

Percent for Each Implementation Option

Governance
1%

45%
4%

Strategy

38%

B.
Review of Five Years of
TCFD Implementation

0%

35%
0%

27%
1%

0%

Appendices
Legend:1

Implemented

59%

6%

Metrics and Targets

D.
Initiatives Supporting TCFD

55%

7%

Risk Management

C.
Case Studies on Board
Oversight

50%

In Process

62%

10%
20%

40%

Do Not Plan to Implement

60%

80%

Undecided

100%
Base size:1 141

The base size represents the number of asset managers implementing or planning to implement the TCFD recommendations.

41

The Task Force on Climate-related Financial Disclosures

Asset Owners43
The Task Force applied the same approachto asset owners’ responses to the survey as it
did to asset managers’ responses. As such, thefigures included below follow the same structure
and order as those above. Figure A30 provides
asset owners’ responses for each of the 11
recommended disclosures. Of those currently
reporting, the highest level of reporting —at 75% — is for Governance a), which is closely
followed by reporting on Governance b), Strategya) and Metrics and Targets a) at 71%. The lowest
level of reporting — at 45% — is for Strategy c).
Notably, the level of reporting on ten of the 11
recommended disclosures was over 50%. In
addition, very few asset owners indicated they
are not planning to report on the recommended
disclosures.

Figure A30

Asset Owners: Status of TCFD-Aligned Reporting
Recommendation

Recommended Disclosure

Governancea) Board OversightA.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementationb) Management’s Role

71%

23%

3%
3%
a) Risks and Opportunities

Strategy

75%

22%

0%
3%

b) Impact on Organization
8%c) Resilience of Strategy

37%

1%
Risk Management

1%

5%

8%

c) Integration into Overall Risk

and Targets

0%

8%

0%
1%

1%

7%

1%

32%

Currently Report

Plan to Report

58%

9%

0%
Legend:66%26%c) Climate-Related
Targets

71%28%b) Scope 1, 2, 3
GHG Emissions

63%

29%

a) Climate-Related
Metrics

61%

30%

1%

Metrics

69%25%b) Risk Management Processes

Management

45%

17%

a) Risk ID andAssessment Processes

63%

29%

0%

D.
Initiatives Supporting TCFD

71%

28%

0%
1%

C.
Case Studies on Board
Oversight

Appendices

Percent for Each Reporting Option

Do Not Plan to Report

20%

40%

Undecided

60%

80%

100%
Base size: 76

43 The Task Force recognizes asset owners represent a wide range of organizations with different types of stakeholders. For ease of reference,
we refer to these stakeholders as beneficiaries.

42

The Task Force on Climate-related Financial Disclosures

The Task Force included a few additionalquestions on the resilience of strategy under
different climate-related scenarios (Strategy c) togain additional insight on whether asset owners
conduct climate-related scenario analysis and,if so, whether they use such analysis in theirdecision-making. Figure A31 provides the percent
of asset owners that indicated they conduct
scenario analysis and use the results in decisionmaking (40%). It also shows that another 34%
indicated they conduct scenario analysis. The
table on the right in Figure A31 shows how asset

owners that indicated they conduct scenario
analysis responded to a question on whether theyreport on the results of their scenario analysis.
Sixty-eight percent (68%) of asset owners that
conduct scenario analysis responded that theyreport the results, with 38% reporting qualitative
results, 9% reporting quantitative results, and 21%
reporting both qualitative and quantitative results.
Furthermore, only 2% of this group mentionedthat they do not plan to report their scenario
analysis results.

Figure A31

A.
State of Climate-Related
Financial Disclosures

Asset Owners: Using Scenario Analysis and Reportingon Results
Percent of Respondents
Conduct Scenario Analysis and Use Results in Decision-Making

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

4%

22%
40%

Conduct and Use

Status of Reporting on Scenario Analysis Results

Conduct Only

Report qualitative results

38%

Do Not Conduct

Report quantitative results

9%

Report qualitative and quantitative results

21%

Plan to report scenario analysis results

30%

Plan to Conduct

Do not plan to report scenario analysis results 2%

34%
Base size: 76

Base size (respondents that conduct scenario analysis): 56

Figure A32 (p. 44) provides the percent of asset
owners that indicated they currently report on
specific metrics.44 The most reported is GHG
emissions associated with assets they own at
59% closely followed by climate-related targets at
58%; and the least reported at 24% is the extent
to which assets they own and their funds andinvestment strategies, where relevant, align witha well below 2°C scenario. Respondents were also
asked how they handle reporting when they are
missing data for specific assets or asset classes.
Over 60% indicated they report metrics based on
available data and acknowledge any gaps in theirreports. See Appendix 4: Asset Manager and Asset
Owner Metrics Reporting for more information on
asset owners’ reporting on metrics.

44 In addition to GHG emissions and climate-related targets — which are part of the 11 recommended disclosures, the survey asked asset owners
about five other specific metrics as follows: 1) weighted-average carbon intensity, 2) the extent to which assets they own and their funds andinvestment strategies, where relevant, are aligned with a well below 2°C scenario, 3) metrics used to assess climate-related physical risks, 4)
metrics used to assess climate-related transition risks, and 5) metrics used to assess climate-related opportunities.

43

The Task Force on Climate-related Financial Disclosures

Figure A32

Asset Owners: Currently Report on Select Metrics
Metrics and Targets

Percent Responding1a) Alignment with <2°C Scenario

24%

Physical Risk

36%

Transition Risk

38%

Climate-Related Opportunities

36%
59%

b) GHG Emissions of AUM
Weighted Average Carbon Intensity42%c) Targets

58%
0%

20%

40%

60%

80%

100%
Base size: 76

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

1

The percentages for Metrics and Targets a) and b) in Figure A30 (p. 42) are higher than the percentages for specific metrics associated with
Metrics and Targets a) and b) in this figure because respondents were identified as currently reporting if they indicated reporting at least oneof the metrics listed.

In terms of significant challenges that asset
owners face in reporting climate-related
information, 71% identified the lack ofmethodologies for calculating climate-related
metrics, which was followed by obtaining
sufficient information from the companies
in which they invest at 63% (see Figure A33).
Several asset owners that indicated the lack ofmethodologies for calculating climate-related

metrics is a challenge specifically mentioned thelack of consensus on existing methodologies asa challenge. As part of updates made last year
to the annex to its 2017 report, the Task Forceacknowledged that data and methodologies
for certain metrics for asset owners are in
early stages of development and that theseorganizations will need time before such metrics
are disclosed to their stakeholders.45

AppendicesFigure A33

Asset Owners: Challenges Reporting
Climate-Related Information
Challenge (from highest to lowest)

Percent Responding1

Lack of methodologies to calculate metrics

71%
63%

Insuﬃcient information from investee companies
Lack of resources

51%

Insuﬃcient information from other sources2

47%
8%

No signiﬁcant challenges

4%Issues related to data or analytical tools
Other

1%
0%

20%

40%

60%

80%

100%
Base size: 76

1
2

Respondents could select multiple options.
Insufficient information from sources other than investee companies.

45 TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures (Annex), October 14, 2021, p. 81.

44

The Task Force on Climate-related Financial Disclosures

The Task Force also reviewed asset owners’
reporting on information aligned with the
11 recommended disclosures based on theirassets under management (AUM). Asset ownerrespondents were divided into three categories

based on their size; and Figure A34 shows thepercent of asset owners in each category thatindicated they currently report the associatedrecommended disclosure.

Figure A34

Asset Owners: Currently Report TCFD-Aligned Information
by Size (AUM)
Percent of Respondents
<$1B
(15)

a) Board Oversight

92%

74%

47%

b) Management’s Role

88%

69%

47%

a) Risks and Opportunities

85%

69%

53%

b) Impact on Organization

81%

57%

47%

c) Resilience of Strategy

69%

34%

27%

a) R
 isk ID and Assessment Processes

92%

66%

33%

b) Risk Management Processes

81%

54%

40%

c) Integration into Overall
Risk Management

77%

57%

53%

a) Climate-Related Metrics

85%

69%

53%

b) Scope 1, 2, 3 GHG Emissions

81%

66%

40%

c) Climate-Related Targets

77%

51%

40%

Governance

Strategy

B.
Review of Five Years of
TCFD Implementation

Risk Management

D.
Initiatives Supporting TCFD
Appendices$1–99B(35)

Recommended Disclosure

A.
State of Climate-Related
Financial Disclosures

C.
Case Studies on Board
Oversight> $100B(26)1

Recommendation

Metrics
and Targets

1

The numbers in parentheses represent the numberof respondents.

Legend:The largest asset owners — those with morethan $100 billion in AUM — have the highest
percentage of reporting for each of the 11
recommended disclosures, followed by asset
owners with between $1 and $99 billion in AUM.
Overall, these results are broadly consistent
with the AI review results for public companies

Low to high percentage of reporting

where the percentage of companies disclosing
TCFD-aligned information tends to increase withcompany size. Notably, the level of reportingby asset owners with more than $100 billion in
AUM on each of 11 recommended disclosures
ranged from 69% to 92%.

45

The Task Force on Climate-related Financial Disclosures

Figure A35 provides a breakdown of the typesof reports for fiscal years 2017 through 2021
in which asset owners indicated they reportclimate-related information. Similar to asset
managers, asset owners were more likely toreport in sustainability reports than in othertypes of reports. Notably, for all five years, amajority of asset owners reported in sustainability
reports and annual or integrated reports. In
addition, there has been significant growth in thepercentage of asset owners reporting in climatespecific reports during this period.

Figure A35

Asset Owners: Location of Reporting for Fiscal Years
2017-2021
Percent of Respondents

A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Report Type1FY2017(25)2FY2018(33)

FY2019(43)

FY2020(48)

FY2021(57)

Financial Filing

22%

19%

15%

17%

15%

Annual Report or Integrated
Report

56%

54%

57%

62%

66%

Sustainability Report

67%

73%

70%

75%

69%

Climate-Specific Report

22%

24%

40%

50%

56%

Beneficiaries Report

22%

19%

19%

17%

18%

Other

26%

24%

19%

17%

18%

Average # of Reports per
Respondent

2.2

2.2

2.2

2.4

2.4

Respondents could select multiple report types.
The numbers in parentheses represent respondents
reporting for the year.

Legend:

1
2

Low to high percentage of reporting46

The Task Force on Climate-related Financial Disclosures

In terms of implementing the TCFD
recommendations, over 73% of asset owners
indicated they have implemented theGovernance recommendation, followed by
Metrics and Targets at 66%, then Strategy at

65%, and finally Risk Management at 64% (seeFigure A36). Notably, very few asset owners
indicated they are undecided or do not plan toimplement the TCFD recommendations.

Figure A36

Asset Owners: Implementation of the
TCFD Recommendations
Recommendation

Percent for Each Implementation Option

Governance
0%
2%

A.
State of Climate-Related
Financial Disclosures

Strategy

B.
Review of Five Years of
TCFD Implementation

Risk Management

C.
Case Studies on Board
Oversight

Metrics and Targets

Appendices1

Implemented

In Process

66%

32%

0%
2%

Legend:

64%

34%

1%
1%

0%

65%

35%

0%
0%

D.
Initiatives Supporting TCFD

73%

25%

20%

40%

Do Not Plan to Implement

60%

80%

Undecided

100%
Base size:1 71

The base size represents the number of asset owners implementing or planning to implement the TCFD recommendations.

CONCLUSION
Overall, the Task Force is encouraged by asset
manager and asset owner responses to its
survey on climate-related reporting practices. In
particular, over 60% of asset managers and over
75% of asset owners indicated they currently
report climate-related information to their clientsand beneficiaries, respectively. In addition, 42%of asset managers and 65% of asset owners, on
average, currently report information alignedwith the 11 recommended disclosures. Theselevels jump to 84% for asset managers and
93% for asset owners when considering thoseindicating they currently report as well as thoseindicating they plan to report. The Task Forcerecognizes the organizations responding to its
survey may not represent the overall populationof asset managers and asset owners but,nevertheless, believes the survey results are apositive sign of growing transparency on climaterelated issues in the investment industry.
The Task Force also recognizes the significant
challenges faced by asset managers and asset
owners in reporting TCFD-aligned information.
Nearly two thirds of asset managers and asset
owners identified insufficient information frominvestee companies as a significant challenge inreporting climate-related information. Despite
this challenge, almost 60% of asset managers
and over 60% of asset owners indicated theyreport on the information they have andacknowledge gaps in their reports. The second
biggest challenge — identified by nearly 60%of the survey respondents — was the lack ofmethodologies for calculating climate-related
metrics. The Task Force recognizes the data andmethodologies for certain metrics, such as theimpact of climate change on investment income
47

The Task Force on Climate-related Financial Disclosuresor asset valuations, are very much in the earlystages of development; and it may take time
before methodologies have been developed
and can be applied in practice. The Task Forcealso recognizes the methodological challenges
of calculating GHG emissions associated withcertain asset classes (e.g., sovereign bonds) andaccepts research is ongoing. Asset managers
and asset owners may find the following
resources on metrics useful:• The PRI’s Introduction to Responsible Investment- Climate Metrics and its “Providers of Scenario
Analysis and Climate Risk Metrics” website.46• Basel Committee on Banking Supervision’s
Climate-Related Financial Risks –Measurement Methodologies.47
A.
State of Climate-Related
Financial Disclosures

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices• The Institutional Investors Group on
Climate Change’s “Paris Aligned Investment
Initiative.”48

Asset Manager and Asset Owner Survey
Results in Context
With the vast majority of the asset manager andasset owner respondents to the Task Force’s
survey already implementing or planning to
implement its recommendations, the Task Force
expected the survey results would show higher
levels of reporting for TCFD-aligned information
than would be the case if the survey populationencompassed a wider range of asset managers
and asset owners. To gauge whether this was
the case, the Task Force compared the survey
results to TCFD-aligned reporting to the PRI by
asset manager and asset owner signatories —on a directional basis.
As mentioned previously, asset manager andasset owner signatories’ reporting to the PRI on
TCFD-aligned information is not yet available forthe current reporting cycle. As such, the Task
Force reviewed the survey results relative to
PRI reporting from the 2021 cycle.49 The Task
Force recognizes direct comparisons of thetwo sets of results would not be appropriate
given the composition of survey respondents
and the difference in time periods covered.
Nevertheless, the Task Force was interested
in understanding whether the survey results
would show higher levels of reporting foreach of the 11 recommended disclosureswhen compared to PRI reporting and whether
the two sets of results would be aligned
in terms of the most and least disclosed
recommended disclosures.
In comparing the survey results of asset
manager respondents that indicated they
currently report information aligned withthe 11 recommended disclosures (the dark
blue bar in Figure A23, p. 28) to TCFD-aligned
reporting to the PRI by asset manager
signatories for the 2021 reporting cycle(Figure A37, p. 49), the Task Force made thefollowing observations:• For seven of the 11 recommended
disclosures, the survey results showed
lower levels of reporting (rather than higher).
• The survey results show Metrics and Targetsa) as having the highest level of reporting,closely followed by reporting on Governanceb), whereas TCFD-aligned reporting to PRI
shows Governance b) as the highest, closely
followed by Governance a) and Strategy a).
Notably, the three recommended disclosureswith the highest levels of reporting in
PRI mapped to PRI “indicators” that weremandatory to report for signatories.
• The survey results show Strategy c) as
having the lowest level of reporting
whereas TCFD-aligned reporting to PRI
shows Metrics and Targets c) as the lowest.

46 PRI, Introduction to Responsible Investment - Climate Metrics, June 27, 2022 and PRI, “Providers of Scenario Analysis and Climate Risk Metrics,”
December 7, 2021.
47 Basel Committee on Banking Supervision, Climate-Related Financial Risks – Measurement Methodologies, April 14, 2021.
48 The Institutional Investors Group on Climate Change, “Paris Aligned Investment Initiative,” September 19, 2019.
49 For more information on TCFD-aligned reporting to the PRI by asset manager and asset owner signatories for the 2021 reporting cycle, please
see the 2021 Status Report, pp. 50-54.

48

The Task Force on Climate-related Financial Disclosures

Figure A37

Asset Managers: TCFD-Aligned Reporting to PRI in 2021
Recommendation

Recommended Disclosure

Governancea) Board Oversight

Percent Reporting
79%b) Management’s Role
Strategy

83%a) Risks and Opportunities

77%b) Impact on Organization

61%c) Resilience of Strategy
Risk Management

25%a) Risk ID and Assessment Processes

47%b) Risk Management Processes

48%
52%

c) Integration into Risk Mgmt.
Metrics and Targets

19%a) Climate-Related Metrics

8%b) Scope 1, 2, 3 GHG Emissions

A.
State of Climate-Related
Financial Disclosures

Legend:B.
Review of Five Years of
TCFD Implementation

Based on a similar review for asset owners, the Task Force made the following observations:C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices7%c) Climate-Related Targets
0%
Mandatory to Report

Voluntary to Report• For eight of the 11 recommended disclosures,the survey results (the dark blue bar in Figure
A30, p. 42) showed higher levels of reporting
compared to TCFD-aligned reporting to the PRI(Figure A38, p. 50).

20%

40%

60%

80%

100%

Base size: 2,182• The survey results show Strategy c) as having
the lowest level of reporting whereas TCFDaligned reporting to PRI shows Metrics andTargets c) as the lowest.

• Both the survey results and TCFD-aligned
reporting to PRI show Governance a),Governance b), and Strategy a) as having thehighest level of reporting.50

50 In the survey results for asset owners, Governance a) had the highest level of reporting at 75% followed by Governance b), Strategy a), and Metrics
and Targets a) at 71%.

49

The Task Force on Climate-related Financial Disclosures

Figure A38

Asset Owners: TCFD-Aligned Reporting to PRI in 2021
Recommendation

Recommended Disclosure

Percent Reporting

Governancea) Board Oversight85%b) Management’s Role

83%

Strategya) Risks and Opportunities

77%b) Impact on Organization

56%c) Resilience of Strategy
Risk Management

Metrics and Targets

35%
42%

a) Risk ID and Assessment Processesb) Risk Management Processes

47%c) Integration into Risk Mgmt.

49%
21%

a) Climate-Related Metrics

12%b) Scope 1, 2, 3 GHG Emissions

A.
State of Climate-Related
Financial Disclosures

10%c) Climate-Related Targets
0%
Legend:B.
Review of Five Years of
TCFD Implementation

Mandatory to Report

Examples of Climate-Related
Financial Reporting

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

20%

40%

60%

80%

This section includes an example of reportingaligned with one of the 11 recommended
disclosures for an asset owner and anotherfor an asset manager. The examples included

100%

Base size: 538

Voluntary to Report

are not intended to represent “best practice”
nor demonstrate disclosures that fully meet
the associated recommended disclosure.51
Instead, the examples are provided because
they may help asset managers and asset
owners generate ideas for theirown reporting.

Sustainability Report 2021

Appendices04.6 Targets and metrics

Figure A39
01 Introduction

Climate-Related Targets

02 Measuring andmanaging sustainability

04.6.1 Climate-related targets

Our support for the low-carbon transition is steered by our commitment to set science-based emission reduction targets and reach net-zero emissions by 2050 in our business
operations and proprietary investment portfolio in line with the Paris Agreement’s target of limiting global warming to 1.5°C.

03 Strengthening
our foundation

Allianz investment portfolio targets, as part of Asset Owner Alliance

04 Climate-related
financial disclosure

Sub-portfolio
Listed Equity
Sub-portfolio
Corporate Bonds
Sub-portfolio
Real Estate

04.1 Highlights
04.2 Governance04.3 Strategy
04.4 Strategy resilience, stress-tests andclimate scenario analysis
04.5 Risk and opportunity management
04.6 Targets and metrics

Target layer

Sub-portfolio
Infrastructure

05 Our universal principles
SectorUtilities

MeasureBase year (2019)

Current year (2021)

Target year (2024)-25 % absolute owned GHG emissions, Scopes 1 and 2

24.9mn t of CO2e18.7 mn t CO2e

18.7mn t of CO2e67.5 kgCO2e/sqm

n/a52.2 kgCO2e/sqm

n/a*

n/a*

n/a*

n/a

n/a*

€ 2.9 bn
€ 4.3 bn

€ 3.14 bn€ 3.88 bn

increase by
5.85% annually€ 3.9 bn
€ 5.7 bn

n/a*

n/a*

20 kgCO2e/boe

~40 %

n/a*

~50%

• Fully owned real estate portfolio aligned with 1.5 degree pathways of CRREM2• Reach 52.2 kgCO2e/sqm2• Full transparency on financed emissions latest by 2023 for all investments• For direct equity investments an absolute carbon reduction of -28 % by year-end 2025 (base year 2020)• New direct (equity and debt) investments in high emitting assets only in case a 1.5°C aligned
decarbonization plans in place• Phase in of net-zero targets for new fund investments by year-end 2024
• Coal phase out in line with 1.5°C pathway• Increase direct and indirect exposure to renewable energy by 5.85 % per year (IRENA4 global pathway)

SectorOil and Gas• Scopes 1 and 2 20 kgCO2e/boe5 in line with OGCI6• 50 % of AuM to set net-zero by 2050 targets for Scope 1 and 2 greenhouse gas emissions

Engagement• Engagement coverage of at least Top 30 (non-aligned) emitters in portfolio. Top 30 means new engagementwith 8 companies, others are covered by existing bilateral or collaborative engagements already1

3*

Description

Indirect
Direct – debt renewables
Direct – equity renewables
Scopes 1 and 2 upstream GHG
emissions intensity
Share of AuM with net-zero 2050
target for Scopes 1 and 2 emissions• Full participation in all available AOA organized sector and asset manager engagements• Increase overall engagement activities by at least 100 %FinancingTransition• 4 to 5 new blended finance vehicles• Climate-positive solutions: Start investing into Forestry, Hydrogen and other

Blended Finance:
2020: Africa Grow 2021: Emerging Market Climate Action Fund
Climate-positive solutions:2021: Investment in BTG Core US Timberland Fund

1 CO2e refers to carbon dioxide equivalent, which includes CO2 and other greenhouse gases.
2 CRREM: Carbon Risk Real Estate Monitor.
3* Where n/a is displayed most recent and/or comprehensive data is not yet available.

85

4
5
6

IRENA: The International Renewables Agency is an intergovernmental organization supporting countries in their transition to a sustainable energy future.
BOE: barrel of oil equivalent.
OGCI: Oil & Gas Climate Initiative; a CEO-led consortium of industry leading O&G companies.

Allianz SE, Sustainability Report 2021, p. 85

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

50

The Task Force on Climate-related Financial Disclosures

The example shown in Figure A39 (p. 50)
provides an asset owner’s climate-related
targets for its investment portfolios. It includes
the base year against which targets aremeasured and the time frames over which theManagement Strategies and Performancetargets apply. The example shown in Figure A40

provides an asset manager’s description ofits board oversight of climate-related issues.
It details the board’s primary responsibilities
and provides examples of the main topics
discussed by and reported to the board in
fiscal year 2020.

Sustainability Initiatives

Climate Change Measures & Environmental Protection

Figure
A40(Disclosure
Based on TCFD Recommendations)

Board
Oversight
Governance

The Board of Directors’ Supervision of MUFG’s Climate
Change Measures
At MUFG, the Sustainability Committee, which operates under the
Executive Committee, is charged with periodically deliberating
policies on and determining the status of the Group’s response toopportunities and risks arising from climate change and otherenvironmental and social concerns.

A.
State of Climate-Related
Financial Disclosures

MUFG has positioned climate change-related risk as one of the
Top Risks that it must pay close attention to. Accordingly, theserisks are discussed by the Credit & Investment Management
Committee, the Credit Committee and the Risk Management
Committee, all of which are under the direct supervision of the
Executive Committee.

B.
Review of Five Years of
TCFD Implementation

Conclusions reached by the above committees are reported to
the Executive Committee—which is tasked with deliberating andmaking decisions on important matters regarding businessexecution—and, ultimately, reported to and discussed by the
Board of Directors.

C.
Case Studies on Board
Oversight

In addition, matters discussed by the Credit & Investment
Management Committee and the Risk Management Committee
are also examined by the Risk Committee, which mainly consistsof outside directors, and then reported to the Board of Directors.

D.
Initiatives Supporting TCFD

In these ways, the Board of Directors exercises supervision over
MUFG’s climate change-related initiatives. Specifically, the Boardof Directors handles issues requiring a groupwide perspective
and, to this end, identifies important themes deserving intensive
discussion, thereby managing these issues based on a PDCA
cycle in accordance with an annual schedule. Also, sustainability
management is considered an important theme. The Board of
Directors actively addresses matters related to this theme
through dedicated sessions in addition to deliberations atregular Board meetings.

AppendicesExternal Advisors Supporting MUFG’s Initiatives to Address
Environmental and Social Issues
MUFG maintains two advisor positions to which it appoints
external specialists representing the environmental and social

fields to engage in the exchange of opinions with members of theBoard (for more details, please refer to page 90). By doing so, we
incorporate insights from outside experts into our climatechange-related initiatives.
Revision of the MUFG Environmental Policy Statement
In line with the MUFG Way, which provides guidelines for all
activities, we uphold the MUFG Environmental Policy Statement,
which serves as a set of specific action principles for ensuring thatdue consideration is given to environmental concerns.
In May 2021, we made it a rule that any changes in the MUFG
Environmental Policy Statement require a resolution by the Boardof Directors. Simultaneously, we revised this statement,
incorporating new clauses that clarify our commitment toproactively disclosing information regarding our environmental
initiatives, including climate change measures.
Executive Compensation Reflecting External ESG Evaluation
To advance our sustainability management, in fiscal 2021, werevised performance-linked indices used for the determination of
executive compensation. The revised indices incorporate thedegree of improvement in external ESG evaluation granted to
MUFG by ESG rating agencies (for more details, please refer topage 95).

Main Items Discussed by and Reported to
the Board of Directors (Fiscal 2020)
MUFG’s approach to sustainability management
Promotion of sustainable businesses via financing for renewableenergy projects, the underwriting of green, social and sustainability
bonds and the pursuit of responsible investment
Carbon neutrality initiatives
MUFG’s approach to transition finance and its in-housepromotion structure
Revision of the MUFG Environmental and Social Policy Framework
Prioritization of various risks arising from climate change andfuture initiatives

Mitsubishi UFG Financial Group, Integrated Report 2021, p. 79

StrategyStrengthening Sustainable Businesses Capabilities
Toward the realization of carbon neutrality, MUFG aims to support
customer efforts to transform business models as well as theclimate transition of whole industries. To this end, we provide
solutions designed to assist customers in their pursuit oftransition and innovation aimed at promoting decarbonization.
In July 2021, we established Sustainable Business Division byreorganizing and upgrading the Sustainable Business Office into
an independent division, with the aim of further promoting

79

MUFG Report 2021

solutions for sustainable businesses. This body is expected to playa central role in MUFG’s efforts to promote sustainable businesses
and, to this end, will be tasked with engaging in dialogue withgovernment agencies and industrial associations while handling
missions ranging from research, strategic planning and solution
development to business execution. In addition to addressing
sustainability issues in Japan, the division will act in close
collaboration with individuals in charge of ESG overseas, share
information and insights with them and employ a cross-regional
approach to promote sustainable businesses.

51

B.
Review of Five Years of
TCFD Implementation

The Task Force on Climate-related Financial Disclosures

B. Review of Five Years of
TCFD Implementation
In its 2017 report, the Task Force indicated thesuccess of its recommendations depended onnear-term, widespread adoption by financial
and non-financial companies. It noted thatthrough widespread adoption, financial risks
and opportunities related to climate change
would become a natural part of companies’ risk
management and strategic planning processes.
As that occurred, companies and investors’
understanding of the potential financial

A.
State of Climate-Related
Financial Disclosures

Figure B1

Milestones Associated with TCFD Implementation from2017 Report

B.
Review of Five Years of
TCFD Implementation

D.
Initiatives Supporting TCFD
AppendicesDisclosures become more complete, consistent,
and comparable, and there is more appropriate
pricing of climate-related risks and opportunities

43

Adoption Volume

C.
Case Studies on Board
Oversight

implications associated with climate change
would grow, information would become moredecision-useful, and risks and opportunities
would be more accurately priced, allowing forthe more efficient allocation of capital. The Task
Force incorporated these concepts as milestones
associated with increasing implementation of
its recommendations over a five-year period.
Figure B1 summarizes the key milestones
included in the 2017 report.52

Preparers and users of disclosure increasingly
view climate-related issues as mainstream
business and investment considerations

The number of companies implementing
the recommendations grows, and thetypes of information disclosed arefurther developed2

1Companies increasingly disclose climate-related
information in ﬁnancial ﬁlings

Final TCFD report released
Five Year Time Frame#

Indicates a possible milestone

Recognizing this year marks five years since
its final recommendations were published,
the Task Force reflected on these milestones
in developing this status report. In particular,
the Task Force sought to evaluate progress
associated with implementation of its
recommendations over the past five years —including progress relative to the key milestones

identified in 2017.53 It also sought to identify
possible implementation trends that may be
useful for companies beginning to implement therecommendations, better understand current
challenges associated with implementation, andunderstand investors and other users’ viewson the usefulness of climate-related financial
disclosures and improvements needed.

52 In its 2017 report, the Task Force included an illustrative five-year implementation path that described milestones associated with the adoptionof the TCFD recommendations.
53 The Task Force recognizes that companies implementing the recommendations in their 2017 fiscal year reports had a limited amount of time
between the release of the Task Force’s final recommendations in June 2017 and the start of their internal processes to prepare their 2017
fiscal year reports.

53

The Task Force on Climate-related Financial Disclosures

Progress Relative to Milestones

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices1
21

Based on a survey of companies implementing the TCFD recommendations (TCFD survey), over 70% disclosed
climate-related information in financial filings, annual reports, or integrated reports for fiscal year 2021
compared to 45% for fiscal year 2017.1

2

Continued growth in jurisdictions using the recommendations as a basis for climate-related financial
disclosure requirements and investor requests for companies to disclose in line with the recommendations
are driving preparers and users of disclosures to increasingly view climate-related issues as mainstream
business and investment considerations.2

3

Based on the TCFD survey, the number of companies disclosing against the TCFD recommendations for fiscal
year 2021 was nearly five times higher than those disclosing in fiscal year 2017.1

4

Based on the TCFD survey, companies, investors, and others indicated they see climate-related issues
affecting the prices and valuations of financial assets.1 In addition, based on a literature review, there is a
growing body of evidence that climate-related risks are beginning to affect prices of certain types of assets.

Given the composition and number of survey respondents, the Task Force cautions readers on extrapolating these results to broader
populations of companies disclosing climate-related financial information and users of such disclosures.
See Section D. Initiatives Supporting TCFD and Climate Action 100+.

Overall, the Task Force is encouraged
by companies’ progress in disclosing the
TCFD recommendations and by the supportof regulators and standard setters in using
the recommendations as a basis to develop
laws, rules, and standards on climate-related
financial disclosure. Nevertheless, theTask Force remains concerned that not enoughcompanies are disclosing decision-usefulclimate-related financial information, which
may hinder investors, lenders, and insurance
underwriters’ efforts to appropriately assess
and price climate-related risks.

survey in the first half of 2022.54 It is importantto highlight the survey was distributed tocompanies and other organizations thatsigned up for updates on the Task Force’s
website, which means that most survey
respondentswere familiar with the Task Force’s
work. In fact, 98% of respondents indicated they
were familiar with the TCFD recommendations.
Given the composition of survey respondents,
the Task Force recognizes the survey results
should not be extrapolated to a broader
population of companies. This subsection
summarizes the results of the survey andhighlights key findings based on the Task
Force’s analysis.

1. ADOPTION AND USE OF THE
TCFD RECOMMENDATIONS

Scope and Approach

To assess progress against key milestones
associated with increasing implementationof the TCFD recommendations — as shownin Figure B1 (p. 53) — and better understandcompanies’ implementation of the TCFD
recommendations over the past five years
as well as investors and others’ views on
the usefulness of climate-related financial
disclosures, the Task Force conducted a

The Task Force’s analysis of the adoption
and use of its recommendations is based on
responses to a survey conducted between
late March and early May of 2022. Throughits survey, the Task Force sought to better
understand the status of companies’
implementation of its recommendations overthe past five years and associated challenges
and to obtain views from users of climate-

54 For each of its status reports, the Task Force has used AI technology to review hundreds of companies’ reports for information aligned with
its recommendations to assess the current state and evolution of climate-related financial disclosures for a defined set of industries (seeSection A.1. TCFD-Aligned Reporting by Public Companies for more information). Importantly, the AI technology looks for specific types of
information that align with the Task Force’s recommended disclosures but does not attempt to identify whether companies have adopted
the TCFD recommendations.

54

The Task Force on Climate-related Financial Disclosuresrelated financial disclosures on the usefulness,availability, and quality of such disclosures. The
Task Force distributed the survey to just over
4,500 organizations, resulting in 399 responses.
The survey directed respondents to specificquestions based on how they described theirrole or responsibilities in the context of climaterelated financial disclosure. The chart on the top
left in Box B1 (p. 56) describes the six options

respondents could choose to describe theirroles or responsibilities along with the percent
of survey respondents that selected each
option. The majority of respondents — 57% —indicated they contribute to producing climaterelated financial disclosures for their companies(referred to as preparers), and 10% indicatedthey make financial decisions or allocate capital
based on disclosure from other companies(referred to as users).

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

55

The Task Force on Climate-related Financial Disclosures

Box B1

Composition of Implementation Survey Respondents
Percent or Number of Respondents1
Respondents by Role or Responsibility

7%

Respondents by Organization Type2% 2% 2%3%

Help produce disclosuresfor company (preparer)

8%

Financial Services

Make decisions or
allocate capital basedon disclosures (user)

9%
9%

51%

Non-Governmental
Organization
Academic or ResearchInstitution

28%

Provide products or services
that support disclosure

10%Consulting and
Auditing Firms

12%

Assist companies withproducing disclosures

57%

Non-Financial Industries

Government or
Public Sector

Develop rules, standards,
or guidelines for disclosure

Stock Exchange

Have other interests
in disclosure
Base size: 399

Base size: 399

Geographic Distribution of Respondents and Top 5 Countries by Number of Respondents

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Geographic Distribution by Region

Top 5 Countries by Number of Respondents

Europe

40%

Japan

87

Asia Paciﬁc

35%

United States of America

43

North America

17%

United Kingdom

38

Middle East and Africa

5%Australia

19South America

3%

Canada19

Base size: 399

Breakdown of Preparers and Users by Organization Type26%

Preparers (226)

70%
93%

Users (42)Legend:Financial

Non-Financial

Other

Average Size of Preparerand User Respondents

Number of Financial Services Companies (98)
29
29%

14

Asset Manager

2

$413B

Number of Non-Financial Companies (161)

$112B

Bank

33
6

Insurance Company
Investment Company

2

Pension or Retirement Fund

12

Other Financial

3

2

average asset
size for banks andinsurance companies

4

33

Materials

22

Consumer Discretionary

17

IT and Communications
Capital Goods

15

Consumer Staples

14

Utilities

12

Energy10Transportation

10

1
1

5

Health Care

3 1

Other Non-Financial

Number of Other Organizations (9)Government or Public Sector

5

Stock Exchange

41average assets
under management
for asset managers

17

Real Estate

Legend:4%7%Preparers$11B

average annual revenue
for non-ﬁnancial companies
These averages are based on asubset of the 268 respondents that
identiﬁed as preparers or users.
Speciﬁcally, the averages are basedon the 54% of respondents thatprovided their companies’ names
and for which public information
was available.

Users

The numbers in parentheses represent the number of respondents.
56

The Task Force on Climate-related Financial Disclosures

Box B1 (p. 56) also provides information on thecomposition of survey respondents. In termsof the types of organizations respondents
represented, just over 50% came from nonfinancial industries, 28% were in financial
services, and 12% were consulting and auditing
firms. In terms of geographic distributionof survey respondents, 40% indicated theircompanies’ headquarters were in Europe and
36% indicated Asia Pacific. Over half of thosethat indicated their headquarters were in Asia
Pacific were based in Japan. In addition, withthe survey primarily aimed at preparers andusers of climate-related financial disclosures, thecharts on the lower left of Box B1 (p. 56) provide abreakdown of these respondents by the types oforganizations they represented, with the majority
coming from non-financial industries.
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesOverview of Results
Overall, the Task Force was pleased with thenumber of responses it received to its survey,
especially in light of the consultations on
proposed rules in the U.S. and international
standards in Europe on climate-related
disclosures based on the TCFD recommendations,which occurred shortly before and immediately
following the distribution of the survey.55 In
reviewing the survey results, the Task Force
identified progress relative to the key milestones
identified in 2017 (see Figure B1, p. 53) as well
as several signs of progress and continuingchallenges associated with implementing the
TCFD recommendations and using climate-related
financial disclosures.
Signs of Progress• TCFD Implementation. Ninety-one percent(91%) of preparer respondents indicatedtheir companies have implemented or are
implementing the TCFD recommendations,with 86% of these respondents currently
disclosing in line with at least one of the 11
recommended disclosures and the remaining
14% planning to disclose in the future.
• Use of Climate-Related Financial Disclosures.
Ninety percent (90%) of respondents that
identified as users have incorporated climaterelated financial disclosures in their financial
decision-making processes, and 66% of these
respondents indicated such disclosures factor
into the way they price financial assets.

• Availability and Quality of Climate-Related
Financial Disclosures. Ninety-five percent(95%) of all respondents other than those
identified as preparers saw an increase in
the availability of climate-related financial
disclosures since the release of the TCFD
recommendations in June 2017, with 88%
of such respondents citing improvementsin the quality of disclosures.
Continuing Challenges
Survey respondents also highlighted several
challenges related to implementing the TCFD
recommendations and areas where climaterelated financial disclosures need to be improved.
• Resilience of Strategy. Over 50% of preparer
respondents indicated implementing Strategy c)— the resilience of their strategies under
different climate-related scenarios — is very
difficult, and another 36% indicated it was
somewhat difficult.
• Scope 3 GHG Emissions. Over 20% of preparer
respondents noted challenges related to
Scope 3 GHG emissions, including datacollection and methodology issues.
• Industry-Specific Metrics. The biggest
improvement identified by investors andother user respondents was for companies
to included standardized, industry-specificclimate-related metrics in their disclosures.

Implementation of the TCFD
Recommendations
The Task Force received 226 survey responses
from individuals that identified themselves
as preparers, and the vast majority — 91% or
206 — indicated their companies have decided
to implement the TCFD recommendations(see Figure B2, p. 58). These 206 respondents
were asked a series of questions designed toelicit information on their companies’ efforts
to implement the TCFD recommendations,
including in which years companies disclosed
or are planning to disclose each of the 11
recommended disclosures that support therecommendations, the types of reports in which
companies disclosed information in line with therecommendations over the past five years, issues
related to implementing the recommendations,and a few other topics.

55 The Task Force distributed its survey on March 30, which was preceded by the U.S. Securities and Exchange Commission’s publicationof proposed rules on climate-related disclosures on March 21, 2022, and followed by the International Sustainability Standards Board’s
proposed standards for climate-related disclosure on March 31, 2022.

57

The Task Force on Climate-related Financial Disclosures

Figure B2

Implementation of the TCFD Recommendations
Percent and Number of Respondents
Decision on Implementing the TCFD Recommendations

Decided to implement ALL

50%, 113

Decided to implement SOME
Undecided
Decided not to implement

41%, 939%, 200%, 0Reasons for Implementing1

Climate-related issues are material for company

85%

Investors are requesting climate-related information

77%

Corporate citizenship/reputational beneﬁts

59%

Senior management made it a priority

53%

Peers are implementing the recommendations

40%

TCFD reporting is required by law or regulation

26%

Base size: 226

1

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesBase size: 206 (respondents implementing all or some)

Respondents could select multiple reasons.

Figure B2 also shows the reasons why
companies decided to implement the TCFD
recommendations, with the top two reasons
being that climate-related issues are material
for the companies (85%) and investors arerequesting climate-related information (77%).
In addition, over 25% indicated TCFD reportingis required in their jurisdictions. The survey also
asked whether companies currently disclose
climate-related financial information publicly.
Of the 206 preparer respondents, 86% indicatedthey currently disclose such information publicly,
and the remaining 14% indicated they plan todisclose such information in the future. The
primary reason, cited by 38% of respondents,
for not currently disclosing climate-related
information publicly was a lack of resources,
followed by 29% of respondents that indicatedtheir companies are working toward disclosing
climate-related information.
Disclosure and Sequencing of the
11 Recommended Disclosures
One of the key goals of the survey was tounderstand the progression of companies’
implementation of the TCFD recommendations
over the past five years. The Task Force believes
such information is useful for companies
considering and in the process of implementing
the TCFD recommendations. As a starting
point, the Task Force reviewed the levels of

disclosure — as indicated by respondents —for each of the 11 recommended disclosuresover the past five years, as shown in Figure B3(p. 59). The percent of companies disclosing
against the 11 recommended disclosuresincreased significantly between fiscal years
2017 and 2021, with the average percentage
point increase across the 11 recommended
disclosures at 61 points. Furthermore, based on
the survey responses, over 70% of companies
disclosed information on at least seven of the 11
recommended disclosures. The largest increases
occurred between fiscal years 2019 and 2020
and 2020 and 2021 with increases of 19 and 32
percentage points, respectively, on average.
The highest level of reporting — in all fivefiscal years — was for Scope 1, Scope 2, and, if
appropriate, Scope 3 GHG emissions (Metrics andTargets b). In the survey, the Task Force asked
respondents about reporting on Scope 3 GHG
emissions separately from Scope 1 and Scope
2 GHG emissions, recognizing the challenges
associated with calculating Scope 3 GHG
emissions. Based on the survey responses, thepercent of companies disclosing Scope 3 GHG
emissions is significantly lower than the percent
disclosing Scope 1 and 2 GHG emissions andis roughly in line with the disclosure levels for
Metrics and Targets c).

58

The Task Force on Climate-related Financial Disclosures

Figure B3Disclosure of the TCFD Recommendations by Year for
Fiscal Years 2017-2021
Recommendation

Recommended
Disclosure

Pt. Change
2017–2021

Governancea) Board Oversight69b) Management’s Role

A.
State of Climate-Related
Financial Disclosures

Strategya) Risks and Opportunities

6%
9%

69

20%

8%
11%

66

43%

22%

9%
11%

75%

44%

19%

77%

42%
75%

b) Impact on Organization

B.
Review of Five Years of
TCFD Implementationc) Resilience of Strategy

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Percent of Companies Disclosing

Risk Management

Appendicesa) Risk ID andAssessment Processes

51

4%
5%

c) Integration into Overall
Risk Management

7%9%

FY 2018

37%

18%

37%

17%

73%

35%

68%

12%
15%
40%

72%

26%
30%
38%

FY 2019

73%

6%
7%

62

10%
13%
19%

52

0%
FY 201719%54c) Climate-Related Targets

63%

53%

23%

b) Scope 1, 2, 3
GHG Emissions

Legend:

33%

23%

7%
10%

66

60

a) Climate-Related
Metrics

13%

2%
3%
8%

66

b) Risk Management
Processes

Metrics
and Targets

59

FY 202020%
FY 2021

34%
40%

52%

80%

62%
60%

80%

100%

Base size: 206

59

The Task Force on Climate-related Financial Disclosures

To better understand whether companies
implementing the TCFD recommendations begin
by disclosing certain types of information first,
the Task Force asked respondents to indicate
in which fiscal years they disclosed each of the
11 recommended disclosures.56 The charts in
Figure B4 provide the percent of companies that
disclosed each of the recommended disclosures
for the first time in their first, second, or third

fiscal year of TCFD reporting. The top chart
provides these percents for “early adopters”
of the TCFD recommendations — those thatbegan disclosing in fiscal years 2017, 2018,2019, or 2020, while the bottom chart provides
the results for “recent adopters” of the TCFD
recommendations — those that began or plan
to begin disclosing in fiscal year 2021 or later.57

Figure B4Sequencing in Disclosing the TCFD Recommendations
Early Adopters

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight

Recommendation

Recommended Disclosure

Governancea) Board Oversight

Strategy48%b) Management's Role

53%a) Risks and Opportunities

47%b) Impact on Organization

Risk
Management

8%

11%

44%

b) Risk Management Processes

42%

13%

13%

14%

11%
12%
10%

37%

11%
11%

12%

14%

52%

a) Climate-Related Metrics

13%

12%

14%

a) Risk ID and Assessment Proc.

c) Integration into Risk Mgmt.
Metrics andTargets

8%

33%
20%

c) Resilience of Strategy

9%b) Scope 1,2 GHG Emissions

D.
Initiatives Supporting TCFD
Appendices

Percent of Companies Disclosing1

13%

87%

b) Scope 3 GHG Emissions

48%
42%

c) Climate-Related Targets
0%

5% 5%
8%

10%

13%

20%

40%

11%
60%

80%

Recent Adopters
Recommendation
Governance

Recommended Disclosure

Percent of Companies Disclosing185%a) Board Oversightb) Impact on Organization

64%c) Resilience of Strategy

62%

1

6%

19%

12%

84%

9%

85%

10% 1%

72%

20%

77%

a) Climate-Related Metricsb) Scope 3 GHG Emissions

48%

16% 7%

c) Climate-Related Targets

49%

6%

20%

40%

Second year

Third year

2%
3%

14%

5%

6%

5%

85%

b) Scope 1,2 GHG Emissions

First year

22%

3%

a) Risk ID and Assessment Proc.

0%
Legend:13%b) Risk Management Processesc) Integration into Risk Mgmt.

Metrics andTargets

1%

6% 2%

83%

a) Risks and Opportunities

Risk
Management

9%

87%

b) Management's Role
Strategy

100%Base size: 118

5%
60%

80%

100%

Base size: 86

The total for each recommended disclosure is less than 100% because respondents could indicate reporting will begin after the third year or
they were undecided on if or when to report.

56 While Metrics and Targets b) asks companies to disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, the survey asked
respondents about reporting on Scope 1 and Scope 2 GHG emissions and Scope 3 GHG emissions separately. As a result, some figures
include survey responses on Scope 1 and Scope 2 GHG emissions and Scope 3 GHG emissions separately.
57 The total number of respondents represented in the charts in Figure B4 is 204 rather than 206 as two of the respondents did not indicate
a specific year for when they planned to disclose any of the recommended disclosures.

60

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Most notably, the percent of companies
disclosing on the recommended disclosures
for the Governance, Strategy, and Risk
Management recommendations and on
Metrics and Targets a) in their first year ofreporting is significantly higher for recent
adopters than early adopters. In addition, early
adopters, on average, disclosed information
on five of the 11 recommended disclosuresin their first year of TCFD reporting comparedto eight recommended disclosures for recent
adopters. The Task Force believes there could
be various reasons for the higher number ofrecommended disclosures being reported
by recent adopters, including increased
demand by investors for climate-related
financial disclosures and developments invarious jurisdictions over the past fiscal year
to require or propose requirements for TCFDaligned reporting.58
The results for Metrics and Targets c) are also
worth highlighting as this recommended
disclosure had the highest percentage ofcompanies indicating they had no plans orwere undecided on whether to disclose thisinformation at 11% for early adopters and 16%
for recent adopters. Somewhat surprisingly
given feedback from companies on thechallenges associated with implementing
Strategy c), only 3% of early adopters and 6%of recent adopters indicated they had no plansor were undecided on whether to disclose theresilience of their strategies under different
climate-related scenarios.

Ease or Difficulty of TCFD Implementation
The Task Force also asked respondents
implementing the TCFD recommendations to rate
the ease or difficulty of implementing each of
the 11 recommended disclosures — with Metrics
and Targets b) divided into two questions (oneon Scope 1 and Scope 2 GHG emissions and theother on Scope 3GHG emissions) and to identify
specific implementation issues. As shown in
Figure B5 (p. 62), the majority of respondents
rated Governance a), Governance b), and Scope
1 and Scope 2 GHG emissions under Metrics
and Targets b) as very easy or relatively easy to
implement. When asked about specific issues
related to implementing the Governancerecommendation, 80% of respondents indicatedthey had not identified any issues, and the mostoften cited issue by the remaining 20% was alack of expertise within the board and senior
management on climate-related issues.
Over 80% of respondents rated Strategy b) and
Strategy c) as somewhat difficult or very difficult
to implement. In addition, 51% of respondents
identified specific issues related to implementing
the Strategy recommendation, with 36% of
those respondents highlighting issues related to
conducting climate-related scenario analysis suchas selecting relevant scenarios and identifying
key inputs and parameters (see Figure B6, p.63)
for additional information).
Around 70% of respondents rated Scope 3
GHG emissions under Metrics and Targets b)
and Metrics and Targets c) as somewhat difficult
or very difficult to implement. In addition, of
the 52% of respondents that identified specific58 For example, in the past two years, the number of investors supporting Climate Action 100+ has grown from 500 investors with $47 trillion
in AUM to over 700 investors with more than $68 trillion in AUM. Part of supporting Climate Action 100+ includes engaging the world’s largest
corporate greenhouse gas emitters to strengthen their climate-related disclosures by implementing the TCFD recommendations.

61

The Task Force on Climate-related Financial Disclosures

issues related to implementing the Metrics
and Targets recommendation, 41% of themhighlighted issues related to Scope 3 GHG
emissions, including challenges with datacollection across the value chain. In terms of risk
management, around 60% of respondents rated
Risk Management b) and Risk Management c) as
somewhat difficult or very difficult to implement,but only about 30% noted specific issues
related to implementation. The most common
issues cited were challenges with developing
processes for identifying, assessing, andmanaging climate-related risks and integratingclimate-related risks into existing risk
management processes.

Figure B5

Implementation Rating by TCFD Recommendation
Percent of Respondents1

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Recommendation

Recommended Disclosure

Very
Easy

Relatively
Easy

Somewhat
Difficult

Very
Difficult

Governancea) Board Oversight

13%

59%

24%

2%

b) Management’s Role

13%

57%

26%

3%

a) Risks and Opportunities

4%

36%

47%

12%

b) Impact on Organization

2%

12%

51%

32%

c) Resilience of Strategy

1%

8%

36%

52%

a) R
 isk ID and Assessment
Processes

4%

44%

41%

9%

b) Risk Management Processes

4%

36%

49%

10%

c) Integration into Overall
Risk Management

3%

34%

43%

17%

a) Climate-Related Metrics

5%

36%

39%

18%

b) Scope 1, 2, 3 GHG Emissions

15%

49%

28%

7%

b) Scope 3 GHG Emissions

4%

18%

28%

43%

c) Climate-Related Targets

4%

23%

43%

26%

Strategy

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Risk Management

Appendices
Metrics
and Targets

1

The total for each recommended disclosure may be less than
100% because respondents could select “not applicable.”

Base size: 206
Legend:Low to high percentage of responses

62

The Task Force on Climate-related Financial Disclosures

Location of Reporting on the TCFD
Recommendations

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesFigure B6

As described in its 2017 report, the Task Forcerecommended that companies include climaterelated financial disclosures in their annual
financial filings but recognized companies
may include such information in other typesof reports.59 To better understand the types ofreports in which companies disclose climaterelated financial information and how that
may have changed over the past five years,
the Task Force asked preparer respondents
to indicate the types of reports in which they
disclosed information related to the TCFD
recommendations for fiscal years 2017 through2021. As shown in Figure B7, the percent ofcompanies — based on the total numberof companies reporting in each year — that
disclosed information in financial filings, annual
reports, or integrated reports increased from
45% in fiscal year 2017 to 71% in fiscal year
2021. In addition, over 60% of companies
disclosed information in line with the TCFD

Climate-Related Scenario Analysis
For more information on conducting climaterelated scenario analysis, including selecting
relevant scenarios and identifying key inputs
and parameters, the Task Force encourages
non-financial companies to review its Guidanceon Scenario Analysis for Non-Financial Companies.
This guidance is intended to assist non-financial
companies interested in using climate-related
scenarios analysis as part of their efforts toimplement the Task Force’s recommendations.
Financial companies should review the resources
available on the Network for Greening the
Financial System’s “Scenarios Portal.”

recommendations in their sustainability orsimilar types of reports in each of the five
years reviewed.

Figure B7

Location of TCFD Disclosures by Year for Fiscal Years
2017-2021
Percent of Respondents
FY2017(33)2FY2018(37)FY2019(53)

FY2020(94)

FY2021(153)

Financial Filing, Annual Report, orIntegrated Report

45%

49%

64%

65%

71%

Sustainability Report

67%

62%

70%

66%

70%

Climate-Specific Report

9%

22%

21%

33%

33%

Other

15%

14%

13%

9%

9%

Average # of Reports per
Respondent

1.5

1.6

1.9

2.0

2.1

Report Type1

1
2

Respondents could select multiple report types.
The numbers in parentheses represent the numberof respondents reporting for the year.

Legend:Low to high percentage of responses

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

63

The Task Force on Climate-related Financial Disclosures

Use of Climate-Related Financial
Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

The Task Force received 42 survey responses
from user respondents — those indicating
they have responsibility for making financial
decisions related to investing, lending, or
insurance underwriting or allocating capital
based on climate-related disclosures from othercompanies. The survey presented a series ofquestions to these respondents related to theiruse of climate-related disclosures in financial
decision-making, including the types of decisions,decision-useful elements of disclosures, anddesired improvements to disclosures. Given therelatively small sample size of user respondents,
the Task Force cautions that the results may not
be representative of the broader population ofusers of climate-related financial disclosures.
As shown in the upper left chart in Figure B8,
90% of user respondents indicated they use
climate-related financial disclosures in making
financial decisions. Of those respondents, 66%
indicated such disclosures factor into the way
they price financial assets. In addition, as shownin the upper right chart, 86% of respondents

use such disclosures in making investing
decisions, and 19% use them in lending
decisions. The bottom chart in Figure B8
provides a breakdown by industry of the typesof decisions in which climate-related financial
disclosures are used.
The Task Force also asked user respondents torate the usefulness of information disclosed inalignment with its 11 recommended disclosures
for financial decision-making as very useful,somewhat useful, not very useful, or not at all
useful. In response, the majority of users rated
the information aligned with the recommended
disclosures as very useful with the exception ofStrategy c) and Scope 3 GHG emissions under
Metrics and Targets b), as shown in Figure B9(p. 65). For these two, 38% of user respondents
rated them as very useful. When combining
responses for very useful and somewhat useful,98% of user respondents indicated Strategy b)— the impact of climate-related issues on acompany’s businesses, strategy, and financial
planning — is useful for making financial
decisions. These results are consistent with asurvey conducted for the 2020 status report, inwhich users were nearly unanimous in identifying

Figure B8

Use of Climate-Related Disclosure in Decision-Making
by Industry
Percent or Number of Respondents
Use Disclosures in Decision-Making

Types of Decisions in which Disclosures are Used1

Investing

10%

86%

Lending90%

Legend:Yes

19%

Insurance Underwriting

5%

Credit Rating

7%

Other

No

2%

Use of Climate-Related Disclosures in Decision-Making by Industry2

Asset Management

26

Investment

4

Banking2

Insurance

1 1

Pension or Retirement

2

Capital Goods

1

1
2

4

1 1

2

2

1

Utilities
Legend:1 1

InvestingLending

Credit Rating

Insurance Underwriting

Other

Base size: 42

Since respondents could select multiple options, the sum across decision types is greater than 100%.
Respondents could select multiple types of uses (investing, lending, etc.).

64

The Task Force on Climate-related Financial Disclosures

the actual impact of climate-related issues on acompany’s businesses and strategy — out of 60
specific disclosure elements they were asked torate — as the most useful for decision-making.60 In
terms of information that users rated as the least
useful across the 11 recommended disclosures,
17% identified Governance a), Scope 3 GHG
emissions under Metrics and Targets b), and Metrics
and Targets c) as not very useful, and an additional
2% identified the latter two as not at all useful for
decision-making.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

To gain insight on improvements needed inclimate-related financial disclosures, the survey
asked user respondents how companies could
improve the usefulness of their disclosures.
Nearly 80% indicated including standardized,
industry-specific climate-related metrics indisclosures would improve their usefulness

for decision-making. In addition, around 70%
of user respondents identified the following
improvements companies could make toincrease the usefulness of climate-related
financial disclosures:• disclose the actual and potential financial
impacts of climate-related issues on theirbusinesses, strategies, or financial planning;• use a standard scenario to assess theresilience of their strategies to climate change;• report climate-related targets in a consistent
way across companies; and• increase the number of companies disclosing
climate-related financial information.

Figure B9Usefulness Rating by Recommendation
Percent of Respondents

Recommendation

Recommended Disclosure

Very
UsefulSomewhat
UsefulNot Very
UsefulNot at all
UsefulGovernancea) Board Oversight

55%

28%

17%

0%

b) Management’s Role

60%

33%

7%

0%

a) Risks and Opportunities

55%

38%

7%

0%

b) Impact on Organization

50%

48%

2%

0%

c) Resilience of Strategy

38%

48%

12%

2%

a) R
 isk ID and Assessment
Processes

64%

26%

10%

0%

b) Risk Management Processes

67%

26%

5%

2%

c) Integration into Overall
Risk Management

62%

29%

7%

2%

a) Climate-Related Metrics

57%

33%

10%

0%

b) Scope 1, 2 GHG Emissions

64%

24%

10%

2%

b) Scope 3 GHG Emissions

38%

43%

17%

2%

c) Climate-Related Targets

52%

29%

17%

2%

Appendices
Strategy

Risk Management

Metrics
and Targets

Base size: 42
Legend:Low to high percentage of responses

60 TCFD, 2020 Status Report, October 29, 2020, pp. 27-33.

65

The Task Force on Climate-related Financial Disclosures

On the issue of standardized, industry-specificclimate-related metrics, the Task Forcerecognizes these are fundamental inputs
for investors and other users to evaluate
companies’ material climate-related risks andopportunities. The Task Force also recognizes —as noted in previous reports — that industry
associations, standard setters, and similarorganizations are best positioned to identify anddefine relevant, industry-specific metrics andnotes the International Sustainability Standards
Board’s inclusion of industry-specific climaterelated metrics in its proposed standards on
climate-related disclosures.61,62 In addition, theEuropean Financial Reporting Advisory Group(EFRAG) is in the process of developing sectorspecific standards.63
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Additional Survey Insights
The survey asked a few additional questions
that the Task Force believes are worthhighlighting. The Task Force was interested inunderstanding the views of users and otherorganizations (non-preparer respondents) on
the availability and quality of climate-related
financial disclosures over the past five years.
As shown in Figure B10, 84% of respondents
saw a significant or moderate increase in
the availability of climate-related financial
disclosures over the past five years, and 71%
saw a significant or moderate improvementin the quality.

Figure B10

Trends in Climate-Related Financial Disclosures
Percent of Respondents
Increased Availability of Climate-Related Disclosures in Past 5 YearsC.
Case Studies on Board
Oversight

Yes, a significant increase

D.
Initiatives Supporting TCFD

Not sure

3%

No

2%

46%
38%

Yes, a moderate increase
11%

Yes, a minimal increase

Base size: 173

Appendices

Increased Availability of TCFD-Aligned Disclosures in Past 5 Years125%

Yes, a significant increase

46%

Yes, a moderate increase
17%

Yes, a minimal increase
Not sure

9%
3%

No

Base size: 168
Improvement in Quality of Climate-Related Disclosures in Past 5 Years

18%

Yes, a significant improvement

53%

Yes, a moderate improvement
17%

Yes, a minimal improvement
Not sure
No
1

7%
5%

Base size: 173

This question was asked of respondents that indicated they were familiar with the TCFD recommendations.

61 TCFD, 2020 Status Report, October 29, 2020 and TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021.
62 International Sustainability Standards Board, Exposure Draft: IFRS S2 Climate-related Disclosures, March 31, 2022.
63 The European Financial Reporting Advisory Group (EFRAG), Cover Note for Public Consultation: Draft European Sustainability Reporting Standards,
April 29, 2022, p. 10.

66

The Task Force on Climate-related Financial Disclosures

With one of the key milestones from theTask Force’s 2017 report relating to more
appropriate pricing of climate-related risks andopportunities, the survey asked both preparer
respondents and user respondents whether
they see climate-related issues affecting market
prices — specifically in the prices or values offinancial assets or as a differential in lending
rates or insurance rates. Figure B11 provides
the responses of preparers (in the top halfof the figure) and users (bottom half of the
figure). Seventy-six percent (76%) of companies
implementing the TCFD recommendations
indicated they see climate-related issues
affecting market prices, with 57% seeing an

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Figure B11

Climate-Related Issues Affecting Market Prices
Percent of Respondents
Market Prices Aﬀected: Preparers

Types of Market Prices Aﬀected: Preparers1
Price or Value of Financial Assets

57%

14%

C.
Case Studies on Board
Oversight

Lending or Insurance Rates

10%
76%

D.
Initiatives Supporting TCFD
Appendiceseffect in the prices or values of financial assets
and 45% seeing an effect in lending or insurance
rates. In addition, 6% of preparer respondents
specifically highlighted effects on commodityand energy prices. In terms of user respondents,
83% indicated they see climate-related issues
affecting market prices, with 71% seeing aneffect in the prices or values of financial assets
but only 20% seeing an effect in lending or
insurance rates. The significant difference
between the percent of users seeing an effect inprices or values of financial assets compared tolending or insurance rates may be driven by thecomposition of user respondents as 69% camefrom the asset management industry.

Legend:Yes

No

Legend:

Yes

6%

Other

5%
Base size: 206

Types of Market Prices Aﬀected: Users1
Price or Value of Financial Assets

7%

71%

Lending or Insurance Rates
83%

1

Commodity Prices

Not sure

Market Prices Aﬀected: Users

10%

45%

No

Other

Not sure

20%
10%

Base size: 42

Since respondents could select multiple options, the sum is greater than 100%.

67

The Task Force on Climate-related Financial Disclosures

2. IMPLEMENTATION PATHS OVER TIME

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

As part of its evaluation of progress associatedwith the milestones identified in 2017 related
to the further development and completenessof companies’ climate-related financial
disclosures (see milestones in Figure B1, p. 53),
the Task Force reviewed five fiscal years ofreports for a small group of companies. The
purpose of the review was to understandwhether companies’ disclosure of TCFDaligned information became more complete
and comprehensive since the publication of
the TCFD recommendations. The Task Forcealso sought to identify possible themes in thetypes, comprehensiveness, and locations of
TCFD-aligned disclosures that may be useful forcompanies in the early stages of implementing
the TCFD recommendations.

Scope and Approach
Since the primary purpose of the review was tobetter understand the evolution of TCFD-aligned
disclosures over the past five fiscal years, theTask Force used a review population of large
public companies that indicated support for
the TCFD recommendations in 2017 or 2018.64
The largest companies were selected because
they were more likely to disclose climate-related
information than smaller companies basedon findings from the AI review this year and inprevious years; and early TCFD supporters werechosen based on an assumption that they weremore likely to disclose TCFD-aligned information
than companies that had not indicated theirsupport for the TCFD.65
The Task Force reviewed the same types ofreports used in the AI review — financial
filings, annual reports, integrated reports, andsustainability (or equivalent) reports — foreach of the five fiscal years. Since the numberof reports that would need to be reviewed foreach company would likely be somewhere
between ten and 15 over the five-year period,
the Task Force limited the number of companies
to be reviewed to 12. The 12 companies weredrawn from six industries that align with groups
highlighted in the Task Force’s 2017 report.66
The review was structured to identify thetypes and comprehensiveness of information
disclosed in line with each of the Task Force’s

11 recommended disclosures in each fiscal year
and for each report type.

Summary of Findings
While the analyses of larger populations ofcompanies in other sections of this reportaddress broader developments on climaterelated financial disclosure, this review provided
several insights into the paths individualcompanies committed to TCFD implementation
have taken. The Task Force’s observations
over the five-year period show progress in linewith the implementation milestones identified
in 2017. Consistent with the expectation that
disclosures would develop and become more
complete over time, the review found that all
12 companies improved the completeness (i.e.,
more types of information in line with the TCFD
recommendations) and comprehensiveness (i.e.,level of detail) of their disclosures since 2017.
Major themes from the review are summarized
in this subsection.
General Themes
In its 2018 status report, the Task Force notedthat “implementation of its recommendations
is a journey and companies are in different
places in terms of their exposure to climaterelated risks and opportunities and theirreporting capabilities.”67 As noted in that same
report, the Task Force believes it is importantfor companies to begin disclosing as soon
as practicable and enhance their disclosuresover time. Consistent with this approach, the12 companies reviewed generally started
with some baseline information related to the
Task Force’s four recommendations in their2017 fiscal year reporting but often did not
address all elements of the 11 recommended
disclosures. Their disclosures were not a onetime or static exercise, as evidenced by changes
in completeness, comprehensiveness, format,
content, and location of individual companies’
disclosures over the five years of reporting. By
the end of the review period, all companies had
addressed more elements of the recommended
disclosures and provided additional detail in
their disclosures. However, even these 12 large,
TCFD-supporting companies do not appear tohave completed their disclosure journeys, as
information gaps remain. In addition, future

64 A few of the companies became TCFD supporters after 2018, but all companies reviewed reported TCFD-aligned information for fiscal year2017 reporting.
65 The Task Force identified the largest companies based on total assets for financial institutions and total revenue for non-financial companies.
All companies reviewed reported some level of TCFD-aligned information.
66 The six industries include Banking, Insurance, Energy, Materials and Buildings, Transportation, and Agriculture, Food, and Forest Products.
67 TCFD, 2018 Status Report, September 26, 2018, p. iii.

68

The Task Force on Climate-related Financial Disclosures

disclosures will likely be influenced by new andevolving climate-related disclosure requirements,
tools, methodologies, and investor expectations.

B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

In terms of the structure of disclosures, somecompanies disclosed in a consistent format
year-to-year while others changed the formatof their reporting over the five years of review.
Most companies also incorporated indices orsignposting pointing to the specific locationof certain climate-related information acrossmultiple reports. Several companies reviewed
consolidated their climate-related disclosures

Implementation Paths by Recommendation
In addition to the general themes, the Task Force
identified several trends for how disclosuresrelated to the four recommendations evolved
over the five-year period. Each of the following
sections includes a high level, aggregate mappingof the completeness and comprehensiveness ofthe 12 companies’ disclosures in 2017 compared
to 2021. Completeness relates to the numberof different disclosure elements addressed andcomprehensiveness relates to the amount ofdetail provided for each disclosure element.
GovernanceThe companies’ early disclosures on governancearound climate-related issues varied more in
their completeness and comprehensivenessthan disclosures for any of the other three TCFD
recommendations. As shown in Figure B12,around half of the companies reviewed disclosed
fairly complete and comprehensive information

Figure B12Governance Implementation
Disclose the company’s governance around climate-related risks and opportunities

Less to More Complete

A.
State of Climate-Related
Financial Disclosures

Regarding the location of disclosures, several
companies integrated additional TCFD-aligned
information into their mainstream reports —including financial filings — over the five-year
period. While several of the reviewed companies
did not include TCFD-aligned information in 2017financial filings, all 12 companies implemented
the TCFD recommendations in their financial
filings to some extent by 2021. The majorityof climate-related disclosures were located insustainability reports in all five fiscal years, but
the review found that over time there was anotable increase in disclosure in annual andintegrated reports. A few of the companies did
not describe any significant actual or potential
impacts from climate-related issues, but still
worked toward disclosing in line with the other
TCFD recommended disclosures in sustainabilityor annual reports by 2021. This may be anindication that those companies view climaterelated issues as mainstream business andinvestment considerations even if they do notconsider those issues directly material to theirbusiness today.

more heavily in one type of report and further
consolidated the disclosures within that report.
For example, one common approach was the
addition of a TCFD section addressing each of
the Task Force’s recommended disclosures.
One company moved from releasing anannual sustainability report to presenting mostinformation on a webpage with links to otherrelevant documents. The Task Force observed
significant variation in different companies’
presentation of climate-related information
across all years, making the information difficult
to compare across companies or, in some cases,
even between years for the same company.

Less to More Comprehensive
Legend:

2017

2021

The larger the circle, the more companies it represents (from one to six)

69

The Task Force on Climate-related Financial Disclosures

on governance in their fiscal year 2017 reports,
while others provided very little information.
However, by 2021, all 12 companies disclosed
relatively complete and comprehensive
information in line with the two Governancerecommended disclosures.

B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesSimilarly, most companies gradually increased
the level of detail in their disclosures related toGovernance b), management’s role in assessing
and managing climate-related risks andopportunities. In 2017, most companies disclosed
high-level information on Governance b).
However, by 2021, all 12 companies disclosed
relatively detailed information on Governance b)compared to their 2017 reporting. In particular,
the companies described more detail on
relevant management positions and their
responsibilities related to specific processes or
climate-related initiatives. Examples of details
provided on management’s role include: setting
strategic climate-related targets, overseeing the

As the companies disclosed more
information related to the TCFD’s Governancerecommendation, several began to use
organizational charts to communicate theirgovernance structure around climate-related
issues. In the reports reviewed, organizational
charts on climate-related roles also evolved
to become more comprehensive over time,with added detail such as descriptions ofresponsibilities for each position shownor information on external resources that
contribute expertise on climate-related issues.
Strategy
All companies reviewed increased thecomprehensiveness of information they
disclosed over the past five fiscal years related
to the Task Force’s Strategy recommendationand most increased their completeness, as
shown in Figure B13. However, there wassignificant variation in the way different
companies described how climate-related issues
have impacted their businesses, strategies, andfinancial planning — likely due to the complex
and company-specific nature of such issues.
The Task Force also observed opportunities
for further evolution in disclosures to provide
additional decision-useful information in
future years.

Figure B13

Strategy Implementation
Disclose the actual and potential impacts of climate-related risks and opportunities on the company’sbusinesses, strategy, and financial planning where such information is materialLess to More Complete

A.
State of Climate-Related
Financial Disclosures

In particular, Governance a), information on
the board’s oversight of climate-related risks
and opportunities, was often one of the firstrecommended disclosures the companies
addressed. Over time, several companies shiftedfrom describing their board’s oversight of broadsustainability topics to providing information on
the board’s oversight of climate-related issues
specifically. The types of information disclosed
included the titles of board committees or roles
that oversaw climate-related issues, discussion
topics or decisions from board meetings focusedon climate-related issues, and board members’
competencies and experience related to climate.

effective implementation of climate-related risk
management, responsibility for relationships
with external advisors on climate-related topics,
and incorporating climate considerations into
financing activities.

Less to More Comprehensive
Legend:

2017

2021

The larger the circle, the more companies it represents (from one to six)

70

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

For Strategy a), climate-related risks andopportunities the organization has identified
over the short, medium, and long term, manyof the companies started by disclosing climaterelated opportunities relevant to certain areas of
their business along with broad, industry-wide
climate-related risks. Early disclosures often
did not include information on time horizons
associated with risks and opportunities. Overthe five-year period, most of the 12 companies
began to describe specific climate-related risks
that had impacted or could impact their strategy,
business, or financial planning. In terms oflocation of disclosure, Strategy a) was one of
the recommended disclosures most commonly
addressed in financial filings. Other improvementsin the comprehensiveness of disclosures included
new information on time horizons and estimatedlikelihoods associated with a company’s risks.
The Task Force also observed changes in how
companies disclose information on Strategy b), theimpact of climate-related risks and opportunities
on the company’s businesses, strategy, andfinancial planning, with many of the companies
reviewed increasing the comprehensiveness ofsuch information over the review period.
Most of the 12 companies also disclosed morecomprehensive information on the impact
of climate-related issues on their strategies
compared to the impact on their financial
planning. For example, most companies
disclosed information on how they plan toaddress specific climate-related risks as wellas current and planned actions to reduce GHG
emissions. The few companies that disclosed
information on financial planning focused on
topics such as investments in research anddevelopment, acquisitions or divestments, andaccess to capital. While these disclosures generally
became more quantitative over time, only a few
companies disclosed estimates on the actual or
potential financial impact of climate-related risks
and opportunities.
In 2021, the Task Force released Guidance on
Metrics, Targets, and Transition Plans (2021 metrics
and targets guidance), noting that organizations

that have made GHG emissions reduction
commitments, operate in jurisdictions thathave made such commitments, or have agreed
to meet investor expectations regarding GHG
emissions reductions should describe their plans
for transitioning to a low-carbon economy.68
More than half of the companies reviewed
included information on transition plans in theirfiscal year 2021 disclosures, with a few releasing
comprehensive dedicated transition plan reports.
Early disclosure on Strategy c), the resilienceof the company’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower scenario,
tended to be limited to listing the scenarios thatcompanies used to assess resilience, with little
to no mention of the results or their application.
Relative to other recommended disclosures,detailed information on Strategy c) wasdisclosed at a slower pace. However, in recent
years of reporting, the Task Force saw several
companies provide more comprehensive
descriptions of the resilience of their strategies.
In the Task Force’s review, disclosures on
Strategy c) were gradually supported by morequantitative findings from scenario analysis
as well as quantitative targets related toresilience. By 2021, approximately half of thecompanies reviewed included some quantitative
information in their description of the resilienceof their strategy.
Risk Management
Similar to the other recommendations,disclosures related to the Risk Management
recommendation generally became more
complete and comprehensive over time. As
shown in Figure B14 (p. 72), disclosure related
to the Risk Management recommendation
was less complete in 2017. However, by 2021,
all but one company reviewed disclosed
information in line with all three of the risk
management recommended disclosures.
Despite the disclosures becoming more
complete, there were still significant differencesin how comprehensive companies were indescribing their risk management processes.

68 TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021.

71

The Task Force on Climate-related Financial Disclosures

Figure B14

Risk Management Implementation

Less to More Complete

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

Less to More Comprehensive
Legend:A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

2017

2021

The larger the circle, the more companies it represents (from one to six)

Over the five years reviewed, nearly all companies
provided more complete and comprehensive
disclosure on Risk Management a) — processes
for identifying and assessing climate-related risks.
In particular, most companies enhanced theirdescriptions of processes for assessing climaterelated risks, including new information on tools
used to assess the severity of their climate-relatedrisks and determine how to respond to thoserisks. Multiple companies began to group theirrisks in line with the categories described in
the Task Force’s 2017 report, such as transition(including market and regulatory) and physicalclimate-related risks. Several companies described
how they tailored their risk management
approaches based on their risk groupings.
While companies’ disclosures of their processes
for identifying and assessing climate-relatedrisks became more comprehensive over time,
their disclosures related to Risk Management b) —processes for managing climate-related risks —remained high-level. The several companies thatprovided more comprehensive information overtime most often focused on the governance andescalation processes surrounding climate-relatedrisks. Examples of additional detail provided for
Risk Management b) include processes for tracking
certain key performance indicators or employing
internal audits to test whether internal controls
are effectively managing climate-related risks.
Of all of the Task Force’s recommended
disclosures, Risk Management c) — how processes
for identifying, assessing, and managing climaterelated risks are integrated into the company’s
overall risk management — was addressed mostsimilarly across the companies reviewed. In
general, the Task Force has observed reportingon Risk Management c) tends to be fairly high-levelcompared to the other recommended disclosures,
which is consistent with the disclosures of
the companies reviewed. A majority of thecompanies disclosed information in line with
Risk Management c) in all years.
Notably, in its 2020 Guidance on Risk Management
Integration and Disclosure, the Task Forceaddressed a concern raised by companies on
disclosures related to Risk Management c).69
Companies with climate-related issues integrated
into existing risk management processes
indicated making a separate or explicit climaterelated financial disclosure is challenging. To
address companies’ concerns, the Task Forceemphasized it did not intend for companies withcomprehensive risk management processes that
include climate-related risks to create separate
processes or duplicate existing disclosures. It
further noted that if a company’s disclosures
clearly describe its risk management processes
and it is clear those processes cover climaterelated risks, then no further disclosure may beneeded.
Metrics and Targets
Most companies’ early disclosures on metrics
and targets were relatively complete comparedto their disclosures related to the three other
TCFD recommendations. Most of the 12companies disclosed some climate-related
metrics and targets in their fiscal year 2017
reporting. However, the review found thatmost companies added new metrics andtargets or new detail to their original metrics
and targets over the five-year period, as shownin Figure B15 (p. 73).

69 TCFD, 2020 Guidance on Risk Management Integration and Disclosure, October 29, 2020, p. 19.

72

The Task Force on Climate-related Financial Disclosures

Figure B15

Metrics and Targets Implementation

Less to More Complete

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities
where such information is materialLess to More Comprehensive
Legend:A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

2017

2021

The larger the circle, the more companies it represents (from one to six)

For Metrics and Targets a), disclosure of metrics
used by the organization to assess climaterelated risks and opportunities in line with its
strategy and risk management process, overhalf of the companies reviewed disclosed new
metrics between fiscal years 2018 and 2021
compared to their fiscal year 2017 reporting.
In the Task Force’s 2021 metrics and targets
guidance, the Task Force identified sevencategories of climate-related metrics that allcompanies should disclose. Out of the sevencategories, companies tended to incorporate
metrics related to transition risks, climaterelated opportunities, and capital deployment
over the five fiscal years of reports reviewed.
Furthermore, the Task Force observed thatmost companies started with more qualitativedescriptions in those areas and provided more
specific, quantified information by 2021.
Metrics and Targets b), Scope 1, Scope 2, and, if
appropriate, Scope 3 GHG emissions, and therelated risks, was one of the most common
disclosures in all years of reporting. In fiscal
year 2017, nearly all companies disclosed atleast Scope 1 and Scope 2 GHG emissions, andaround half disclosed information on all three
Scopes of emissions. By fiscal year 2021, all
12 companies disclosed Scope 1 and Scope 2
emissions, and all but one company disclosed
Scope 3 emissions. Over time, the companies
also provided more detail by reporting emissions
across different categories, such as by region,
business, or product.

However, most reports only included single
year of GHG emissions information rather thanpresenting multiple years of GHG emissions
using a consistent emissions calculation
methodology, in a single report. As mentioned
in the Task Force’s 2021 metrics and targets
guidance, presenting historical GHG emissions
helps users better understand an organization’s
exposure to climate-related issues and thepotential need to make stronger GHG emissions
reductions in later years if earlier interim
targets are not met.
In 2017, most companies reviewed disclosed
on Metrics and Targets c), targets used by
the company to manage climate-related
opportunities and performance against targets.
However, several targets appeared to increasein size and strategic importance to the company
over time. The most commonly disclosed targets
across the five-year period of review weretargets related to GHG emissions — particularlycommitments to achieve net-zero emissions
by a selected year — and capital deployment.
Over the five-year period, companies tended
to provide more comprehensive, quantified
reporting on their progress towards targets.
Additionally, a few companies incorporated
figures in their reports showing historicalperformance against their targets.

73

The Task Force on Climate-related Financial Disclosures

3. SUMMARY OF RESEARCH ON PRICING
OF CLIMATE-RELATED RISKSA.
State of Climate-Related
Financial Disclosures

When the FSB created the Task Force in late2015, there was growing concern that thephysical and transition effects of climatechange might contribute to changes in thevalue of financial assets and, depending on
how those changes developed, raise financial
stability concerns. For instance, inadequate
information about climate-related risks could
lead to a mispricing of assets and misallocationof capital, potentially giving rise to abrupt
corrections leading to market vulnerabilities.70
The FSB, therefore, highlighted the need forbetter information to improve understanding
and analysis of climate-related financial risks
and support more informed financial decisionmaking, in order to promote a smoother processof adjustment in asset prices in response to
climate change.71

C.
Case Studies on Board
Oversight

As part of the Task Force’s review of progress
associated with TCFD implementation overthe past five fiscal years and relative to the key
milestones identified in 2017, the Task Forcereviewed various studies of climate-related risks
and their effects on the market prices of financial
assets, lending rates, and insurance rates.72

D.
Initiatives Supporting TCFD

Scope and Approach

B.
Review of Five Years of
TCFD Implementation

Appendices

The Task Force reviewed studies looking atseveral types of financial assets and products
including equities, bonds, real estate, bankloans, and insurance policies. Most of thestudies focused on observed effects over thelast ten to 15 years. This summary should
be read as indicative and directional of thegrowing body of evidence of how markets are
pricing climate-related risks, keeping in mind
two contextual factors. First, the scope andmethodologies used by the studies variedin how they accounted for and isolated theeffects of climate-related risk from otherprice factors. Second, the relevant time-series
data for pricing studies continues to evolveand deepen. Over the last couple of decades,
this evolution has resulted in a gradually
increasing level of information and disclosure
for researchers to use, particularly over thelast five years. Table B1 (p. 75) summarizes thestudies referenced in this section. Appendix 5:
References on Pricing of Climate-Related Risks
contains the full list of studies reviewed, forfurther reference.

The Task Force reviewed over 100 peer-reviewed
academic papers as well as other “grey” literature
and articles to better understand the following:73• whether climate-related risks are being
factored into the prices of financial assets
and products, and• whether climate-related disclosure influences
investment, lending, and insurance
underwriting decisions regarding risk
premia and prices paid for financial assets
and products.

70 Carney, M., “Breaking the Tragedy of the Horizon — Climate Change and Financial Stability,” September 29, 2015.
71 See FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.
72 The Task Force also surveyed preparers and users’ experiences and perceptions about whether climate-related risks appear to be affecting
market prices, valuations of financial assets, lending rates, and insurance rates by conducting a survey (see Section B.1. Adoption and Use of
TCFD Recommendations for a description of survey results).
73 Grey literature is information produced outside of traditional academic publishing and distribution channels, and can include reports, policy
literature, working papers, newsletters, government documents, speeches, white papers, etc. Grey literature (usually) does not go through a peer
review process.

74

The Task Force on Climate-related Financial Disclosures

Table B1

Summary of Select Studies Reviewed
Study

Focus of
ReviewTime
Frame

Chen, L. and Gao, L.S.
The Pricing of Climate Risk.
Alessi et al. The Geranium
Matters: Evidence on the Pricing of
Climate Risk.
Berkman et al. Firm-SpecificClimate Risk and Market Valuation.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Anginer et al. Climate Reputation
and Bank Loan Contracting.

C.
Case Studies on Board
Oversight

Carbone et al. The Low-Carbon
Transition, Climate Commitments,
and Firm Credit Risk.

D.
Initiatives Supporting TCFD

Beirne et al. Feeling the Heat:
Climate Risks and the Cost of
Sovereign Borrowing.

Appendices

Clayton et al. Climate Risk
and Commercial Property
Values: A Review and Analysis of
the Literature.
Bakkensen, L. and Barrrage, L.
Flood Risk Belief Heterogeneity
and Coastal Home Price
Dynamics: Going Under Water?

Type of
Risk Studied

Effect on
Pricing

U.S.

EuropeStocksandEquities

U.S.
Short term

Faccini et al. Dissecting
Climate Risks: Are they
Reflected in Stock Prices?

Allman, E. Pricing Climate Change
Risk in Corporate Bonds.

Geographic
Focus

U.S.

Corporate
Bonds

Bank Loans
and Credit
Ratings

Long term

U.S.

U.S.
E.U. and U.S.
Non-U.S. and non-E.U.

Sovereign
Bonds

GlobalAustralia, Europe,and North America
Real
EstateU.S.

Geneva Association. Climate
Change Risk Assessment for the
Insurance Industry.

Insurance
Premiums

GlobalKolbel et al. Does the CDS
Market Reflect Regulatory Climate
Risk Disclosures?

Derivatives(CreditDefault
Swaps)U.S.

Legend:Time frame
Before 2016 (pre–Paris Agreement)
2016–2022

Type of Risk Analyzed

Evidence of Pricing of Climate–Related Risk

Physical Risk

Strong Evidence— Mixed Evidence

Transition Risk

Some Evidence

No Evidence

75The Task Force on Climate-related Financial Disclosures

Summary of Findings
Many of the reviewed studies found evidence
suggesting that climate-related risks are
increasingly being factored into prices fordifferent types of products and services,
particularly since the adoption of the Paris
Agreement in 2015. The extent to which climaterelated risks affect prices, however, varies basedon the type of financial asset or product andthe type of climate-related risk (e.g., transition
versus physical).
In reviewing the literature, three themes emerge
about climate-related risk and asset prices,
as follows:A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices• First, climate-related risks that are expected
to materialize in the near term are more likely
to be incorporated into prices than those
expected to materialize in the medium tolonger term. Transition risk, therefore, seems
to be more likely to be priced into financial
markets than physical risk given its near-term
potential materialization.
• Second, the effect of transition risk on
prices has generally increased since theParis Agreement in 2015 but varies overtime with news and election cycles as new
information emerges.
• Third, prices are a function of not only the
specific climate-related risks of a company(as measured by some proxy such as GHG
emissions), but also the uncertainties
surrounding a company’s future cash flows —uncertainty tends to raise risk premia.74
However, while the literature is directionallysuggestive that asset prices underestimate
climate-related risks rather than overestimate
them, it does not present a uniform or

unequivocal view.75 Results differ along threemajor lines. First, some differences stem fromthe time frame of the study. Considerationof climate-related risk is a relatively recent
phenomenon in asset markets. It is only in thelast three to five years that a consensus seems
to be emerging in the literature, and as such,it is important to take note of the timeframe
analyzed by particular studies — more recent
studies may be more indicative of the financial
dynamics than earlier studies.76 Second, studies
take different approaches to measure climaterelated risk exposure of companies. Some use
indicators such as GHG emissions, environmental
scores, or geographic proximity to physicalrisks such as sea level rise or wildfire risk. Other
studies use companies’ issuance of green bonds
as an indicator of relative risks or constructportfolios of “carbon-efficient” assets to test
investment returns. Third, other differences arise
from the type of the climate-related risk studied.
Assets are differentially exposed to physical andtransition climate-related risk factors and thesedifferent types of risk often do not materialize at
the same time.

Variation in Evidence by Asset Class
and Other Variables
Most studies focus on the effects of climaterelated risk on stock and bond pricing. Several
studies found that stock prices tended to exhibita price differential or risk premium due to theissuer’s degree of climate-related risk.77 Other
studies found that corporate and sovereign bondprices showed evidence of yield differencesand differences in credit ratings due to climaterelated risk.78 These results are consistent
with an interpretation that investors aredifferentiating among companies on the basisof climate risks and demanding compensation
for their exposure to climate-related risk.

74 Ilhan et al. Carbon Tail Risk, 2021, Review of Financial Studies, 34, pp. 1540-1571; Blyth et al., “Investment Risks Under Uncertain Climate Change
Policy,” November 2007, Energy Policy, 35, pp. 5766-5773; Avramov et al., Sustainable Investing with ESG Rating Uncertainty, August 2022, Journalof Financial Economics; Chen, L. and Gao, L.S., The Pricing of Climate Risk, October 7, 2011, Journal of Financial and Economic Practice; and Jiang etal., Information Uncertainty and Expected Returns, 2005, Review of Accounting Studies, 10, pp. 185-221.
75 Stroebel, J. and Wurgler, J., What do you Think About Climate Finance?, November 2021, Journal of Financial Economics, 142, pp. 487-498.
76 Giglio et al., Climate Finance, June 18, 2021, Annual Review of Financial Economics, 13, pp. 15-36.
77 Chen, L. and Gao, L.S., The Pricing of Climate Risk, October 7, 2011, Journal of Financial and Economic Practice; Alessi et al., The Geranium Matters:
Evidence on the Pricing of Climate Risk, October 2019; Berkman et al., Firm-Specific Climate Risk and Market Valuation, March 26, 2021; Bolton, P.
and Kacperczyk, M., Do Investors Care About Carbon Risk?, April 2020, NBER Working Paper 266968; Bolton, P. and Kacperczyk, M., Global Pricingof Carbon-Transition Risk, February 2021, NBER Working Paper 28510; Karydas, C. and Xepapadeas, A, Climate Change Financial Risks: Pricing andPortfolio Allocation, November 2019, Working Paper 19/327, Economics Working Paper Series, ETH Center of Economic Research; and Trinks etal., Greenhouse Gas Emissions Intensity and the Cost of Capital, 2017, Working Paper 2017-017-EEF, University of Groningen, Faculty of Economics
and Business.
78 Allman, E., Pricing Climate Change Risk in Corporate Bonds, March 31, 2021; Kling et al., “The Impact of Climate Vulnerability on Firms’ Costof Capital and Access to Finance,” January 2021, World Development, 137, 105131; Seltzer et al., “Climate Regulatory Risks and Corporate
Bonds,” April 25, 2022, Federal Reserve Bank of New York Staff Reports, no. 1014; Beirne et al., “Feeling the Heat: Climate Risks and the Cost of
Sovereign Borrowing,” November 2021, International Review of Economics & Finance, 76, pp. 920-936; Painter, M., “An Inconvenient Cost: The
Effects of Climate Change on Municipal Bonds,” February 2020, Journal of Financial Economics, 135(2), pp. 468-482; Hauser, A., “From Hot Air
to Cold Hard Facts: How Financial Markets are Finally Getting a Grip on How to Price Climate Risk and Return- and What Needs to Happen
Next,” October 16, 2020, Speech given by Andrew Hauser, Executive Director, Markets, Bank of England, to Investment Association, London;
Cevik, S. and Jalles, J., This Changes Everything: Climate Shocks and Sovereign Bonds, June 2020, IMF Working Paper WP/20/79; and Baker et al.,Financing the Response to Climate Change: The Pricing and Ownership of US Green Bonds, November 13, 2018.

76

The Task Force on Climate-related Financial Disclosures

Studies focusing on real estate and insurance,
however, had more mixed results in terms ofpricing effects of climate-related risk. For realestate, climate news and the climate beliefs ofbuyers were found to affect the prices paid forreal estate, and residential valuation practices
that did not take climate-related risks into accountoften failed to generate strong pricing effects forresidential properties.79,80 Other studies looking at
the effects of sea level rise on coastal real estate
prices also found mixed results.81

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesSpecific academic studies of climate-related
risk pricing for insurance are limited. Many
insurers, however, have acknowledged the risingclimate-related costs of insurance claims and are
beginning to raise premiums and deductibles,
and limiting coverage.82 One clear development,
though, is the strong growth in insurancelinked bonds that allow insurance companies totransfer the underwriting risks of catastrophic
climate events of a defined magnitude.83 On
the investment side, however, studies indicatethat the industry response to climate-related
investment risk has been more muted.
There is also some evidence that climate-related
risk is affecting the pricing and terms of bankloans and other types of credit provision. For
example, borrowers with higher climate-relatedrisks bear significantly higher spreads, shorterloan maturities, more covenant restrictions, anda higher likelihood of collateral requirements.84
Climate-related risk in the form of high emissions
has also been attributed to higher credit risk,
but disclosing emissions and setting a forwardlooking target to cut emissions (particularly more
ambitious targets) are both associated with lower
credit risk.85 One study found the magnitudeof these effects to be economically meaningful
and comparable to the effect of other standard
determinants of credit risk such as firm leverage.86

Variation in Evidence by Physical andTransition Risk
Some studies attempt to disaggregate the effectsof transition and physical climate-related risks
on asset prices.87 In general, this research foundthat those climate-related risks expected tomaterialize in the short-term were more likely to
be factored into prices than those expected tomaterialize in the long-term.
These studies have generally found thattransition risk is being priced into the market,
especially following the 2015 Paris Agreement,
but that physical risk was not being priced to thesame extent in all cases. One reason proposedin the literature is that physical climate-relatedrisks are sometimes perceived to be more
remote. For example, rising sea levels are risks
that appear less imminent and materialize inthe long-term, hence they might not be factored
into pricing to the same extent as short-termtransition risks. The pricing of physical risks also
may be affected by data quality and data gap
problems as assessments often require detailed
information on the location of company assets,
their nature (type, vulnerability, adaptations),
the use of localized or regional climate models,and challenges with acute event attribution toclimate change.
Some studies have also found a difference within
the transition risk category depending on whena particular risk is expected to be realized. For
example, short-term transition risks, such as
those influenced by a new government’s politicalintentions and actions on climate change, require
a much faster response compared to long-termtransition risks such as implementation of a
global climate policy, which would take much
longer for a wider set of countries to reacha consensus.

79 Bakkensen, L. and Barrage, L., Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics: Going Under Water?, February 2021, NBER
Working Paper No. 23854; Baldauf et al., Does Climate Change Affect Real Estate Prices? Only if You Believe in It, February 14, 2020, The Review of
Financial Studies, 33(3), pp. 1256-1295; and Clayton et al., Climate Risk and Commercial Property Values: A Review and Analysis of the Literature,
UNEP FI, August 2021.
80 Clayton et al., Climate Risk and Commercial Property Values: A Review and Analysis of the Literature, UNEP FI, August 2021.
81 Baldauf et al., Does Climate Change Affect Real Estate Prices? Only if you Believe in it, February 14, 2020, The Review of Financial Studies, 33(3),pp. 1256-1295; Murfin, J. and Speigel, M., Is the Risk of Sea Level Rise Capitalized in Residential Real Estate?, February 14, 2020, Journal of Financial
Studies, 33(3), pp. 1217-1255; Bernstein et al., Disaster on the Horizon: The Price Effect of Sea Level Rise, November 2019, Journal of Financial
Economics, 134, pp. 253-272; and Giglio et al., Climate Change and Long-Run Discount Rates: Evidence from Real Estate, March 25, 2021, Review of
Financial Studies, 34(8), pp. 3527-3571.
82 Marketplace, “The Changing Climate is Driving Up Home Insurance Claims, and Rates,” October 28, 2021; Reuters, “Natural Disasters Cost
Insurers $120 Billion in 2021, Munich Re Says,” January 10, 2022; Vox, “The $5 Trillion Insurance Industry Faces a Reckoning. Blame Climate
Change,” October 15, 2021; and Geneva Association, Climate Change Risk Assessment for the Insurance Industry, February 2021.
83 NAIC, “Insurance-linked Securities,” October 19, 2021.
84 Anginer et al., Climate Reputation and Bank Loan Contracting, November 15, 2021 and Jiang et al., “Can Firms Run Away from Climate-change
Risk? Evidence from the Pricing of Bank Loans,” September 2019.
85 Carbone et al., The Low-carbon Transition, Climate Commitments, and Firm Credit Risk, 2021.
86 Ibid. The study covered approximately 560 European and U.S. listed non-financial institutions observed over the period 2010 to 2019.
87 Faccini et al., Dissecting Climate Risks: Are They Reflected in Stock Prices?, Mar 3, 2021, (Revised Oct 1, 2021); Campiglio et al., Climate Risks in
Financial Assets, November 2019, Discussion Note 2019/2, Council on Economic Policies; Bolton, P. and Kacperczyk, M., Do Investors Care About
Carbon Risk?, April 2020, NBER Working Paper 266968; Bolton, P. and Kacperczyk, M., Global Pricing of Carbon-Transition Risk, February 2021,
NBER Working Paper 28510; and Kolbel et al., Does the CDS Market Reflect Regulatory Climate Risk Disclosures?, June 2, 2020.

77

The Task Force on Climate-related Financial Disclosures

For U.S. equities, one study found that only
short-term transition risk is priced into U.S.
stock returns, while physical risks, which may
take longer to materialize, are typically not.88
Similarly, for derivatives, another study foundthat transition risk increased credit default
swap spreads, though it did not find such aneffect related to physical risk.89 The study also
noted that this trend in factoring in transition
risk was particularly evident following the Paris
Agreement in 2015.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesTransition risks appear to affect companies’
credit ratings as well. One study found thathigh-emitting companies, implicitly exposedto transition risk, tended to have higher credit
risk.90 The study also noted that following
the Paris Agreement, firms most exposed toclimate-related transition risk saw their ratings
deteriorate whereas other comparable firms
did not. While these studies predominantly
highlight the effect of transition risks, there issome indication that physical risk does affectcertain assets classes. One study found that U.S.
corporate bonds bearing physical risk in the formof sea level rise are issued at higher yields.91

Continued Refinement of DisclosureStandards is Important for Risk Pricing
The academic literature looking at climaterelated risks and capital markets has been
growing over the last ten years and covers mostmajor asset classes. While these studies use
different theoretical and empirical approaches,analytical techniques, and data sets to test
whether climate-related risks are being
incorporated into asset prices, many, if not
most, of the studies reviewed point to evidence
that climate-related risk may be increasingly
incorporated into asset prices. Some experts,

however, continue to believe that climaterelated risks are underestimated rather thanoverestimated in the market.
Disclosure plays a necessary and crucial rolein this pricing process.92 Many of the reviewed
studies note that inadequate disclosure — andthereby a lack of complete information — is oneof the primary reasons that markets are notaccounting for climate-related risks sufficiently.93
But critically, such disclosures need to containdecision-useful information. One study
cautioned that “while general information on thenegative impact of climate-related risk on theeconomy is not in short supply, many investors
believe the current generic language used in thelimited climate-related risk disclosure of firms
is uninformative, insufficient, and imprecise forinvestors, regulators, and policymakers to assess
this risk.”94
Attaining more complete and specificinformation on a company’s climate-related
financial risks calls for continued refinementof disclosure standards, development ofcomparable and efficacious risk metrics, andimproved data quality and data management.
Several initiatives are underway to addresssome of these challenges. For example, theInternational Sustainability Standards Board(ISSB) is working on a climate disclosure standard
to serve as a global baseline, building on the
TCFD framework. A number of regulators arealso mandating climate-related disclosure related
to the TCFD framework. The Task Force has also
issued several technical guidance reports overthe last two years to help improve disclosures.
In particular, the TCFD’s Guidance on Metrics,
Targets, and Transition Plans describes a set ofcross-industry, climate-related metric categories
to support convergence in the disclosure of key
climate-related risk metrics.

88 Faccini et al., Dissecting Climate Risks: Are They Reflected in Stock Prices?, March 3, 2021, (Revised October 1, 2021).
89 Kolbel et al., Does the CDS Market Reflect Regulatory Climate Risk Disclosures?, June 2, 2020.
90 Carbone et al., The Low-carbon Transition, Climate Commitments, and Firm Credit Risk, December 2021, European Central Bank Working Paper
No. 2631.
91 Allman, E., Pricing Climate Change Risk in Corporate Bonds, March 31, 2021.
92 Alberti-Alhaybat et al., Mapping Corporate Disclosure Theories, June 29, 2012, Journal of Financial Reporting & Accounting, Vol. 10 No. 1, pp. 73-94;
Francis et al., Does Corporate Transparency Contribute to Efficient Resource Allocation?, September 2009, Journal of Accounting Research, 47(4), pp.
943-989; Healy, P.M. and Palepu, K.G., Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of the Empirical Disclosure
Literature, September 2001, Journal of Accounting and Economics, 31, pp. 405-440; Leuz, C. and Verrechia, R.E, The Economic Consequences of
Increased Disclosure, 2000, Journal of Accounting Research, 38, pp. 91-124; Stulz, R.M., Securities Laws, Disclosure, and National Capital Markets
in the Age of Financial Globalization, August 2008, NBER Working Paper Series, Working Paper 14218, National Bureau of Economic Research; andJavidi, S. and Masum, A-A., The Impact of Climate Change on the Cost of Bank Loans, August 2021, Journal of Corporate Finance, 69, 102019.
93 Several studies also point to other weaknesses, barriers, or impediments to effective climate risk disclosure. See Bolstad et al., Flying Blind:
What do Investors Really Know About Climate Change Risks in the U.S. Equity and Municipal Debt Markets?, September 16, 2020, Brookings,
Hutchins Center on Fiscal and Monetary Policy; Monasterolo et al., Vulnerable Yet Relevant: The Two dimensions of Climate-related Financial
Disclosure, November 27, 2017, Climate Change, 145, pp. 495-507; and O’Dwyer, B. and Unerman, J., Shifting the Focus of Sustainability Accounting
from Impacts to Risks and Dependencies: Researching the Transformative Potential of TCFD Reporting, July 10, 2020, Accounting, Auditing, &Accountability Journal, 33(5), pp. 1113-1141.
94 Alberti-Alhaybat et al., Mapping Corporate Disclosure Theories, June 29, 2012, Journal of Financial Reporting & Accounting, Vol. 10 No. 1, pp. 73-94.

78

C.
Case Studies on
Board OversightThe Task Force on Climate-related Financial Disclosures

C. Case Studies on Board OversightThis section includes case studies from sevencompanies — three from the financial sector
and four from non-financial industries. In thecase studies, the companies describe theirrespective experiences in implementing theTask Force’s Governance recommendation,
specifically related to the board’s oversightof climate-related issues (Governance a). In
its 2017 report, the Task Force indicatedclimate-related financial disclosures should
be subject to internal governance processes

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendicesthat are the same or substantially similar
to those used for financial reporting, likely
involving review by the audit committee (or acomparable board committee).95 As such, theTask Force was interested in understanding
companies’ experiences implementing therecommendations in terms of board oversight.
The case studies are intended to provide
practical insights on and considerations for
implementing governance around climaterelated issues.

Key Takeaways from Case Studies
Effectively managing climate-related issues generally requires engaging a wide range of stakeholders
across the company. Defining key roles and responsibilities early in the process is important when engaging
multiple functions.
Companies should consider leveraging public disclosures of peers and other types of companies whendeveloping and enhancing their climate-related financial disclosures.
Companies in jurisdictions where climate-related financial disclosures may or will become mandatory should
begin preparing as early as possible and disclosing available information (noting areas where further work
is needed).

1. CASE STUDY BY A
TELECOMMUNICATIONS COMPANY
Introduction
The Singtel Group is a leading
telecommunications company, providing
telecommunications and technology services toboth consumers and businesses, predominantlyin Singapore, Australia, and across Asia. We
were an early adopter of TCFD and officiallyendorsed TCFD in 2017, the year the framework
and recommendations were launched. We feltthat the framework would be impactful forSingtel to adopt early on as it would further
guide our rigor and approach to climate action.
Our major stakeholders were also investors,
lenders, and insurers who would eventually
use and apply the framework to their portfolio
companies and clients. Our adoption of the TCFD
recommendations built on the earlier climate
scenario analysis and network adaptation
exercise we undertook in 2016. In addition, ouruse of the TCFD recommendations built on theSingtel Group’s science-based emissions targets

which were approved by the Science Based
Targets initiative (SBTi) in 2017, the first company
in Asia (ex-Japan) to receive such approval.

Evolution of Board Oversight of ClimateRelated Issues
The TCFD recommendations were useful for us,
as they provided a solid governance, strategy,
risk management, and metrics and targets
framework to organize our thinking and help us
identify areas in which we could enhance ourcompany’s climate-related response. Specifically,in the context of board governance, our board
was less involved in the formal oversight ofclimate-related issues prior to adopting the
TCFD recommendations in 2017. Over time, andwith the guidance of the TCFD recommendation
framework, we increased the rigor of our board
oversight of climate-related issues.
Since 2014, a few years prior to adopting the
TCFD recommendations, we undertook formal
stakeholder engagement and materiality
assessments for sustainability topics, including

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

80

The Task Force on Climate-related Financial Disclosures

climate. This exercise was used to prioritize
environmental, social, and governance (ESG)
issues that were important to stakeholders
and had high potential business impact in themedium to longer term if left unaddressed.
Prior to 2017, the materiality matrix wasapproved by the Management Committee
which comprised the C-level suite and not by
the board. Subsequent to TCFD and since 2017,
the board reviews and approves all material
ESG items, commitments, and associated midto long-term targets including climate-related
targets. Finally, the board also reviews andapproves the performance against our climaterelated targets and signs off on disclosures,
including climate-related disclosures, made in
the sustainability report.
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Furthermore, after adopting the TCFD
recommendations, the Risk Management
Committee, which reports directly to the Board
Risk Committee (as shown in Figure C1), began
to bring climate-related risk into their agenda.
Subsequently, the Executive Resource andCompensation Committee started to tie formal
climate-related KPIs to top executives’ shortand long-term incentives. For all of our top
executives, 10% and 20% of their short- andlong-term incentives, respectively, are tied to
ESG KPIs. Within those percentages, one-fifthof the KPIs are climate-related. The Financeand Investment Committee of the board also
approves our ESG targets for sustainability
linked loans and bonds as these are tied toclimate- and GHG emissions-related targets.

Figure C1

Sustainability Governance Structure

C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendices

Singtel Group, Task Force on Climate-related Financial Disclosures 2022 for Singtel Group Operations in Singapore and Optus
Operations in Australia, p.10

81

The Task Force on Climate-related Financial Disclosures

Lessons Learned from
TCFD Implementation
Singtel was an early adopter of the TCFD
recommendations and started our climate
journey relatively early. While we had some
initial challenges operationalizing the TCFD
recommendations in the early years as it was
new and had little precedence, we probably faceless challenges today compared to companies
now rushing into TCFD and only beginning tothink about their climate-related strategy due
to regulations, mandatory disclosures, andinvestor pressure. Below are five perspectives
and lessons we would like to share about climatechange response and disclosures, based on
lessons learned from our own challenges andanecdotal experiences from peers.
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
AppendicesFirstly, companies should start building up
their governance and response to climaterelated issues proactively even if progressively,
and before it is made mandatory by yourgovernment, stock exchange, or regulator.
Companies need to begin developing theirgovernance and climate-related analyticalprocesses as early as possible as it is an
iterative process of improvement. In ourown example, our board had progressively
taken a more formalized oversight role acrossdifferent committees since we have adopted
the TCFD framework. These changes were
implemented incrementally, across multiple
years. Some companies have shared with usthat they found themselves caught off guard
when the stock exchange and financial regulator
introduced guidelines and expectations
around climate-related disclosures as thesecannot be established overnight. For example,
company boards and management cannot
set GHG emissions reduction targets before
even undergoing an GHG emissions baselining
exercise, and this took us several years to refine
to the point it could be externally assured. While
we had our Scope 1 and Scope 2 GHG emissions
tracked and externally assured for many years,
we only recently completed in 2022 a fullanalysis of all 15 categories of our Scope 3 GHG
emissions with external assurance. The financial
analysis of climate-related impact also takes time
to model against different scenarios, test, andrefine assumptions.
Secondly, as we were implementing the TCFD
recommendations, we realized that it was noteffective for boards and management to thinkin terms of climate jargon. Board members andtop management are used to thinking about
issues in terms of the financial drivers of thebusiness. TCFD helped us think through how

we could formally map climate-related physicaland transition risks to the income and balance
sheet impacts on the business. Specifically,
we identified which of our existing financial
drivers were indirectly and directly impacted
from climate-related risk. This formal mapping
exercise was instrumental to the subsequent
financial impact modelling exercise undertakenby the business as it helped us identify existing
financial information that can be leveraged.
Thirdly, companies at all points of their climaterelated disclosure journey now do not need toreinvent the wheel of learning and start fromground zero. This was something we had to go
through as an early adopter of TCFD. They canleverage the proliferation of public disclosuresof other companies to leapfrog what is needed
and how they approach climate-related issues
and disclosures. We continue to read otherleading companies’ climate-related disclosures to
identify areas that we can enhance our internal
processes, actions, and disclosures.
Fourthly, we have gained a lot of climate-related
knowledge from collective learning and sharing
of information among companies. In the past
we had run closed door business roundtables in
Singapore with other Singaporean corporates,
the Singapore Exchange, and climate experts
to discuss how to best approach issues such as
setting SBTi targets and implementing the TCFD
recommendations. We have also contributed
to TCFD articles and case studies with theGovernance Institute of Australia and Singapore
Institute of Directors. Climate change is acomplex and systemic issue, and all companies
are on similar journeys in figuring out how tomanage climate-related issues. We strongly feelthat these knowledge-sharing sessions help
inform more impactful climate-related response.
Corporates are also in a position to shape
government policy for climate-related action,and in Australia we have joined forces with otherleading Australian banks, insurers, and NGOs
since 2013 to support research into the impact
of climate change and natural disasters on
economy, communities, advocating for policies
that focus on building resilience, and not justdisaster recovery.
Finally, even as corporates may be grapplingwith TCFD, there is the ISSB’s proposed climaterelated disclosure standards which are going
through global consultation and will likely
become the de facto integrated sustainability
and financial disclosure standards. Going
through the TCFD journey will help companies
understand what is needed with the ISSB as it
will leverage the same principles of having a82

The Task Force on Climate-related Financial Disclosurescompany link the material impact of all their
key sustainability issues to financial disclosures,and the same good governance required in
scenario planning, risk management and having
clear disclosures on targets, metrics, andperformance.

2. CASE STUDY BY AN
INSURANCE COMPANY
Introduction

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendices

Aviva plc (Aviva) is a multinational insurance,
wealth, and retirement business headquarteredin the UK. We first began disclosing in alignment
with the TCFD recommendations in 2017 basedon the TCFD draft recommendations and havesince aimed to be a leader in climate-related
disclosures. For instance, we are the first major
insurer worldwide to target net zero by 2040
and have been at the forefront of publishing ourportfolio warming, climate-related risk analysis,
and transition plan.

Evolution of Board Oversight of
Climate-Related Issues
To support implementing the TCFD
recommendations, we developed a set of key
metrics using the TCFD framework as guidance:
climate value at risk, absolute operation carbon
emissions, weighted average carbon intensity,
investment in green assets, portfolio warming
potential, monitoring sovereign holdings, andweather-related losses. This development
was an important activity towards advancing
our climate change response. As reflected in
Figure C2 (p. 84), we leveraged these metrics tocreate our Climate Transition Plan, define andmonitor our climate-related risk appetite, andset targets such as our net zero by 2040 goal.
The development of these metrics, and thesubsequent plans and targets, has also enabled
us to implement a remuneration metric. Now,
5% of Aviva’s 2021–2023 Long Term Incentive
Plan is linked to the percent reduction in carbon
intensity of shareholder assets.
All these advancements have led to moreengaged board discussions over the past two to
three years about how climate change and its
related risks fits into Aviva’s strategic businessplanning. The board has been increasingly
engaged because our climate-related response
is an important part of our strategy and because
public disclosure of climate-related information
requires a level of robustness similar to that ofdisclosed financial figures.
Now that we have brought in climate-relatedrisks and opportunities into our businessstrategy, in line with our net zero by 2040 plan,
climate is being discussed alongside topics suchas customer growth, and the increased board
focus on climate permeates all the way down.

Lessons Learned from TCFD
Implementation
The main barrier for many companies towards
disclosing climate-related information is thatthe data and methodologies for producing
climate-related metrics over extended
time horizons are still relatively immaturecompared to traditional financial metrics
and there is considerable uncertainty in theunderlying assumptions. There is a lack ofstandardized methodologies for calculating
metrics, and the level of assurance is relatively
low. Understandably, boards get nervous
when it comes to new disclosures without
the usual level of assurance. Our primary
piece of advice for companies beginning toaddress climate related risks and opportunities
is that they cannot wait until the data andmethodologies are perfect to begin theirdisclosure journey.

83

The Task Force on Climate-related Financial Disclosures

Figure C2

Climate Journey 2014–2022
2021

Climate-related
Financial Disclosure
put to shareholder
vote for the first time

2020

2017

Aviva’s launches
climate change plan

Aviva Investors asked tojoin EU Commission’sHigh Level Expert Groupon Sustainable Finance

2019

2014

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Launched Aviva
Roadmap for Sustainable
Capital Markets andSustainable CapitalMarkets Manifesto

2015

Former Group CEO
speaks at UN General
Assembly on Sustainable
Finance
Aviva published Strategic
Response to Climate
Change and actively
participated in COP21

2016

Aviva Investors asked
to join the Financial
Stability Board Taskforce
on climate-related
financial disclosures

Aviva first discloses
against TCFD
recommendations
Aviva France Article
173 response

Aviva investors joined
Investor Forum BoardC.
Case Studies on Board
Oversight

Aviva plc, Climate-related Financial Disclosure, p. 4

D.
Initiatives Supporting TCFD

We would advise others to provide transparency
from the get-go by disclosing their climaterelated plans, challenges, and areas where
further work is needed. At Aviva, we recognizethat some of our processes for producing
climate-related disclosures are imperfect. For
such areas, we are actively collaborating withothers to find the answers collectively andto encourage more standardized disclosuresacross companies.

Appendices

Aviva becomes thefirst major insurer
worldwide to target Net
Zero carbon by 2040

For companies in jurisdictions where TCFDaligned reporting is not yet mandated, wewould still recommend starting as soon as
possible where practicable. For instance, allcompanies should be able to start disclosing
their governance of climate-related risks andopportunities, or at least how they are changing
their governance structure to encompass the
topic of climate. As a second step, companies
can disclose how they are capturing or plan
to capture climate-related risks in their risk
management framework. These disclosures canstart off as qualitative rather than quantitativeby disclosing areas which a company can expect
high climate-related risk exposure. After doingthat initial exercise, companies can start thinking
about their strategy and transition plans.

Aviva Response toSS3/19UN Net Zero Asset
Owner member

Aviva signs up tointernationallyrecognised Science
Based Targets initiative

Aviva is a founding
member of the Net Zero
Insurance Alliance
Aviva supports thecreation of the Glasgow
Financial Alliance for Net
Zero at COP26

2022

Aviva releases
its first Climate
Transition
Plan

Companies do not need to start disclosing all
the 11 recommended disclosures all at once.
They can begin by thinking about the things they
can do, even if imperfectly, and focus on thoseinitially. In Aviva’s case, one of the first steps wetook was developing our climate-related metrics
for planning and progress tracking purposes.
Since taking that first step, we have progressively
expanded our oversight of climate-related issues
to the point where climate is a core pillar in ourbusiness strategy.
Finally, from our experience, we believe thatcomprehensive climate-related disclosures
benefit companies beyond just regulatory
preparedness. The process of implementing
climate-related disclosures can also help
companies to start thinking of their response to
climate change not just from a risk management
perspective but also from a strategic perspective.
Furthermore, based on Aviva’s experienceoffering climate-conscious products,
transparency and leadership in publishingclimate-related disclosures can help companies
to attract additional business.

84

The Task Force on Climate-related Financial Disclosures

3. CASE STUDY BY A FINANCIALSERVICES COMPANY
Introduction

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Standard Chartered PLC (SCB) is a leadinginternational bank with a presence in 59 markets.
We were an early supporter of TCFD and publicly
committed to the recommendations of the TCFD
in 2017 and have subsequently been reportingin alignment with the TCFD recommendations
since 2018. SCB has made substantial progressin embedding climate-related issues throughout
its organization, and our TCFD reporting has
become more sophisticated over time. There
are four themes that have come out of thisevolution. First, by being an earlier adopter wespurred the development of other capabilities
such as climate stress testing and establishingbaselines for the financed emissions impact
from our banking activities. Second, the level ofgovernance and challenge has improved witheach successive report. Third, we have worked
with our clients to improve the availability of real
economy climate data, especially in emerging
markets. Fourth, we have emphasized theimportance of seeing climate as both a potential
financial risk and a business opportunity to help
finance the transition.

Evolution of Board Oversight of
Climate-Related Issues
SCB has several internal committees which
support the board and management team inmanaging and monitoring climate change and its
associated impacts, as shown in Figure C3 and as
fully detailed in our TCFD Report. Over time, as
climate-related risks and opportunities formed
part of SCB’s strategy and our climate risk
oversight was enhanced, additional committees
were formed to embed governance of climaterelated issues into SCB.

Figure C3

C.
Case Studies on Board
Oversight

Overview of Governance Structure

D.
Initiatives Supporting TCFD
AppendicesStandard Chartered PLC, Climate-related Financial Disclosures Report 2021, p. 11

85

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendices

For example, our board formally elevatedsustainability to become a strategic pillar in SCB’s
core strategy and integrated our climate-related
strategy fully in SCB’s Stand of Accelerating
Zero, with a focus on three pillars: accelerating
sustainable finance, reducing SCB’s direct
and financed emissions, and managing thefinancial and non-financial risks from climatechange. SCB has focused on the importance oftreating climate-related risk and sustainablefinance as part of the same journey. This
integrated climate and sustainability strategy
was overseen and approved by our board
which in turn is supported by our Culture andSustainability Committee (CSC). The CSC is aboard subcommittee which oversees SCB’s
overall sustainability strategy and monitors
the implementation of the sustainability
framework to align with SCB’s net-zero goals. In
addition, SCB’s Sustainable Finance GovernanceCommittee was set up in early 2019 to provide
leadership, governance, and oversight indelivering SCB’s sustainable finance offerings.
The committee reviews and endorses sustainablefinance products and guides SCB in identifying
and embracing opportunities. It also guides SCB
in reviewing the reputational risks relating tosustainable finance, including any greenwashingrisks on sustainable finance products. As SCB’s
coverage of climate-related considerations
and sustainable finance product offerings
expanded across markets, we developed robust
governance measures that escalate all the way
to the board level. Over time, we have built
a governance approach to managing climate
and sustainable finance that is based upontransparency, expertise, governance, review,
challenge, and verification.
When it comes to climate, a large part of SCB’s
focus has been in the context of net-zeroalignment and how that translates through tobusiness risks and business opportunities. For
example, we have focused on the tradeoffs
between more climate-focused opportunities
versus more traditional opportunities. We havealso worked with clients to focus on investment
in low-carbon methods and technologies via
transition opportunities. Moreover, in 2021 ourboard signed off on SCB’s net-zero financed
emissions by 2050 plan and approved our
published net-zero methodology and roadmap
via SCB’s net zero white paper.
Modelling the impact of climate-related risk and
SCB’s net zero roadmap over long periods andacross multiple dimensions was a challenge.
This challenge was due to limitations in scenario
data and pathways, client-specific data, andmodelling review, among other reasons.

Estimating the impact has required SCB to takeseveral new approaches, such as working withour clients to understand their climate-related
risk preparations, sourcing new external data
sources and models, and working with external
consultants and academics to formulate credible
plans and methodologies.
The SCB board is very involved in reviewing,overseeing, and monitoring the net zeroroadmap. This process presents an opportunity
for further education for our executives andboard regarding the complexity of aligning to
net zero. Overall, our board is increasingly awareof and interested in climate-related issues,
especially given board members’ connections
to emerging markets, particularly across Asia,
Africa, and the Middle East. These regions are at
risk of being most impacted by climate change,
where there is the most significant investment
gap, and where investment would have thebiggest impact.
As shown through these examples, over time,
SCB’s governance of climate-related issues has
become increasingly embedded throughout theentire organization as climate and sustainability
become a core strategic pillar.

Lessons Learned from TCFD
Implementation
A key challenge of building rigorous internal
governance of climate-related issues isbringing different teams together to embedclimate-related considerations throughout
the entire company. Among many companies,
climate-related analysis often starts withinrisk teams. At SCB, climate-related risk was
initially embedded in our governance, risk
management, and scenario analysis processes
and was incorporated into SCB’s enterpriserisk management framework. Climate-related
risk is also designated as an integrated risk
type, as the risks from climate change manifest
through other existing risk types. To further
enhance comprehensive climate-related risk
management, SCB’s view is that companies
need to find a way to equally involve teams
such as finance, risk, legal, compliance, andoperations to help ensure the climate-related
considerations are factored in holistically. SCB
has dedicated a significant amount of time
towards carving out the specific climate-related
responsibilities across various teams anddeveloping processes to transfer data between
teams. For example, climate-related disclosures
are developing with plans to be factored in asa core part of the financial reporting suite. By
86

The Task Force on Climate-related Financial Disclosuresdeveloping responsibilities across risk teams
and formulating data sharing processes, SCB’s
finance team is able to have greater insight andcontribute more effectively to climate-related
financial planning and reporting, even thoughmost of SCB’s climate-related analysis emanateswith the climate risk team.
For companies at the beginning of their journey
to enhance their response to climate-related
issues, SCB recommends that they spend a
substantial amount of time and effort upfront
towards defining key climate-related roles,
responsibilities, and data transfer processes.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
AppendicesFinally, SCB’s most fundamental piece of advice isthat companies just need to get started. It is easy
for companies to have a long list of reasons why
climate-related risk management and disclosures
will be difficult. Unless companies really start andget all the relevant people and teams involved,
no significant progress can be made. There isa risk of “the perfect being the enemy of thegood” when it comes to governance of climaterelated issues and climate-related disclosure.
SCB recommends starting by reporting baseline
information and including the appropriate
caveats on the need to evolve disclosures as
data, knowledge, and frameworks become
more sophisticated. Thus, transparency on theapproaches taken to build up climate-related
response and the associated challenges is
helpful to move the collective state of knowledge
forward. We encourage companies to leverage
the increasing amount of external support
available, from organizations such as the NetZero Banking Alliance, the Global Investors for
Sustainable Development Alliance, the Taskforce
for Scaling the Voluntary Carbon Markets, and
the Glasgow Financial Alliance for Net Zero.

4. CASE STUDY BY AN ENERGY COMPANY
Introduction
INPEX CORPORATION (INPEX) is a global
energy supply company headquartered inJapan. Our operations focus on research,
exploration, development, production, andsales of oil, natural gas, renewable energy,
and other related energy. We began disclosing
climate-related information aligned with the
TCFD recommendations in 2018. Over the
past few years, we have adjusted our boardlevel governance of climate-related issues, amove that was in part influenced by the TCFD
recommendations.

Evolution of Board Oversight of ClimateRelated Issues
Prior to 2017, our Health, Safety, andEnvironment unit oversaw climate-related
issues and raised significant issues to the board
in collaboration with the Corporate Strategy& Planning unit as needed. In early 2017, wetransferred responsibility for overseeing climaterelated issues to the Corporate Strategy &Planning unit, within which we established a
dedicated Climate Change Strategy Group in
2018. We also established the Climate Change
Strategy Working Group (working group),
composed of approximately 30 CEO-approved
managers from each business and corporate
division of the company. The working groupassesses and manages climate-related risks andopportunities on an annual cycle and acts as anadvisory body to the Sustainability Committee,
which is chaired by the CEO (see Figure C4).

Figure C4

Governance Framework for Climate Change Response

INPEX, Sustainability Report 2022, p. 55

87

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
AppendicesThis change in governance was made because wethought it was important to factor climate-related
issues into INPEX’s main business planning andgovernance processes. Since the working groupmembers are cross-divisional and sensitive toclimate-related issues among their own business
operations, establishing the working group helped
enable the integration of company-wide inputs
into our climate-related risk and opportunity
assessment processes. In addition, our efforts
to implement the TCFD recommendations
further complemented this shift given theemphasis on involving and disclosing board
oversight of climate-related issues as well as theimpact of such issues on companies’ businesses
and strategies.

review by the Corporate Strategy & Planning
Unit is an evaluation of INPEX’s progress against
Scope 1 and Scope 2 net zero GHG emissions
targets by 2050.96

INPEX’s progress against the company’s
overarching climate-related goals, risks, andopportunities have been annually reviewed
by Corporate Strategy & Planning Unit. These
overarching climate-related measures are
outlined in our “Corporate Position on Climate
Change” report, which was first released in 2015
and was recently revised in 2022 after approvalby the board. The outcomes of this annual review
are shared in our “INPEX’s Current Initiatives”
publication on a yearly basis, after being approved
and/or reported to Sustainability Committee
chaired by the CEO, Executive Committee, andthe board (see Figure C5). Included in this annual• developing a hydrogen business;

In 2022, the climate-related opportunities thatwere captured in the process outlined in Figure C5
have been set as the basis of INPEX Vision@2022, our long-term strategy and medium-termbusiness plan. Accordingly, our board began tooversee climate-related issues in a more crossdivisional and systematic basis. Our board reviews
quarterly the progress of five net zero businesses
strategies INPEX developed to achieve net zeroby 2050. These five net zero business strategies
include the following:• reducing CO2 emissions from oil and gas
operations (promoting carbon capture
utilization and storage);• enhancing and emphasizing renewable energy
initiatives;• promoting carbon recycling and cultivating new
business opportunities; and• promoting forest conservation.

Figure C5

Process of Assessing and Managing Climate-Related Issues

INPEX, Sustainability Report 2022, p. 57

96 In January of 2021, INPEX’s board approved these targets and receives annual progress updates from the company’s relevant business units.

88The Task Force on Climate-related Financial Disclosures

In addition, we revised our compensation system
to incorporate climate-related targets into
bonuses for all of the company’s representative
directors and other internal directors.
Specifically, we adopted GHG emissions intensity
as a key performance indicator for stock-based
compensation, which serves as a medium- tolong-term form of incentive.

Lessons Learned from TCFD
Implementation

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendices

While implementing the TCFD recommendations,
we determined that climate-related risks andopportunities are not limited to discrete partsof INPEX’s business but rather have significant
implications to the company as a whole. As
a result of the changes we made aroundgovernance, our board-level oversight of climaterelated issues has become more embedded
across our entire business. The establishment of
the cross-divisional working group made clear
the importance of a centralized and dedicatedclimate function with systematic processes inplace. To effectively manage climate-relatedrisks and opportunities, discussions should not
be held in silos, but should include inputs frommany divisions of the company.
Additionally, it was critical that we actively
promoted climate-related response from the top.
Our company’s mindset around climate change
shifted at all levels after we established our“Corporate Position on Climate Change” at theboard level and culminated its momentum byannouncing our medium- and long-term strategy
under the leadership of a director and the CEO.
Along with this mindset shift, we had the driverneeded to continuously improve our internal
governance of climate-related issues.

5. CASE STUDY BY AN ENERGY COMPANY
Introduction
Shell is a global group of energy andpetrochemical companies with a presence inover 70 countries. Shell’s Powering Progress
strategy is to accelerate the transition of theirbusiness to net-zero emissions, purposefully andprofitably.97 Shell began publicly supporting anddisclosing against the TCFD recommendations in2017. While Shell previously included a mappingon their website of TCFD disclosures which

could be found across various publications,in 2021 Shell integrated the TCFD reporting
framework into their Annual Report andAccounts in accordance with UK listing
rule requirements and to further enhancetransparency and comprehensiveness ofclimate-related disclosures. This disclosuretransformation for the 2021 Annual Report andAccounts was done in parallel with disclosuresreflecting Shell’s Powering Progress strategy
which were communicated in early 2021. The
transformation also paralleled the internal
governance shift made in 2021, where Shell
reshaped their organization to support deliveryof the energy transition strategy.

Board Oversight of
Climate-Related Issues
At Shell, transparency in climate-related
disclosures, the shifts in the external landscapeof reporting requirements, and the net zerotarget are all key factors in driving towards
the rigorous oversight needed to execute an
ambitious decarbonization strategy.
At the highest level, the board approves Shell’senergy transition strategy and provides oversightof its implementation and delivery. Throughout
the year, the board considers climate-related
matters from assessing climate-related risk
management policies, challenging and endorsing
business plans and budgets, among other areas.
Under the board, there are also the following
three committees that play a key role in thegovernance of climate-related issues:• The Safety, Environmental and Sustainability
Committee reviews sustainability policies
and practices including climate change andprovides oversight of technical delivery indriving reduction of carbon emissions.
• The Remuneration Committee links
compensation policies to climate-related
targets to challenge and support managementin their decarbonization efforts.
• The Audit Committee provides oversight of theeffectiveness of Shell’s internal controls andrisk management framework, which include
climate-related controls and risks, to ensurethat the company’s financial statements reflect
the risks and opportunities associated with
Shell’s energy transition strategy and climaterelated matters.

97 The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this report “Shell” is sometimes used forconvenience where references are made to Shell plc and its subsidiaries in general.

89The Task Force on Climate-related Financial Disclosures

In addition to the executive board and three
sub-committees in Figure C6, Shell has two
supporting management committees: theCapital Investment Committee (CIC) and theCarbon Reporting Committee (CRC). In addition,a Carbon Management Framework (CMF) has
been developed.
The CIC comprises senior executives including
the CEO, CFO, and business directors and theyfacilitate portfolio management decisions
ensuring climate risks and opportunities areembedded in investment decision-making.

The CRC is a cross-functional group that includes
senior management representatives from thebusiness, group strategy, finance, legal, andprojects and technology. This committee is
responsible for standards and methodologies
for measuring and reporting GHG emissionsrelated metrics and ensuring that the company’s
external reporting complies with the many
regulatory requirements relevant to Shell. In
addition, the reporting output of the CRC supports
management in internal decision-making.

Figure C6

A.
State of Climate-Related
Financial Disclosures

Structure for Assessing and Managing Climate-Related
Risks and Opportunities

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendices

Shell plc, Annual Report and Accounts 2021, p. 76

The CMF seeks to implement an approach to
managing and reducing emissions similar to how
Shell uses it’s financial framework. The CMF helps
set carbon budgets in Shell’s operating plan andsupports assessment of trade-offs which helps
inform portfolio decisions.
Governance of climate-related risks andopportunities can be complex in that climaterelated issues span the entire organizationand touch everything that Shell does. Thus,
Shell’s governance structure aims to address
this inherent complexity. Over the past years,
Shell has created this cross-business and crossfunctional governance structure for climaterelated issues which spans multiple layers of
the organization.

Lessons Learned from
TCFD Implementation
A key challenge regarding climate-related
disclosures today is the lack of one global
standard and managing the current externalfragmented disclosure requirements thatcompanies need to comply with. Shell
engaged externally to understand investorand stakeholders needs. Those engagements,for example, allowed Shell to understand theinvestors’ focus on the risk of stranded assets,
and the impact on asset values under different
long-term oil and gas price parameters ofvarious external climate-related scenarios.
From engaging stakeholders extensively, Shell
was able to navigate the many disclosure
90

The Task Force on Climate-related Financial Disclosuresrequirements while also focusing on providing
informative disclosures to address investor andstakeholder requests.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendices

When companies start their journey in designing
governance of climate-related issues andclimate-related disclosures, it is important tostart with a clear strategy and board oversight
but also to create dedicated, cross-functional,
management groups early on. For Shell, thecreation of the CRC and CMF enabled theintegration needed across the organization to set
targets, and then measure, report, and monitor
progress against those targets. In addition,
the formation of a cross-functional group withbusiness, technical, strategy, finance, and legal
involved helps enhance expertise across theorganization and ensure Shell provide robust,transparent data and insights in internal andexternal disclosures.

6. CASE STUDY BY A MATERIALS AND
BUILDINGS COMPANY
Introduction
Holcim is a Switzerland-based building materials
company with four core business segments:
Cement, Ready-Mix Concrete, Aggregates, andSolutions & Products. We began supporting the
TCFD in 2017 and have since worked to become
a global leader in innovative and sustainablebuilding solutions.

Evolution of Board Oversight of
Climate-Related Issues
Over the past few years, Holcim has undergone
an acceleration in the robustness of ourgovernance of climate-related issues, which has
been integral in supporting the implementationof the TCFD recommendations. The acceleration
stems from a key event: the board’s creationof the Chief Sustainability and Innovation
Officer (CSIO) position at the Executive
Committee level.
While many companies have createdsustainability positions recently, there is a
key difference in creating this position at theexecutive level, as we did at Holcim. We decided
to create the CSIO position at the highest level toensure that climate change issues remained at
the top of the company’s agenda.

The creation of the CSIO position meant thatclimate and sustainability issues would now beembedded into the governance processes of thecompany. These issues are part of every coredecision-making and strategy conversation. For
instance, the CSIO is present at board meetings
and frequently interacts with the board to discuss
climate and sustainability topics, including ones
related to the TCFD recommendations. The
Executive Committee meets quite often, and with
the CSIO as a member, climate and sustainability
are part of the key discussion topics during
these meetings. As such, while we previously
undertook many efforts focused on climate andsustainability, the awareness of and focus on
these topics has increased enormously in the last
two to three years.
Beyond the new position, the board oversees
climate-related issues primarily through the
Health, Safety, and Sustainability Committee(HSSC), which was formed in 2017 to advise
the board on all matters related to sustainable
development. In addition, the Nomination,
Compensation & Governance Committee(NCGC) is responsible for developing our LongTerm Incentive Plan, which incorporates metrics
on the reduction of GHG emissions and waste
recycled, among others. See Figure C7 (p. 92) for
further detail on Holcim’s governance structure.

Lessons Learned from
TCFD Implementation
As Holcim has worked to embed climate andsustainability issues into our governance overthe last several years, we have also improved
how we communicate our progress as acompany to our stakeholders. We have used the
TCFD recommendations to help frame how wedisclose such progress.
The building materials industry is relatively
careful and conservative around making andannouncing major changes. However, we
believe it is important for Holcim to be a leader
in our industry, which is part of why we madesignificant changes to our governance structure
for climate and sustainability issues and why
we were one of the earliest TCFD supporters.
Holcim was also first mover on disclosing
forward-looking net-zero targets and transition
plans. With that came the challenge of balancing
the desire to move quickly in defining our
climate strategy while ensuring that we tooka science-based and rigorous approach tosupport our public statements.

91

The Task Force on Climate-related Financial Disclosures

Figure C7

Overview of Governance Structure1
The Board of Directors has the ultimate responsibility
for the Group strategy and overall governance of thecompany, including Holcim’s climate strategy.
Through the Audit Committee (AC) and the Health,
Safety and Sustainability Committee (HSSC), the Boardof Directors oversees Holcim risk management andInternal Control process, including sustainability andclimate change-related risks and opportunities.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

The entire Board of Directors is included in the Risk
Management process and is thus regularly updated
on climate-related risks and opportunities, as well as
potential scenarios in carbon price regulation systems
such as EU Emissions Trading System (EU ETS). The
Holcim process for approval of major climate-related
capital expenditures acquisitions and/ or divestitures,
includes climate and other environmental andsocietal considerations in the assessment andultimately requires the approval of the Board.
The Nomination, Compensation & GovernanceCommittee (NCGC) proposes the objectives for theLong-Term Incentive Plan, which alongside financial
metrics, also includes metrics related to the reductionof specific net CO2, waste recycled and the reductionof specific cement freshwater withdrawals. These
objectives are then approved by the Board of Directors.

The HSSC advises the Board of Directors on all
matters related to sustainable development.
The HSSC reviews and approves the company’s
climate-related plans and targets. The HSSC
consists of five Board members. The Chairman of
the Board of Directors (unless they are a member ofthe HSSC), the Vice Chairman, the Group CEO, theGroup Chief Sustainability and Innovation Officer(CSIO), the Group General Counsel, the Group Headof Security and the Group Head of Health, Safety andEnvironment participate as invited guests. The HSSC
meets at least quarterly.
The HSSC supports and advises the Board of
Directors on the development and promotion of ahealthy and safe environment for employees andcontractors, as well as on sustainable development
and social responsibility.
In 2021, the HSSC held four meetings. The average
duration of the meetings was approximately twohours. The president of the HSSC then reports to
the Board on the conclusions of the meeting. In
addition, as a member of the Executive Committee,
the CSIO attends part of all Board meetings andpresents the sustainability strategy at the Board
strategy workshop.

D.
Initiatives Supporting TCFD
Appendices

Holcim, Climate Report 2022, p. 48
1 Some content was reformatted in order to fit the page.

At Holcim, prior to disclosing our net-zerotargets, we built a bottom-up and top-downtransition model to demonstrate to internal
stakeholders that we had the capability to deliver
on an ambitious pledge. This took considerable
time and effort, as we involved over a hundred
people from each of Holcim’s key geographiesand functions. The effort was successful,
however, as our net-zero commitment received
a highly positive response from both internaland external stakeholders. A key learning fromthis process was that senior level support andcompany-wide cooperation are critical in setting
and disclosing public climate commitments.
We recommend that companies disclose
information beyond just high-level net zerotargets. Along with targets, companies should
aim to disclose details on their underlying
transition plan to achieve those targets. In
particular, we advise companies with highGHG emissions exposure to back their climaterelated commitments with credible and robust
decarbonization strategies, developed prior to92

The Task Force on Climate-related Financial Disclosures

making any public commitments. If companies
seek to announce targets while they are still in
the process of developing their decarbonization
roadmap, we recommend the inclusion oftransparent caveats in their disclosures on whatis still in progress. As transition plans continue to
evolve, it is critical to follow up on these caveats
in subsequent reporting cycles by disclosing
progress and new details around the developed
transition plan.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
Appendices

Thanks to our efforts in developing transition
plans to support our net-zero targets, Holcim’s
transition pathway plan has cascaded down toa plant level, where each plant has in place a
portfolio transition plan to meet internal targets
and KPIs. With regards to strategic planning, wehave learned that it is important to have both
leading and lagging KPIs to track performanceand react proactively. These plant-level KPIs are
now integrated in our managers’ and directors’
bonuses to ensure our climate-related goals areembedded into our long-term incentives.
There are many resources to help companies
get started. For example, at the start of ourdisclosure journey, we worked very closelywith CDP on how to translate the TCFD
recommendations into the most effective
disclosures. Additionally, companies can leverage
existing TCFD-aligned disclosures from theirpeers to understand what type of internal
analysis others are undertaking and how theyreport on climate-related issues. Companies
should take advantage of the many resources
available to improve their climate strategy andassociated disclosures. Most companies have astrong understanding of their GHG emissions
impacts and just need to get started in buildingout a rigorous, science-based climate transition
plan, and communicate that plan througheffective and transparent disclosures.

7. CASE STUDY BY A PENSIONPLAN INVESTOR
Introduction
CPP Investments is the professional investment
management organization that invests the
Canada Pension Plan (CPP) funds not currently
needed to pay benefits. Our public purpose isto help provide a foundation upon which the

CPP’s 21 million contributors and beneficiaries
can build their financial security in retirement.
CPP Investments is one of two global pension
plan investors represented on the TCFD andhas been a strong supporter of the TCFD since
its inception. Since joining the TCFD, we haveworked to improve our own climate-related
decision-making and associated disclosures, aswell as those of our portfolio companies. A casestudy describing our approach to incorporatingclimate change into investment decisions andhow the TCFD recommendations have helped
informed this process is included in the Task
Force’s 2020 status report.98
As governments around the world continue
to align their economies to net zero throughNationally Determined Contributions, companies
operating in this landscape will increasingly berequired to decarbonize. Against this backdrop,
we believe that board of directors now have a
responsibility to see that management teams
have appropriately considered and integrated atransition strategy to decarbonize their business.

Evolution of Board Oversight of ClimateRelated Issues
As described in our 2020 case study, CPP
Investments’ efforts to understand the financial
impacts of climate change started more than adecade ago and will continue to accelerate in
the coming years. The evolution of our journey
toward decision-useful climate disclosure goesback to the strong tone from the top set by our
CEO and board when we launched the Climate
Change Program more than four years ago. At
that time, climate change was defined in our
corporate business plan as a leading issue facing
our organization as a long-term investor — one
that must be considered and fully integrated into
our investment process and decision-making.
Implementing the TCFD recommendations hashelped us define and develop our internal efforts
and provided a common framework for engaging
with portfolio companies. In particular, we focus
significant time and attention toward disclosure
by companies of their material climate-related
factors and boards’ oversight of these risks andopportunities. This focus is a key component of
the TCFD’s Governance pillar and is increasingly
important as the global economy transitions
to net zero. Engagement on companies’
reporting has also led us to refine our metrics

98 TCFD, 2020 Status Report, October 29, 2020, p. 59.

93

The Task Force on Climate-related Financial Disclosuresand approaches to integrating climate-related
information into our decision-making for
CPP Investments.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD

As we continue to expand our own climate
reporting, both in public disclosure and whenreporting to our board, we value and advocate
for clear, standardized methods and disclosures
for understanding the decarbonization capacityof our portfolio companies. While initiatives
like the Science Based Targets Initiative provide
an objective appraisal of whether the plans
are sufficiently ambitious and use appropriate
levers to decarbonize, the market currently
has no convention for issuers to report theeconomic feasibility of delivering against theircommitments. We identified this gap as a newrisk for issuers and investors relying on thisforward-looking guidance.
To help address this gap, we developed an
Abatement Capacity Assessment Framework(ACA Framework) to aid the boards andmanagement teams of our portfolio companies
in better understanding their current capacity
to decarbonize, how to prioritize decarbonization
levers as a catalyst for developing decarbonization
strategies, measuring the financial impacts ofdecarbonization efforts, and in turn improving
their climate-related disclosures.
The proposed ACA framework was publishedin 2021 and seeks to complement existing

disclosures by providing additional criticalinformation for directors and investors(see Figure C8, p. 95), who require concrete
disclosure from management about acompany’s ability to abate GHG emissions
under current state and possible futurescenarios.99
CPP Investments is piloting use of the
ACA Framework with select portfolio companies
and on our own operational emissions. Our
portfolio companies’ use of this framework
will also enable us, among other investors, tostandardize the information we receive andhelp us track and disclose the climate-related
impacts of our portfolio.
We have conducted this analysis for one of
our U.K. portfolio companies. In less than twomonths, we were able to quantify the projected
abatement capacity of the business, providing
the board and executive team of that portfolio
company with insights to help them develop
a robust transition plan, and providing usconfidence in the low risk of value impairment
for this asset. While some of the emissions weredeemed uneconomic to abate, the benefit ofconducting this exercise is that management
now has line of sight on where these emissions
come from, which allows them to engage withtechnology providers to solution ways to reducethe cost of abatement overtime. See Box C1(p. 95) for more information.

Appendices

99 The proposal suggests that companies conduct Abatement Capacity Assessments in order to calculate and report Projected Abatement
Capacity. The former is the process of allocating current GHG emissions to specific decarbonization drivers, e.g., efficiency, greening of power
supplies and deployment of technology economic to abate under current and future carbon price assumptions.  Once 100% of GHG emissions
have been attributed, they are translated into a pro forma matrix of “projected abatement capacity.” This matrix can provide a clear view of whichemissions are economically viable to abate now, which emissions would become economic to abate at higher carbon prices, and lastly thoseemissions currently uneconomic to abate even at US$150/tCO2e.

94

The Task Force on Climate-related Financial Disclosures

Figure C8

Template for Reporting Projected Abatement Capacity

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

CPP Investments, Insights InstituteD.
Initiatives Supporting TCFD
Appendices

Box C1Case Example: The Abatement Capacity Assessment
Framework in Action
In 2022, we identified the opportunity to assess thedecarbonization potential of one of our portfolio
companies in order to create value and thus potential
exit optionality. CPP Investments has a 100%
ownership interest in this company which is partof our Real Assets portfolio.
This decarbonization exercise included piloting theapplication of our proposed ACA Framework on thecompany’s operations. The results were promising.
The company found that currently at least 64%
of Scope 1 and Scope 2 GHG emissions could be
removed using economically viable measures thatexist today, like the replacement of elevators, theinstallation of more energy-efficient lights, smart

lighting controls, and rooftop solar power systems.
While 100% of Scope 1 and Scope 2 GHG emissions
from the company’s operations can be abatedbased on technological measures that exist today,
not all of these measures are economically viable.
The Abatement Capacity Assessment provided thecompany’s board with concrete data and information
to proceed with confidence along its decarbonization
pathway. The company will look to accelerate theabatement of GHG emissions by taking a holistic
view of revenue opportunities resulting from thedecarbonization process and aligning its renewableenergy strategy as it reflects on its ambition toachieve net zero for Scope 1 and Scope 2 GHG
emissions by 2030.

95

The Task Force on Climate-related Financial Disclosures

The ACA Framework could provide users withproven, probable, and still to be determined GHG
abatement capacity for any issuer, in any sector
with operations in any geography. By providing
standardized disclosure about a company’s
current and projected ability to abate its GHG
emissions, based on current pricing, technology,
and regulations, the ACA Framework would help
us and other investors have a greater degreeof confidence in a company’s commitment andability to transition to a low-carbon future. The
ACA Framework also provides us with robust andstandardized rationale to push for action fromthe boards of our portfolio companies who use
this framework.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

D.
Initiatives Supporting TCFD
AppendicesLessons Learned from
TCFD Implementation
In its 2017 report the Task Force noted it
expected that “reporting of climate-relatedrisks and opportunities will evolve over time asorganizations, investors, and others contributeto the quality and consistency of the information
disclosed.” We believe the ACA Framework is a
new and valuable tool in this evolution. Similar
to the TCFD recommendations, in developing
the ACA Framework, we also aimed to create an
approach that could be applied across industries
and geographies with common assumptions.
We have spent over a year piloting and refining
the ACA Framework and have acquired many
additional lessons along the way. Specifically, we
gained more insight on the types of information
boards and management teams need todecarbonize their company more effectively
and thus produce transparent, decision-usefulclimate-related disclosures in line with the goalsof the TCFD.
Earlier this year, the CPP Investments Insights
Institute convened various stakeholders,
including other asset owners, asset managers,

accountants, academics, consultants, andindex providers, to socialize the proposed ACA
Framework and to develop steps to refine andimprove this novel idea to be useful for allorganizations. We found widespread agreementthat the majority of companies and boards of
directors need more information to determine
a company’s ability to transition to a low-carbon
future. More specifically, boards and management
could benefit greatly from having the relevant
information in a decision-useful framework to
help drive business decisions. Within our pilot
assessments, we found that the data from thisground-up assessment catalyzed subsequent
decarbonization efforts by helping boards andexecutive teams prioritize both the highest impact
and most economic opportunities. In addition, theuse of the ACA Framework for decision-making
also facilitated reporting of such decisions to thebroader stakeholder community.
By enabling boards and management to better
understand the levers for decarbonizationof their companies, the Abatement Capacity
Assessment could be a valuable addition andcomplement to the TCFD recommendations andother existing or proposed climate-reporting
initiatives and regulations. It is our hope that
other market participants will also adopt
and pilot the ACA Framework for their own
GHG emissions and those of their portfolio
companies. The updated ACA Framework is
publicly available on our website.
Using the lessons learned from developing andpiloting the TCFD recommendations and the ACA
Framework, we continue to seek opportunities
to further improve the quality of climate-related
financial disclosures for all and, ultimately,support more appropriate pricing of climaterelated risks and allocation of capital. It is also
our hope that reading about and implementing
our ACA Framework will inspire others to develop
new techniques to contribute to the quality andconsistency of climate-related disclosures.

96

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

D. Initiatives Supporting TCFD

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

Amid continued momentum behind the Task
Force’s recommendations, over 1,300 additional
companies and other organizations have become
supporters since the Task Force released its
2021 status report, bringing the total numberof supporters to 3,960, as shown on the left in
Figure D1.100,101 Of these supporters, 3,723 arecompanies and 237 are other organizations(e.g., industry associations, governments). As
shown on the right in Figure D1, these supporters
come from around the world, but the Asia Pacificregion has the highest percentage of supporters
at 47%, largely driven by supporters in Japan.
Companies supporting the TCFD represent a
broad range of sectors with a combined market
capitalization of $26 trillion. This includes over
1,500 financial institutions, responsible for assets
of $220 trillion. In addition, 92 of the 100 largest
public companies support the TCFD, report in linewith the TCFD recommendations, or both.102
Over the past five years, the Task Force has
seen significant growth in the number ofcompanies and other organizations that support
the TCFD and report information aligned with its

recommendations.103 In addition, governments,
regulators, and stock exchanges continue
toincorporate the TCFD recommendations — infull or in part — into laws, rules, and guidanceon climate-related financial disclosure orreference the recommendations as a basis
for their disclosure requirements. Table D1(p. 99) provides a summary of climate-related
financial disclosure requirements and proposed
requirements that incorporated or drew fromthe TCFD recommendations (referred to as
TCFD-aligned disclosure requirements) in various
jurisdictions. Furthermore, the International
Sustainability Standards Board issued proposed
standards on general sustainability-related
disclosure and climate-related disclosure thatbuild upon the TCFD recommendations. The
Task Force attributes the global spread of the
TCFD framework to the support and willingnessof thousands of companies to implement the
TCFD recommendations on a voluntary basis
and the FSB’s work to promote use of the TCFD
recommendations as a basis for climate-related
financial disclosures.104,105

D.
Initiatives Supporting TCFD

Figure D1

Appendices

Number and Geographic Distribution of TCFD Supporters
3,960

32%
Europe

3,004

1,539

1,292

16%

1,003
571
294
277
2018
Legend:

800

1,712

449
554
2019

2021

Financial Sector Supporters
Other TCFD Supporters

100

101
102
103
104
105

2,421

944
2020

47%

North
America

1,744

Asia
Pacific

3%

2%

Latin
America

Middle East
and Africa

2022 YTD
Legend:

1–9

10–49

50–99

100–199

200–999>1,000

Number of supporters by country

Importantly, not all organizations that support the TCFD recommendations implement them. Some organizations express support byconvening their members and facilitating consistency in implementation while others — such as governments and regulators — express
support by encouraging or requiring companies and other organizations to implement the recommendations.
There were just over 2,600 supporters when the Task Force released its 2021 status report.
Forbes, The World’s Largest Public Companies, May 12, 2022. In reviewing the 100 largest public companies, the Task Force identified whether acompany indicated it reported in line with the TCFD recommendations.
See Section A.1. TCFD-Aligned Reporting by Public Companies for information on the increase in the number of companies reporting in linewith the TCFD recommendations.
The Task Force recognizes — and appreciates — the significant efforts of companies in implementing the recommendations and industry
associations, nongovernmental organizations, and others in supporting implementation through workshops, guidance, and other means.
In the FSB’s Report on Promoting Climate-Related Disclosures, it recommends financial authorities use a framework based on the TCFD
recommendations across all sectors for climate-related financial disclosures, in line with jurisdictions’ regulatory and legal requirements.
The FSB’s report also indicated using the TCFD recommendations as the basis for disclosure would contribute to a more common
approach among national and regional financial authorities.
98

The Task Force on Climate-related Financial Disclosures

Table D1

TCFD-Aligned Disclosure Requirements and Proposals
in Select Jurisdictions
Final Requirements
Jurisdiction: Authority

Scope Threshold

Time Frame Report Type

Brazil:Securities and Exchange Commission

Regulated issuers

Brazil:Central Bank of Brazil

Regulated institutions except Segment 5106

Egypt:
Egyptian Financial Regulatory Authority

Issued capital or net ownership >E£500M

New Zealand:
New Zealand Government

Issuers: securities >NZ$60M
Banks: assets >NZ$1B
Asset managers: AUM >NZ$1B
Insurers with premium income >NZ$250M

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Singapore:
Singapore Exchange

Specific industries107
Specific industries108

Switzerland:
Financial Market Supervisory Authority

Assets >CHF100B or AUM >CHF500B

United Kingdom:
UK ParliamentSpecific UK companies and Limited Liability
Partnerships >500 employees109
Occupational pension schemes: assets >£5B

C.
Case Studies on Board
Oversight

Occupational pension schemes: assets >£1B
United Kingdom:
Financial Conduct Authority

Issuers of standard-listed shares and GDRAsset managers: AUM >£50B

D.
Initiatives Supporting TCFD

Appendices

Asset owners: AUM >£25B
Asset managers and asset owners: AUM >£5B

Proposed Requirements
Jurisdiction: Authority

Scope Threshold

Canada:Canadian Securities Administrators

Regulated issuers110

European Union:
European Commission

Specific issuers on EU regulated markets

Time Frame Report TypeP

Large non-listed companies
European Union:
Parliament and Council

Specific issuers on EU regulated markets111

Switzerland
Federal Council

Assets >CHF20M or revenues >CHF500B

United States:
Securities and Exchange Commission

All registrants

Legend:
Scope

106
107
108
109
110
111

Time Frame

Listed Companies

In Effect

Financial Institutions

FY 2022Other

FY 2023

P

Report TypeFY 2024 and Later
P Phased in Based on Effective Date

Financial Filing/Annual Report
Sustainability Report
Other

The requirements address qualitative aspects of governance, strategy, and risk management. Segment 5 includes institutions whose size is lessthan 0.1% of GDP and that use an optional simplified methodology to calculate regulatory capital, unless they are multiple banks, commercial banks,
investment banks, foreign exchange banks, or federal savings banks.
All issuers required to report on a comply or explain basis for the year beginning on January 1, 2022. Issuers in the financial; agriculture, food, andforest products; and energy industries subject to mandatory reporting beginning on January 1, 2023.
Issuers in the transportation and materials and buildings industries subject to mandatory reporting beginning on January 1, 2024.
See the UK Companies Act 2006 s414(CA) and the UK Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006)
Regulations 2008 part 5 and 5a.
See Proposed National Instrument 51-107 Disclosure of Climate-related Matters, part 6.
See article 449a of the Capital Requirements Regulation (CRR). While the CRR does not mention TCFD, the European Banking Authority
published final draft implementing standards on uniform disclosure formats — as required under Article 434a of the CRR — that
99
incorporate several TCFD elements.

The Task Force on Climate-related Financial Disclosures

Key Takeaways
Support for the TCFD has increased significantly since the 2021 status report was issued — around 1,300
new organizations have indicated their support for the TCFD, an increase of over 50%.
The Task Force continues to see governments and regulators incorporate the TCFD recommendations intorules and guidance on climate-related financial disclosure.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Appendices

The subsections below provide brief descriptionsof government and regulatory developments aswell as developments related to internationaland regional standard setting, stock exchanges,
and private-sector initiatives that support
implementation of the TCFD recommendations.
The Task Force primarily focused on
developments since its previous status report
was published in October 2021.112

information in their annual reports or otherspecific documents; 2) whether the report or
document considers the TCFD recommendations
or recommendations for financial disclosuresfrom other recognized entities; and 3) an
explanation if the securities issuers have not
adopted the TCFD recommendations or ones
from other recognized entities.
Canada1. GOVERNMENTAL AND
REGULATORY EFFORTS
While the TCFD remains a voluntary, market-led
initiative, many governments and regulators aretaking steps to require or encourage disclosures
based on the TCFD recommendations. Over 120
regulators and governments from around theworld are TCFD supporters, including Belgium,
Canada, Chile, Denmark, France, Ireland, Japan,
New Zealand, Sweden, and the United Kingdom(UK). This subsection summarizes developments
in various jurisdictions that are driving disclosureof information in line with the Task Force’s
recommendations, including requirements,
proposed requirements, and guidance.
Australia: In November 2021, the Australian
Prudential Regulation Authority (APRA)
published guidance for banks, insurers, andsuperannuation trustees on managing financial
risks associated with climate change. The
guidance includes a section on climate-related
disclosure in which APRA indicates it “considers
it better practice for any disclosures to be
produced in line with the framework establishedby the TCFD.”
Brazil: In December 2021, the Brazilian Securities
and Exchange Commission amended its rules —effective January 2, 2023 — to require securities
issuers to indicate 1) whether they disclose
environmental, social, and corporate governance112• In October 2021, the Canadian Securities
Administrators issued proposed disclosure
requirements for all reporting issuers alignedwith the four TCFD recommendations. As
described in the proposal, the requirements
would be phased-in over a one-year period
for non-venture issuers and over a threeyear period for venture issuers and are
not anticipated to come into force prior to
December 31, 2022.
• In April 2022, the Canadian Government
released its 2022 budget in which it indicatedthe “federal government is committed tomoving towards mandatory reporting ofclimate-related financial risks across a broad
spectrum of the Canadian economy, basedon the [TCFD] framework.” The budget also
indicated the Office of the Superintendent of
Financial Institutions (OSFI) would consult on
climate-related disclosure guidelines in 2022
and require financial institutions to publish
TCFD-aligned climate disclosures using aphased approach, starting in 2024.
• In May 2022, OSFI released a draft guideline
for consultation on federally regulated
financial institutions’ management of climaterelated risks. As part of the draft guideline,
OSFI introduced mandatory climate-related
financial disclosures that incorporate the
TCFD recommendations.

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

100

The Task Force on Climate-related Financial Disclosures

Egypt: In July 2021, the Egyptian Financial
Regulatory Authority announced theissuance of resolutions requiring companies
listed on the Egyptian Stock Exchange andcompanies operating in non-bank financial
activities to submit disclosure reports related
to sustainability and the financial impactsof climate change in line with the TCFD
recommendations.113 These reports are to be
included in annual board of directors’ reports
and attached to the annual financial statements
beginning with fiscal year 2022.
European Union

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Appendices• In April 2021, the European Commission (EC)issued a proposed Corporate Sustainability
Reporting Directive (CSRD) that would amend
existing reporting requirements to include a
broader range of companies.114 As part of its
proposed CSRD, the EC asked the European
Financial Reporting Advisory Group to develop
reporting standards that consider existing
standards and frameworks, including the TCFD
framework.115 In late June 2022, the European
Parliament and the Council of the European
Union (EU) reached a provisional agreementon the CSRD, which further expands the scopeof companies covered and describes the phasein of reporting requirements beginning withfinancial year 2024.
• In January 2022, the European Banking
Authority published final draft implementing
technical standards on disclosing
environmental, social, and governance or
ESG risks — including physical and transition
risks related to climate change — for large
financial institutions that have issued securities
admitted to trading on a regulated market of
any EU member state. The standards weredeveloped in alignment with various initiatives,
including the TCFD recommendations,and incorporate metrics included in the
Task Force’s supplemental guidance. Under the
EU’s Capital Requirements Regulation, large
financial institutions are required to disclose
information on their ESG risks, including
climate-related risks, beginning June 28, 2022.
Hong Kong: In November 2021, the Mandatory
Provident Fund Schemes Authority issued a

113
114
115
116

circular with high-level principles for mandatory
provident fund trustees on integrating
ESG factors into their investment and risk
management processes. One of the principles
focuses on disclosing metrics and targets
and references the TCFD recommendations.
In December 2021, the Hong Kong Monetary
Authority issued a supervisory policy manual
for banks, restricted license banks, and deposittaking companies (authorized institutions) on
key elements of managing climate-related risk.
The manual indicates authorized institutions
should “take actions to prepare climaterelated disclosures in accordance with TCFD
recommendations as soon as practicable andmake their first disclosures no later than
mid-2023.”
India: In July 2022, the Reserve Bank of India(RBI) released a Discussion Paper on Climate
Risk and Sustainable Finance to seek feedback
on several topics, including climate-related
financial disclosure. In the discussion paper, theRBI highlights the TCFD recommendations “as adesirable framework [for regulated entities] torely upon, at least at the initial stage.”
Japan: In November 2021, the Japan Financial
Services Agency published its strategic priorities
for July 2021-June 2022 in which it indicatedit would encourage companies listed on the“Prime Market” segment of the Tokyo Stock
Exchange to enhance the quality and quantity of
disclosure based on the TCFD recommendations
or an equivalent framework. In May 2022, theBank of Japan issued a report that describes its
initiatives related to climate change in line with
the TCFD recommendations. The report indicatesthe Bank is encouraging financial institutions toenhance their disclosures, both qualitatively andquantitatively, based on the TCFD framework.
Malaysia: In June 2022, the Joint Committeeon Climate Change published a guide to support
implementation of climate-related disclosuresaligned with TCFD recommendations.116
The guide is aimed at financial institutions
regulated by the Bank Negara Malaysia andthe Securities Commission Malaysia andincludes commercial banks, investment banks,
insurance and reinsurance companies, and fundmanagement companies.

The Egyptian Financial Regulatory Authority’s announcement is in Arabic; however, the Sustainable Stock Exchanges Initiatives provides asummary of the announcement in English.
See the European Commission’s “Corporate Sustainability Reporting” webpage for more information.
In November 2021, the European Financial Reporting Advisory Group published a status report on the development of the reporting
standards, noting that the […] reporting areas are “totally compatible with the approach of the [TCFD] in terms of content.”
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysia financial
sector. The JC3 is co-chaired by the Deputy Governor Bank Negara Malaysia and the Deputy Chief Executive Securities Commission Malaysia,
with members comprising senior officials from Bursa Malaysia and 21 financial industry players as well as relevant experts.

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The Task Force on Climate-related Financial Disclosures

New Zealand: In October 2021, the New Zealand
Government passed legislation making climaterelated disclosures mandatory for large publicly
listed companies, insurers, banks, non-bankdeposit takers, and investment managers. The
new law is expected to come into effect in 2023,
subject to the publication of climate standards
that are based on the TCFD recommendations.
The publication of draft climate-related
disclosure standards are described in thesubsection below.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Appendices

Switzerland: In March 2022, the Swiss
Federal Council initiated a consultation on the“implementing ordinance” on climate reportingfor large Swiss companies. The ordinanceprovides for the binding implementation of
the TCFD recommendations by large Swisscompanies. The ordinance is expected to comeinto force at the beginning of the financial
year 2023.
Thailand: In February 2022, the Bank of Thailand
issued a consultation paper on the financial
landscape that describes policies to support
three objectives for the financial sector. Oneof the objectives relates to the financial sector
helping businesses and households transition
to a digital economy and effectively manage
environmental risks. The consultation paper
describes several potential policies to support
this objective, one of which is to set disclosure
standards for financial institutions that areconsistent with international frameworks suchas the TCFD.
United Kingdom• In July 2021, the UK Parliament approved
regulations — proposed by the Department
for Works and Pensions — that came into
force on October 1, 2021, requiring trusteesof occupational pension schemes withmore than £5 billion in relevant assets aswell as all authorized master trust schemes
and authorized collective money purchaseschemes to make TCFD-aligned climate-related
financial disclosures.117 Trustees are required
to produce and publish such disclosures on a
publicly available website within seven monthsof the end of each scheme year. Occupational
pension schemes with more than £1 billion in
117
118
119

120
121

net assets are subject to the regulations as of
October 1, 2022.
• In December 2021, the Financial Conduct
Agency (FCA) published two policy statements
on TCFD-aligned climate-related financial
disclosures. One of the statements extends
the application of the FCA’s existing climaterelated disclosure requirements to issuers ofstandard listed shares and global depositary
receipts representing equity shares fromJanuary 1, 2022. The other statement applies
to asset managers with more than £50 billion
in AUM and asset owners (life insurers andFCA‑regulated pension providers) with assets
over £25 billion. These organizations are
required to make disclosures consistent with
the TCFD recommendations on an annual
basis at both an entity-level and productlevel beginning on or after January 1, 2022.
Organizations with AUM or assets under
the previously mentioned thresholds but
above £5 billion are expected to disclose foraccounting periods beginning on or afterJanuary 1, 2023.
• In January 2022, the UK Parliament approved
two regulations requiring TCFD-aligned,
climate-related financial disclosure of UK
companies that were proposed by the
Department for Business, Energy andIndustrial Strategy in October 2021. One of
the regulations applies to UK companies
with more than 500 employees that arelisted in section 414CA of the Companies
Act 2006.118,119 The other regulation applies
to limited liability partnerships with morethan 500 employees and turnover of morethan £500 million.120 Both regulations apply
to reporting for financial years starting on orafter April 6, 2022.
United States: In March 2022, the Securities
and Exchange Commission proposed
amendments to its rules under the Securities
Act of 1933 and Securities Exchange Act of 1934
that would require securities issuers to include
climate-related information — aligned with the
TCFD recommendations — in their registration
statements and annual reports.121 The proposed
rule amendments would be phased in overa three-year period based on the type of

See the explanatory memorandum to the regulation.
See the explanatory memorandum to the regulation.
The regulation applies to 1) companies currently required to produce a non-financial information statement, being companies with morethan 500 employees and transferable securities admitted to trading on a UK regulated market, banking companies, or insurance companies;
2) registered companies with securities admitted to the Alternative Investment Market of the London Stock Exchange with more than 500
employees; or 3) registered companies not included in 1) or 2) and with more than 500 employees and turnover of more than £500 million.
See the explanatory memorandum to the regulation.
The SEC refers to securities issuers as registrants in the Securities Act, which are defined as issuers of securities for which a registration
statement is filed.

102

The Task Force on Climate-related Financial Disclosuresregistrant, with the first group of companies
disclosing climate-related information under
the rules for the first fiscal year following theeffective date of the rules (e.g., fiscal year 2023).
In addition, in June 2022, the U.S. Commodity
Futures Trading Commission announceda Request for Information to gather public
feedback on climate-related market risk, which
includes questions about building requirements
based on the TCFD recommendations.

2. INTERNATIONAL AND REGIONAL
STANDARD SETTING

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Appendices

In November 2021, the International Financial
Reporting Standards Foundation announced theestablishment of the International Sustainability
Standards Board (ISSB), with the aim todevelop a comprehensive global baseline ofsustainability disclosure standards to meetinvestors’ information needs. In March 2022,
the ISSB published two exposure drafts for
consultation. One sets out general sustainabilityrelated disclosure standards and the otherspecifies climate-related disclosure standards.
Both exposure drafts build upon the TCFD
recommendations, with the latter covering
elements of all 11 recommended disclosures.
In April 2022, the European Financial
Reporting Advisory Group released the draft
EU Sustainability Reporting Standards for publiccomment. The related disclosure requirements
correspond to the pillars of the TCFD
recommendations and ISSB standards.

In July 2022, New Zealand’s External Reporting
Board (XRB) issued a final consultation document
on climate-related disclosure standards thatdrew from and is largely consistent with
the Task Force’s four recommendations
and 11 recommended disclosures. The
final consultation document incorporates
feedback received on the XRB’s two previous
consultations on proposed standards — one
related to governance and risk management(published in October 2021) and the otherrelated to strategy and metrics and targets(published in March 2022).

3. STOCK EXCHANGE DEVELOPMENTS
The UN Sustainable Stock Exchanges
Initiatives launched a database that provides
information on 78 stock exchanges that are
taking actions to support enhancing climaterelated financial disclosures in line with the
TCFD recommendations in their markets. The
database highlights five activities that stock
exchanges are undertaking to support the TCFD,
as reflected in Figure D2. The most common
action taken — by 50 stock exchanges — isproviding TCFD training, followed by referencing
the TCFD recommendations in the stock
exchange’s ESG disclosure guidance.
In October 2021, the London Stock ExchangeGroup issued Guidance on Climate Reporting
Best Practice and TCFD Implementation forcompanies listed on the London Stock Exchange’s
markets. The guidance is intended to help
companies integrate and communicate
climate-related information in alignment
with TCFD recommendations.

Figure D2

Stock Exchange Activities that Support the TCFD
Recommendations1
Number of Stock Exchanges
50

TCFD Training
41

TCFD Referenced in ESG Guide
36

TCFD Supporter30

TCFD-Aligned Disclosure
TCFD-Specific Guidance
1

4

Based on information included in the Sustainable Stock Exchanges Initiative’s “TCFD Activities Database.”

103

The Task Force on Climate-related Financial Disclosures

In November 2021, the Japan Exchange Group,
Inc. published the “Survey of TCFD Disclosurein Japan,” which summarizes TCFD-aligned
disclosure practices of nearly 260 Japanese listedcompanies that declared support for TCFD as ofthe end of March 2021.
In November 2021, the Hong Kong Exchanges
and Clearing published guidance to support
listed companies in implementing the TCFD
recommendations and developing climaterelated disclosures. The guidance indicates that“[i]n light of the direction towards mandatory
TCFD-aligned climate-related disclosuresby 2025, we encourage our listed issuers tocommence reporting in accordance with the
TCFD recommendations.”A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Appendices

In December 2021, the Singapore Exchange
amended its rules requiring issuers to provide
climate-related disclosures — based on
TCFD — on a comply or explain basis for theirfinancial year beginning on January 1, 2022.
For the financial year beginning on January 1,
2023, issuers in the financial; agriculture, food,and forest products; and energy industries
will be subject to mandatory climate-related
reporting. For the financial year beginning on
January 1, 2024, issuers from the industries
mentioned previously as well as those fromthe materials and buildings and transportationindustries will be subject to mandatory climaterelated reporting.
In June 2022, the Johannesburg Stock
Exchange issued two guidance documentsthat incorporate aspects of the TCFD
recommendations — Sustainability Disclosure
Guidance and Climate Change Disclosure
Guidance. The guidance documents areintended to support issuers and investors
with understanding the climate crisis and how
disclosure can be used to anticipate risk andidentify opportunities.

4.		INDUSTRY-LED INITIATIVESIn November 2021, the Climate DisclosureStandards Board in collaboration with We
Mean Business released the second editionof the TCFD Good Practice Guide.122 The guidehighlights examples of good practice disclosuresthat are aligned with the TCFD recommendations

122
123

and included in companies’ mainstream
financial reports.
In December 2021, with support andparticipation from members of the Japan
TCFD Consortium, Mexican industry leaders
and the Central Bank of Mexico initiated efforts
to establish a Mexican TCFD Consortium. The
primary goal of the Consortium is “to promote
an increase in the disclosure of financiallymaterial ESG risks, starting with climate risks
in accordance with the recommendations of
the TCFD.”123 Preliminary efforts to establish apilot structure for the Mexican TCFD Consortium
are currently underway.
In January 2022, the Cambridge Institute for
Sustainability Leadership’s Centre for Sustainable
Finance, together with the United Nations
Environment Programme Finance Initiative(UNEP FI), published a report on principles toassist financial institutions with integrating theirassessments of physical and transition climaterelated risks. The report explores the combined
financial impact of physical and transition
risks, building on UNEP FI’s TCFD program andexisting tools for climate-related risk assessment,
including scenario analysis. One of the fiveprinciples in the report centers on alignment
with the TCFD recommendations.
In March 2022, the World Business Council for
Sustainable Development (WBCSD) publisheda report proposing a business-relevant climate
scenario analysis reference approach forcompanies in the energy system, based ona request from the TCFD. The approach was
designed to support corporate scenario analysis
practice and companies’ disclosures of theresilience of their strategies under different
climate-related scenarios, consistent with the
TCFD recommendations. WBCSD convened 12companies — all TCFD supporters — from acrossenergy supply and primary demand to develop
the proposals.
In March 2022, the Center for Climate andEnergy Solutions issued a report on emerging
practices in climate-related risk and opportunity
analysis and disclosure aligned with the TCFD
recommendations. The report summarizes
findings in four areas: current practices in
conducting climate-related financial analysis,
challenges of such analysis and related
disclosures, views on future developments, and

The Climate Disclosure Standards Board (CDSB) was consolidated into the IFRS Foundation on January 31, 2022.
Speech of Bank of Mexico Governor Alejandro Díaz de León, “Lanzamiento del Consorcio TCFD,” December 7, 2021.

104

The Task Force on Climate-related Financial Disclosurescase studies. A study of 19 companies in sectors
considered to be “high greenhouse gas emittersand highly exposed to impacts of climate” wasused to inform the findings of the report witha goal of helping companies conduct morein-depth and decision-useful analysis of climaterelated risks and opportunities. The report also
describes specific actions for how companies
can enhance their TCFD-aligned disclosuresand policy recommendations to improve suchdisclosure within U.S. financial markets.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Appendices

In April 2022, Her Majesty’s Treasury launched
the UK Transition Plan Taskforce (TPT) to
support companies in developing and disclosing
transition plans. The TPT has a two-year
mandate to bring together British industry andacademia with regulators and nongovernmentalorganizations and develop its view on bestpractice for transition plans and associatedmetrics. The TPT plans to develop a set of
sectoral transition plan templates and guidanceon metrics are targets for real economy sectors
and financial services sub-sectors, drawing fromthe body of existing work, including the TCFD
recommendations.
In June 2022, the Glasgow Financial Alliancefor Net Zero proposed recommendations
and guidance on net zero transition plans forfinancial institutions. The recommendations
and guidance address elements of disclosure
on transition plans, building on the Task
Force’s 2021 metrics and targets guidance andreferencing the TCFD recommendations andPrinciples of Effective Disclosure.

In July 2022, Chapter Zero, the Directors’ Climate
Forum, released the Board Toolkit to help nonexecutive directors address climate change asa strategic business issue on their boards. The
toolkit describes five steps boards can take for“timely, positive, and decisive climate action.”
The toolkit references the TCFD as a resource,suggests that all companies can benefit byimplementing the TCFD recommendations, andincorporates the Task Force’s tables on climaterelated risks, opportunities, and financial impacts
into one of the five steps.
In October 2022, the industry-led TCFD
Consortium in Japan released an update toguidance first released in December 2018,
which provided detailed commentary on how
to implement the TCFD recommendations forfive industrial sectors. The updated guidance —Guidance on Climate-related Financial Disclosures
3.0 — incorporates updates the Task Force madeto its annex in 2021 and the 2021 metrics andtargets guidance.
In October 2022, the Initiative Climat International
and the British Private Equity & Venture Capital
Association published guidance to support private
markets firms with implementing the TCFD
recommendations. The publication builds on the
TCFD guidance, focusing on the incorporation ofclimate change considerations into core businessstrategy, processes, and reporting. It is intended
as a step-by-step guide for TCFD reporting,outlining actions for each recommendation to
help private markets firms enhance their climaterelated financial disclosures, regardless of theirstarting point.

105

Appendices

The Task Force on Climate-related Financial Disclosures

Appendix 1: Task Force Members
Chairman And Vice Chairs
Michael Bloomberg
Chair
Founder
Bloomberg LP and Bloomberg Philanthropies
Denise Pavarina
Vice Chair
Senior Advisor
DPP Intermediação de Negócios

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Graeme Pitkethly
Vice Chair
Chief Financial Officer
Unilever

Yeo Lian Sim
Vice Chair
Special Advisor, Diversity
Singapore Exchange

Members
Jane Ambachtsheer
Global Head of Sustainability
BNP Paribas Asset Management

Andre Argenton
Chief Sustainability Officer and Vice President ofEnvironment, Health, Safety and Sustainability
Dow

David Blood
Senior Partner
Generation Investment Management

Richard Cantor
Vice Chair
Moody’s Investors Service

Koushik ChatterjeeGroup Executive Director, Finance and Corporate
Tata Steel Limited

Rosanna Fusco
Head of Climate Change Strategy and Positioning
Eni

Alan X. Gómez Hernández
Vice President, Sustainability
Citibanamex

Imre Guba
Director and Corporate Reporting Specialist
S&P Global Ratings

Thomas Kusterer
Chief Financial Officer
EnBW Energie Baden-Wurttemberg AG

Geraldine Leegwater
Chief Investment Management andMember of the Executive Committee
PGGM

Mark Lewis
Head of Climate Research
Andurand Capital Management

Ruixia Liu
Chief Expert of Task Force of Climate Risk Management
Industrial and Commercial Bank of China

Richard Manley
Managing Director, Head of Sustainable Investing
Global Leadership TeamCPP Investments

Masaaki Nagamura
Fellow, International Initiatives
Tokio Marine Holdings, Inc.

Mathew Nelson
Leader of Climate Change and Sustainability Services
EY

Catherine Saire
Partner, Sustainability Services
Deloitte

107

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

Ashley Schulten
Managing Director, Head of ESG Investment
BlackrockMartin Skancke
Chair, Risk Committee
Storebrand

Céline SoubranneGroup Chief Sustainability Officer
AXA

Lucy Thomas
Head of Sustainable Investing and Impact
UBS Asset Management

Sylvain Vanston
Executive Director, Climate Investment Research
MSCI

Steve Waygood
Chief Responsible Investment Officer
Aviva Investors

Simon Weaver
Partner, Co-Head of Climate Risk and Strategy
KPMG

Martin Weymann
Head Group Sustainability
Swiss Re

Fiona Wild
Group Climate and Sustainability Officer
BHP

Jon Williams
Partner, Sustainability and Climate Change
PwC

Special Advisor
Russell Picot
Chair, Trustee Board
HSBC Bank (UK) Pension Scheme
Former Group Chief Accounting Officer, HSBC
Deputy Chair, Chair of Investment Committee
Universities Superannuation Scheme Limited

D.
Initiatives Supporting TCFD

Secretariat

Appendices

Mary Schapiro
Vice Chair for Global Public Policy andSpecial Advisor to the Founder and Chair
Bloomberg LP

Stacy Coleman
TCFD Secretariat

Mara Childress
Director, Global Public Policy
Bloomberg LP

Jeff Stehm
TCFD Secretariat

Curtis Ravenel
TCFD Secretariat

Financial Stability Board Observers
Rupert Thorne
Deputy to the Secretary General

Kathy Huynh
Secretariat Member(Until August 2022)

Sonia Boulad
Secretariat Member(From August 2022)

This report was developed with the support of Bloomberg LP’s Tom Coleman and Oliver Wyman’s John Colas,
Alban Pyanet, Ryan Singel, Julia Yang, Will Carter, and Nolwenn Cousineau.

108

The Task Force on Climate-related Financial Disclosures

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

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesCompanies Included in the Review
The AI methodology was used to review
financial filings, annual reports, integrated
reports, and sustainability reports of 1,434
public companies from five regions in eightindustries Figure A2-1, (p. 111). Six of the eightindustries align with groups highlighted in the
Task Force’s 2017 report — Banking; Insurance;
Energy; Materials and Buildings; Transportation;
and Agriculture, Food, and Forest Products.
To incorporate other types of companies that
may be exposed to climate-related risks, two
additional industries — Technology and Mediaand Consumer Goods — are also included.
For this status report and the previous one,
the Task Force sought to maintain as muchconsistency with the final review population
used in the 2020 status report as possible. For
the 2020 status report, the Task Force selectedcompanies included in the AI review using themethodology outlined below.
• Identified universe of public companies —companies with public debt or equity — in theeight selected industries using the 29 subindustries listed in Figure A2-1, (p. 111). The
29 sub-industries are loosely based on the
Global Industry Classification Standard subsectors and industries.

• Removed subsidiaries to avoid double countingof companies. Identified companies that shared
the same industry and ultimate parent forcapital structure purposes and retained thecompany with the largest annual revenue (fornon-financial industries) or the largest total
assets (for financial industries). We followed
this approach to avoid, as much as possible,
removing companies that published annual
reports separate from their parent company.
• Removed smaller companies from the
population to maintain focus on larger
companies. We retained banks and insurancecompanies with total assets of at least$10 billion and $1 billion, respectively, andcompanies in the six non-financial industries
with annual revenue of $1 billion or more. This
resulted in 4,446 total companies; and thebreak-down by industry and sub-industry is
shown in Figure A2-1, (p. 110).
• Removed companies that did not have reports
available in English.
• Removed companies that did not have annual
reports available for review for fiscal years
2017, 2018, and 2019. This was done to ensure
a consistent population of companies andcomparable reporting across all three years.
Importantly, not all disclosures for fiscal year
2019 were available by the date that documents
were extracted for review (May 4, 2020).
• This methodology resulted in a final review
population of 1,701 companies.
The final review population of 1,701 companies
for the 2020 status report was used as theinitial review population for the 2021 status
report. The final review population used for the2021 status report was reduced to 1,651 after
accounting for companies that no longer existed
in or did not have reports available in English
for fiscal year 2020.

109

The Task Force on Climate-related Financial Disclosures

For this status report, the Task Force beganwith an initial review population of the 1,651
companies that were included in the AI review
for the 2021 status report.

The final review population used for thisyear’s AI review was reduced to 1,434 after
accounting for companies that no longer
existed in or did not have reports available
in English for fiscal year 2021.124

Figure A2-1

Industry and Sub-Industry of Companies Selected
for Review in 2020

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesIndustries

Sub-Industries

Banking
608 Companies• Regional Banks

Insurance
246 Companies• Multi-line Insurance• Life and Health Insurance• Property and Casualty Insurance• Reinsurance

Energy483 Companies• Oil and Gas• Utilities

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

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

Consumer Goods
456 Companies• Consumer Retailing• Textiles and Apparel

Total: 4,446 Companies

124

In the interest of maintaining a consistent sample of companies, the Task Force did not remove companies from the review population if their
total assets or annual revenue fell below the relevant size threshold after the 2020 selection process.

110The Task Force on Climate-related Financial Disclosures

Documents Reviewed
The Task Force focused primarily on companies’
fiscal year 2017, 2018, 2019, 2020, and 2021
financial filings, annual reports, integrated
reports, and sustainability reports. These
documents were identified using the Bloomberg
Terminal, and other relevant documents
provided in the Terminal were reviewed
as available. The Task Force only selected
documents available in English and documents
were categorized by the year of reporting.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices• Financial Filings (including 10-Ks, 20-Fs,
annual report and accounts, and registration
documents): Reports that describe
companies’ audited financial results under
the corporate, compliance, or securities
laws of the jurisdictions in which they
operate. While reporting requirements differinternationally, financial filings generally
contain financial statements and otherinformation such as governance statements
and management commentary.
• Annual or Integrated Reports: Reportsthat describe companies’ activities for thepreceding year (annual reports) or thebroader range of measures that contribute tocompanies’ long-term value and the role theyplay in society (integrated reports).
• Sustainability Reports (including Corporate
Social Responsibility and Environmental,
Social, and Governance reports): Reportsthat describe companies’ impact on society,often addressing environmental, social, andgovernance issues.
• Other Relevant Documents: Documents
available in the Bloomberg Terminal that areassociated with companies’ annual reportingor sustainability.

AI-Based Review Methodology
The AI technology used to review companies’
publicly available reports for this report was
the same as was used for the Task Force’s 2021
status report. The goal of the AI review was toautomatically identify TCFD-aligned information

125
126

in financial filings and other company reports.
One of the challenges in designing an automatedAI technology to review company reports for
TCFD-aligned information is that the language
and semantics used to describe a particular
recommended disclosure could differ acrosscountries, sectors, and even between companies
in the same sector. To help address thesechallenges, the AI technology used language
models that can represent whole sentences andparagraphs mathematically and understandmeaning in context.125
Training the AI Models
The AI technology employed a set of language
models that were trained to identify TCFDaligned information. These language models
used for classification were based on the
Bidirectional Encoder Representations fromTransformers (BERT) architecture.126 BERT
is a deep learning-based natural language
processing model trained on a massive text
document corpus that encodes text into
mathematical representations while taking
into account the context for a given word.
For example, while other techniques might
have encoded the word “running” in the twosentences, “the car is running great,” and “thecar is running out of gas,” in the same way, BERT
would take the context into account and provide
different representations for “running” in thetwo sentences. This means that BERT-basedmodels (and other similar architectures) canutilize the contextual meaning of words while
making a classification decision.
A set of language models built on the BERT
architecture were then trained using passagesof text or excerpts identified as aligning with the
Task Force’s 11 recommended disclosures —referred to as labeled data. Subject matter
experts labelled text as being aligned to
the recommended disclosures based on acommon standard that narrowed down each
recommended disclosure to a single yes-noquestion as shown in Figure A2-2 (p. 112). In
addition, in 2022 a new model was introduced
to assess references to four categories ofclimate-related scenarios by temperature
rating (below 2°C, 2°C, between 2°C and 3°C,
and over 3°C).

Devlin et al., “Bert: Pre-training of Deep Bidirectional Transformers for Language Understanding,” May 24, 2019.
Liu et al., “RoBERTa: A Robustly Optimized BERT Pretraining Approach,” July 26, 2019.

111

The Task Force on Climate-related Financial Disclosures

Figure A2-2

AI Review Questions

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices#

Question

Recommended Disclosure

1

Does the company describe the board’s or a board committee’s oversight ofclimate-related risks or opportunities?

Governance a)2

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

Governance b)

3

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

Strategy a)

4

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

Strategy b)

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

Strategy c)

6

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

Risk Management a)

7

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

Risk Management b)

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

Risk Management c)

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

Metrics and Targets a)

10 Does the company disclose Scope 1 and Scope 2, and, if appropriate Scope 3
GHG emissions?

Metrics and Targets b)

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

Metrics and Targets c)

To increase the efficiency of the labeling
effort, active learning techniques were used.127
Active learning is an iterative, machine-driven
annotation cycle for data labeling, where the
AI model identifies ambiguous unlabeled
samples that are most informative and provide
the most useful information for improving its
model performance. This technique is usefulin resource-constrained environments wherelabeled data is limited and sufficient subject
matter experts are not available to provide

127labels on large data volumes (which the AI deeplearning models need to improve performance).
A batch-based active learning process in which
the AI models iteratively identified relevantbatches of unlabeled informative data samples
for human-annotation from large document
collections was used. This resulted in a more
efficient use of annotator effort and enabled the
AI models to perform successfully on a limited
number of annotated examples.

Settles, B., “Active Learning Literature Survey,” January 9, 2009.

112

The Task Force on Climate-related Financial Disclosures

Review of Company Reports
As part of the review process, text passages
were first extracted from the various documents
available for review. An AI model incorporating
computer vision techniques — which enable theanalysis and interpretation of visual information,
including images, graphs, and charts — wasused in this step to properly identify paragraphboundaries. Correct paragraph segmentation
was important to allow the language models
used in subsequent steps to correctly capture
the context of sentences.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

The paragraph segmentation technique
identified thousands of paragraph passages
across the various available documents foreach company. To filter these passages down
to only the ones relevant to climate-related
disclosures, a language model-based information
retrieval technique was then used to retrieve,
score, and rank the passages in order of theirrelevance to a particular disclosure. The top
ranked relevant passages were then selected
as relevant to a particular disclosure. Finally, alanguage model fine-tuned for climate disclosure
classification was used to determine if anentity’s report aligned with each of the 11 TCFD
recommended disclosures.
The AI technology was implemented and run
on mlfabric™, a custom-designed modular,
reusable, cloud-based platform developed at
Moody’s that operationalizes deep learning andmachine learning models, allowing users to
deploy and reuse AI models and AI workflows
at scale. The disclosure review leveraged themlfabric™ models-as-a-service platform to scale
the processing of over 15,000 documents for theselected population of companies to produce thefinal results.
Performance Validation
The performance of the AI technology wasassessed at a company level. A company wasmarked as having a TCFD-aligned disclosure
if at least one passage was categorized as apositive result for the questions in Figure A2-2
(p. 112) in any of its reports. If a company was128

predicted to be making a particular disclosureand human annotators were also in agreement(based on annotated data) with that judgement,
then that particular example was marked ascorrectly classified. The metric used to assess the
final performance of the AI technology was theF1 Score.128
The F1 Scores for the 11 recommended
disclosures and new information on
scenario temperature ratings are presented
in Figure A2-3.
Outcome
The AI technology was applied to the excerpts
from the reports of the 1,434 companies,
and the results were aggregated for analysis
by the 11 recommended disclosures, theeight industries, the size of the companies,
and the regions in which the companies
were headquartered.

Figure A2-3

Paragraph-Level Model Performance
Recommended Disclosure

F1 Score

Governance a)

0.958

Governance b)

0.815

Strategy a)

0.857

Strategy b)

0.906

Strategy c)

0.820

Risk Management a)

0.900

Risk Management b)

0.882

Risk Management c)

0.897

Metrics and Targets a)

0.955

Metrics and Targets b)

0.957

Metrics and Targets c)

0.857

Scenario Temperature

0.942

In binary classification, precision measures the number of correct positive predictions out of the total number of positive predictions while
recall measures the number of correct positive predictions out of the actual number of examples that were correct. The F1 Score is the
harmonic mean of precision and recall. It is an indicator of the classification accuracy of a model and is commonly used in machine learning
applications to judge performance.

113

The Task Force on Climate-related Financial Disclosures

Appendix 3: AI Review Results by Industry
As summarized in Section A.1. TCFD-Aligned
Reporting by Public Companies, the Task Forcedeveloped an approach using artificial intelligence(AI) technology to review the alignment of
information included in fiscal years 2019-2021
public reports with the TCFD recommendations.

This appendix provides the results of the AI
review for each of the eight industries includedin the review — Banking; Insurance; Energy;
Materials and Buildings; Transportation;
Agriculture, Food, and Forest Products;
Technology and Media; and Consumer Goods.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

114

The Task Force on Climate-related Financial Disclosures

Banking
The AI technology reviewed reports from 248
banks in three sub-industries: investment andasset management firms, large and diversifiedbanks, and regional banks. The 248 banks ranged
in size from about $430 million to $476 billion
in assets, with a mean asset size of nearly $33
billion in assets. The AI review results for banks

are shown in Figure A3-1. The largest increasein disclosure between 2019 and 2021 for thebanking industry was 32 percentage points
for Risk Management c). In addition, banks had
the largest increase in disclosure of Strategy a)
between 2019 and 2021 for any industry of 28
percentage points.

Figure A3-1

Banking Review Results
Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight

19

14%

b) Management’s Role

18

10%
18%

A.
State of Climate-Related
Financial Disclosures
Strategya) Risks and Opportunities

B.
Review of Five Years of
TCFD Implementationb) Impact on Organization

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Risk Management

Appendices

Metrics
and Targets

Percent of Companies Disclosing

FY 2019

28%
36%

27%

27

c) Resilience of Strategy

12

7%
11%
19%

a) Risk ID andAssessment Processes

26

21%

b) Risk Management
Processes

2720%c) Integration into Overall
Risk Management

32a) Climate-Related
Metrics

8b) Scope 1, 2, 3
GHG Emissions

8c) Climate-Related Targets

13

FY 2020

FY 2021

33%

28

17%

45%

38%

32%

31%

31%

64%

54%

47%

47%

49%

34%
38%
42%
27%
27%
35%
18%
23%
31%
0%

Legend:

24%

20%

40%

60%

80%

100%

Base size: 248

115

The Task Force on Climate-related Financial Disclosures

Insurance$12 billion in assets. The AI review results forthese companies are shown in Figure A3-2.
In 2021, insurance companies most often
disclosed information aligned with Strategy a)of 58%. Additionally, between 2019 and 2021,
the percent of insurance companies reporting
information aligned with the two Governancerecommended disclosures increased by 20
percentage points, respectively.

The AI technology reviewed reports from 118
insurance companies in four categories: multiline insurance, property and casualty insurance,
reinsurance, and life and health insurance. The
118 insurance companies reviewed ranged insize from about $118 million to $130 billion
in assets, with a mean asset size of aroundFigure A3-2

Insurance Review Results
Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight20b) Management’s Role

20a) Risks and Opportunities

18

40%

b) Impact on Organization

13

33%
38%
46%

c) Resilience of Strategy

15a) Risk ID andAssessment Processes

16b) Risk Management
Processes

15c) Integration into Overall
Risk Management

26a) Climate-Related
Metrics

8b) Scope 1, 2, 3
GHG Emissions

12

21%

c) Climate-Related Targets

10

23%
31%
33%

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Strategy

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Risk Management

Appendices

Metrics
and Targets

Percent of Companies Disclosing
16%

11%

10%

FY 2019

FY 2020

FY 2021

23%
31%
54%
58%

20%
25%
29%
38%
45%
34%

26%

45%
49%

40%

52%

30%
38%
38%

0%
Legend:

38%
36%

20%

36%
33%

40%

60%

80%

100%

Base size: 118

116

The Task Force on Climate-related Financial Disclosures

EnergyIn 2021, energy companies had the highest
average percentage of disclosure of all industries(see Figure A3, p. 14). For all three years ofreporting reviewed, the energy companies
reviewed had the highest percent of disclosure
across all industries for information aligned with
Strategy a) and Strategy b). While the percent
of energy companies disclosing information
on Metrics and Targets a) only increased one
percentage point from 2019 to 2021, the percent
of energy companies reporting informationaligned with Metrics and Targets c) increased
by 24 percentage points.

The AI technology reviewed reports from
223 energy companies in three categories:
oil and gas, coal, and utilities. The 223 energy
companies ranged in size from about $104
million to $307 billion in annual revenue, witha mean annual revenue of nearly $21 billion.
The AI review results for these companies areshown in Figure A3-3.

Figure A3-3

Energy Review Results
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Percent of Companies Disclosing

Governancea) Board Oversight

13

27%

b) Management’s Role

5a) Risks and Opportunities

10b) Impact on Organization

10c) Resilience of Strategy

4a) Risk ID andAssessment Processes

13

24%

b) Risk Management
Processes

1323%c) Integration into Overall
Risk Management

14a) Climate-Related
Metrics

1b) Scope 1, 2, 3
GHG Emissions

9c) Climate-Related Targets

24

StrategyD.
Initiatives Supporting TCFD

16%
20%
21%
63%
68%
73%
44%
49%
54%
14%
18%
18%

Appendices
Risk Management

Metrics
and Targets

FY 2019

FY 2020

FY 2021

35%
37%

32%
36%

28%
33%

42%
50%
46%
51%

39%
38%
32%

0%
Legend:

37%
40%

20%

40%

48%
48%
56%
60%

80%

100%

Base size: 223

117

The Task Force on Climate-related Financial Disclosures

Materials and Buildings

In 2021 reporting, materials and buildings
companies most often disclosed informationaligned with the Strategy a) and the Metrics andTargets recommended disclosures. In addition,
the percent of materials and buildings companies
disclosing information in alignment with eachof the Metrics and Targets recommended
disclosures was greater than that of any otherindustry. However, disclosure of Metrics andTargets b) remained constant between 2020 and
2021 after increasing by 13 percentage points
between 2019 and 2020.

The AI technology reviewed reports from
353 materials and buildings companies infive categories: capital goods, chemicals,
construction materials, metals and mining, andreal estate management and development. The
353 materials and buildings companies ranged
in size from about $394 million to $291 billion
in annual revenue, with a mean annual revenueof $16 billion. The AI review results for thesecompanies are shown in Figure A3-4.

Figure A3-4

Materials and Buildings Review Results
A.
State of Climate-Related
Financial Disclosures

Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight

20

12%

b) Management’s Role

14

11%

a) Risks and Opportunities

21b) Impact on Organization

18c) Resilience of Strategy

12a) Risk ID andAssessment Processes

12

19%

b) Risk Management
Processes

1516%c) Integration into Overall
Risk Management

19

17%

a) Climate-Related
Metrics

4b) Scope 1, 2, 3
GHG Emissions

13c) Climate-Related Targets

23

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

StrategyD.
Initiatives Supporting TCFD

Percent of Companies Disclosing

Metrics
and Targets

33%

4%

FY 2019

FY 2020

FY 2021

61%
67%

49%
51%

14%
16%
31%
31%
30%
31%
29%
36%
54%
62%
58%
45%

34%

0%
Legend:

21%
25%
46%

Appendices
Risk Management

28%
32%

20%

40%

58%
58%

49%
57%
60%

80%

100%

Base size: 353

118

The Task Force on Climate-related Financial Disclosures

Transportation

In 2021, transportation companies most often
disclosed information aligned with Strategy a)
and Metrics and Targets c) — at 54% and 48%,
respectively. Transportation companies
least often disclosed information alignedwith Strategy c) — at 12%. Between 2019 and
2021, the largest increase in disclosure of
20 percentage points was for Strategy a) andMetrics and Targets c).

The AI technology reviewed reports from 136
transportation companies in six categories: air
freight, automobiles, maritime transportation,passenger air transportation, rail transportation,and trucking services. The 136 transportationcompanies ranged in size from $679 million to$204 billion in annual revenue, with a meanannual revenue of over $14 billion. The AI
review results are shown in Figure A3-5.

Figure A3-5

Transportation Review Results
A.
State of Climate-Related
Financial Disclosures

Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight129%b) Management’s Role

8

10%
14%
18%

a) Risks and Opportunities

20b) Impact on Organization

14c) Resilience of Strategy

10a) Risk ID andAssessment Processes

8b) Risk Management
Processes

1311%c) Integration into Overall
Risk Management

13

11%
17%
24%

a) Climate-Related
Metrics

4

39%
43%
43%

b) Scope 1, 2, 3
GHG Emissions

6

34%
36%
40%

c) Climate-Related Targets

20

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

StrategyD.
Initiatives Supporting TCFD
Appendices

Risk Management

Metrics
and Targets

Percent of Companies Disclosing

34%

25%

2%
4%

FY 2019

FY 2020

FY 2021

51%
54%

36%
39%

12%
16%
22%
24%
25%
24%

28%
33%
0%

Legend:

19%
21%

20%

40%

48%
60%

80%

100%

Base size: 136

119

The Task Force on Climate-related Financial Disclosures

Agriculture, Food, and Forest Productswith a mean annual revenue of over $11 billion.
The AI review results for these companies areshown in Figure A3-6.

The AI technology reviewed reports from 123
agriculture, food, and forest products companies
in four categories: beverages, packaged foods
and meats, agriculture, and paper and forest
products. The 123 agriculture, food, and forest
products companies ranged in size from about$845 million to $96 billion in annual revenue,

In 2021, agriculture, food, and forest products
companies most frequently disclosed
information on Strategy a). Between 2019 and
2021, the largest increase in disclosure of 19
percentage points was for Risk Management c).

Figure A3-6

Agriculture, Food, and Forest Products Review Results
Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight

12

10%
18%
22%

b) Management’s Role

13

7%

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Strategy

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Risk Management

Appendices

Metrics
and Targets

Percent of Companies Disclosinga) Risks and Opportunities

18b) Impact on Organization

14c) Resilience of Strategy

14a) Risk ID andAssessment Processes

10b) Risk Management
Processes

1416%c) Integration into Overall
Risk Management

19

13%

a) Climate-Related
Metrics

9b) Scope 1, 2, 3
GHG Emissions

16

35%

c) Climate-Related Targets

16

33%

43%

31%
33%
3%

FY 2019

FY 2020

FY 2021

52%

61%

45%

11%
17%
20%
26%
30%
25%
30%

22%

32%
42%

0%
Legend:

15%
20%

20%

40%

52%
51%

46%
51%
50%
49%
60%

80%

100%

Base size: 123

120

The Task Force on Climate-related Financial Disclosures

Technology and MediaIn 2021, technology and media companies had
the lowest average percentage of disclosure of
all industries reviewed (see Figure A3, p. 14).
Moreover, technology and media was the only
industry where the percent of companies
reporting TCFD-aligned information decreased
for some recommended disclosures between
2019 and 2021, specifically for Governance b) andMetrics and Targets a). Despite these decreases,
the percent disclosing information aligned with
Metrics and Targets c) increased by 18 percentage
points over the same period.

The AI technology reviewed reports from96 technology and media companies in two
categories: interactive media and services andtechnology hardware and equipment. The 96
technology and media companies ranged in size
from about $807 million to $386 billion in annual
revenue, with a mean annual revenue of $21
billion. The AI review results for these companies
are shown in Figure A3-7.

Figure A3-7

Technology and Media Review Results
A.
State of Climate-Related
Financial Disclosures

Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight

4

2%
4%
6%

b) Management’s Role

-1

5%
9%
4%

a) Risks and Opportunities

4b) Impact on Organization

2

B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

StrategyD.
Initiatives Supporting TCFD

Percent of Companies Disclosing

27%
26%
31%
20%
22%

c) Resilience of Strategy

2

4%
4%
6%

a) Risk ID andAssessment Processes

3

7%
8%
10%

b) Risk Management
Processes

6

2%
5%
8%

c) Integration into Overall
Risk Management

3

4%
9%
7%

a) Climate-Related
Metrics-1b) Scope 1, 2, 3
GHG Emissions

1c) Climate-Related Targets

18

Appendices
Risk Management

Metrics
and Targets

25%
30%
24%
21%
25%
22%
9%

0%
Legend:FY 2019

FY 2020

FY 2021

31%

20%

21%
27%
40%

60%

80%

100%

Base size: 96

121

The Task Force on Climate-related Financial Disclosures

Consumer Goods

than $25 billion. The AI review results for thesecompanies are shown in Figure A3-8. In 2021,
consumer goods companies most often disclosed
information aligned with Strategy a) and Metrics
and Targets a) at 54% and 47%, respectively.
Notably, the percent of disclosure for Risk
Management c) increased by 28 percentage
points, from 8% in 2019 to 36% in 2021.

The AI technology reviewed reports from 137
consumer goods companies in two categories:
consumer retailing and textiles and apparel.
The 137 consumer goods companies ranged insize from $857 million to $576 billion in annual
revenue, with a mean annual revenue of more

Figure A3-8

Consumer Goods Review Results
Recommendation

Recommended
Disclosure

Pt. Change
2019–2021

Governancea) Board Oversight176%b) Management’s Role

137%a) Risks and Opportunities

24

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Strategyb) Impact on Organization

C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

Risk Management

Appendices

Metrics
and Targets

Percent of Companies Disclosing

FY 2019

17%
20%
30%

23

20%
23%

43%

8

3%
7%
11%

a) Risk ID andAssessment Processes

189%b) Risk Management
Processes

217%c) Integration into Overall
Risk Management

28a) Climate-Related
Metrics

12b) Scope 1, 2, 3
GHG Emissions

7

31%
36%
38%

c) Climate-Related Targets

12

26%
34%
38%

8%

FY 2020

FY 202154%43%c) Resilience of Strategy

22%
27%
18%

18%

28%

36%
35%
41%
47%

0%
Legend:

19%
23%

20%

40%

60%

80%

100%

Base size: 137

122

The Task Force on Climate-related Financial Disclosures

Appendix 4: Asset Manager and Asset
Owner Metrics ReportingAs described in Section A.2. TCFD-Aligned
Reporting by Asset Managers and Asset Owners,
the Task Force conducted a survey to better
understand TCFD-aligned reporting practices byasset managers and asset owners. This appendix
provides additional information on the reportingof specific climate-related metrics, as follows:• the extent to which assets under management
or assets owned are aligned with a well below
2°C scenario,

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD

• metrics used to assess climate-related
physical risks,

These metrics are included in the Task Force’s
guidance for all sectors and supplemental
guidance for asset managers and asset
owners.129 Figure A4-1 shows the current
reporting status of each of the metrics asindicated by asset manager respondents.
Respondents could select one of four options
to describe the reporting status for each metricas follows: currently report, do not reportcurrently, but plan to report, do not plan toreport, or undecided.
For five of the metrics, the percent of asset
managers currently reporting them issignificantly lower than the percent that areplanning to report. The two metrics where thepercent of asset managers currently reporting ishigher than — by just one percentage point —or the same as those planning to report are
WACI at 34% and GHG emissions associatedwith assets under management at 42%,
respectively. Notably, 13% of asset managers
indicated they do not plan to report WACI,
which is the metric the Task Force recommends
asset managers and asset owners report totheir clients and beneficiaries, respectively.

• metrics used to assess climate-relatedtransition risks,• metrics used to assess climate-related
opportunities,• GHG emissions of assets under management
or assets owned,• weighted-average carbon intensity or
WACI, and• climate-related targets.

AppendicesFigure A4-1

Asset Managers: Status of Reporting Select Metrics
Metrics and Targets

Percent for Each Reporting Option1a) Alignment with <2°C Scenario

15%

43%

Physical Risk

21%

Transition Risk

24%

Climate-Related Opportunities

41%

1

129

7%
33%

Plan to Report

34%

40%

Do Not Plan to Report

5%
13%

37%
20%

30%

42%

25%
0%

30%

3%

41%
34%

c) Climate-Related Targets

Currently Report

8%

42%

Weighted Average Carbon Intensity

34%

43%

18%

b) GHG Emissions of AUM

Legend:8%8%60%Undecided

11%

20%
30%
80%

100%
Base size: 149

The percentages for Metrics and Targets a) and b) in Figure A23 (p. 36) are higher than the percentages for specific metrics associated with
Metrics and Targets a) and b) in this figure because respondents were identified as currently reporting if they indicated reporting at least oneof the metrics listed.

See the Task Force’s Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures.

123The Task Force on Climate-related Financial Disclosures

Similarly, Figure A4-2 shows the current
reporting status of each of the metrics for asset
owner respondents. Notably, nearly 60% of asset
owners indicated they currently report GHG
emissions associated with assets they own andtheir climate-related targets.

In addition, 6% of asset owners indicated they
are not planning to report the extent to whichassets they own and their funds and investment
strategies are aligned with a well below 2°C
scenario or the WACI metric.

Figure A4-2

Asset Owners: Status of Reporting Select Metrics
Metrics and Targets

Percent for Each Reporting Option1a) Alignment with <2°C Scenario

24%

Physical Risk

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

45%
36%

Transition Risk

38%

Climate-Related Opportunities

36%b) GHG Emissions of Assets Owned

1

Currently Report

32%

Plan to Report

20%

40%

Do Not Plan to Report60%
Undecided

20%
19%
26%
3% 12%

6%
32%

58%
0%

1%
2%
26%

42%

c) Climate-Related Targets

25%
1%

42%
36%
59%

Weighted Average Carbon Intensity

Legend:

6%
43%

20%
1% 9%

80%

100%
1
Base size: 76

The percentages for Metrics and Targets a) and b) in Figure A30 (p. 42) are higher than the percentages for specific metrics associated with
Metrics and Targets a) and b) in this figure because respondents were identified as currently reporting if they indicated reporting at least oneof the metrics listed.

D.
Initiatives Supporting TCFD
Appendices

124

The Task Force on Climate-related Financial Disclosures

Figure A4-3

Asset Managers: Currently Report on Select Metrics
By Level of Aggregation
MetricTotal Portfolio

Fund

Asset Class

Mandate1

Do Not Report

Alignment with <2°C Scenario

12%

16%

10%

2%

0%

Physical Risks

18%

18%

7%

4%

3%

Transition Risks

23%

21%

9%

9%

1%

GHG Emissions of AUM

50%

45%

18%

11%

0%

Weighted Average Carbon Intensity

30%

41%

15%

12%

1%

Climate-Related Targets

11%

15%

5%

5%

9%

By Investment Strategy

A.
State of Climate-Related
Financial Disclosures

MetricActivePassiveOther

Do Not Report

Alignment with <2°C Scenario

21%

2%

1%

1%

Physical Risks

26%

5%

2%

4%

B.
Review of Five Years of
TCFD Implementation

Transition Risks

32%

6%

3%

2%

GHG Emissions of AUM

60%

11%

3%

3%

Weighted Average Carbon Intensity

46%

11%

5%

1%

C.
Case Studies on Board
Oversight

Climate-Related Targets

27%

2%

4%

7%

D.
Initiatives Supporting TCFD

MetricAlignment with <2°C Scenario

15%

8%

6%

5%

0%

Appendices

Physical Risks

16%

8%

7%

12%

4%

Transition Risks

22%

13%

7%

12%

2%

GHG Emissions of AUM

36%

17%

20%

23%

1%

Weighted Average Carbon Intensity

32%

20%

12%

14%

0%

Climate-Related Targets

17%

9%

8%

9%

8%

By Asset Class
Listed Equities Fixed Income

1 Refers to aggregation consistent with clients’ investment mandates.
2 PE refers to private equity; Prop or infra refers to property
or infrastructure.

PE2 or Debt

Prop or Infra2 Do Not Report

Base size: 94
Legend:Low to high percentage of reporting125

The Task Force on Climate-related Financial Disclosures

The survey also asked respondents whether
they report select metrics by specific levels of
aggregation (e.g., for the total portfolio, at a fundlevel), by investment strategy (e.g., active, passive),and by asset class. Figure A4-3 (p. 125) provides
asset managers’ responses, and Figure A4-4
provides asset owners’ responses. The highest
level of reporting for asset managers was for
GHG emissions associated with assets undermanagement for actively managed investments
at 60%, followed by GHG emissions associatedwith assets under management at a total portfolio

level at 50%. At the asset class level, a higher
percentage of asset managers report metrics forlisted equities than for fixed income.
For asset owners, the highest level of reporting
was for GHG emissions associated with the assets
they own for actively managed investments at
64%, closely followed by climate-related targets atthe total portfolio level at 63%. In addition, 25% ormore of the asset owner respondents indicatedthey report most of the metrics for listed equities,
fixed income, and property or infrastructure.

Figure A4-4

Asset Owners: Currently Report on Select Metrics
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

By Level of Aggregation
MetricTotal Portfolio

Fund

Asset ClassDo Not Report

Alignment with <2°C Scenario

20%

5%

9%

6%

Physical Risks

33%

6%

20%

5%

Transition Risks

41%

5%

17%

2%

GHG Emissions of Assets Owned

56%

13%

50%

2%

Weighted Average Carbon Intensity

33%

13%

39%

0%

Climate-Related Targets

63%

9%

28%

0%

MetricActivePassiveOther

Do Not Report

Alignment with <2°C Scenario

22%

11%

0%

9%

Physical Risks

38%

22%

0%

5%

Transition Risks

44%

23%

0%

3%

GHG Emissions of Assets Owned

64%

39%

3%

5%

Weighted Average Carbon Intensity

45%

34%

3%

3%

Climate-Related Targets

58%

30%

5%

8%

By Investment Strategy

By Asset Class
MetricListed Equities Fixed Income

PE1 or Debt

Prop or Infra2 Do Not Report

Alignment with <2°C Scenario

16%

16%

6%

13%

6%

Physical Risks

31%

25%

11%

25%

3%

Transition Risks

33%

27%

11%

27%

5%

GHG Emissions of Assets Owned

59%

45%

17%

39%

2%

Weighted Average Carbon Intensity

44%

36%

11%

25%

0%

Climate-Related Targets

45%

31%

17%

33%

6%
Base size: 60

1 PE refers to private equity.
2 Prop or infra refers to property or infrastructure.

Legend:Low to high percentage of reporting

126

The Task Force on Climate-related Financial Disclosures

Appendix 5: Studies Reviewed on Pricing of
Climate-Related Risk

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Author

Study

Year

Alberti-Alhaybat et al.

Mapping Corporate Disclosure Theories

2012

Alessi et al.

The Greenium Matters: Evidence on the Pricing of Climate Risk

2019

Allman, E.

Pricing Climate Change Risk in Corporate Bonds

2021

Allen et al.

Climate Change and Capital Markets

2015

Alvarez et al.

A New Framework for Assessing Climate Change Risk in Financial
Markets

2021

Avramov et al.

Sustainable Investing with ESG Rating Uncertainty

2021

Ameli et al.

Higher Cost of Finance Exacerbates a Climate Investment Trap in
Developing Economies

2021

Amel-Zadeh et al.

Why and How Investors Use ESG Information: Evidence from a
Global Survey

2017

Anginer et al.

Climate Reputation and Bank Loan Contracting

2021

Atz et al.

Does Sustainability Generate Better Financial Performance? Review,Meta-Analysis, and Propositions

2021

Baker et al.

Financing the Response to Climate Change: The Pricing and Ownershipof US Green Bonds

2018

Bakkensen, L. and Lint, B.

Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics:
Going Under Water?

2018

Baldauf et al.

Does Climate Change Affect Real Estate Prices? Only if You Believe in It

2020

Bank of New York-Mellon

Future 2024: Future-Proofing Your Asset Allocation in the Ageof Mega Trends

2019

Basel Committee on Banking
Supervision (BCBS)

Climate-Related Financial Risks – Measurement Methodologies

2021

BCBS

Climate-Related Risk Drivers and Their Transmission Channels

2021

Beirne et al.

Feeling the Heat: Climate Risks and the Cost of Sovereign Borrowing

2020

Berg et al.

Aggregate Confusion: The Divergence of ESG Ratings

2022

Berkman et al.

Firm-Specific Climate Risk and Market Valuation

2021

Bernstein et al.

Disaster on the Horizon: The Price Effect of Sea Level Rise

2019

Bloomberg

Why Green Stocks Are Slumping During an ESG Boom

2021

Blyth et al.

Investment Risks Under Uncertain Climate Change Policy

2007

Boffo, R. and Patalano, R.

ESG Investing: Practices, Progress and Challenges

2020

Bolstad et al.

Flying Blind: What Do Investors Really Know About Climate Change
Risks in the U.S. Equity and Municipal Debt Markets?

2020

Bolton, P. and Kacperczyk, M.

Global Pricing of Carbon-Transition Risk

2021

Bolton, P. and Kacperczyk, M.

Do Investors Care About Carbon Risk?

2020

Breuer et al.

The Economics of Firms’ Public Disclosure: Theory and Evidence

2020

Brookfield Insights

Powering the Transition to Net Zero

2021

127

The Task Force on Climate-related Financial Disclosures

Author

Study

Year

Brooks, C. and Okionomou, I.

The Effects of Environmental, Social and Governance Disclosures andPerformance on Firm Value: A Review of the Literature in Accounting
and Finance2017

Cambridge Institute for
Sustainability Leadership

Unhedgeable Risk: How Climate Sentiment Impacts Investment

2015

Campiglio et al.

Climate Risks in Financial Assets. Discussion Note 2019/2,
Council on Economic Policies

2019

Carbone et al.

The Low-Carbon Transition, Climate Commitments, and Firm Credit
Risk. ECB Working Paper No. 2631

2021

Cash, D.

The Role of the Credit Rating Agencies

2018

Chen, L. and Gao, L.S.

The Pricing of Climate Risk

2012

Chodnicka-Jawarska, P.

ESG as a Measure of Credit Ratings

2021

Clayton et al.

Climate Risk and Commercial Property Values: A Review and Analysisof the Literature

2021

Condon, M.

Market Myopia’s Climate Bubble

2021

Condon et al.

Mandating Disclosure of Climate-Related Financial Risk

2021

Dlugolecki et al.

Coping with Climate Change: Risks and Opportunities for Insurers

2009

Faccini et al.

Dissecting Climate Risks: Are They Reflected in Stock Prices?

2021

C.
Case Studies on Board
Oversight

Flatt, D.

Proliferating ESG Indices Pose Dilemma for Investors

2021

Francis et al.

Does Corporate Transparency Contribute to Efficient
Resource Allocation?

2009

D.
Initiatives Supporting TCFD

Francis et al.

Costs of Equity and Earnings Attributes

2004

Garnache, C. and Guilfoos, T.

A City on Fire? Effect of Salience on Risk Perceptions

2019

Appendices

Geneva Association

Climate Change Risk Assessment for the Insurance Industry

2021

Giglio et al.

Climate Finance

2021

Giglio et al.

Climate Change and Long-Run Discount Rates: Evidence from
Real Estate

2021

Ginglinger, E. and Moreau, Q.

Climate Risk and Capital Structure

2021

Gough et al.

An Introduction to Systematic Reviews. March 22, 2012.
Sage Publications. ISBN 978-1-4739-2943-2.

2017

Hauser, A.

“From Hot Air to Cold Hard Facts: How Financial Markets Are Finally
Getting a Grip on How to Price Climate Risk and Return- And What
Needs to Happen Next”

2020

Healy, P.M. and Palepu, K.G.

Information Asymmetry, Corporate Disclosure, and the CapitalMarkets: A Review of the Empirical Disclosure Literature

2001

Her Majesty’s Treasury

Transition Plan Taskforce

2022

Howell, J.

ESG Is Huge and Terribly Flawed. Now What?

2021

Huang et al.

The Impact of Climate Risk on Firm Performance and Financing
Choices: An International Comparison

2018

Hugon, A. and Law, K.

Impact of Climate Change on Firm Earnings: Evidence from
Temperature Anomalies

2019

International Energy Agency

Climate Policy Uncertainty and Investment Risk

2007

Ilhan et al.

Carbon Tail Risk. 2021. Review of Financial Studies, 34, pp. 1540-1571.

2021

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

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The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

Author

Study

Year

International Monetary Fund

Climate Change: Physical Risk and Equity Prices

2020

In et al.

Is Being Green Rewarded in the Market? An Empirical Investigation of
Decarbonization and Stock Returns

2019

Javadi, S. and Masum, A-A.

The Impact of Climate Change on the Cost of Bank Loans

2021

Jiang et al.

Can Firms Run Away from Climate-Change Risk? Evidence from thePricing of Bank Loans

2021

Jiang et al.

Information Uncertainty and Expected Returns

2005

Johnston, A.

Climate-Related Financial Disclosures: What Next for Environmental
Sustainability?

2018

Karydas, C. and Xepapadeas,A.

Climate Change Financial Risks: Pricing and Portfolio Allocation

2019

Khan et al.

Corporate Sustainability: First Evidence on Materiality

2016

Kling et al.

The Impact of Climate Vulnerability on Firms’ Cost of Capital andAccess to Finance

2021

Klusak et al.

Rising Temperatures, Falling Ratings: The Effect of Climate Change on
Sovereign Creditworthiness

2021

Kolbel et al.

Does the CDS Market Reflect Regulatory Climate Risk Disclosures?

2020

Krueger et al.

The Importance of Climate Risks for Institutional Investors

2020

Leuz, C. and Verrecchia, R.E.

The Economic Consequences of Increased Disclosure

2000

Marketplace

The Changing Climate Is Driving Up Home Insurance Claims, and Rates

2021

Mathiesen, K.

Rating Climate Risks to Credit Worthiness. May 30, 2018. Nature
Climate Change, 8, pp. 454-456.

2018

D.
Initiatives Supporting TCFD

McKinsey

Five Ways That ESG Creates Value

2019

Appendices

McKinsey

Prioritizing Financial Protection in the Face of Extreme Weather

2019

McKinsey

Climate Change and P&C Insurance: The Threat and Opportunity

2020

Monasterolo et al.

Vulnerable Yet Relevant: The Two Dimensions of Climate-Related
Financial Disclosure

2017

Monasterolo, I. and De
Angelis, L.

Blind to Carbon Risk? An Analysis of Stock Market’s Reaction to theParis Agreement

2019

Monin, P.

Integrating Climate Risks into Credit Risk Assessment

2018

Murfin, J. and Spiegel, M.

Is the Risk of Sea Level Rise Capitalized in Residential Real Estate?

2020

National Association of
Insurance Commissioners

Insurance-linked Securities

2021

O’Dwyer, B. and Unerman, J.

Shifting the Focus of Sustainability Accounting from Impacts to Risks
and Dependencies: Researching the Transformative Potential of
TCFD Reporting

2020

Organization for Economic
Financial Markets and Climate Transition: Opportunities, Challenges,
Co-operation and Development and Policy Implications

2021

Onischka, M.

Environmental and Climate Risks in Financial Analysis

2008

Painter, M.

An Inconvenient Cost: The Effects of Climate Change on
Municipal Bonds

2020

Park, J.H. and Noh, J.H.

Relationship Between Climate Change Risk and Cost of Capital

2018

Polzin et al.

The Effect of Differentiating Costs of Capital by Country andTechnology on the European Energy Transition

2021

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Author

Study

Year

Principles for Responsible
Investment (PRI)

Shifting Perceptions: ESG, Credit Risk and Ratings—Part I—The Stateof Play2017

PRI

Shifting Perceptions: ESG, Credit Risk and Ratings—Part II—Exploring
the Disconnects

2018

Reuters

Natural Disasters Cost Insurers $120 Billion in 2021, Munich Re Says

2022

Riedl, D.

The Magnitude of Energy Transition Risk Embedded in Fossil FuelCompany Valuations

2021

Sebbag et al.

Integrating Climate Risk into Credit Risk Modelling

Seltzer et al.

Climate Regulatory Risks and Corporate Bonds

2020

S&P Global

How Does S&P Global Ratings Incorporate Environmental, Social, andGovernance Risks into Its Ratings Analysis

2017

S&P Global Market Intelligence Linking Climate Transition Risks and Credit Risks

2020

S&P Global Market Intelligence How Different Responses to Climate Change Impact a Company’s
Creditworthiness

2021

S&P Global Ratings

2021

B.
Review of Five Years of
TCFD Implementation

General Criteria: Environmental, Social, and Governance Principles in
Credit Ratings

Stroebel, J. and Wurgler, J.

What Do You Think About Climate Finance?

2021

Stulz, R.M.

2008

C.
Case Studies on Board
Oversight

Securities Laws, Disclosure, and National Capital Markets in the Age ofFinancial Globalization

Tran, N. and Uzmanoglu, C.

Climate Risk and Credit Ratings

2021

Trinks et al.

Greenhouse Gas Emission Intensity and the Cost of Capital

2017

Venturini, A.

Climate Change, Risk Factors and Stock Returns: A Review of
the Literature

2022

Vox

The $5 Trillion Insurance Industry Faces a Reckoning – Blame
Climate Change

2021

Zhou et al.

The Energy Transition and Changing Financing Costs

2021

A.
State of Climate-Related
Financial Disclosures

D.
Initiatives Supporting TCFD
Appendices

130

The Task Force on Climate-related Financial Disclosures

Appendix 6: Glossary and Abbreviations
Glossary
ANNUAL OR INTEGRATED REPORTS referto reports that describe companies’ activities
for the preceding year (annual reports) or thebroader range of measures that contribute tocompanies’ long-term value and the role theyplay in society (integrated reports).

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

BOARD OF DIRECTORS (OR BOARD) refers toa body of elected or appointed members who
jointly oversee the activities of a company ororganization. Some countries use a two-tiered
system where “board” refers to the “supervisoryboard” while “key executives” refers to the“management board.” 130
FINANCIAL FILINGS refer to the annual
reporting packages in which companies are
required to deliver their audited financial
results under the corporate, compliance, or
securities laws of the jurisdictions in which they
operate. While reporting requirements differinternationally, financial filings generally containfinancial statements and other information suchas governance statements and management
commentary.131
FINANCIAL PLANNING refers to a company’s
consideration of how it will achieve and fund its
objectives and strategic goals. The process offinancial planning allows companies to assess
future financial positions and determine how
resources can be utilized in pursuit of shortand long-term objectives. As part of financial
planning, companies often create “financial
plans” that outline the specific actions, assets,
and resources (including capital) necessary toachieve these objectives over a one-to-five-year
period. However, financial planning is broader
than the development of a financial plan as
it includes long-term capital allocation andother considerations that may extend beyond
the typical three-to-five-year financial plan(e.g., investment, research and development,
manufacturing, and markets).

130
131
132
133
134
135

GOVERNANCE refers to “the system by which
an organization is directed and controlled
in the interests of shareholders and otherstakeholders.”132 “Governance involves a setof relationships between an organization’s
management, its board, its shareholders, andother stakeholders. Governance provides the
structure and processes through which theobjectives of the organization are set, progressagainst performance is monitored, and results
are evaluated.”133
GREENHOUSE GAS (GHG) EMISSIONSSCOPE LEVELS134• Scope 1 refers to all direct GHG emissions.
• Scope 2 refers to indirect GHG emissions fromconsumption of purchased electricity, heat,or steam.
• Scope 3 refers to other indirect emissions notcovered in Scope 2 that occur in the value
chain of the reporting company, including both
upstream and downstream emissions. Scope 3
emissions could include: the extraction andproduction of purchased materials and fuels,transport-related activities in vehicles not
owned or controlled by the reporting entity,
electricity-related activities (e.g., transmission
and distribution losses), outsourced activities,
and waste disposal.135
MANAGEMENT refers to those positions acompany or organization views as executive or
senior management positions.
RISK MANAGEMENT refers to a set ofprocesses that are carried out by a company
or organization’s board and management tosupport the achievement of its objectives byaddressing its risks and managing the combined
potential impact of those risks.
SCENARIO ANALYSIS is a process for identifying
and assessing a potential range of outcomes of
future events under conditions of uncertainty.
In the case of climate change, for example,
scenarios allow an organization to explore andOrganization of Economic Cooperation and Development (OECD), G20/OECD Principles of Corporate Governance, November 30, 2015, OECD
Publishing, Paris.
Based on CDSB, CDSB Framework for Reporting Environmental Information, Natural Capital and Associated Business Impacts, April 2018.
Cadbury, A., Report of the Committee on the Financial Aspects of Corporate Governance, December 1, 1992.
OECD, G20/OECD Principles of Corporate Governance, November 30, 2015, OECD Publishing, Paris.
World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD), The Greenhouse Gas Protocol: A Corporate
Accounting and Reporting Standard (Revised Edition), March 2004.
WRI and WBCSD, The Corporate Value Chain (Scope 3) Accounting and Reporting Standard, April 16, 2014.

131

The Task Force on Climate-related Financial Disclosuresdevelop an understanding of how the physicaland transition risks of climate change may
impact its businesses, strategies, and financial
performance over time.
SECTOR refers to a segment of companies
performing similar business activities in an
economy. A sector generally refers to a large
segment of the economy or grouping of businesstypes, while “industry” is used to describe more
specific groupings of companies within a sector.
STRATEGY refers to an organization’s desired
future state. An organization’s strategy
establishes a foundation against which it canmonitor and measure its progress in reachingthat desired state. Strategy formulation generally
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight

involves establishing the purpose and scopeof the organization’s activities and the natureof its businesses, considering the risks andopportunities it faces and the environment inwhich it operates.
SUSTAINABILITY REPORT is a report that
describes a company or organization’s impact onsociety, often addressing environmental, social,and governance issues.
TRANSITION PLAN refers to an aspect ofan organization’s overall business strategy
that lays out a set of targets and actions
supporting its transition toward a low-carbon
economy, including actions such as reducing its
GHG emissions.

Abbreviations
1.5°C — 1.5° Celsius

IPCC — Intergovernmental Panel on Climate Change

2°C — 2° Celsius

ISSB — International Sustainability Standards Board

AI — Artificial intelligence

KPI — Key performance indicator

AUM — Assets under management

PRI — Principles for Responsible Investment

ERM — Enterprise risk management

NGO — Non-governmental organization

D.
Initiatives Supporting TCFD

ESG — Environmental, social, and governance

TCFD — Task Force on Climate-related Financial
Disclosures

Appendices

FCA — Financial Conduct Authority
UN — United Nations
FSB — Financial Stability Board
GDR — Global depositary receipt

UNEP FI — United Nations Environment Programme
Finance Initiative

GHG — Greenhouse gas

WACI — Weighted average carbon intensity

IFRS — International Financial Reporting Standards

WBCSD — World Business Council for
Sustainable Development

132

The Task Force on Climate-related Financial Disclosures

Appendix 7: References
African Rainbow Minerals. Report on Climate Change and Water 2021. October 19, 2021.
https://arm.co.za/wp-content/uploads/2021/11/ARM-Climate-and-Water-2021-FINAL.pdf.
Alberti-Alhaybat et al. Mapping Corporate Disclosure Theories. June 29, 2012. Journal of Financial
Reporting & Accounting. Vol. 10 No. 1, pp. 73-94. https://doi.org/10.1108/19852511211237453.
Alessi et al. The Greenium Matters: Evidence on the Pricing of Climate Risk. October 2019.
https://www.eba.europa.eu/sites/default/documents/files/document_library/Calendar/ConferenceWorkshop/2019/8th%20annual%20workshop%20documents/17%20The%20Greenium%20
matters%20-%20Evidence%20on%20the%20pricing%20of%20climate%20risk.pdf.
Allianz. Sustainability Report 2021. April 29, 2022.
https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/sustainability/
documents/Allianz_Group_Sustainability_Report_2021-web.pdf.
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesAllman, E. Pricing Climate Change Risk in Corporate Bonds. March 31, 2021.
http://dx.doi.org/10.2139/ssrn.3821018.
Anginer et al. Climate Reputation and Bank Loan Contracting. November 15, 2021.
https://www.fdic.gov/analysis/cfr/bank-research-conference/annual-20th/papers/anginer-paper.pdf.
Australian Prudential Regulation Authority. Prudential Practice Guide CPG 229 Climate Change Financial
Risks. November 2021. https://www.apra.gov.au/sites/default/files/2021-11/Final%20Prudential%20
Practice%20Guide%20CPG%20229%20Climate%20Change%20Financial%20Risks.pdf.
Aviva plc. Climate-related Financial Disclosure 2021. March 1, 2022.
https://static.aviva.io/content/dam/aviva-corporate/documents/socialpurpose/pdfs/climaterelated-financial-disclosure-2021-report.pdf.
Aviva plc. Climate Transition Plan. 2022. https://static.aviva.io/content/dam/aviva-corporate/
documents/socialpurpose/pdfs/2021-climate-transition-plan.pdf.
Avramov et al. Sustainable Investing with ESG Rating Uncertainty. August 2022. Journal of Financial
Economics. https://doi.org/10.1016/j.jfineco.2021.09.009.
Baker et al. Financing the Response to Climate Change: The Pricing and Ownership of US Green Bonds.
November 13, 2018. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3275327.
Bakkensen, L. and Barrage, L. Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics: Going
Under Water? February 20, 2021. NBER Working Paper No. 23854.
http://www.nber.org/papers/w23854.
Baldauf et al. Does Climate Change Affect Real Estate Prices? Only if You Believe in It. February 14, 2020.
The Review of Financial Studies, 33(3), pp. 1256-1295. https://doi.org/10.1093/rfs/hhz073.
Banco Santander. Annual Report 2021. February 24, 2022.
https://www.santander.com/content/dam/santander-com/en/documentos/informe-financieroanual/2021/ifa-2021-consolidated-annual-financial-report-en.pdf.
Bank Negara Malaysia. “Inaugural Meeting of Joint Committee on Climate Change.”
September 27, 2019. https://www.bnm.gov.my/-/inaugural-meeting-of-joint-committee-on-climatechange#:~:text=The%20JC3%20is%20intended%20to,within%20the%20Malaysia%20financial%20
sector.&text=facilitating%20collaboration%20between%20stakeholders%20in,address%20
arising%20challenges%20and%20issues.
Bank of Japan. Climate Change Initiatives: Disclosure Based on TCFD Recommendations. May 27, 2022.
https://www.boj.or.jp/en/about/climate/tcfd22.pdf.
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Bank of Thailand. BOT Consultation Paper on Financial Landscape: Repositioning Thailand’s Financial
Sector for a Sustainable Digital Economy. February 2022.
https://www.bot.or.th/landscape/files/consultation-paper-en.pdf.
Basel Committee on Banking Supervision. Climate-Related Financial Risks – Measurement Methodologies.
April 14, 2021. https://www.bis.org/bcbs/publ/d518.pdf.
Beirne et al. Feeling the Heat: Climate Risks and the Cost of Sovereign Borrowing. November 2021.
International Review of Economics & Finance, 76, pp. 920-936.
https://doi.org/10.1016/j.iref.2021.06.019.
Berkman et al. Firm-Specific Climate Risk and Market Valuation. March 26, 2021.
http://dx.doi.org/10.2139/ssrn.2775552.
Bernstein et al. Disaster on the Horizon: The Price Effect of Sea Level Rise. November 2019. Journal of
Financial Economics, 134, pp. 253-272. https://doi.org/10.1016/j.jfineco.2019.03.013.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation

Blyth et al. Investment Risks Under Uncertain Climate Change Policy. November 2007. Energy Policy, 35,
pp. 5766-5773. https://doi.org/10.1016/j.enpol.2007.05.030.
Bolstad et al. Flying Blind: What do Investors Really Know About Climate Change Risks in the U.S. Equity andMunicipal Debt Markets? September 16, 2020. Brookings, Hutchins Center on Fiscal and Monetary
Policy. https://www.brookings.edu/wp-content/uploads/2020/09/WP67_Victor-et-al.pdf.
Bolton, P. and Kacperczyk, M. Do Investors Care About Carbon Risk? April 2020. NBER Working Paper
266968. http://www.nber.org/papers/w26968.

C.
Case Studies on Board
Oversight

Bolton, P. and Kacperczyk, M. Global Pricing of Carbon-Transition Risk. February 2021. NBER Working
Paper 28510. http://www.nber.org/papers/w28510.

D.
Initiatives Supporting TCFD

BP. Annual Report 2021. March 18, 2022. https://www.bp.com/content/dam/bp/business-sites/en/
global/corporate/pdfs/investors/bp-annual-report-and-form-20f-2021.pdf.

AppendicesBrazilian Securities and Exchange Commission. Resolução CVM nº 59. December 22, 2021.
https://conteudo.cvm.gov.br/legislacao/resolucoes/resol059.html.
Cadbury, A. Report of the Committee on the Financial Aspects of Corporate Governance. December 1, 1992.
https://ecgi.global/sites/default/files//codes/documents/cadbury.pdf.
Cambridge Institute for Sustainability Leadership. Climate Tango: Principles for Integrating Physical andTransition Climate-Risk Assessment with Sectoral Examples. January 13, 2022.
https://www.cisl.cam.ac.uk/resources/publications/climate-tango-principles-integrating-physicaland-transition-climate-risk.
Campiglio et al. Climate Risks in Financial Assets. November 2019. Discussion Note 2019/2,
Council on Economic Policies.
https://www.cepweb.org/wp-content/uploads/2019/11/CEP-DN-Climate-Risks-in-Financial-Assets.pdf.
Canadian Securities Administrators. Consultation: Climate-related Disclosure Update and CSA Noticeand Request for Comment Proposed National Instrument 51-107 Disclosure of Climate-related Matters.
October 18, 2021.
https://www.osc.ca/sites/default/files/2021-10/csa_20211018_51-107_disclosure-update.pdf.
Canada’s Office of the Superintendent of Financial Institutions. Climate Risk Management. July 19, 2022.
https://www.osfi-bsif.gc.ca/Eng/Docs/b15-dft.pdf.
Carbone et al. The Low-carbon Transition, Climate Commitments, and Firm Credit Risk. December 2021.
European Central Bank Working Paper No. 2631. https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.
wp2631~00a6e0368c.en.pdf?195cfc6554b68283fae13c769051243c.
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The Task Force on Climate-related Financial Disclosures

Carney, M. “Breaking the Tragedy of the Horizon—Climate Change and Financial
Stability.” September 29, 2015. https://www.bankofengland.co.uk/-/media/boe/files/
speech/2015/breaking-the-tragedy-of-the-horizon-climate-change-and-financial-stability.
pdf?la=en&hash=7C67E785651862457D99511147C7424FF5EA0C1A.
Cathay Financial Holdings. Sustainability Report 2021. July 2021.
https://www.cathayholdings.com/en/holdings/csr/intro/csr-report.
CDP. “More than 680 Financial Institutions with US $130+ Trillion in Assets Call on Nearly 10,400
Companies to Disclose Environmental Data through CDP.” March 14, 2022.
https://www.cdp.net/en/articles/media/More-than-680-financial-institutions-call-on-nearly-10400companies-to-disclose-environmental-data-through-CDP.
CEMEX. Integrated Report 2021. March 24, 2022.
https://www.cemex.com/documents/20143/57102208/IntegratedReport2021.pdf/ca7f90b7-d742314c-de70-7de4bf8f5431?t=1648173083550?download=true.

A.
State of Climate-Related
Financial Disclosures

Center for Climate and Energy Solutions. Emerging Practices in TCFD-Aligned Climate Risk andOpportunity Analysis and Disclosure. March 2022.
https://www.c2es.org/wp-content/uploads/2022/03/emerging-practices-in-TCFD-aligned-climaterisk-and-opportunity-analysis-and-disclosure-3.pdf.

B.
Review of Five Years of
TCFD Implementation

Central Bank of Brazil. New Regulation on Social, Environmental, and Climate-related Risk Disclosures.
September 15, 2021. https://www.bcb.gov.br/content/about/legislation_norms_docs/BCB_
Disclosure-GRSAC-Report.pdf.

C.
Case Studies on Board
Oversight

Central Bank of Brazil. “Resolution 4,553.” January 30, 2017. https://www.bcb.gov.br/content/
financialstability/Brazilian_Prudential_Financial_Regulation_Docs/ResolutionCMN4553.pdf.

D.
Initiatives Supporting TCFD
AppendicesCentral Bank of Mexico. Words of Lic. Alejandro Diaz de Leon, Governor of the Bank of Mexico, During the
Launch of the TCFD Consortium. December 7, 2021. https://www.banxico.org.mx/publicaciones-yprensa/discursos/%7B7111FB74-BDEB-9FB2-CBE1-E85D1F75FA90%7D.pdf.
Cevik, S. and Jalles, J. T. This Changes Everything: Climate Shocks and Sovereign Bonds. June 2020.
IMF Working Paper WP/20/79.
Chapter Zero. Board Toolkit. July 19, 2022.
https://chapterzero.org.uk/wp-content/uploads/2022/07/Chapter-Zero-Board-Toolkit-2022.pdf.
Chen, L. and Gao, L.S. The Pricing of Climate Risk. October 7, 2011.
http://dx.doi.org/10.2139/ssrn.1940727.
Clayton et al. Climate Risk and Commercial Property Values: A Review and Analysis of the Literature.
August 2021. UNEP FI. https://www.unepfi.org/wordpress/wp-content/uploads/2021/08/Climaterisk-and-real-estate-value_Aug2021.pdf.
Climate Action 100+. https://www.climateaction100.org/.
Climate Action 100+. “Investor Signatories.” https://www.climateaction100.org/whos-involved/investors/.
Climate Action 100+. “The Three Asks.” https://www.climateaction100.org/approach/the-three-asks/.
Climate Action Tracker. Despite Glasgow Climate Pact, 2030 Climate Target Updates Have Stalled.
June 3, 2022. https://climateactiontracker.org/documents/1051/CAT_2022-06-03_Briefing_
MidYearUpdate_DespiteGlasgowTargetUpdatesStalled.pdf.
Climate Disclosure Standards Board (CDSB). CDSB Framework for Reporting Environmental Information,
Natural Capital and Associated Business Impacts. April 2018.
https://www.cdsb.net/sites/default/files/cdsb_framework_2.1.pdf.
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CDSB. “IFRS Foundation Announces International Sustainability Standards Board, Consolidation with
CDSB and VRG, and Publication of Prototype Disclosure Requirements.” November 3, 2021.
https://www.cdsb.net/news-press-room/harmonization/1282/ifrs-foundation-announcesinternational-sustainability-standards.
CDSB. TCFD Good Practice Handbook. November 2021.
https://www.cdsb.net/sites/default/files/tcfd_good_practice_handbook_v5_pages.pdf.
Commodity Futures Trading Commission. Request for Information on Climate-Related Financial Risk.
June 8, 2022. https://www.cftc.gov/sites/default/files/2022/06/2022-12302a.pdf.
CPP Investments. “The Future of Climate Change Transition Reporting.” October 31, 2021.
https://www.cppinvestments.com/insights-institute/climate-change-transition.
Department of Finance Canada. Budget 2022: A Plan to Grow Our Economy and Make Life More
Affordable. April 7, 2022. https://budget.gc.ca/2022/pdf/budget-2022-en.pdf.

A.
State of Climate-Related
Financial Disclosures

Devlin et al. “Bert: Pre-training of Deep Bidirectional Transformers for Language Understanding.”
May 24, 2019. https://arxiv.org/abs/1810.04805.

B.
Review of Five Years of
TCFD Implementation

European Banking Authority. Final Report: Final Draft Implementing Technical Standards on Prudential
Disclosures on ESG Risks in Accordance with Article 449a CRR. January 24, 2022.
https://www.eba.europa.eu/sites/default/documents/files/document_library/Publications/
Draft%20Technical%20Standards/2022/1026171/EBA%20draft%20ITS%20on%20Pillar%203%20
disclosures%20on%20ESG%20risks.pdf.

C.
Case Studies on Board
Oversight

European Commission (EC). “Corporate Sustainability Reporting.” February 20, 2020.
https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/companyreporting/corporate-sustainability-reporting_en.

D.
Initiatives Supporting TCFD

EC. Proposal for a Directive of the European Parliament and of the Council Amending Directive 2013/34/EU,
Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as Regards Corporate
Sustainability Reporting. April 21, 2021.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021PC0189&from=EN.

Appendices

European Financial Reporting Advisory Group (EFRAG). Cover Note for Public Consultation:
Draft European Sustainability Reporting Standards. April 29, 2022. https://www.efrag.org/Assets/
Download?assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2FESRS_CN.pdf.
EFRAG. “Press Release: EFRAG Launches a Public Consultation on the Draft ESRS EDs.” April 29, 2022.
https://www.efrag.org/Assets/Download?assetUrl=/sites/webpublishing/SiteAssets/
PRESS+RELEASE+220429+FINALv.pdf.
EFRAG. Project Task Force on European Sustainability Reporting Standards (PTF-ESRS) Status Report:
Five Months into the Elaboration Phase of Draft European Sustainability Reporting Standards.
November 15, 2021. https://www.efrag.org/Activities/2105191406363055/Sustainability-reportingstandards-interim-draft.
European Parliament and European Council. Capital Requirements Regulation – 08/07/2022. June 28, 2022.
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02013R0575-20220708.
European Parliament and European Council. Capital Requirements Regulation – 28/06/2023. June 28, 2022.
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02013R0575-20230628.
European Parliament and European Council. Directive 2014/95/EU of the European Parliament and theCouncil of 22 October 2014 Amending Directive 2013/34/EU as Regards Disclosure of Non-Financial andDiversity Information by Certain Large Undertakings and Groups. October 22, 2014.
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32014L0095.

136

The Task Force on Climate-related Financial Disclosures

European Parliament and European Council. Regulation (EU) No 575/2013 on Prudential Requirements
for Credit Institutions and Amending Regulation (EU) No 648/2012. June 26, 2013.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32013R0575&from=EN.
External Reporting Board (XRB). “Climate-related Disclosures.” Accessed May 17, 2022.
https://www.xrb.govt.nz/standards/climate-related-disclosures/.
XRB. “Climate-related Disclosures Final Consultation.” Accessed May 17, 2022.
https://www.xrb.govt.nz/standards/climate-related-disclosures/consultation/exposure-draft/.
XRB. Aotearoa New Zealand Climate Standard 1: Climate-related Disclosures (NZ CS 1), Governance andRisk Management Consultation Document. March 2022.
https://www.xrb.govt.nz/dmsdocument/4182.
XRB. Aotearoa New Zealand Climate Standard 1: Climate-related Disclosures (NZ CS 1), Strategy and Metrics
and Targets Consultation Document. March 2022. https://www.xrb.govt.nz/dmsdocument/4377.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Faccini et al. Dissecting Climate Risks: Are They Reflected in Stock Prices? Mar 3, 2021. (Revised Oct 1, 2021).
http://dx.doi.org/10.2139/ssrn.3795964.
Financial Conduct Authority (FCA). Enhancing Climate-related Disclosures by Asset Managers, Life Insurers
and FCA-Regulated Pension Providers. December 2021.
https://www.fca.org.uk/publication/policy/ps21-24.pdf.
FCA. Enhancing Climate-related Disclosures by Standard Listed Companies. December 2021.
https://www.fca.org.uk/publication/policy/ps21-23.pdf.
FCA. Proposals to Enhance Climate-related Disclosures by Listed Issuers and Clarification of Existing
Disclosure Obligations. December 21, 2020. https://www.fca.org.uk/publications/policy-statements/
ps20-17-proposals-enhance-climate-related-disclosures-listed-issuers-and-clarification-existing.
Financial Services Agency. The JFSA Strategic Priorities July 2021-June 2022: Overcoming COVID-19
and Building the Financial System for Greater Vibrancy. August 2021. https://www.fsa.go.jp/en/
news/2021/20211008/The_JFSA_Strategic_Priorities_July_2021-June_2022.pdf.
Financial Stability Board (FSB). “FSB to establish Task Force on Climate-related Financial Disclosures.”December 4, 2015. http://www.fsb-tcfd.org/wp-content/uploads/2016/01/12-4-2015-Climatechange-task-force-press-release.pdf.
FSB. Proposal for a Disclosure Task Force on Climate-Related Risks. November 9, 2015.
https://www.fsb.org/wp-content/uploads/Disclosure-task-force-on-climate-related-risks.pdf.
FSB. Report on Promoting Climate-Related Disclosures. July 7, 2021.
https://www.fsb.org/wp-content/uploads/P070721-4.pdf.
Forbes. The World’s Largest Public Companies. May 12, 2022.
https://www.forbes.com/global2000/list/3/#tab:overall.
Francis et al. Does Corporate Transparency Contribute to Efficient Resource Allocation? September 2009.
Journal of Accounting Research, 47(4), pp. 943-989. https://www.jstor.org/stable/40389205.
Geneva Association. Climate Change Risk Assessment for the Insurance Industry. February 2021.
https://www.genevaassociation.org/sites/default/files/research-topics-document-type/pdf_public/
climate_risk_web_final_250221.pdf.
Giglio et al. Climate Change and Long-Run Discount Rates: Evidence from Real Estate. March 25, 2021.
Review of Financial Studies, 34(8), pp. 3527-3571. https://doi.org/10.1093/rfs/hhab032.

137

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Giglio et al. Climate Finance. June 18, 2021. Annual Review of Financial Economics, 13, pp. 15-36.
https://doi.org/10.1146/annurev-financial-102620-103311.
Glasgow Financial Alliance for Net Zero. “Glasgow Financial Alliance for Net Zero.”https://www.gfanzero.com/.
Global Investors for Sustainable Development Alliance. “The GISD Alliance.”https://www.gisdalliance.org/.
Hauser, A. “From Hot Air to Cold Hard Facts: How Financial Markets Are Finally Gettinga Grip on How to Price Climate Risk and Return- and What Needs to Happen Next.”
October 16, 2020. Speech given by Andrew Hauser, Executive Director, Markets, Bankof England, to Investment Association, London. https://www.bankofengland.co.uk/-/
media/boe/files/speech/2020/from-hot-air-to-cold-hard-facts-speech-by-andrew-hauser.
pdf?la=en&hash=5D73B8F9748EC41ECFFAD676A6D1D71A93703E15.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

Healy, P.M. and Palepu, K.G. Information Asymmetry, Corporate Disclosure, and the Capital Markets: A
Review of the Empirical Disclosure Literature. September 2001. Journal of Accounting and Economics,
31, pp. 405-440. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=258514.
Holcim. Climate Report 2022. April 8, 2022.
https://www.holcim.com/sites/holcim/files/2022-04/08042022-holcim-climate-report-2022.pdf.
Hong Kong Exchanges and Clearing. Reporting on TCFD Recommendations: Guidance on Climate
Disclosures. November 5, 2021. https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-andGuidance/Environmental-Social-and-Governance/Exchanges-guidance-materials-on-ESG/guidance_
climate_disclosures.pdf?la=en.
Hong Kong Mandatory Provident Fund Schemes Authority. “Circular Letter PR/CTR/2021/002:
Principles for Adopting Sustainable Investing in the Investment and Risk Management Processesof MPF Funds.” November 26, 2021. Received by All MPF Approved Trustees.
https://www.mpfa.org.hk/-/media/files/information-centre/legislation-and-regulations/circulars/
mpf/20211126/cir-20211126.pdf.
Hong Kong Monetary Authority. Supervisory Policy Manual GS-1: Climate Risk Management.
December 30, 2021. https://www.hkma.gov.hk/media/chi/doc/key-functions/banking-stability/
supervisory-policy-manual/GS-1.pdf.
Ilhan et al. Carbon Tail Risk. 2021. Review of Financial Studies, 34, pp. 1540-1571.
INPEX CORPORATION. “Corporate Position on Climate Change” and “INPEX’s Current Initiatives.”
March 25, 2022. https://www.inpex.co.jp/english/csr/climatechange/pdf/20220325.pdf.
INPEX CORPORATION. Sustainability Report 2022. June 2022.
https://www.inpex.co.jp/english/csr/pdf/INPEX_SustainabilityReport2022_Eng.pdf.
Intergovernmental Panel on Climate Change (IPCC). Climate Change 2022: Mitigation of Climate ChangeWorking Group III Contribution to the IPCC Sixth Assessment Report. April 4, 2022.
https://report.ipcc.ch/ar6wg3/pdf/IPCC_AR6_WGIII_FinalDraft_FullReport.pdf.
IPCC. “Press Release: Climate Change 2022-Mitigation of Climate Change.” April 4, 2022.
https://report.ipcc.ch/ar6wg3/pdf/IPCC_AR6_WGIII_PressRelease-English.pdf.
IPCC. Summary for Policymakers: Global Warming of 1.5 C. October 8, 2018.
https://www.ipcc.ch/site/assets/uploads/sites/2/2018/07/SR15_SPM_version_stand_alone_LR.pdf.
Initiative Climat International. Interim Report of the UK’s Joint Government-Regulator TCFD Taskforce.
November 2020. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/
attachment_data/file/933782/FINAL_TCFD_REPORT.pdf.
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The Task Force on Climate-related Financial Disclosures

International Financial Reporting Standards. “IFRS Foundation Announces International Sustainability
Standards Board, Consolidation with CDSB and VRF, and Publication of Prototype Disclosure
Requirements.” November 3, 2021. https://www.ifrs.org/news-and-events/news/2021/11/ifrsfoundation-announces-issb-consolidation-with-cdsb-vrf-publication-of-prototypes/.
International Sustainability Standards Board (ISSB). Comparison: [Draft] IFRS S2 Climate-related
Disclosures with the TCFD Recommendations. March 31, 2022. https://www.ifrs.org/content/dam/ifrs/
project/climate-related-disclosures/comparison-draft-ifrs-s2-climate-related-disclosures-with-thetcfd-recommendations.pdf.
ISSB. Exposure Draft: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial
Information. March 31, 2022. https://www.ifrs.org/content/dam/ifrs/project/general-sustainabilityrelated-disclosures/exposure-draft-ifrs-s1-general-requirements-for-disclosure-of-sustainabilityrelated-financial-information.pdf.
ISSB. Exposure Draft: IFRS S2 Climate-related Disclosures. March 31, 2022.
https://www.ifrs.org/content/dam/ifrs/project/climate-related-disclosures/issb-exposure-draft2022-2-climate-related-disclosures.pdf.
A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

ISSB. “Press Release: ISSB Delivers Proposals that Create Comprehensive Global Baseline of
Sustainability Disclosures.” March 31, 2022. https://www.ifrs.org/news-and-events/news/2022/03/
issb-delivers-proposals-that-create-comprehensive-global-baseline-of-sustainability-disclosures/.
Japan Exchange Group. Survey of TCFD Disclosure in Japan. November 2021. https://www.jpx.co.jp/
english/corporate/news/news-releases/0090/b5b4pj000004jllw-att/TCFDsurveyEN.pdf.
Javidi, S. and Masum, A-A. The Impact of Climate Change on the Cost of Bank Loans. August 2021.
Journal of Corporate Finance, 69, 102019. https://doi.org/10.1016/j.jcorpfin.2021.102019.
Jiang et al. Can Firms Run Away from Climate-Change Risk? Evidence from the Pricing of Bank Loans.
September 2019. https://business.unl.edu/academic-programs/departments/finance/about/seminar-series/documents/Qian.pdf.
Jiang et al. Information Uncertainty and Expected Returns. 2005. Review of Accounting Studies,10, pp. 185-221.
Johannesburg Stock Exchange (JSE). Leading the Way for a Better Tomorrow: JSE Sustainability Disclosure
Guidance. December 9, 2021. https://www.jse.co.za/sites/default/files/media/documents/JSE%20
Sustainability%20Disclosure%20Guidance%202021_SPS.pdf.
JSE. Leading the Way for a Better Tomorrow: JSE Climate Change Disclosure Guidance. December 9, 2021.
https://www.jse.co.za/sites/default/files/media/documents/JSE%20Climate%20Disclosure%20
Guidance%202021_SPS.pdf.
Joint Committee on Climate Change. TCFD Application Guide for Malaysian Financial Institutions.
June 29, 2022. https://www.bnm.gov.my/documents/20124/3770663/TCFD_Application_Guide.pdf.
Karydas, C. and Xepapadeas, A. Climate Change Financial Risks: Pricing and Portfolio Allocation.
November 2019. Working Paper 19/327, Economics Working Paper Series, ETH Center of Economic
Research. https://doi.org/10.3929/ethz-b-000380385.
Kling et al. The Impact of Climate Vulnerability on Firms’ Cost of Capital and Access to Finance. January 2021.
World Development, 137, 105131. https://doi.org/10.1016/j.worlddev.2020.105131.
Kolbel et al. Does the CDS Market Reflect Regulatory Climate Risk Disclosures? June 2, 2020.
https://www.zora.uzh.ch/id/eprint/187908/1/SSRN-id3616324.pdf.
Landsec. Sustainability Performance and Data Report 2021. June 3, 2021. https://landsec.com/sites/
default/files/2021-06/Landsec_Sustainability_PerformanceAndDataReport_2021_Final.pdf.
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Leuz, C. and Verrechia, R.E. The Economic Consequences of Increased Disclosure. 2000. Journal of
Accounting Research, 38, pp. 91-124. https://doi.org/10.2307/2672910.
Liu et al. “Roberta: A Robustly Optimized Bert Pretraining Approach.” July 26, 2019.
https://arxiv.org/abs/1907.11692.
London Stock Exchange Group. Guidance on Climate Reporting Best Practice and TCFD Implementation.
October 2021. https://docs.londonstockexchange.com/sites/default/files/documents/LSE_guide_
to_climate_reporting_final_0.pdf.
Marketplace. “The Changing Climate is Driving Up Home Insurance Claims, and Rates.”
October 28, 2021. https://www.marketplace.org/2021/10/28/changing-climate-is-driving-uphome-insurance-claims-rates/.
Mitsubishi UFJ Financial Group. Integrated Report 2021. August 2021.
https://www.mufg.jp/dam/ir/report/annual_report/pdf/ir2021_all_en.pdf.

A.
State of Climate-Related
Financial Disclosures
B.
Review of Five Years of
TCFD Implementation
C.
Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
AppendicesMonasterolo et al. Vulnerable Yet Relevant: The Two Dimensions of Climate-related Financial Disclosure.
November 27, 2017. Climate Change, 145, pp. 495-507. https://doi.org/10.1007/s10584-017-2095-9.
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New Zealand Government. Financial Sector (Climate-related Disclosures and Other Matters) Amendment
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PRI. “Reporting Framework Pilot: Next Steps for Signatories.” August 2, 2021. https://www.unpri.org/
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Financial Disclosures
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Review of Five Years of
TCFD Implementation
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Case Studies on Board
Oversight
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Initiatives Supporting TCFD
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TCFD. 2021 Status Report. October 14, 2021.
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Review of Five Years of
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Case Studies on Board
Oversight
D.
Initiatives Supporting TCFD
Appendices

TCFD Consortium. Guidance on Climate-related Financial Disclosures 3.0. October 2022. https://tcfdconsortium.jp/pdf/en/news/22100501/TCFD_Guidance_3.0_e.pdf.
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United Kingdom, DWP. The Occupational Pension Schemes (Climate Change Governance and Reporting)
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Case Studies on Board
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D.
Initiatives Supporting TCFD
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