Task Force on
Climate-related
Financial Disclosures
2023 Status Report

October 2023

1

September 13, 2023

Mr. Klaas Knot
Chair
Financial Stability Board
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
Switzerland
Dear Chair Knot,
On behalf of the Task Force on Climate-related Financial Disclosures, it is my pleasure to present our sixth status report.
As you know, this is our final report before the International Sustainability Standards Board assumes responsibility formonitoring companies’ progress on climate-related disclosure as of next year. It reflects not only on progress made overthe last year, but also on experiences and insights gained over the eight years since the Task Force was formed.
The final TCFD recommendations published in June 2017 were designed to provide a framework for companies todisclose critical climate-related financial information to help increase consistency and comparability around the world.
Six years later, the recommendations have become the foundation for national and international climate-related
disclosure requirements — including as the global baseline set by the International Sustainability Standards Board’s
general sustainability-related and climate-related disclosure standards — and have driven far greater consistency incompanies’ climate-related reporting. In short, the Task Force’s work has been an unequivocal success.
The success of the TCFD’s recommendations can be demonstrated by the 19 jurisdictions, accounting for close to 60% of
global 2022 GDP, with final or proposed TCFD-aligned disclosure requirements. Additionally, the Task Force has seen over
4,800 organizations indicate their support for the TCFD’s recommendations, ranging from companies and civil society to
governments.
However, more needs to be done. As this report describes, although companies continue to make progress in theirdisclosures, significant gaps in data remain. In particular, reporting the impact of climate change on companies’
businesses, strategies, and financial planning is still lagging behind.
To help address those gaps, the Climate Data Steering Committee recommended the development of a global, open
repository for climate transition-related data: the Net-Zero Data Public Utility. It will provide free, public access to acentral source of emissions and targets information, in line with the TCFD recommended disclosures on metrics andtargets — a major step forward in the comparability and availability of data, building on work that the Task Force has led.
I’ve been honored to Chair the TCFD for these eight years and am grateful to the Task Force members who havededicated themselves to its success. On behalf of us all, I want to thank you and the Financial Stability Board, its Chairs,
and its Secretariat for recognizing the need for this work and for their steadfast support to make it possible.

Sincerely,

Michael R. BloombergiThe Task Force on Climate-related Financial Disclosures

Executive Summary
In June 2017, the Financial Stability Board’s
Task Force on Climate-related Financial
Disclosures (Task Force or TCFD) released its
final recommendations (2017 report), which
provide a framework for companies and otherorganizations to develop more effective climaterelated financial disclosures through their
existing reporting processes.1 In its 2017 report,
the Task Force emphasized the importanceof transparency in pricing risk — including
risk related to climate change — to support
informed, efficient capital-allocation decisions.
With the release of the Task Force’s
recommendations and supporting
implementation guidance in 2017 and eachyear thereafter, the FSB asked the Task Forceto continue its work — promoting adoptionof the TCFD framework; providing further
guidance; supporting educational efforts;monitoring climate-related financial disclosure
practices in terms of their alignment with the
TCFD recommendations; and preparing annual
status reports. During this time, the Task Force
has issued five status reports — with thisbeing its sixth and final report. In the months
between this status report and the 2022 status
report, the Task Force has continued to see
significant momentum around adoption of andsupport for its recommendations, including theInternational Sustainability Standards Board’s(ISSB’s) release of its climate-related and generalsustainability-related disclosure standards —which are based on the TCFD recommendations.

Shortly after the release of the standards,
the FSB indicated that the ISSB standards
represent a culmination of the Task Force’s
work and that the TCFD would be disbanded
upon release of its 2023 status report.

This report describes companies’ progress inmaking climate-related financial disclosuresand highlights some of the challenges they
face in making such disclosures, including
challenges with incorporating climate-relatedrisks into their financial statements. The report
also provides an update on significant actions
by governments, regulators, and standard

setters to use the TCFD recommendations
in developing climate-related disclosure
requirements and concludes with the Task
Force’s view of insights gained over the past
eight years and areas that warrant continued
focus or further work by others.

Greater Alignment of Climate-Related
Financial Disclosure Regimes
In developing its recommendations, the Task
Force sought to balance the needs of theusers of disclosures with the challenges facedby the preparers and was keenly aware of 1)
companies’ concerns that multiple climaterelated disclosure frameworks increase
the administrative burden and cost of theirdisclosure efforts and 2) investors and otherusers’ identification of non-comparable
reporting by companies as a major obstacle toincorporating climate-related issues into theirfinancial decisions. In light of these concerns,
the Task Force drew on existing climate-related
disclosure regimes to develop a singular,
accessible framework for climate-related financial
disclosure that it believed would help existing
disclosure regimes come into closer alignment
over time.

The Task Force believes its recommendations,which provide a singular, accessible
framework for climate-related financial
disclosure, have helped existing disclosure
regimes come into closer alignment over time.

The Task Force believes its recommendations
have been a key driver of greater consistency
among major climate-related disclosure regimesthat existed when the Task Force was created aswell as climate-related disclosure requirements
and standards that have been developed
more recently. For example, by 2019, several
major climate-related disclosure regimes had
incorporated the TCFD recommendations
into their requirements and guidance. 2 In
addition, as described later in this report,
several governments, regulators, and standard
setters have incorporated or drawn from the
TCFD recommendations in developing climaterelated reporting requirements and standards,

1

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.

2

See Principles for Responsible Investment, “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework,” December 18, 2017;
Climate Disclosure Standards Board (now part of the IFRS Foundation), Framework for Reporting Environmental and Social Information, January2022; CDP, “How CDP is aligned to the TCFD,” Accessed June 21, 2023; and Sustainability Accounting Standards Board (now part of the IFRSFoundation), TCFD Implementation Guide, May 1, 2019.

ii

The Task Force on Climate-related Financial Disclosures

including the U.S. Securities and Exchange
Commission (SEC), the U.K. Parliament,
the European Commission, and the ISSB. 3
Furthermore, the International Organizationof Securities Commissions endorsed the
ISSB standards and called on its 130 member
jurisdictions “to consider ways in which theymight adopt, apply or otherwise be informedby the ISSB standards within the context of
their jurisdictional arrangements, in a waythat promotes consistent and comparable
climate-related and other sustainability-related
disclosures for investors.”4

Increased Focus on Climate-Related Risks
in Financial Filings
Over the past several months, the Task Force
has noticed an increased focus on companies’
inclusion of climate-related financial
information in their financial filings, includingin the financial statements. For example,
the U.S. SEC created a task force to identify
potential violations including material gaps
or misstatements in companies’ disclosureof climate-related risks under existing rules. 5
In addition, the European Securities andMarkets Authority included climate-related
matters as one of its priorities for monitoring
and assessing public companies’ compliancewith relevant reporting requirements in 2022

financial filings.6 Finally, the U.K. Financial
Reporting Council conducted a review of how
well companies explained the link between
their net-zero targets and transition plans andtheir financial statements when there was areasonable expectation that there could be amaterial impact on the financial statements.7
The Task Force is encouraged by this focus as
it aligns with its 2017 recommendation thatcompanies provide climate-related financial
disclosures in their annual financial filings. With
recent warnings from the Intergovernmental
Panel on Climate Change that many climaterelated risks are higher than previously
assessed and losses and damages will increase
with each increment of warming (see FigureES1), the Task Force believes an increasing
number of companies will need to incorporate
climate-related issues into their financial filings.8
A tangible example of the way in which rising
global temperatures contribute to significant
losses is through extreme weather events.
In 2022, natural disasters resulted in global
economic losses of $284 billion, of which lessthan half — $125 billion — were covered byinsurance.9 Since 2017, average annual insured
losses from natural disasters have been over$110 billion, more than double the averageof $52 billion over the previous five-year

Figure ES1

Intergovernmental Panel on Climate Change: Select Findings from Recent Report
Global warming will continue to increase in the near term.
Many changes in the climate system, including extreme
events, will become larger in the near term with increasing
global warming.
Multiple climatic and non-climatic risks will interact,resulting in increased compounding and cascading
impacts becoming more difficult to manage.
Losses and damages will increase with increasing
global warming.
Source: Intergovernmental Panel on Climate Change, Synthesis Report of the IPCC Sixth Assessment Report, March 20, 2023.

3

U.S. Securities and Exchange Commission, “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosuresfor Investors,” March 21, 2022; U.K. Parliament, “Companies Act 2006 s414(CA),” (as amended), Accessed June 21, 2023; European Parliamentand European Council, Directive 2022/2464 as Regards Corporate Sustainability Reporting, December 14, 2022; IFRS Foundation, “ISSB Issues
Inaugural Global Sustainability Disclosure Standards,” June 26, 2023.

4International Organization of Securities Commissions, “IOSCO Endorses the ISSB’s Sustainability-Related Financial Disclosures Standards,” July25, 2023.

5

U.S. SEC, “Enforcement Task Force Focused on Climate and ESG Issues,” April 11, 2023.

6

European Securities and Markets Authority, European Common Enforcement Priorities for 2022 Annual Financial Reports, October 28, 2022.

7

Financial Reporting Council, CRR Thematic Review of Climate-Related Metrics and Targets, July 26, 2023.

8Intergovernmental Panel on Climate Change, Synthesis Report of the IPCC Sixth Assessment Report, March 20, 2023.

9

Swiss Re Institute, “Natural Catastrophes and Inflation in 2022: A Perfect Storm,” March 29, 2023.

iii

The Task Force on Climate-related Financial Disclosures

period.10 With global temperatures continuing
to rise in the near term — leading to larger
extreme events, the Task Force emphasizes
the importance of companies considering
the impact of climate change and associatedmitigation and adaptation efforts on theirstrategies and operations and disclosing relatedmaterial information, including in their financial
statements as appropriate. Such informationis critical for investors, lenders, and insurance
underwriters to appropriately assess and priceclimate-related risks and opportunities andallocate capital.

Climate-Related Financial Disclosure
Practices 11
Similar to previous status reports, this reportprovides an overview of current climaterelated financial disclosure practices in termsof their alignment with the Task Force’s
recommendations. To better understandcurrent disclosure practices and how they
have evolved, the Task Force reviewed — using
artificial intelligence (AI) technology — publicly
available reports for more than 1,350 large
companies in specific sectors around the world
over a three-year period. In addition, to gain
insight on asset managers and asset owners’
TCFD-aligned reporting practices, the Task
Force reviewed publicly available reports ofthe top 50 asset managers and top 50 asset
owners globally based on their assets undermanagement and conducted a survey. The
Task Force found the results of its reviews
and survey encouraging but believes 1) moreprogress is needed to improve transparency
on the actual and potential impact of climatechange on companies and 2) more companies
need to consider the effects of climate-related
issues on their financial statements. Table
ES1 summarizes the key themes and findings
described in this year’s report.

Table ES1

Key Takeaways and Findings
The percentage of public companies disclosing TCFD-aligned information continues to grow,but more progress is needed. For fiscal year 2022 reporting, 58% of companies disclosed in linewith at least five of the 11 recommended disclosures — up from 18% in 2020; however, only 4%
disclosed in line with all 11.
The percentage of companies reporting on climate-related risks or opportunities, board
oversight, and climate-related targets increased significantly — by 26, 25, and 24 percentage
points, respectively — between fiscal years 2020 and 2022.
Disclosure of climate-related financial information in financial filings is limited. On average forfiscal year 2022, information aligned with the 11 recommended disclosures was four times more
likely to be disclosed in sustainability and annual reports than in financial filings.
The majority of jurisdictions with final or proposed climate-related disclosure requirements
specify that such disclosures be reported in financial filings or annual reports.
Over 80% of the largest asset managers and 50% of the largest asset owners reported in linewith at least one of the 11 recommended disclosures. Based on a review of publicly available
reports, nearly 70% of the top 50 asset managers and 36% of the top 50 asset owners disclosed
in line with at least five of the recommended disclosures.
Based on a 2022 TCFD survey, asset managers and asset owners indicated the top challenge toclimate-related reporting is insufficient information from investee companies. Asset managers
highlighted information from public companies as most challenging (62%), while asset owners
identified information on private investments (84%).11

10

Ibid.

11

Importantly, 93% of survey respondents indicated they had implemented the TCFD recommendations or planned to in the future. As a result, theTask Force recognizes the survey results should not be extrapolated to a broader population of asset managers and asset owners.

iv

The Task Force on Climate-related Financial Disclosures

Conclusion
Overall, the Task Force is encouraged bycompanies’ progress in disclosing climaterelated financial information aligned with the
TCFD recommendations and by the support ofgovernments, regulators, and other authorities
in using the recommendations as a basis todevelop laws, rules, and standards on climaterelated financial disclosure. Nevertheless,the Task Force remains concerned that too
few companies are disclosing decision-usefulclimate-related financial information —especially as it relates to the impact of climatechange on their businesses, strategies, andfinancial planning, 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 and previous status
reports as well as broader assessments on thestate of climate change, including those in theIntergovernmental Panel on Climate Change’s
March 2023 report.
With its work coming to a close with the releaseof this status report, the Task Force wishes
to commend the FSB on its leadership inestablishing the TCFD as an industry-led task
force to develop voluntary recommendations
on climate-related financial disclosure and forsupporting its work to promote and monitor
adoption of the recommendations for the past
several years. In addition, the Task Force is
pleased that the ISSB has agreed to the FSB’s
request to assume responsibility for monitoring
progress on the state of climate-related
financial disclosures by companies as of next
year and support effective implementation ofits standards, including developing guidance

and other capacity building efforts.12,13 As the
ISSB and other appropriate bodies continue todrive improvements in climate-related financial
disclosure and support companies’ efforts tomake such disclosures, the Task Force believes it
is especially important to recognize the dynamic
nature of climate-related (as well as broader
sustainability) issues and the need for ongoingassessment and adjustment, as appropriate, as
practices continue to evolve.
Finally, the Task Force reflected on its
experiences and insights gained over the past
eight years as well as areas that it believes
warrant continued focus or further work,
which are described in the last section of
the report and summarized in Box ES1 (p.
vi). It also considered the reasons why its
voluntary climate-related financial disclosure
recommendations and overall framework were
well received by both the private sector andthe public sector, ultimately serving as thefoundation upon which several jurisdictional
and international climate-related reporting
requirements and standards were built. The
Task Force attributes the global spread of the
TCFD recommendations to the support andwillingness of thousands of companies toimplement the recommendations on a voluntarybasis; the tremendous support from investors
and others in asking companies to disclose
information in line with the recommendations;and the FSB’s work to promote use of the TCFD
recommendations by governments, regulators,
and standard setters as a basis for climaterelated financial disclosure requirements.
Furthermore, the Task Force believes theinsights gained from its work could be useful for
similar types of initiatives in the future.

12

FSB, FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report, July 13, 2023.

13

IFRS Foundation, “IFRS Foundation Welcomes Culmination of TCFD Work and Transfer of TCFD Monitoring Responsibilities to ISSB from2024,” July 10, 2023.

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The Task Force on Climate-related Financial Disclosures

Box ES1

TCFD Major Milestones 2016–2023 and View on Future WorkTCFD Major Milestones 2016–2023
2016

March 2016: Consultation on Phase I Report

Task Force on Climate-Related Financial Disclosures—Phase I Report

Public Consultation
Phase 1 Report

Sought feedback on the scope and objectives of the Task Force’s work todevelop recommendations on climate-related financial disclosures.

Public Consultation
TCFD Recommendations

December 2016: Consultation on TCFD Recommendations

1

2017

100+ TCFD Supporters

Final TCFD Recommendations
TCFD Recommendations
Supported by 100+ CEOs
390 Investors Called on G20
Leaders to Support TCFD
Recommendations

2018~500 TCFD Supporters

TCFD Knowledge Hub
WBCSD TCFD Preparer
Forum Report
First TCFD Status Report
CDP, CDSB, and PRI Alignedwith TCFD

2019~800 TCFD Supporters

Japan TCFD Consortium
Second TCFD Status Report
European Commission
Guidelines in Line with TCFD
Recommendations

Sought feedback on the draft TCFD recommendations and engaged with users, preparers,
and other stakeholders in relevant industries and sectors around the world.

2016–2017: Engagement with Over 2,700 Individuals in 43 Countries
128 Industry Interviews and 5
Focus Groups in 20 countries

10 Webinars and 793
Attendees in 30 countries

523 Responses on Public
Consultations from 34 countries

Outreach Events in
13 countries

June 2017: Final TCFD Recommendations

DRAFT – FOR DISCUSSION PURPOSES ONLY

Final Report

Published final recommendations on climate-related financial disclosures alongwith implementation guidance and a technical supplement on scenario analysis.

Recommendations of
the Task Forceon Climate-related
Financial Disclosures

June 2017

Recommendations of the Task Force on Climate-related Financial Disclosuresi

2017–2018: Conferences and Workshops Held to Drive Adoption
Held two scenario analysis conferencesin Europe and North America.

Hosted three implementation workshops inEurope and Asia Pacific.

May 2018: TCFD Knowledge Hub
Launched the TCFD Knowledge Hub to help companies implement the
TCFD recommendations.
DRAFT – FOR DISCUSSION PURPOSES ONLY

September 2018: The Task Force’s First Status Report2018 Status Report
DRAFT

Included an overview of TCFD-aligned disclosure practices disclosure examples
user case studies describing how TCFD-aligned information is used.

Task Force on
Climate-related
Financial Disclosures:
Status Report

September 2018

The Task Force on Climate-related Financial Disclosuresi

2018–2019: TCFD Implementation and Use Survey
Surveyed preparers on implementing the TCFD recommendations and related challenges
and users on the usefulness, availability, and quality of TCFD-aligned disclosures.

June 2019: 2019 Status Report2019 Status Report

WBCSD TCFD Preparer Forum Reports

Included an overview of TCFD-aligned disclosure practices disclosure examples
user case studies survey results insights on disclosing strategy resilience.

2020

March 2020: User Survey on Decision-Useful Information

Task Force on
Climate-related
Financial Disclosures:
Status Report

June 2019

The Task Force on Climate-related Financial Disclosures

1,500+ TCFD Supporters

WBCSD TCFD Preparer Forum Report
Risk Management Guidance
Scenario Analysis Guidance
Third TCFD Status Report
Public Consultation: Forward-Looking
Financial Sector Metrics

2021

2,600+ TCFD Supporters

WBCSD TCFD Preparer Forum Report
Public Consultation: Metrics, Targets,
and Transition Plans
Metrics, Targets, and Transition
Plans Guidance
Updated Implementation Guidance
Fourth TCFD Status Report
FSB Report Encouraging Use of the
TCFD Framework
ISSB to Develop Standards Basedon TCFD
Mexico TCFD Consortium

Legend:TCFD Reports and Other Resourcesi

Surveyed expert users on most useful climate-related information for financial decisionmaking. Expert users rated 60+ disclosure elements drawn from the TCFD framework.

October 2020: Guidance on Risk Management and Scenario Analysis

Task Force on
Climate-related
Financial Disclosures
Guidance on Risk Management
Integration and Disclosure

Issued guidance on 1) integrating climate-related issues into existing risk
management processes and disclosing relevant information and 2) conducting
climate-related scenario analysis for non-financial companies.

Task Force on
Climate-related
Financial Disclosures
Guidance on Scenario Analysis
for Non-Financial Companies

October 2020

October 2020

October 2020: 2020 Status Report
Included an overview of TCFD-aligned disclosure practices disclosure examples
insights from users on most useful TCFD-aligned information for financial
decision-making case studies by preparers regulatory developments.

Task Force on
Climate-related
Financial Disclosures
2020 Status Report

October 2020

2020–2021: Consultations on Metrics, Targets, and Transition Plans
Sought feedback on various forward-looking,climate-related metrics for the financial sector
in October 2020.

Sought feedback on proposedguidance on metrics, targets, andtransition plans in June 2021.

October 2021: 2021 Status Report

Task Force on
Climate-related
Financial Disclosures
2021 Status Report

Included an overview of TCFD-aligned disclosure practices disclosure
examples insights on disclosing financial impact of climate-related issues
regulatory developments.

October 2021

October 2021: Guidance on Metrics, Targets, and Transition Plans
and Updated Implementation Guidance

Task Force on
Climate-related
Financial Disclosures

Guidance on Metrics, Targets,
and Transition Plans

Task Force on
Climate-related
Financial Disclosures
Implementing the Recommendationsof the Task Force on Climate-related
Financial Disclosures

Issued guidance on seven, core cross-industry metrics and transition plans
and updated implementation guidance to reflect industry developments.

October 2021

October 2021

This document updates and supersedes the 2017 Annex "Implementing
the Recommendations of the Task Force on Climate-related Financial Disclosures"Support from Prepares, Users, and Official Bodies

External Engagementvi

The Task Force on Climate-related Financial Disclosures

Box ES1

TCFD Major Milestones 2016–2023 and View on Future Work (continued)
2022

3,900+ TCFD Supporters

U.S. SEC Proposed Rules
Leveraging TCFDISSB Draft Standards Based on TCFDEFRAG Draft Standards in Line
with TCFD
Fifth TCFD Status Report2023

4,850+ TCFD Supporters

ISSB Final Standards
First Set of Final EFRAG Standards
Last TCFD Status Report
TCFD Disbanded

Legend:TCFD Reports and Other Resources

February 2022: TCFD Workshop Presentation Series
Released a set of five presentations to support TCFD implementation.

February and March 2022: Surveys on Reporting Trends and Challenges
Sought input from asset managers andasset owners on reporting of climaterelated information to clients andbeneficiaries, respectively.

Sought input from preparers on TCFD
implementation over five-year period
and from users on using TCFD-aligned
information for decision-making.

October 2022: 2022 Status Report
Included an overview of TCFD-aligned disclosure practices disclosure
examples progress and challenges with TCFD implementation over past
five years users’ views of the usefulness of TCFD-aligned disclosuresregulatory developments.

Task Force on
Climate-related
Financial Disclosures
Overview

December 2022

October 2023: The Task Force’s Last Status Report
Included an overview of TCFD-aligned disclosure practices disclosure
examples regulatory developments case studies by preparers
climate-related issues in financial statements insights gained over the
past eight years areas of continued focus and further work.

Support from Prepares, Users, and Official Bodies

Task Force on
Climate-related
Financial Disclosures
2023 Status Report

October 2023

External Engagement

Areas of Continued Focus and Further WorkAs part of reflecting on its work over the past eight years, the Task Force considered areas that it
believes warrant continued focus or further work by the ISSB or other appropriate bodies. These
areas are summarized below.
Ensuring interoperability of the ISSB standards with jurisdictional frameworks to supportconsistent company reporting across jurisdictions and avoid the need for companies to reportthrough multiple venues.
Developing implementation guidance on topics such as climate-related physical risk assessment
and adaptation planning, climate-related scenario analysis at a sector or industry level, and Scope 3
GHG emissions measurement at a sector or industry level.
Continuing to focus on companies’ disclosure of the resilience of their strategies under
different climate-related scenarios, including a climate-related scenario aligned with the latest
international agreement on climate change.
Continuing to focus on decision-useful disclosure on other sustainability topics — such as
biodiversity, water, and social issues — and consider the linkages between climate-related andother sustainability issues (for example, in the context of companies’ transition plans).
Developing a consistent climate-related financial disclosure framework for use by countries
and other sovereign entities. Consistent and comparable reporting by sovereigns would support
companies in preparing comprehensive TCFD-aligned disclosures and transition plans thatappropriately reflect their operating environment.

vii

Contents

The Task Force on Climate-related Financial Disclosures

Letter from Michael R. Bloomberg

i

Executive Summaryii

A. State of Climate-Related Financial Disclosures

1

1. TCFD-Aligned Reporting by Public Companies

2

2. TCFD-Aligned Reporting by Public Companies by Region

8

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

26

B. Financial Statement Considerations

50

1. General Factors Considered52

2. Common Challenges Related to Climate Change and Financial Statements

56

3. Resources on Climate-Related Issues in Financial Statements

58

4. Examples of Climate-Related Disclosures in Financial Statements

59

C. Case Studies on Scope 3 GHG Emissions

63

1. Case Study by a Resources Company

65

2. Case Study by a Global Risk Assessment Firm

68

3. Case Study by a Global Automotive Group71

4. Case Study by an Integrated Energy and Chemicals Company

73

5. Case Study by a Global Gaming, Hospitality, and Entertainment Company

77

D. TCFD-Aligned Requirements and Related Initiatives

80

1. Final and Proposed TCFD-Aligned Disclosure Requirements

83

2. Governmental, Regulatory, and Other Developments

86

3. Industry-Led Initiatives

87

E. Types of Financial Impact and Associated Drivers

89

1. Scope and Approach91

2. Summary of Results

93

3. Case Studies on Financial Impact

97

F. Insights Gained and View on Future Work108

1. Meeting the Remit from the FSB

109

2. Insights Gained from the Task Force’s Work111

3. Areas of Continued Focus or Further Work115

Appendix 1: Task Force Members

120

Appendix 2: Company Selection and AI Review Methodology

122

Appendix 3: AI Review Results by Industry

126

Appendix 4: Additional Information on Financial Impact

134

Appendix 5: Glossary

137

Appendix 6: References

139

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.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Consistent with previous status reports, theTask Force undertook a review of hundreds ofpublic companies’ reports for climate-related
financial information using artificial intelligence(AI) technology.14 The AI technology was used
to determine whether the reports include
information that appears to align with the Task
Force’s recommendations. The Task Force hasreceived feedback that the baseline information
on climate-related financial disclosures coming
out of its AI reviews is helpful for companies
implementing the TCFD recommendations inunderstanding current practices. In addition,
users, preparers, and others have expressedinterest in understanding changes in climaterelated financial disclosures over time.
To assess the current state and evolution ofclimate-related financial disclosures, the Task
Force used AI technology to review reportsof more than 1,350 public companies over athree-year period — fiscal years 2020, 2021,
and 2022 — as described in Section A.1.
TCFD-Aligned Reporting by Public Companies.
In addition, given the growing number ofjurisdictions around the world using the TCFD
recommendations in developing climate-related
reporting requirements, the Task Force used the
AI technology to review fiscal year 2022 reports
for a larger and more geographically diverse
set of public companies (around 3,100). The
purpose of the review was to provide insights
on reporting practices at an industry level foreach of five regions — Asia Pacific, Europe, Latin

America, Middle East and Africa, and North
America.15 These insights are described in
Section A.2. TCFD-Aligned Reporting by PublicCompanies by Region.
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 ofreports needed for analysis are not publicly
available. Instead, the Task Force conducted asurvey to gain insight into these organizations’climate-related reporting practices to theirclients and beneficiaries and reviewed thelargest asset managers and asset owners’
publicly available reports to better understandtheir climate-related reporting practices more
broadly. The results are described in Section
A.3. 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 ofpublic companies’ reporting for fiscal years
2020, 2021, and 2022 with the Task Force’s
11 recommended disclosures as well as theresults and key findings from the review.16

Key Takeaways

Appendices

The percentage of companies disclosing TCFD-aligned information continues to grow, but moreprogress is needed. For fiscal year 2022 reporting, 58% of companies disclosed information in linewith at least five of the 11 recommended disclosures — up from 18% in 2020; however, only 4%
disclosed in line with all 11.
The percentage of companies reporting on climate-related risks or opportunities, board oversight,
and climate-related targets increased significantly — by 26, 25, and 24 percentage points,
respectively — between fiscal years 2020 and 2022.

Disclosure of climate-related financial information in financial filings is limited. On average for fiscal
year 2022, information aligned with the 11 recommended disclosures was four times more likely to
be disclosed in sustainability and annual reports than in financial filings.

14

The Task Force gratefully acknowledges the work of Geoffrey Gunow, Weitingting Liu, Chuck-Hou Yee, Jennifer Shih, Shubham Chopra, Ryan
Berry, Shira Clement, Elizabeth Attah, Suzanne Szur, Nadia Humphreys, and Edo Schets from Bloomberg, L.P. on the AI technology review.

15

While Latin America generally includes Mexico, Mexico is included as part of North America for the purposes of this report.

16

In this report, references to reporting year(s) are to fiscal year(s) reporting, unless the context indicates otherwise.

2

The Task Force on Climate-related Financial Disclosures

Key Takeaways (continued)
In 2022, the most often disclosed recommended disclosure — at 71% of the companies reviewed —was the metrics they use to assess their climate-related risks or opportunities.
The least disclosed recommended disclosure for all three years reviewed was the resilienceof companies’ strategies under different climate-related scenarios, with only 11% disclosing thisinformation in 2022.

Scope and ApproachA.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

The Task Force reviewed financial filings, annual
reports, integrated reports, sustainability
reports, and other relevant reports of 1,365
public companies from five regions in eightindustries (see Figure A1).17 Six of the eightindustries correspond to groups highlighted
in the Task Force’s 2017 report, as follows:
Banking, Insurance, Energy, Materials andBuildings, Transportation, and Agriculture,
Food, and Forest Products.18 The four nonfinancial industries were identified as thosepotentially most affected by climate change
and the transition to a low-carbon economy.
Beginning with the 2019 status report, the Task
Force included two additional industries in its
AI reviews to incorporate other large companies
that may be exposed to climate-related risks —Technology and Media and Consumer Goods.
For this status report and the previous two,
the Task Force sought to maintain as muchconsistency as possible with the final review
population used in the 2020 status report.19
As such, the Task Force began with an initial
review population of 1,434 companies thatwere included in the AI review for the 2022
status report. 20 The final population used forthis year’s AI review was reduced to 1,365 after
accounting for companies that no longer existed
or did not have reports available in English for
all three years. 21 The AI technology was used
to review more than 19,000 reports from the
1,365 companies and determine whether thereports included information that appeared toalign with one or more of the Task Force’s 11
recommended disclosures (see Table A1, p. 4). 22
17

Figure A1

AI Review Population Size
Industry

NumberBanking

235

Insurance

117

Energy205

Materials and Buildings

345

Transportation

126

Agriculture, Food, and Forest Products

115

Technology and Media

91

Consumer Goods
Total

131
1,365

It is important to note that the AI technology
used for this year’s review is different from the
AI technology used for the previous two status
reports. As such, direct comparisons between
this year’s AI review results and previous years’
results should not be made. More informationon the methodology is provided in Appendix 2:
Company Selection and AI Review Methodology.
Importantly, the AI review was not designed
to assess the quality of companies’ climaterelated financial disclosures, but rather toprovide an indication of the alignment ofexisting disclosures with the Task Force’s 11
recommended disclosures.

Other relevant reports include those specifically focused on climate change or the TCFD recommendations.

18

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

19

TCFD, 2020 Status Report, October 29, 2020.

20

TCFD, 2022 Status Report, October 13, 2022.

21

Because the AI technology cannot process reports in languages other than English, the AI review population has a higher representation ofinternational companies and those 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 A6 (p. 7). In addition, the AI technology reviewed the reports of allcompanies included in the population for TCFD-aligned information regardless of the materiality of the information.

22

The Task Force used AI technology to perform an automated review of more than 1,350 companies’ public reports. Performing such a review“manually” through human reviewers would take thousands of hours, which would not be feasible for the Task Force.

3

The Task Force on Climate-related Financial Disclosures

Table A1

TCFD Recommendations and Supporting Recommended Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

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 thecompany’s businesses,
strategy, and financial
planning where suchinformation is material.

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

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

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

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

a) D escribe the company’s
processes for identifying
and assessing climaterelated risks.

a) D isclose the metrics usedby the company to assessclimate-related risks
and opportunities in linewith its strategy and risk
management process.

b) D escribe management’s
role in assessing andmanaging climate-relatedrisks and opportunities.

b) D escribe the impact ofclimate-related risks andopportunities on thecompany’s businesses,
strategy, and financial
planning.

b) D escribe the company’s
processes for managing
climate-related risks.

b) D isclose Scope 1, Scope2, and, if appropriate,
Scope 3 greenhouse gas(GHG) emissions, and therelated risks.

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

c) Describe how processes
for identifying,assessing, and managing
climate-related risks
are integrated into thecompany’s overall risk
management.

c) Describe the targets
used by the company tomanage climate-relatedrisks and opportunities
and performance against
targets.

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Summary of AI Review Results 		
and Findings
This subsection summarizes the results andfindings from the AI review of public companies’
reports for fiscal years 2020, 2021, and 2022
in terms of alignment with the Task Force’s
11 recommended disclosures. Overall, thepercentage of companies disclosing informationin line with the Task Force’s recommendations
steadily increased each year, as did the amountof TCFD-aligned information companies disclosed.

Disclosure of climate-related information
has increased since 2020, but more progressis needed. As shown on the left in Box A1, theaverage number of recommended disclosures
addressed per company in 2020 was 3.2, rising
to 5.3 in 2022. In addition, 58% of companies
disclosed in line with at least five of the 11
recommended disclosures in 2022 — up from
18% in 2020; however, only 4% disclosed in linewith all 11.

Box A1AI Review Results for Fiscal Years 2020–2022
Average Number of Disclosures per Company

Percent of Companies Disclosing
At least 1
90%

3.2

4.6

5.3

At least 5
58%

64%

All 11
4%18%
FY 2020

At least 7
39%

FY 2021

FY 2022

1

Average Number of Recommended Disclosures
Base size: 1,365

3

5

8%
7

0%
9

11

Number of Recommended Disclosures
Legend:FY 2020

FY 2022

Base size: 1,365

4The Task Force on Climate-related Financial Disclosures

Companies’ disclosure of their climate-relatedrisks and opportunities grew more than any
other recommended disclosure between 2020
and 2022. While the percentage of disclosurefor each of the Task Force’s 11 recommended
disclosures increased between 2020 and 2022,
as shown in Figure A2, the largest increase inreporting — at 26 percentage points — wason companies’ descriptions of their climaterelated risks or opportunities (climate-related
issues). This was followed closely by companies’
reporting on their boards’ oversight of climaterelated issues at 25 percentage points.

Reporting on climate-related metrics
was higher than any other recommended
disclosure. Just over 70% of the companies
reviewed disclosed the metrics they use
to assess their climate-related risks andopportunities (Metrics and Targets a), followed byreporting on greenhouse gas (GHG) emissions
and climate-related targets — both at 66%.
Notably, the percent of companies reportingon their climate-related targets increased by 24
percentage points between 2020 and 2022.

Figure A2

TCFD-Aligned Disclosures by Fiscal Year for 2020–2022
A.
State of Climate-Related
Financial Disclosures

Strategy

Risk Management

F.
Insights Gained and View
on Future Work
Appendicesa) Board Oversight

25

39%

b) Management’s Role

21

a) R
 isks and Opportunities

26b) Impact on Organization

17c) Resilience of Strategy

7

4%
9%
11%

a) R
 isk ID and Assessment
Processes

22

14%

b) R
 isk Management Processes20c) Integration into Overall Risk
Management

14

a) C
 limate-Related Metrics

13

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

16

c) C
 limate-Related Targets

24

GovernanceD.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

Percent of Companies Disclosing

Recommended Disclosure

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

Pt. Change
2020–2022

Recommendation

Metrics and Targets

56%
64%
23%
37%
44%
36%
55%
62%
26%
37%
43%

26%
36%
19%
33%
39%
11%
21%
25%
58%
66%
71%
50%
60%
66%
42%
59%
66%
0%

Legend:FY 2020

FY 2021

FY 2022Companies disclosed TCFD-aligned
information primarily in sustainability andannual reports. While companies disclosed
information in multiple types of reports (e.g.,financial filings, annual reports, integrated
reports, and sustainability reports), they werefour times more likely to disclose TCFD-aligned

20%

40%

60%

80%

100%

Base size: 1,365

information in sustainability and annual reports
based on fiscal year 2022 reporting. Notably,
however, there was a significant increase incompanies including TCFD-aligned informationin their financial filings over the three years
reviewed. Specifically, companies on average
were eight times more likely to disclose TCFD5The Task Force on Climate-related Financial Disclosuresaligned information in their sustainability andannual reports than in their financial filings forfiscal year 2020 reporting. In addition, acrossthe 11 recommended disclosures, companies
were more likely to include the metrics
they use to assess climate-related risks andopportunities in line with their strategy andrisk management process (Metrics and Targetsa) in sustainability and annual reports than in
financial filings.

6.3

Materials and Buildings

5.8

Insurance

5.2

Agriculture, Food, and Forest Products

5.1

Transportation

5.1

Banking

5.0

Consumer Goods

4.1

Technology and Media

3.7

Figure A4

in

13
1)

Recommendation

Recommended Disclosure

In

En

nk

gy

g(

23

5)

(11
7)

Percent of Companies1

(2
M
05
at
)
e
B u riil d al s
Tr ing ands(
an34(12 sp5)6 ) or
ta
tio
Ag
n
r
an i cud l tuFr
Te ore e, Fchs t oo(1
an n odd lo 15) ,
M gy
ed
Co
ia
n
Go sum (91
)
od e
s( r

Disclosure by Industry: 2022 Fiscal Year Reporting

Ba

Appendices

NumberEnergyEnergy companies disclosed more information
than companies in the other seven industries.
Energy companies, on average, reported on 6.3of the 11 recommended disclosures in 2022,
followed by materials and buildings companies

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Industryce

D.
TCFD-Aligned Requirements
and Related Initiatives

Average Number of Disclosures
per Company

erC.
Case Studies on Scope 3
GHG Emissions

Figure A3

ran

B.
Financial Statement
Considerations

The resilience of companies’ strategies under
different climate-related scenarios had thelowest level of disclosure in all three years
reviewed. Only 11% of the companies reviewed
reported in line with this recommended
disclosure (Strategy c) for fiscal year 2022.
Based on a survey conducted last year of over
200 companies, nearly 90% of them rated thisrecommended disclosure as somewhat difficult
or very difficult to implement, which may help
explain why its disclosure is low. 23

suA.
State of Climate-Related
Financial Disclosuresat 5.8 (see Figure A3). In addition, companies
in the energy industry had the highest levelsof disclosure on seven of the 11 recommended
disclosures (see Figure A4). 24 The insurancecompanies and banks reviewed had the highest
levels of reporting on the Risk Management
recommendation, which may be attributable tofinancial regulators’ general emphasis on risk
management processes.

Governancea) B oard Oversight

57%

65%

76%

71%

70%

57%

43%

58%

b) M
 anagement’s Role

40%

44%

57%

46%

44%

39%

32%

32%

a) R
 isk and Opportunities

69%

68%

70%

66%

55%

57%

38%

46%

b) Impact on Organization

35%

45%

58%

46%

40%

49%

27%

28%

c) R
 esilience of Strategy

9%

13%

16%

12%

6%

17%

5%

8%

a) R
 isk ID and Assessment Proc.

40%

44%

42%

40%

30%

36%

14%

22%

b) R
 isk Management Processes

46%

51%

45%

38%

37%

35%

20%

29%

c) Integration into Risk Mgmt.

38%

36%

32%

22%

21%

18%

7%

11%

61%

56%

81%

81%

70%

71%

67%

62%

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

58%

53%

77%

75%

64%

64%

65%

54%

c) C
 limate-Related Targets

47%

50%

80%

77%

73%

69%

56%

63%

Strategy

Risk Management

Metrics and Targets a) Climate-Related Metrics

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

Legend:Low to high percentage of reporting23

See TCFD, 2022 Status Report, October 13, 2022 (pp. 57–64).

24

The AI review results for each industry for the past three fiscal years are provided in Appendix 3: AI Review Results by Industry.

6

The Task Force on Climate-related Financial Disclosures

Companies in the consumer goods andtechnology and media industries disclosed
less than companies in other industries.
As noted previously, these two industries
were added to the AI review to incorporate
other large companies that may be exposed toclimate-related risks whereas the other four
non-financial industries were included because
they are most likely to be affected by climatechange. This may explain why companies inthese two industries, on average, have thelowest levels of disclosure.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Companies in Europe had the highest levelof reporting for each of the 11 recommended
disclosures. The European companies
reviewed, on average, reported on 7.2 of the
11 recommended disclosures (see Figure
A5). Notably, 92% of European companies
disclosed their climate-related targets (Metrics

AppendicesFigure A5

Average Number of Disclosures
per Company
RegionNumberEurope7.2

Asia Pacific5.0North America

4.6

Latin America

4.2

Middle East and Africa

3.8

Figure A6

Disclosure by Region: 2022 Fiscal Year Reporting
Percent of Companies1

Asia Pacific

EuropeRecommendation

Recommended Disclosure

Governancea) B oard Oversight

62%

b) M
 anagement’s Role
Strategy

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Workand Targets c) — which is 35 percentage points
higher than companies in Asia Pacific and 32
percentage points higher than companies
in North America (see Figure A6). Please see
Section A.2. TCFD-Aligned Reporting by PublicCompanies by Region for results at an industry
level for each region.

Risk Management

Metrics and Targets

(279)

(38)

(65)

(659)

71%

53%

45%

65%

33%

60%

34%

22%

42%

a) R
 isk and Opportunities

53%

76%

61%

38%

61%

b) Impact on Organization

41%

59%

39%

29%

37%

c) R
 esilience of Strategy

11%

24%

3%

6%

6%

a) R
 isk ID and Assessment Proc.

31%

65%

24%

22%

26%

b) R
 isk Management Processes

41%

56%

34%

28%

32%

c) Integration into Risk Mgmt.

20%

35%

26%

20%

22%

a) Climate-Related Metrics

80%

92%

55%

63%

58%

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

73%

88%

50%

58%

54%

c) C
 limate-Related Targets

57%

92%

42%

48%

60%

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

Larger companies are more likely to disclose
TCFD-aligned information than smaller
ones. On average, companies with a market
capitalization of at least $12.3 billion reported
on 6.7 of the 11 recommended disclosuresin fiscal year 2022 (see Figure A7, p. 8), whilesmaller companies on average — those withless than $3.2 billion in market capitalization —reported on 3.9 recommended disclosures.
The Task Force notes that this finding has been
consistent in all six of its status reports.

(324)

Latin
Middle East North
America and Africa America

Legend:Low to high percentage of reporting

The highest level of reporting by larger
companies was on climate-related targets— at 85%, followed closely by climate-related
metrics at 83% (see Figure A8, p. 8). Notably,
medium-sized companies (market capitalization
between $3.2 billion and $12.3 billion) andsmaller companies (market capitalization lessthan $3.2 billion) reported most frequently
on climate-related metrics — at 72% and 59%,
respectively. Their reporting on climate-related
targets was at least seven percentage points
7

The Task Force on Climate-related Financial Disclosures

lower than the levels of reporting on theirclimate-related metrics. A possible reason
why larger companies reported on climaterelated targets as much as they reported on
climate-related metrics could be that a greater
proportion of larger companies have madenet-zero or other GHG emissions reduction
commitments.

Figure A7

Average Number of Disclosures
per Company
Market Capitalization

Number

>$12.3B

6.7$3.2–12.3B

5.3<$3.2B

3.9

Figure A8Disclosure by Company Size: 2022 Fiscal Year Reporting
Percent of Companies1

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices<$3.2B Market
Capitalization$3.2B–12.3B Market
Capitalization>$12.3B Market
Capitalization

Recommendation

Recommended Disclosure

Governancea) B oard Oversight

49%

65%

80%

b) M
 anagement’s Role

27%

44%

60%

a) R
 isk and Opportunities

50%

63%

74%

b) Impact on Organization

30%

41%

58%

c) R
 esilience of Strategy

5%

12%

16%

a) R
 isk ID and Assessment Proc.

21%

36%

50%

b) R
 isk Management Processes

29%

38%

51%

c) Integration into Risk Mgmt.

16%

24%

35%

59%

72%

83%

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

52%

67%

79%

c) C
 limate-Related Targets

48%

65%

85%

Strategy

Risk Management(462)

Metrics and Targets a) Climate-Related Metrics

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

2. TCFD-ALIGNED REPORTING BY PUBLICCOMPANIES BY REGION
As noted previously, given the growing numberof jurisdictions around the world using the TCFD
recommendations in developing climate-related
reporting requirements, the Task Force also
used the AI technology to review fiscal year 2022
reports for a larger and more geographicallydiverse set of public companies (around 3,100),
referred to as the expanded population.

(448)

Legend:(455)

Low to high percentage of reporting

The purpose of the review was to provide
insight on TCFD-aligned reporting practices at
an industry level for each region — Asia Pacific,
Europe, Latin America, Middle East and Africa,
and North America. The scope and approach
used for the review is described below, followed
by a summary of the AI review results and key
findings for the expanded population overall
and for each region. At the end of the section,
several examples of TCFD-aligned disclosure areincluded.

Key Takeaways
Companies in Asia Pacific and Europe had higher levels of reporting on climate-related metrics
than those in North America. For example, 78% of companies in Europe and 49% in Asia Pacificreported their climate-related metrics, while only 35% did so in North America.
Insurance companies had some of the highest levels of disclosures in Latin America and Europe but
some of the lowest levels in Asia Pacific and the Middle East and Africa.

8

The Task Force on Climate-related Financial Disclosures

Key Takeaways (continued)
Across all five regions, technology and media companies had significantly lower levels of disclosurecompared to companies in other industries.
Across all five regions and industries, the resilience of companies’ strategies under different
climate-related scenarios had the lowest level of disclosure. In all regions except Europe, there wasat least one industry in which none of the companies reviewed reported this information.

Scope and ApproachA.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

To review reports of the expanded populationof companies, the Task Force used the same
AI technology and followed the same generalapproach described in the previous section.
The one difference relates to the scope of
public companies included in the review. The
Task Force began with the 1,365 companies
used in the review of the past three fiscal yearsof reporting, which was originally identified
using specific size thresholds so that only thelargest companies were included. 25 To achieve
statistically significant AI review results at anindustry level for each region, the Task Force
had to supplement the AI review population
with an additional 1,748 companies, which
required including companies of all sizes. In
addition, because the AI technology cannot
process reports in languages other thanEnglish, the number of companies that could be
included in the reviews for Asia Pacific, Europe,
Latin America, and the Middle East and Africa
was smaller than it otherwise would be. In fact,
there were not enough companies with reports
in English to provide statistically significant
AI review results for two industries in Latin
America. 26

Summary of Overall AI Review Resultsfor Expanded Population
For companies in the expanded AI review
population, Figure A9, Figure A10 (p. 10), andFigure A11 (p. 10) provide an overview of theoverall AI review results and serve as a basis ofcomparison for the AI review results for eachregion. Figure A9 provides the average numberof recommended disclosures per company foreach industry for fiscal year 2022 reporting,while Figure A10 (p. 10) and Figure A11 (p. 10)
provide the overall AI review results for each of
11 recommended disclosures by industry andregion, respectively, based on fiscal year 2022

Figure A9

Average Number of Disclosures
per Company
Industry

NumberEnergy4.9

Materials and Buildings

4.7

Insurance

3.7

Banking

3.7

Transportation

3.3

Agriculture, Food, and Forest Products

3.0

Consumer Goods

2.8

Technology and Media

1.7

reports. Importantly and as noted in this status
report and previous ones, larger companies
are more likely to disclose climate-related
information than smaller ones. 27 Consequently,
the overall AI review results for the expanded
population are lower than the analogous results
described in the previous section, with the
exception of Strategy c) for companies in Latin
America where the AI review results are thesame in the two populations.
In general, the overall AI review results for the
expanded population follow patterns similar
to the overall AI review results described in
the previous section. For example, companies
in the energy and materials and buildings
industries, on average, disclosed on more of the
11 recommended disclosures than companies
in the other industries; and companies in the
consumer goods and technology and media
industries, on average, disclosed on the fewest.
In addition, companies in Europe had thehighest level of reporting for each of the 11
recommended disclosures.

25

See Appendix 2: Company Selection and AI Review Methodology for more information on the approach for selecting the review population.

26

In Latin America, there were not enough companies with reports in English for the consumer goods and technology and media industries toachieve statistically significant results at an 80% confidence level. This resulted in excluding three companies from Latin America that were partof the 1,365 companies used in the review of the past three fiscal years of reporting and an expanded population of 3,110 companies.

27

See Figure A7 (p. 8) in this report; TCFD, 2022 Status Report, October 13, 2022 (p. 18); TCFD, 2021 Status Report, October 14, 2021 (p. 37); andTCFD, 2020 Status Report, October 29, 2020 (p. 13).

9

The Task Force on Climate-related Financial Disclosures

Figure A10

Disclosure by Industry for Expanded Population: 2022 Fiscal Year Reporting

In

En

M
0)
a
B u te ri
ail d l s
Tr ing andsan( 3 sp (5 4 3
23
o
)
r
)
ta
Ag
tio
r
n
an i cud l tuFo rere , FTesoc
M hn o t ( 3 7 o d ,e d lo0)
Co ia ( 3 g y a8ndn
Go sum 2)
od es r

Governancea) B oard Oversight

41%

43%

58%

61%

40%

31%

19%

35%

b) M
 anagement’s Role

28%

28%

38%

35%

24%

19%

13%

19%

a) R
 isk and Opportunities

52%

45%

54%

55%

33%

32%

17%

28%

b) Impact on Organization

23%

27%

38%

35%

24%

25%

12%

16%

c) R
 esilience of Strategy

5%

6%

10%

9%

4%

6%

2%

4%

a) R
 isk ID and Assessment Proc.

26%

29%

27%

29%

18%

15%

6%

13%

b) R
 isk Management Processes

32%

32%

32%

29%

23%

19%

9%

21%

c) Integration into Risk Mgmt.

25%

21%

20%

16%

13%

9%

4%

8%

43%

40%

58%

63%

43%

42%

30%

43%

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

40%

37%

54%

57%

39%

36%

28%

38%

c) C
 limate-Related Targets

33%

33%

57%

61%

44%

39%

25%

38%

B.
Financial Statement
Considerations

Risk Management

Metrics and Targets a) Climate-Related Metrics

C.
Case Studies on Scope 3
GHG Emissions

37

su

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

Legend:D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

(3

gy
er

ra
n

ce

(4
3

(2

6)
46

g(

A.
State of Climate-Related
Financial DisclosuresnkinStrategy

59)

Recommended Disclosure)

Recommendation

Ba

Percent of Companies1

Low to high percentage of reporting

Figure A11

Disclosure by Region for Expanded Population: 2022 Fiscal Year Reporting
Percent of Companies1

Asia Pacific

EuropeRecommendation

Recommended Disclosure

Governancea) B oard Oversight

37%

b) M
 anagement’s Role

Appendices
Strategy

Risk Management

Metrics and Targets

(724)

(111)

(271)

(1,388)

55%

34%

22%

44%

18%

47%

20%

10%

25%

a) R
 isk and Opportunities

29%

56%

37%

17%

45%

b) Impact on Organization

24%

44%

18%

12%

22%

c) R
 esilience of Strategy

5%

16%

3%

2%

3%

a) R
 isk ID and Assessment Proc.

15%

47%

12%

10%

14%

b) R
 isk Management Processes

24%

43%

25%

15%

20%

c) Integration into Risk Mgmt.

13%

27%

13%

8%

12%

a) Climate-Related Metrics

49%

78%

34%

31%

35%

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

45%

73%

31%

27%

31%

c) C
 limate-Related Targets

34%

73%

38%

22%

38%

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

(616)

Latin
Middle East North
America and Africa America

Legend:Low to high percentage of reporting

10

The Task Force on Climate-related Financial Disclosures

Asia Pacific
The AI review of companies headquartered in
the Asia Pacific region included 724 companies
across 18 jurisdictions. The two jurisdictions
with the largest number of companies includedin the review were China with 161 companies
and Japan with 141 companies as shown in Box
A2. This figure also describes the number ofcompanies included in each of eight industry

groups along with an indication of the size of thecompanies included based on their total assets
for financial institutions and total revenue fornon-financial companies. Financial institutions
ranged in size from about $600 million toaround $5.7 trillion in assets, and non-financial
companies ranged in size from about $100
million to nearly $500 billion in revenue.
Figure A12 shows jurisdictions where theBox A2

Demographics of Companies Reviewed in Asia Pacific
Number by Jurisdiction1

Number and Size Range by Industry

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesFinancial Institutions

NumberTotal Assets ($US billion)

China

161

Min

Median

Japan

141

Max

Banking

92

$5.0

$166

$5,742

Taiwan75

Insurance

66

$0.6

$9

$2,230Hong Kong

70

Revenue ($US billion)
Non-Financial Companies

NumberMin

MedianMax

Ag., Food, and Forest Products

94

$0.3

$4

$73

Consumer Goods

96

$1.2

$3

$156

Energy

88

$0.1

$9

$493

Materials and Buildings

99

$0.3

$7

$172

Technology and Media

96

$0.7

$5

$235

Transportation

93

$0.8

$8

$275

Australia

57

India

55

Thailand32

Indonesia

30

Malaysia

25

South Korea

20

Singapore

20

Philippines

13

Pakistan11

New Zealand

7

Vietnam3

1. In addition, there were two companies from Bangladesh and one company each from Kazakhstan and Sri Lanka.

government or another authority has issued
climate-related disclosure requirementsthat incorporate or draw from the TCFD
recommendations. The governments or otherauthorities in jurisdictions shaded in light blue
or dark blue have issued final climate-related
disclosure requirements, while those shadedin dark gray have issued proposed disclosure
requirements. The types of climate-related
disclosure requirements range from legislationthat applies to public companies to guidelines
issued by a financial regulator that apply to only
select financial institutions. It is important tonote that the Task Force’s review of documents
is limited to those available in English. As aresult, Figure A12 may understate the numberof jurisdictions that have issued TCFD-aligned
disclosure requirements.
The AI review results for companies in Asia
Pacific are shown in Figure A13 (p. 12) and Figure
A14 (p. 12). Overall, companies in the materials
and buildings industry disclosed more TCFDaligned information than companies in the

Figure A12

TCFD-Aligned Disclosure
Requirements
For Jurisdictions in Asia PacificLegendIn Effect
Not in EffectProposedNoneother industries, followed by banks and energy
companies. In addition, the highest level ofreporting was on climate-related metrics (Metrics
and Targets a) for seven of the eight industries.

11

The Task Force on Climate-related Financial Disclosures

Figure A13

Governance
Strategy

Risk Management

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Metrics and Targets

gy

(9

6)

ce

er

su

a) B
 oard Oversight

53%

32%

45%

64%

30%

31%

15%

28%

b) M
 anagement’s Role

26%

11%

24%

30%

14%

14%

7%

14%

a) R
 isk and Opportunities

35%

26%

42%

52%

20%

18%

15%

23%

b) Impact on Organization

26%

12%

36%

39%

19%

27%

15%

17%

Recommended Disclosure

En

In

Recommendation

Ba

nk

in

ra
n

g(

92
)

(6
6

)

Percent of Companies in Asia Pacific1

(8
8)
M
a
B u te ri
il d al s
Tr ing andan s (
99
(9 sp
3)
or )
ta
Ag
tio
r
n
an i cud l tuFo reTere , Fcsoa n h n o t (9 o dd l o 4) ,
M gy
ed
Co
ia
n
G o s u m (9 6
)
od e
s r

TCFD-Aligned Disclosures by Industry for Fiscal Year 2022c) R esilience of Strategy

3%

3%

7%

12%

3%

4%

0%

5%

a) R
 isk ID and Assessment Proc.

30%

14%

17%

30%

8%

11%

4%

8%
22%

b) R
 isk Management Processes

39%

17%

27%

34%

20%

21%

13%

c) Integration into Risk Mgmt.

26%

11%

18%

16%

12%

9%

3%

7%

a) Climate-Related Metrics

68%

30%

61%

81%

31%

45%

30%

43%

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

63%

29%

58%

73%

26%

36%

29%

41%

c) C
 limate-Related Targets

35%

21%

41%

57%

28%

38%

21%

29%

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

Materials and buildings companies, on average,
reported in line with 5.1 of the 11 recommended
disclosures. They also had the highest levelsof reporting on eight of the 11 recommended
disclosures, with the highest on climate-related
metrics (Metrics and Targets a) at 81%, which was
31 percentage points higher than the averagefor the region as shown in Figure A11 (p. 10).
On average, the banks reviewed reported in linewith 4.2 of the 11 recommended disclosures— the second highest of the eight industries
but closely followed by energy companies at
4.1. In addition, banks had the highest levelsof reporting on the three recommended
disclosures under the Risk Management
recommendation — identifying and assessing
climate-related risks; processes for managing
climate-related risks; and how these processes
are integrated into overall risk management.
Technology and media companies, on
average, reported on the fewest number ofrecommended disclosures — at only 1.5. Thisis consistent with the AI review results forthe industry overall as shown in Figure A9 (p.
9). Insurance companies also had relatively
low levels of reporting — at 2.2 of the 11
recommended disclosures on average. Notably,
insurance companies overall — those reviewed
across all five regions — had relatively highlevels of reporting, as shown in Figure A9 (p. 9).
In addition, the insurance companies reviewed
had significantly lower levels of reporting

Legend:Low to high percentage of reporting

Figure A14

Average Number of Disclosures 		per Company
Industry

NumberMaterials and Buildings

5.1

Banking

4.2

Energy4.1

Agriculture, Food, and Forest Products

2.8

Consumer Goods

2.4

Transportation

2.3

Insurance

2.2

Technology and Media

1.5

when compared with the banks reviewed. For
example, 68% of the banks reported on theirclimate-related metrics while only 30% of theinsurance companies did so.

EuropeThe AI review of companies headquarteredin Europe included 616 companies across 37
jurisdictions. The three jurisdictions with thelargest number of companies were the U.K.
with 91 companies, Germany with 65, andSwitzerland with 53, as shown in Box A3 (p.
13). This figure also describes the number ofcompanies included based on their total assets
12

The Task Force on Climate-related Financial Disclosures

Box A3

Demographics of Companies Reviewed in Europe
Number by Jurisdiction1

Number and Size Range by Industry
Total Assets ($US billion)
Financial Institutions

87

$12

$88 $2,949

Insurance46$2$68 $1,002

Non-Financial Companies

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Number Min Median Max

Banking

United Kingdom

91

Germany

65

Switzerland

53

France

49

Italy

45

Revenue ($US billion)

Sweden41

Number Min Median Max

Norway29

Ag., Food, and Forest Products

80

$0.7

$3.0

$99

Finland26

Consumer Goods

78

$0.9

$5.0

$92

Spain

23
21

Energy

78

$1.4

$12.0

$381

Netherlands

Materials and Buildings

95

$0.4

$9.0

$256

Denmark

21
18

Technology and Media

79

$0.1

$0.5

$27

RussiaTransportation

73

$0.8

$4.0

$294

Poland18

Austria

16

Turkey15

1. In addition, there were 14 companies in both Belgium and Ireland; ten companies in Greece; seven in Portugal; six in Romania;
five in Luxembourg; four in Croatia; three companies each in the Czech Republic, Cyprus, and Slovenia; two companies in each of
the following jurisdictions: Estonia, Hungary, Lichtenstein, and Lithuania; and one company in each of the following jurisdictions:
Bulgaria, Faroe Islands, Isle of Man, Jersey, Malta, Monaco, Serbia, and Ukraine.

for financial institutions and total revenue fornon-financial companies. Financial institutions
ranged in size from about $2 billion to nearly $3
trillion in assets, and non-financial companies
ranged in size from about $100 million to nearly$400 billion in revenue.
As described in this status report and previous
ones, European companies on average havehigher levels of TCFD-aligned reporting
than companies in the other four regions. 28
European companies, governments, andregulators have focused on climate-related
reporting issues for several years, well before
the Task Force published its recommendations,which may explain the higher levels ofreporting. Figure A15 shows jurisdictions where
the government or another authority has
issued climate-related disclosure requirementsthat incorporate or draw from the TCFD
recommendations. The governments or otherauthorities in jurisdictions shaded in light blue
have issued final climate-related disclosure
requirements, while those shaded in lightgray have not issued either proposed or final
disclosure requirements. It is important tonote that the Task Force’s review of documents
is limited to those available in English. As aresult, Figure A15 may understate the number

Figure A15

TCFD-Aligned Disclosure
Requirements
For Jurisdictions in Europe

LegendIn Effect
Not in EffectProposedNoneof jurisdictions that have issued TCFD-aligned
disclosure requirements.
Most jurisdictions in Europe have final
requirements that are already in effect. The
European Union (EU) issued requirements
in late 2014 for large companies to disclose
information on environmental (including
climate-related) and other matters beginningin their 2017 financial year reports. 29 Morerecently, the EU issued a directive on corporate
sustainability reporting that builds on therequirements issued in 2014. The U.K. andSwitzerland have also issued climate-related
disclosure requirements.

28

See Figure A11 (p. 10) in this report; TCFD, 2022 Status Report, October 13, 2022 (p. 16); TCFD, 2021 Status Report, October 14, 2021 (pp. 34–35);
and, TCFD 2020 Status Report, October 29, 2020 (p. 14).

29

See European Parliament and European Council, Non-Financial Reporting Directive, October 22, 2014. On June 17, 2019, the European
Commission published additional Guidelines on Reporting Climate-Related Information, which referenced the TCFD recommendations.

13

The Task Force on Climate-related Financial Disclosures

The AI review results for Europe are shown in
Figure A16 and Figure A17. Overall, companies
in seven of the eight industries reviewed
disclosed, on average, in line with at least five of
the 11 recommended disclosures. Companies
in the technology and media industry, on
average, disclosed less than three of the 11
recommended disclosures.

Industry

NumberMaterials and Buildings

7.8

Insurance

7.7

Energy7.7

Banking

6.9

Agriculture, Food, and Forest Products

5.8

Transportation

5.8

Consumer Goods

5.1

Technology and Media

2.7

climate-related scenarios (Strategy c), whichis consistent with the AI review results for theother regions.

Figure A17

TCFD-Aligned Disclosures by Industry for Fiscal Year 2022

F.
Insights Gained and View
on Future Work
AppendicesM
8)a
B u te ri
il d al sia
Tr ngs ndan(95)( 7 sp
3)
or
t
a
Ag
tio
r
n
an i cu
l
d tu
Fo re
re , FTes t ooc(8dan hn od l o 0) ,
M gy
e
Co
di
a
n
G o s um ( 7 9
)
od e
s r
53%

45%

19%

60%

61%

41%

40%

20%

40%

64%

79%

51%

59%

15%

40%

54%

64%

58%

37%

50%

15%

24%
13%

(4
6

)

55%

61%

64%

76%

a) B
 oard Oversightb) M anagement’s Role

Strategya) R isk and Opportunitiesb) Impact on Organization

47%

gy
er

65%

Recommended Disclosure

Governance

(7

ce

87

su
In

68%

Recommendation

Risk Management

ra
n

g(
in
nk

E.
Types of Financial Impact
and Associated Drivers

72%

Ba

D.
TCFD-Aligned Requirements
and Related Initiatives

72%

)

C.
Case Studies on Scope 3
GHG Emissions

En

Percent of Companies in Europe1

8)

B.
Financial Statement
Considerations

Average Number of Disclosures
per Company(7

A.
State of Climate-Related
Financial Disclosures

The highest levels of reporting for eachof the eight industries were on the threerecommended disclosures related to metrics
and targets — namely climate-related metrics;
Scope 1, Scope 2, and Scope 3 GHG emissions;and climate-related targets. More than 75%of the companies in six of the eight industries
reviewed reported their climate-related metrics(Metrics and Targets a). The lowest level ofreporting in each industry was on the resilienceof companies’ strategies under different

Figure A16

46%

c) R
 esilience of Strategy

16%

20%

24%

24%

10%

19%

3%

a) R
 isk ID and Assessment Proc.

63%

72%

56%

67%

45%

35%

14%

31%

b) R
 isk Management Processes

53%

63%

65%

42%

38%

40%

11%

40%

46%

46%

41%

27%

15%

20%

9%

14%

80%

87%

86%

94%

77%

79%

49%

72%

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

77%

83%

81%

88%

71%

70%

46%

68%

c) C
 limate-Related Targets

77%

78%

82%

97%

78%

73%

38%

62%

c) Integration into Risk Mgmt.
Metrics and Targets a) Climate-Related Metrics

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

Notably, nearly all the companies in thematerials and buildings industry reviewed(97%) reported on their climate-related targets,
followed closely by reporting on their climaterelated metrics (94%). In addition, materials
and buildings companies on average reported
in line with 7.8 of the 11 recommended
disclosures — closely followed by insurance
and energy companies, both of which reported
on 7.7 of the 11 recommended disclosures
on average. Companies in the technology
and media industry had the lowest levels ofreporting for all 11 recommended disclosures,
which is consistent with the AI review results

Legend:Low to high percentage of reportingfor technology and media companies overall— those reviewed across all five regions — asshown in Figure A10 (p. 10).

Latin America
The AI review of companies headquartered in
Latin America included 111 companies across
11 jurisdictions. The three jurisdictions withthe largest number of companies were Brazil
with 52 companies, Chile with 18, and Bermuda
with 12, as shown in Box A4 (p. 15). As noted
previously, there were not enough companies
with reports in English in Latin America for the14

The Task Force on Climate-related Financial Disclosuresconsumer goods and technology and media
industries to achieve statistically significant
results. As a result, the analysis covers six
industry groups, listed in Box A4 along with anindication of the size of the companies included.

Financial institutions ranged in size from about$2 billion to more than $400 billion in assets,
and non-financial companies ranged in size fromabout $10 million to over $100 billion in revenue.

Box A4

Demographics of Companies Reviewed in Latin America
Number and Size Range by Industry

Number by Jurisdiction

Total Assets ($US billion)
Financial Institutions

F.
Insights Gained and View
on Future Work
Appendices

18
12

20

$19

$65

$439

Bermuda

14

$2

$12

$48

Argentina

9

Colombia

7

Peru

5

Revenue ($US billion)

B.
Financial Statement
Considerations

E.
Types of Financial Impact
and Associated Drivers

Chile

Banking

Non-Financial Companies

D.
TCFD-Aligned Requirements
and Related Initiatives

52

BrazilMax

InsuranceA.
State of Climate-Related
Financial Disclosures

C.
Case Studies on Scope 3
GHG Emissions

Number Min Median

Number Min MedianMax

Ag., Food, and Forest Products

21

$0.3

$2

$25

Consumer Goods1

—

—

—

—

Energy

19

$1.2

$5

$124

Materials and Buildings

23

$1.0

$4

$44

Technology and Media1

—

—

—

—

Transportation

14

$0.01

$1

$9

Trinidad and Tobago

2

Puerto Rico

2

Jamaica2

Panama1

Cayman Islands

1

1. There were not enough companies to obtain statistically significant results.

Figure A18 shows jurisdictions where thegovernment or another authority has issued
climate-related disclosure requirementsthat incorporate or draw from the TCFD
recommendations. The governments or otherauthorities in jurisdictions shaded in light blue
have issued final climate-related disclosure
requirements. It is important to note that the
Task Force’s review of documents is limited tothose available in English. As a result, Figure
A18 may understate the number of jurisdictions
that have issued TCFD-aligned disclosure
requirements, as it reflects requirements in
Brazil and Columbia only.
The AI review results for Latin America areshown in Figure A19 and Figure A20 (p. 16).
Insurance companies on average reported
on more recommended disclosures thancompanies in the other industries. Insurancecompanies also had the highest level ofreporting on all the recommended disclosures
except two — climate-related targets (Metrics
and Targets c) and the resilience of companies’
strategies under different climate-related
scenarios (Strategy c). Notably, insurancecompanies had the lowest level of reporting on
Metrics and Targets c) across the six industries
reviewed at 21%.
The Latin American banks reviewed had thehighest level of reporting on Metrics and Targets

Figure A18

TCFD-Aligned Disclosure
Requirements
For Jurisdictions in Latin America

LegendIn Effect
Not in EffectProposed
None

Figure A19

Average Number of Disclosures
per Company
Industry

NumberInsurance

6.1

Banking

4.2

Energy3.0

Materials and Buildings

2.8

Transportation

2.0

Agriculture, Food, and Forest Products

1.0c) across the six industries reviewed at 55%. In
contrast, banks overall — those reviewed acrossall five regions — had the second lowest level
15

The Task Force on Climate-related Financial Disclosuresof reporting on Metrics and Targets c), as shownin Figure A10 (p. 10). On average, companies
in the agriculture, food, and forest products
industry reported in line with only one of the

11 recommended disclosures — the lowest of
the eight industries. These companies also had
the lowest level of reporting on nine of the 11
recommended disclosures.

Figure A20

TCFD-Aligned Disclosures by Industry for Fiscal Year 2022

Recommended DisclosureEnMa
B u te ril d ial s
in an
gs d
(2
Tr
3)
an
(1 sp
4)
or
ta
tio
n
Ag
ric
an u
d l tuFo rere , Fst o(2 od

Governancea) B oard Oversight

45%

64%

32%

30%

29%

10%

b) M
 anagement’s Role

30%

50%

16%

17%

7%

5%
19%

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Risk Management

Metrics and Targets

ce

(19
)

(14
)

)
20

Ba

su

er

gy

ra
n

g(

A.
State of Climate-Related
Financial DisclosuresnkinStrategy

1)

Recommendation

In,

Percent of Companies in Latin America1a) R isk and Opportunities

55%

64%

26%

30%

29%

b) Impact on Organization

20%

43%

16%

13%

14%

5%

c) R
 esilience of Strategy

0%

0%

11%

4%

0%

0%

a) R
 isk ID and Assessment Proc.

10%

36%

11%

9%

7%

5%
10%

b) R
 isk Management Processes

30%

57%

16%

30%

7%

c) Integration into Risk Mgmt.

10%

50%

5%

17%

0%

0%

a) Climate-Related Metrics

45%

50%

32%

30%

36%

14%

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

35%

43%

32%

30%

36%

14%

c) C
 limate-Related Targets

55%

21%

32%

48%

36%

24%

Legend:1. The numbers in parentheses represent the size of the review population.

Middle East and Africa
The AI review of companies headquarteredin the Middle East and Africa included 271
companies across 21 jurisdictions. The three
jurisdictions with the largest number ofcompanies were South Africa with 53 companies,
Saudi Arabia with 50, and Israel with 40, as
shown in Box A5. This figure also describes the

Low to high percentage of reporting

number of companies included in each of eightindustry groups along with an indication of thesize of the companies included based on their
total assets for financial institutions and total
revenue for non-financial companies. Financial
institutions ranged in size from about $1 billion
to more than $300 billion in assets, and nonfinancial companies ranged in size from $3
million to over $50 billion in revenue.

Box A5

Demographics of Companies Reviewed in the Middle East and Africa
Number by Jurisdiction1

Number and Size Range by Industry
Total Assets ($US billion)
Financial Institutions

Number Min Median Max

Banking

40

$25

$63

$324

Insurance

36

$0.7

$1

$63

Revenue ($US billion)
Non-Financial Companies

Number Min

Median Max

South Africa

53

Saudi Arabia

50

Israel40

United Arab Emirates

32

Qatar

16

Nigeria

12

Kuwait

12

Egypt

9

Kenya

7

Ag., Food, and Forest Products

37

$0.3

$0.6

$41

Consumer Goods

33

$0.1

$0.6

$12

Jordan7

Energy

32

$0.4

$1.4

$19

Oman

6

Materials and Buildings

42

$1.0

$4.4

$53

Bahrain5

Zimbabwe

4

Zambia4

Morocco4

Technology and Media25$0.003$0.1$5Transportation

26

$0.01

$0.5

$13

1. In addition, there were three companies from Mauritius; two companies each from Botswana and Ghana; and one company fromeach of the following jurisdictions Sudan, Togo, and Uganda.
16

The Task Force on Climate-related Financial Disclosures

Figure A21 shows jurisdictions where thegovernment or another authority has issued
climate-related disclosure requirementsthat incorporate or draw from the TCFD
recommendations. It is important to note that
the Task Force’s review of documents is limited
to those available in English. As a result, Figure
A21 may understate the number of jurisdictions
that have issued TCFD-aligned disclosure
requirements, as it reflects requirements in
Egypt, Kenya, and Mauritius only.

Proposed
None

The AI review results for the Middle East andAfrica are shown in Figure A22 and Figure A23.
Materials and buildings companies, on average,
reported on more recommended disclosuresthan companies in the other industries. These
companies also had the highest level of reportingon eight of the 11 recommended disclosuresand relatively high reporting on climate-related
metrics, GHG emissions, and climate-related
targets at 60%, 57%, and 50%, respectively.

Figure A22

Average Number of Disclosures
per Company
Industry

Companies in the technology and media andinsurance industries, on average, reported inline with less than one of the 11 recommended
disclosures. The lowest level of reporting ineach of the industries was on resilience ofcompanies’ strategies under different climaterelated scenarios (Strategy c). In fact, none of
the energy, transportation, technology andmedia, or consumer goods companies reviewed
reported in line with Strategy c).

NumberMaterials and Buildings

3.9

Banking

2.9Energy2.1

Agriculture, Food, and Forest Products

1.3

Consumer Goods

1.1

Transportation

1.0

Insurance

0.9

Technology and Media

0.5

Figure A23

TCFD-Aligned Disclosures by Industry for Fiscal Year 2022

Recommended Disclosure

Governancea) B oard Oversight

28%

14%

25%

45%

12%

16%

4%

18%

b) M
 anagement’s Role

20%

6%

13%

21%

8%

3%

4%

3%

a) R
 isk and Opportunities

33%

14%

13%

31%

8%

8%

16%

6%

b) Impact on Organization

15%

6%

9%

26%

4%

14%

4%

12%

c) Resilience of Strategy

3%

3%

0%

5%

0%

3%

0%

0%

a) R
 isk ID and Assessment Processes

23%

6%

9%

21%

8%

3%

0%

0%
18%

Risk Management

Metrics and Targets

(3

(3

gy

nk

in
Strategy

ce

g(

40

)

(3

6)

Appendices3)

Recommendation2)
Ma
B u te ri
il d al s
Tr ing andsa(2 nsp (42)
6)
or
ta
tio
Ag
n
ric
an u
d l tuFo reTere , Fcsoan hn o t ( 3 o dd lo 7 ) ,M gy
Co e din
G o s um a ( 2 5
)
od e
s r

Percent of Companies in the Middle East and Africa1

erF.
Insights Gained and View
on Future Work

Not in Effect

En

E.
Types of Financial Impact
and Associated Drivers

In Effectran

D.
TCFD-Aligned Requirements
and Related Initiatives

Legendsu

C.
Case Studies on Scope 3
GHG Emissions

For Jurisdictions in the Middle East and Africa

In

B.
Financial Statement
Considerations

TCFD-Aligned Disclosure
Requirements

Ba

A.
State of Climate-Related
Financial Disclosures

Figure A21b) R isk Management Processes

23%

8%

9%

31%

8%

8%

4%

c) Integration into Overall Risk Mgmt.

20%

3%

6%

12%

12%

3%

0%

3%

a) Climate-Related Metrics

45%

14%

34%

60%

15%

30%

8%

21%

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

40%

11%

31%

57%

12%

24%

8%

12%

c) Climate-Related Targets

28%

6%

28%

50%

12%

19%

0%

18%

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

Legend:Low to high percentage of reporting

17

The Task Force on Climate-related Financial Disclosures

North America

along with an indication of the size of thecompanies included based on their total assets
for financial institutions and total revenue fornon-financial companies. Financial institutions
ranged in size from about $800 million toover $3.5 trillion in assets, and non-financial
companies ranged in size from $5 million tomore than $600 billion in revenue.

The AI review of companies headquarteredin North America included 1,388 companies,
with the majority headquartered in the UnitedStates (1,185), as shown in Box A6. This figure
also describes the number of companies
included in each of eight industry groups

Box A6

Demographics of Companies Reviewed in North America
Number and Size Range by Industry

Number by Jurisdiction

Total Assets ($US billion)
Financial Institutions

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Number Min Median

United States

1,185

Max

Canada183

Mexico20

Banking

227

$4.1

$13

$3,666

Insurance

75

$0.8

$13

$690

Revenue ($US billion)
Non-Financial Companies

Number Min MedianMax

Ag., Food, and Forest Products

138$0.005$0.9

Consumer Goods

152

$0.03

$3.0

$102
$611

Energy

213

$0.3

$3.0

$399

Materials and Buildings

284

$0.9

$4.0

$77

Technology and Media

182

$0.03

$0.7

$394

Transportation

117

$0.01

$3.0

$158

Figure A24 shows jurisdictions where thegovernment or another authority has issued
climate-related disclosure requirementsthat incorporate or draw from the TCFD
recommendations. In Canada — shaded indark blue, the Office of the Superintendentof Financial Institutions issued guidelines
on climate-related risk management for
financial institutions that includes minimum
mandatory climate-related financial disclosure
expectations, which incorporate the Task
Force’s 11 recommended disclosures. 30 In
addition, the Canadian Securities Administration
has proposed mandatory climate-related
disclosures for public companies; and in the
U.S. — shaded in dark gray, the Securities
and Exchange Commission has proposed
rules to enhance and standardize climaterelated disclosures that drew on the TCFD
recommendations.
The AI review results for North America areshown in Figure A25 (p. 19) and Figure A26 (p.
19). Overall, the energy companies reviewed
reported, on average, in line with 4.8 of the
11 recommended disclosures — the highestof all industries reviewed. They were followed
30

Figure A24

TCFD-Aligned Disclosure
Requirements
For Jurisdictions in North America
LegendIn Effect
Not in EffectProposedNoneby materials and buildings companies,
which disclosed 3.9 of the 11 recommended
disclosures on average. Energy companies also
had the highest levels of reporting — acrossthe industries reviewed — on eight of the 11
recommended disclosures. The exceptions wereon the three recommended disclosures related
to risk management — processes for identifying
and assessing climate-related risks; processes

Under the guidelines, “Domestic Systemically Important Banks” and “Internationally Active Insurance Groups” have to report at the end of fiscal
year 2024 and other federally regulated financial institutions have to report at the end of fiscal year 2025.

18

The Task Force on Climate-related Financial Disclosures

for managing climate-related risks; and how
these processes are integrated into overallrisk management. For these recommended
disclosures, the insurance companies reviewed
had the highest levels of reporting.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Figure A25

Average Number of Disclosures
per Company
Industry

Technology and media companies reported lessclimate-related information than companies
in the other industries reviewed. On average,these companies reported on 1.6 of the 11
recommended disclosures. Technology andmedia companies also had the lowest levelsof reporting on seven of the 11 recommended
disclosures; and banks had the lowest levelsof reporting on the three recommended
disclosures under the Metrics and Targets
recommendation. Only 15% of the North
American banks reviewed reported their targets
as compared with 77% of the European banks
reviewed (see Figure A17, p. 14).

NumberEnergy4.8

Materials and Buildings

3.9

Insurance

3.4

Transportation

3.1

Banking

2.3

Consumer Goods

2.1

Agriculture, Food, and Forest Products

2.1

Technology and Media

1.6

Figure A26

TCFD-Aligned Disclosures by Industry for Fiscal Year 2022
Percent of Companies in North America1

Recommended Disclosure

In

En

M
a
B u te ri
il d al s
Tr ings anda((11 nsp 28 4)7 ) or
ta
Ag
tio
r
n
an i cud l tuFo rere , FTesco
M hno t (13 od,e d lo8
ia g y )
Co
(18 a
n
2 nd
G o s um )
od e
s r

Governancea) B oard Oversight

28%

49%

65%

61%

48%

30%

23%

36%

b) M
 anagement’s Role

19%

31%

41%

31%

28%

17%

14%

16%

a) R
 isk and Opportunities

56%

53%

64%

54%

38%

33%

20%

30%

b) Impact on Organization

15%

31%

36%

30%

24%

16%

11%

13%

c) R
 esilience of Strategy

2%

4%

8%

4%

3%

3%

2%

0%

a) R
 isk ID and Assessment Proc.

11%

25%

24%

19%

14%

10%

4%

9%

b) R
 isk Management Processes

23%

35%

27%

23%

21%

11%

8%

11%

c) Integration into Risk Mgmt.

18%

19%

17%

13%

15%

7%

4%

5%

17%

29%

52%

49%

39%

25%

24%

32%

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

16%

27%

47%

43%

37%

22%

23%

27%

c) C
 limate-Related Targets

15%

31%

62%

53%

43%

28%

26%

35%

F.
Insights Gained and View
on Future Work
Appendices

Metrics and Targets a) Climate-Related Metrics

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

The highest level of reporting for companies inenergy, materials and buildings, transportation,and consumer goods was on their boards’
oversight of climate-related issues (Governancea), while the highest level of reporting for banks,
insurance companies, and agriculture, food, andforest products companies was on their climaterelated risks or opportunities (Strategy a). In
addition, in four of the eight industries, over

er

(15
2)

gy

ce

(2
13
)

(7

7)
22

Risk Management

ra
n

g(
Strategy

su

in

E.
Types of Financial Impact
and Associated Drivers

nk

D.
TCFD-Aligned Requirements
and Related Initiatives

5)

Recommendation

Ba

C.
Case Studies on Scope 3
GHG Emissions

Legend:Low to high percentage of reporting

50% of the companies reviewed reported on
Strategy a). For companies in each of the eightindustries, the lowest level of reporting was on
the resilience of their strategies under different
climate-related scenarios (Strategy c). Notably,
none of the consumer goods companies
reviewed and only 2% of the banks reviewed
reported on Strategy c).

19

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures

Examples of Climate-Related Financial
Disclosure

they may help companies generate ideas fortheir own disclosures.

This subsection includes examples of publiccompanies' reporting on information alignedwith one or more of the 11 recommended
disclosures. The Task Force sought to include
examples from a geographically diverse set ofcompanies, covering all five regions and the
11 recommended disclosures. The examples
included are not intended to represent “bestpractice” nor demonstrate disclosures that fully
meet the associated recommended disclosure. 31
Instead, the examples are provided because

Governance Recommendation
Governance a) asks companies to describe theboard’s oversight of climate-related risks andopportunities, and Governance b) asks themto describe management’s role in assessing
and managing those risks and opportunities.
Figure A27 shows a U.S. materials company’s
description of its board oversight andmanagement’s role in assessing and managing
climate-related issues.

Figure A27

Board Oversight and Management’s Role
The Board of
Directors is
responsible for
ensuring there are
adequate policies
and strategies inplace to understandand manage climate
risk while also
seizing the strategic
opportunities
presented by thetransition to a lowcarbon economy.

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Climate change governance
Climate change is a material governance and strategic issue, and the Board of
Directors is responsible for ensuring there are adequate policies and strategies
in place to understand and manage climate risk while also seizing the strategic
opportunities presented by the transition to a low-carbon economy.
The Safety, Health, Environment, Community and Sustainability (SHECS)
Committee assists the Board in overseeing its climate-related performance andgovernance responsibilities. The Risk Committee reviews climate-related risk
and is ultimately responsible for overseeing the embedding of climate risk into
the Enterprise Risk Management (ERM) approach and setting the risk appetite
for the company. The charters for these committees are available in the FY22
Corporate Governance Statement and Director’s Report and at www.simsltd.
com/governance. In practice, all members of the Board participate in eachcommittee meeting, which supports holistic consideration of climate-related
topics.
MANAGING RISK AND OPPORTUNITY
With support and input of the executive leadership team, our chief risk andcompliance officer (CRCO) is responsible for providing and maintaining the
ERM framework, in which climate change risk is considered. Reporting to
the CEO and Board, the CRCO has accountability for oversight of climate
targets and climate-related matters across the company, including monitoring
performance across the business, maintaining the ERM system andperformance disclosure.
Executives are ultimately the risk owners and are accountable for identifying,
managing and monitoring climate-related risks and opportunities within the
ERM framework and risk appetite. Key risks are reported to the Board’s Risk
Committee at least quarterly. The CEO, CRCO and the rest of the executive
leadership team are accountable for the company’s actions and commitments
to embed climate change into our risk management and business strategy.

Appendices

In relation to opportunities, our executive and management teams, under theleadership of the CEO, are responsible for delivering the strategic direction
and goals approved by the Board. These include implementation of climaterelated targets and policy positions, identiﬁcation and management of risks andopportunities, and reporting on these topics to the Board directly and/or throughthe relevant Board committees.

Sims Limited, 2022 Climate Report, p. 13

31

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

20

The Task Force on Climate-related Financial Disclosures

Strategy Recommendation
Strategy a) asks companies to describe thematerial climate-related risks and opportunities
they have identified over the short, medium,and long term. Figure A28 shows the climaterelated risks, associated time horizons, andpotential impacts of an Italian energy company’s
Latin American subsidiary.

Figure A28

Climate-Related Risks and Opportunities
Scenario
phenomena

Acute
PhysicalA.
State of Climate-Related
Financial DisclosuresTimehorizonFrom ashort
period(1 to 3 years)

Category of risks Description of theopportunities
impactImpactModel of management

Risk:
Particularly extreme
and intense weather
events.

Extreme events cancause impacts interms of damage
to property andlack of continuity ofoperations.

The Company adopts the best practices
to manage the return to activity in the
shortest possible time. Furthermore. itworks to implement investment plans
for resilience. With regard to the Risk
Assessment activity in the insurance
area. it manages a Loss prevention
program for Property risks. to value
the main exposures linked to natural
events. together with prevention
activities and internal risk management
policies. In the future. the potential
impacts of trends due to the most
relevant climate variations that will
manifest themselves in the term will be
integrated into the valuations.

MarketRisk/opportunity:
Increased or
decreased demandfor electricity,
increase or decreasein production.

Electricity demandis also affectedby temperature.
fluctuating in which
may affect ourbusiness. Renewableenergy generation canalso be affected bystructural changes inresource availability.

The geographical and technologicaldiversification of the Enel Grouppermits it to mitigate the impact ofchanges (positive and negative) on asingle variable at a general level. To
guarantee that operations always
consider weather and climate events.
a number of practices such as weather
forecasting. real-time monitoring ofplants and long-term climate scenarios
are adopted to identify any chronicchanges in the availability of renewablesources.

Policy andregulation

Risk/opportunity:CO., pricing andemissions policies,
incentives for energy
transition, greater
margin for investment
in renewables andresilience.

The effects of energy
transition andresilience policies
can influence thevolume and return on
investments.

The Company is minimizing its
exposure to risks through strategic
actions focused on investing in
renewables. grids and customers that
permit us to mitigate potential threats
and seize opportunities related to theenergy transition. These activities arecarried out within the framework of
stakeholder dialogue platforms.

MarketRisk/opportunity:
Changes in theprice of commodity:
raw materials andenergy, evolutionof the energy
package, changes inretail consumption,
modification of thecompetitive structure.

Considering
alternative transition
scenarios. theCompany assesses
the impacts of thedifferent trends with
the increase in theweight of renewablesources in the energy
package and theelectrification of final
consumption.

The Company maximizes opportunities
thanks to a strategy aimed at theenergy transition. the electrificationof consumption and the great
development of renewable energy
production.

Product & Services

Opportunity: Greater
margins and more
space to invest
as a result of thetransition, in terms ofelectric transport andnew electrification
technologies andefficiency of final
consumption.

Considering twoalternative transition
scenarios. Enel
Américas assesses
the impact of thedifferent trends inthe electrification of
consumption.

Enel Américas maximizes opportunities
thanks to a strong strategic positioning
on new businesses and services“beyond commodities”.

Technology

Opportunity: Greater
margins and more
space to invest
as a result of thetransition, in terms ofelectric transport andnew electrification
technologies andefficiency of final
consumption.

Faced with thetrend of penetrationof electrificationand efficiency
technologies.
considering twoalternative transition
scenarios. theCompany values theopportunities to scalein current businesses.

Enel Américas maximizes opportunities
thanks to a strong strategic positioning
on its networks.

Extreme events

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

Chronic
PhysicalD.
TCFD-Aligned Requirements
and Related Initiatives
Transition

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Transition

From a long
period(2030-2050)

From ashort period(1 to 3 years)

From anaverageperiod(2025-2029)

AppendicesTransition

Transition

From anaverageperiod(2025-2029)

From anaverageperiod(2025-2029)

Enel Américas, Integrated Annual Report Enel Américas 2022, pp. 132–133
Note: Some content was reformatted in order to fit the page.

21

The Task Force on Climate-related Financial Disclosures

Strategy b) asks companies to describe theimpact of material climate-related risks andopportunities that they have identified on theirbusinesses, strategies, and financial planning.

In Figure A29, a Spanish bank describes thepotential impact of certain climate-related
risk factors on its operations, reputation, andstrategy.

Figure A29

Impact of Climate-Related Risks
Risk type

Potential impact on climate
risk factors

What we’re doing to manage climate risk

Next steps

Operational→ Serious climate events canaffect business continuity,
infrastructure, processes
and headcount at branches
and offices.

→ Climate risk was a mandatory addition
to our scenario analyses.

→ Embed climate risk in
the annual operationaland control risk selfassessment.

→ If energy, water andinsurance prices soar, so will
operational costs.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Reputational

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Appendices→ We’re updating our continuity plan withmore details on the threats of climate
risk.

→ Customers, investors
and other stakeholders
who believe banks aren’t
doing enough to meet lowcarbon targets or their own
public commitments canpose reputational risk.

→ Updated climate and environmental risk
policies and procedures.

→ The Group’s climate
information isconsidered insufficientor misleading, or productannouncements appear tobe “greenwashing”.

→ Strengthen climate and environmental
risk governance, which the Reputationalrisk forum addresses. Formal meetingsscheduled to review reputational issues(including climate matters), involving
the legal, responsible banking, investor
relations, risk and other teams.

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work→ We updated our operational risk
database with a new climate andenvironmental risk metric.

→ Corporate credit committees address
reputational risk when assessing
sensitive transactions that involve
climate and environmental risk.

→ Enhance the operationalrisk that considers
climate risk data.
→ Study external data
sources.
→ Methodology toquantify the andprocedures. reputational
impact of climate andenvironmental risk.

→ Proactive measures that show
Santander supports companies’ green
transition and decarbonization.
Strategic→ The Group’s net-zerofinancing and operations
strategy fails to bringabout enough change andundermines our strategy.

→ Regular monitoring of the strategic‘Climate change’ project, including
KPIs that relate to the Group’s net zero
objectives.

→ Increase granularity ofstressed event impacts
as part of the top risk
identification.

→ Our top risk identification includes a
climate change risk event. We analyse
the potential impact of low-probability
stress scenarios on the Group’s
strategic plans and draw up actionplans accordingly, o budget tracking forinclusion in the strategic risk profile.

→ Update key ESG metrics
according to the Group’s
strategy.

→ Monitoring of ESG initiatives presented
at the CPGF and investors’ forum.

→ Continue to include ESG
factors in comparisonswith peers.

→ Include more ESG factors
in our business model
performance review.

Banco Santander, 2022 Annual Report, p. 496
Note: Some content was reformatted in order to fit the page.

22

The Task Force on Climate-related Financial Disclosures

Strategy c) asks companies to describe theresilience of their strategies under different
climate-related scenarios. In Figure A30, a
Mexican materials and buildings company

describes its business resilience under threedifferent scenarios, including two scenarios
under 2°C.

Figure A30

Resilience of Strategy
SCENARIO NAMESTATED POLICIESSUSTAINABLE DEVELOPMENT

NET ZERO EMISSIONS BY 2050

Short name - external reference scenario

STEPS

SDS

NZE

STRATEGY EFFECTIVENESS: RISKS AND OPPORTUNITIES

RISKS

LOW

PROBABILITY
MED
HIGH

LOW

IMPACT
MED

HIGH

LOW

PROBABILITY
MED
HIGH

LOW

IMPACT
MED

HIGH

LOW

PROBABILITY
MED
HIGH

LOW

IMPACT
MED

HIGH

Reduced market demand for higher-carbon products/
commodities
Physical: Increased business interruption and damage acrossoperations and supply chains with consequences for input
costs, revenues, asset values, and insurance claims
Increased input/operating costs for high carbon activities
under regulated markets (even threats to securing license tooperate)A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Risk of stranded assets: plants that cannot be easily
upgraded and close to end of their lifetime

OPPORTUNITIES
Increased demand for energy-eﬃcient, lower-carbon
products and services
New technologies available at competitive cost that
disrupt markets

Access to competitive energy sources (AF cost)

Opportunity to enhance reputation and brand valueThe
resultsof the ofanalysisthat Cemex’s
carbonstrategy
is in generalrobust.strategy
Cemex is awareThe
results
theconfirm
analysisconfirmthat
Cemex’scarbonis inthatclimate action is the biggest challenge of our times. With the Future in Action program, we remain commitgeneralrobust.
Cemex
is awarethatby 2050.
We will provide greener products and services for a moreted
to becoming
a net-zero
CO2 company
sustainablecircularisworld.
climate andactionthe biggest challenge of our times. With the FutureinActionprogram,weremaincommitted
net-zero
COcomby 47%
 Wewill continue
working toachieve2030 targetof reducingto
ourbecoming
net specific COa2 emissions
2
pared to ourby
1990
baseline;
mid-term
performance
validation toguarantee achievement.
company
2050.
Wewill provide
greener
products
and services for amore sustainable and circular world.
• W e will continue working to achieve 2030 target of reducing our net
specific CO2 emissions by 47% compared to our 1990 baseline; midterm performance validation to guarantee achievement.
• In 2022, Cemex validated its 2050 net-zero CO2 roadmap and its 2030
decarbonization goals under the Science-Based Targets initiative’s(SBTi) recently announced 1.5ºC Scenario.

Cemex validated
its 2050
CO2 roadmap
and itsin
2030
decarbonization
under the• InA2022,
lso, Cemex
expects
tonet-zerocontinue
investingresearchand goals
developScience-Based Targets initiative’s (SBTi) recently announced 1.5ºC Scenario.
ment to deliver innovative building materials and solutions to build
 Also, Cemex expects to continue investing in research and development to deliver innovative building
climate-smart
projects, sustainablebuildings,
andandclimate-rematerials
and solutionsurban
to build climate-smart
urban projects, sustainablebuildings,
climate-resilient
infrastructures,
while capitalizing onwhile
CX Ventures,
Urbanization
Solutions,and strategicUrbanization
partnerships.
silient infrastructures,
capitalizingon
CX Ventures, We
remain committed
to identifying partnerships.
and investing in new technologies needed to achieve our 2050 tarSolutions,and strategic
get, and we expect it will be strengthened in the most carbon-constrained scenarios.
• We remain committed to identifying and investing in new technologies
needed to achieve our 2050 target, and we expect it will be strengthened in the most carbon-constrained scenarios.

CEMEX, 2022 Integrated Report, p. 258
Note: Some content was reformatted in order to fit the page.

Risk Management Recommendation
Risk Management a) asks companies to describe
their processes for identifying and assessing
climate-related risks.

In Figure A31, a Mexican multinational beveragecompany describes its process for identifying
and assessing climate-related physical andtransition risks.

AppendicesFigure A31

Risk Identification and Assessment Processes

TASK FORCE ON
CLIMATE-RELATEDFINANCIALDISCLOSURES(TCFD) REPORT[...] [...]

Risk Management: Processes used by the organization to identify, assess, and manage
climate-related risks
We assess physical and transitional risks and opportunities in line with TCFD recommendations using
a five-step method:
1.
2.
3.
4.
5.

Identification of climate risks and opportunities (qualitative analysis)
Definition of climate scenarios and time horizons
Identification of variables associated with climate scenarios
Estimation of risk and opportunity parameters
Calculation of value at risk from climate change (includes a quantitative estimate of the expected
and stressed impact of risks and opportunities).

Multidisciplinary groups in our operations (consisting of areas such as sustainability, strategic planning,
operations, marketing, finance, corporate affairs, etc.) work together to identify, prioritize, and quantify
the main climate-related risks and opportunities. […]Coca-Cola FEMSA, 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report, p. 1
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

23

The Task Force on Climate-related Financial Disclosures

Risk Management b) asks companies to describe
their processes for managing climate-relatedrisks. In Figure A32, a Chilean company

describes its climate-related risk management
processes.

Figure A32

Risk Management Processes

Riskmanagement
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Our model

Falabella and its subsidiaries operate their businesses in changing
environments. Therefore, they are exposed to various risks that could
adversely impact their business objectives and sustainability. Accordingly,
risk management is required to adequately and continually protect thevalue created.
Our risk management model is based on an Integrated Risk Management
Policy and Internal Audit Policy, which describe our risk prevention andmitigation procedures and guidelines. Both policies apply to all our
subsidiaries, who can issue additional policies and guidelines, provided
they do not contradict these policies.
The Integrated Risk Management Policy was updated in October
2022 and approved by the Board. It was developed from national andinternational risk standards, such as ISO 31000 and COSO ERM 1. It
describes the general guidelines within the risk management model, theresponsibilities of the main positions involved in risk management, how it
operates, communication channels and reporting lines.

We developed various measures to identify,
manage and mitigate the risks facing eachbusiness. We integrated our environmental,social and governance (ESG) risks into
our traditional risk management model, to
produce an overall vision that connects themarket, the local community and the company.
Risk management at Falabella and its
subsidiaries is based on the Institute ofInternal Auditors’ (IIA) “Three Lines Model”,
which identifies the structures and processes
required to achieve their objectives and robust
risk governance. This model is based on a“Tone at the Top” culture that originates with
the Board and senior management, followedby the rest of the organization. The model isbased on: Governance structure, Leadershipand Internal Audit

1 Committee of Sponsoring Organizations of the Tradeway Commission – Enterprise Risk Management
Falabella, Annual Report 2022, p. 50
Note: Some content was reformatted in order to fit the page.

Risk Management c) asks companies to describe
how their processes for identifying, assessing,and managing climate-related risks areintegrated into their overall risk management.

Figure A33 shows an Indian metals andmining company’s description of how climaterelated risks are a part of its enterprise risk
management processes.

Figure A33

Appendices

Integration into Overall Risk Management
Climate Risk Management
Tata Steel uses the company-wide integrated Enterprise Risk Management (ERM) process for managing climatechange risks. The process identifies and assesses business risks through bottom up, top down and outside inperspectives so as to ensure comprehensive risk identification and minimize blind spots. Likelihood, impact, andvelocity scores are assigned for each of the risks post a due-diligence process including scenario. Appropriate early
warning indicators and mitigation strategies are identified for review, including by the Apex Risk Committee andRisk Management Committee (RMC) of the Board.
Tata Steel, Integrated Report and Annual Accounts 2021–22, p. 105
Note: Some content was reformatted in order to fit the page.

Metrics and Targets Recommendation
Metrics and Targets a) asks companies todisclose the metrics they use to assess climaterelated risks and opportunities in line with
their strategy and risk management processes.

Figure A34 (p. 25) shows a South African metals
and mining company’s description of a selectionof its climate-related metrics, including its Scope
1, Scope 2, and Scope 3 GHG emissions.

24

The Task Force on Climate-related Financial Disclosures

Figure A34

Climate-Related Metrics
Climate adaptation, resilience and transition refer to our capacity
to adjust to current and anticipated climate change-related risks,and capitalise on strategic opportunities presented by a low-carbon
and resource-constrained economy.
Two of Exxaro’s strategic objectives — to transition at speed andscale and to be carbon neutral by 2050 — outline our goals andcommitment to fundamentally change our business to positively
respond to the climate change agenda.
Our Climate Change Response strategy, TCFD recommendations,decarbonisation plan (under development for the medium andlong-term targets) and linked STI scheme across the business support
the achievement of these objectives. The principles and mechanisms
to respond to climate change are integrated throughout our businessand are central to our thinking and actions.

We mitigate climate change and its impacts through:• Reducing our carbon footprint, guided by our Climate Change
Response strategy and decarbonisation plan. In the shortterm, our operational energy efficiency projects, renewableenergy self-generation and potential divestment, will resultin emissions reduction of 40% by 2026 for scope 1 and 2.
We are developing the medium and long-term elements ofour decarbonisation plan, including the capital alignment
implications• Measuring, monitoring and reporting data and performance• Incentivising performance through the STI scheme• Prioritising adaptation and resilience of our operations andhost communities• Creating awareness during regular stakeholder engagements• Supporting research and development[...]

Snapshot of our performanceA.
State of Climate-Related
Financial Disclosures

Carbon intensity increased by 0.5% toScope 3 emissions increased by 5% to

5.54tCO2e/kTTM

74 488ktCO2e(2021: 5.51tCO2e/kTTM)

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices(2021: 70 931ktCO2e)

CDP score: B(higher than the coal mining
sector C average)

Scope 1 and scope 2
emissions decreased

R8.9 million invested inby 2.5% to 971ktCO2e(2021: 995ktCO2e)

research and development(2021: R9.5 million)

Exxaro Resources Limited, Exxaro Resources Limited Integrated Report 2022, pp. 105–106
Notes: STI stands for short-term incentive and TTM for trailing twelve-month.
Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

Metrics and Targets b) asks companies to disclose
their Scope 1, Scope 2, and, if appropriate,
Scope 3 GHG emissions. Figure A35 shows a
British consumer goods company’s descriptionof its Scope 1 and Scope 2 GHG emissions overa three-year period as well as its Scope 3 GHG
emissions broken down by categories.

Figure A35

Scope 1, Scope 2, and Scope 3 GHG Emissions
GHG emissions (million tonnes CO2e)

2022
(a)

2021

2020

2022 – 2021
% change

Scope 1 and 2 GHG emissions: Unilever operations (Note 2)

0.62

0.71

0.82

-13%

Scope 3 GHG emissions(b)

33.69

33.03

34.85

2%

Raw materials and ingredients

20.16

19.35

19.32

4%

Packaging materials

4.54

4.60

4.53

-1%
-2%

Downstream logistics and distribution

1.00

1.02

(c)

2.78

Retail ice cream freezers

3.55

3.75

4.01

-5%

Direct consumer use (HFC propellants)

0.82

0.71

0.77

15%

Product end of life
Scope 1, 2 and 3 GHG emissions in scope of net zero target

3.62

3.60

3.44

1%

34.31

33.74

35.67

2%

Scope 3 GHG emissions – indirect consumer use(b)

57.54

64.87

65.76

-11%

Total Scope 1, 2 and 3 GHG emissions

91.85

98.61

101.43

-7%

(a)
(b)
(c)

Measured for the 12 month period ended 30 September.
Measured for the 12 month period ended 30 June.
The change in our logistics and distribution emissions between 2020 and 2021 is a result of a move from using industry-standard global GHG emission conversion
factors to industry-standard regional GHG conversion factors in our calculations.

Unilever, Unilever Annual Report and Accounts 2022, p. 39
Note: Some content was reformatted in order to fit the page.

25

The Task Force on Climate-related Financial Disclosuresdescription of its GHG emissions reduction
targets for both the medium term and longer
term as well as its performance against them.
Of note, the company also disclosed avoided
emissions — expressed as “contribution to CO2
reduction.”

Metrics and Targets c) asks companies to
describe the targets they use to manage
climate-related issues as well as theperformance against those targets. Consistent
with this recommended disclosure, Figure
A36 shows a Japanese technology company’s
Figure A36

Climate-Related Targets
Metrics and Targets Used to Assess and Manage Climate-related Risks and Opportunities
Konica Minolta seeks to achieve Carbon Minus status by actively helping to reduce global CO2 emissions in cooperation with its
stakeholders, especially suppliers and customers. The Group defines “Carbon Minus status" as "contributing more to CO2emissions in areas outside of our responsibility than to CO2 emissions reductions in areas we are responsible for.” Konica
Minolta’s goal is to ensure that the Group contributes to emission reductions for customers and the broader society greater thanthe emissions directly related to its own products and operations (including Scope 1, 2, and 3 emissions). Konica Minolta hopes
to accelerate the effects of decarbonization, broaden its ties with stakeholders, and grow its business together, by not only
fulfilling its social responsibilities but also helping stakeholders fulfill theirs.

A.
State of Climate-Related
Financial Disclosures

Progress toward achieving Carbon Minus
2,067
thousand tons

B.
Financial Statement
Considerations

Parts and materials
procured at
Konica Minolta

CO2 emissions inKonica Minolta
product lifecycle

C.
Case Studies on Scope 3
GHG Emissions

Scope 1,2 and 3
CO2 emissions

Appendices992
thousand
821
790
tons
thousand thousand
tons
tons

Distribution
Sales andserviceUse ofKonica Minolta
products

2005

2019

Contribution to CO2 reduction
outside Konica Minolta
product lifecycle
Contribution to
CO2 reductions
other than
Scope 1, 2 and 3

F.
Insights Gained and View
on Future Work

2023 Target"Carbon Minus"
Status57%
reduction

Production

D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

Medium-Term
Plan 2022

2020

2021

880
thousand
tons

2022

Contribution
Contribution Contribution
to CO2to CO2to CO2
reductions
reductions reductions(579 thousand
tons)(599 thousandtons)(650 thousand
tons)

Eco Vision
2050

60%
reduction

800
thousand
tons

2030

Contribution
to CO2
reductions(800 thousand
tons)

80%

reduction

400
thousand
tons

2050

Increase
Contribution
to CO2
reductions

Konica Minolta, Konica Minolta, Inc. Sustainability Report 2022, p. 68
Note: Some content was reformatted in order to fit the page.

3. TCFD-ALIGNED REPORTING BY ASSETMANAGERS AND ASSET OWNERS

reporting to their clients and beneficiaries andrecommended they use their existing channels offinancial reporting, where relevant and feasible.

When the Task Force published its
recommendations in 2017, it recognized thatreporting by asset managers and asset owners
is intended to satisfy the needs of clients,
beneficiaries, regulators, and oversight bodies
and often follows a format that is generally
different from corporate financial reporting.32
For the purposes of asset managers and asset
owners’ adoption of the recommendations,
the Task Force focused on these organizations’

While the Task Force focused on reporting toclients and beneficiaries, it also recognizedthat many asset managers and asset owners
have a broader range of stakeholders towhich they report climate-related financial
information. 33 In particular, asset managers
that are public companies have two distinct
audiences for their climate-related financial
disclosures. The first audience is shareholders,32

See the Task Force’s 2022 Status Report, October 13, 2022, (p. 30) for more information on asset managers and asset owners, including the typesof reporting channels they may use.

33

TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, October 14, 2021 (pp. 37 and 41–42).

26

The Task Force on Climate-related Financial Disclosures

who need to understand enterprise-levelrisks and opportunities and how they are
managed; and the second is clients, for which
product-, investment strategy-, or clientspecific disclosures are more relevant. For
asset owners, the Task Force recognized thatthey sit at the top of the investment chain andtheir disclosure of climate-related issues — tothe extent possible given existing data andmethodology constraints — allows beneficiaries
and other audiences to assess the asset owners’
investment considerations and approaches toclimate change.
As noted previously, asset managers and asset
owners were excluded from the AI review
A.
State of Climate-Related
Financial Disclosures

Key Takeaways
TCFD Survey

B.
Financial Statement
Considerations

TCFD Survey

C.
Case Studies on Scope 3
GHG Emissions

Asset managers and asset owners indicated the top challenge to climate-related reporting is
insufficient information from investee companies. Asset managers highlighted information frompublic companies as most challenging (62%), while asset owners identified information on private
investments (84%).

Over 40% of the largest asset managers and 30% of the largest asset owners described theirtargets on GHG emissions associated with their assets under management in public reports.

E.
Types of Financial Impact
and Associated Drivers

Appendices

Seventy percent (70%) of asset managers and 84% of asset owners indicated they currently reportclimate-related information to their clients and beneficiaries, respectively.

Over 80% of the largest asset managers and 50% of the largest asset owners reported in line withat least one of the 11 recommended disclosures. Based on a review of publicly available reports,nearly 70% of the asset managers and 36% of the asset owners disclosed in line with at least five of
the recommended disclosures.

D.
TCFD-Aligned Requirements
and Related Initiatives

F.
Insights Gained and View
on Future Workbecause the types of reports needed for analysis
may not be publicly available. To gain insighton these organizations’ current reportingof climate-related financial information totheir clients and beneficiaries, the Task Force
conducted a survey in early 2023. The Task Forcealso reviewed the largest asset managers andasset owners’ publicly available reports to better
understand their climate-related reporting
practices to a broader group of stakeholders.
This subsection describes the scope andapproach used to collect information on asset
managers and asset owners’ reporting practices,summarizes the results from the survey
and review of publicly available reports, andhighlights key findings related to the results.

Just over 20% of the largest asset managers and 14% of the largest asset owners described theweighted average carbon intensity of their funds, products, or investment strategies in public reports.

Scope and Approach: Survey of AssetManagers and Asset Owners
In late February 2023, the Task Force issued asurvey to better understand asset managers
and asset owners’ TCFD-aligned reporting
practices to their clients and beneficiaries,
respectively. 34 The Task Force believes it isimportant to highlight that the survey was
distributed primarily to financial institutions
that signed up for updates on the Task Force’s
website, which means most survey respondents
were familiar with the Task Force’s work. In fact,
93% of the survey respondents indicated they
had implemented the TCFD recommendations
or planned to in the future. Given thecomposition of survey respondents, the Task
Force recognizes the survey results should not
be extrapolated to a broader population ofasset managers and asset owners.
The Task Force distributed the survey to around
1,300 financial institutions, resulting in 150
responses from asset managers and asset
owners. 35,36 The survey asked asset managers
and asset owners about their reporting toclients and beneficiaries, respectively, on
information aligned with the Task Force’s
11 recommended disclosures along withassociated challenges. In addition, as part of thequestions aligned with the three recommended
disclosures related to metrics and targets,

34

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

35

In addition to distributing the survey to financial institutions that signed up for updates on the Task Force’s website, the TCFD Secretariat also
sent the survey to the Principles for Responsible Investment and requested the survey be shared with its signatories.

36

In addition to asset managers and asset owners, 40 organizations began the survey and indicated that they were neither asset managers nor
asset owners and, as a result, were not asked to complete the survey.

27

The Task Force on Climate-related Financial Disclosures

the survey incorporated specific metrics thatare included in the Task Force’s supplemental
guidance for asset managers and asset
owners. 37 Other topics covered include thetypes of reports in which asset managers andasset owners report climate-related financial
information, the amount of their assets undermanagement (AUM) or assets in investment
portfolios, and whether they are implementing
the TCFD recommendations.
Box A7 provides an overview of the compositionof the asset managers and asset owners that

responded to the survey. Asset managers
represented 71% (106) of the responses,
and asset owners represented 29% (44). The
plurality (39%) was headquartered in Europe,
30% in North America, 23% in Asia Pacific, 5%in Latin America, and the remaining 3% in the
Middle East and Africa.
In terms of the size of survey respondents
overall, 77% held $99 billion or less in
AUM. When viewed by organization type, adifferent picture emerges, wherein 81% ofasset manager respondents held $99 billion

Box A7

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

Composition of Asset Manager and Asset Owner Survey Respondents
Percent of Respondents1

Implementing TCFD

Organization Type93%

No (11)

Yes (139)

71%

Base size: 150

Asset Managers (106)29%
Base size: 150

Asset Owners (44)Geographic Distribution of Respondents
Percent of Respondents by Region

Top 5 Countries by Number of Respondents

EuropeUnited States of America

31

United Kingdom			

24

Canada				

11

39%

North America

30%

Asia Pacific23%

Latin America

5%Japan				9Middle East and Africa

3%

Australia				9Distribution by Assets Under Management 2

23%

6%
5%

9%

25%

22%

<$100M

58%<$999M

Asset Managers (106)<$9B

Asset Owners (44)

92%

<$99B

<$499B

87% Insurance Company
Non-Corporate Pension5
65%

Fiduciary Management

442%Fund of Funds
Wealth Management

100%

91%

100%

All

Types of Asset Owners

Offering Multiple Services (92)3

Execution and Advisory Only (14)66%

All Respondents (150)Services Offered by Asset Managers

Other

39%

81%

100%

92%

77%

52%

F.
Insights Gained and View
on Future Work
Appendices

7%

32%

48%
21%

Corporate Pension5

11%

Endowment or Foundation

9%

Real Estate Investment Trust

7%

7%

Sovereign Wealth Fund

2%

13%

Family Office2%

1. The numbers in parentheses represent the number of respondents.
2. The percentages in this chart are cumulative percentages.
3. Respondents could select multiple types of services.
4. Fiduciary management or other outsourced discretionary fund allocation.
5. Pension fund, superannuation, retirement, or provident fund or plan.

37

In addition to climate-related metrics, GHG emissions, and climate-related targets—which are part of the 11 recommended disclosures—thesurvey asked about four other specific metrics as follows: weighted average carbon intensity; the extent to which assets under management orin the investment portfolio are aligned with a well-below 2°C scenario; the extent to which products, funds, or investment strategies are alignedwith a well-below 2°C scenario; and targets related to GHG emissions.

28

The Task Force on Climate-related Financial Disclosuresor less in AUM compared with 66% of asset
owner respondents. Of the asset ownerrespondents, the vast majority were insurancecompanies (48%) and corporate or noncorporate pension funds (32%). For asset
managers, the survey asked about the types ofservices they offer and more than one type ofservice could be selected, with the exceptionof “execution and advisory services only.” Of
the 87% that offered multiple services, 65%
indicated they offered fiduciary management
or other outsourced discretionary fundallocation, 42% indicated fund of funds,
manager of managers, or sub-advised products,
32% indicated wealth management, and theremaining 7% identified other types of services.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Scope and Approach: Review of Largest
Asset Managers and Asset Owners
In addition to the survey — which focused onreporting to clients and beneficiaries, the Task
Force also reviewed large asset managers andasset owners’ publicly available reports to better
understand their reporting practices to a broader
group of stakeholders. The review included
the top 50 asset managers and top 50 asset
owners globally based on their assets undermanagement. The reports reviewed included
the most recent financial filings, annual or
integrated reports, and climate or sustainability
reports published between March 2021 andMarch 2023. The purpose of the review was todetermine whether the organizations reported
information aligned with each of the Task Force’s
11 recommended disclosures.38
As shown in the top two charts in Box A8, thetop 50 asset managers represented 63% or $70
trillion of the total AUM held by asset managers($112 trillion); and the top 50 asset owners
held 35% or $26 trillion of the total AUM heldby corporate and non-corporate pensions,insurance companies, endowments, andreserve/sovereign wealth funds ($75 trillion). 39
The bottom two charts show the geographic
distribution of the survey respondents. The
majority of the top 50 asset managers were
headquartered in North America (82%),
followed by Europe (12%), and then Asia Pacific(6%). There was no representation from Latin
America or the Middle East and Africa. Amongasset owners, a plurality were headquarteredin North America (40%), followed by Asia Pacific(26%), Europe (18%), and the Middle East andAfrica (16%). Similar to asset managers, there
was no representation from Latin America.

Summary of TCFD-Aligned Reporting
The Task Force’s survey asked asset managers
and asset owners whether they currently
report, plan to report, or do not plan to reportclimate-related information to their clientsand beneficiaries, respectively. As shown in
the top charts in Box A9 (p. 30), the majority of

Box A8Composition of Top 50 Asset Managers and Top 50 Asset Owners
Percent of Total Global Assets Under Management of Top 50
Asset Managers

Asset Owners

Appendices
63%($70T)

37%($42T)

Top 5035%($26T)All OtherTop 5065%($49T)All Other

Distribution of Top 50 by Region
Asset Managers

Asset Owners

North America

North America

EuropeAsia Pacific

82%
12%
6%

40%

Asia Pacific26%

Europe18%

Middle East and Africa

16%

38

This approach was not designed to assess the quality or comprehensiveness of the organizations’ climate-related reporting, but rather to provide
an indication of the alignment of information in their publicly available reports with the Task Force’s recommendations.

39

All figures are for 2021. The top 50 asset managers’ AUM was sourced from Pensions & Investments, “The Largest Money Managers,” December
31, 2021. The top 50 asset owners’ AUM was sourced from the Thinking Ahead Institute, The Asset Owner 100, November 30, 2022. Assetmanagers’ total AUM was sourced from Boston Consulting Group, “Global Asset Management 2022: From Tailwinds to Turbulence,” May 25,
2022. Asset managers’ AUM includes professionally managed assets, which can include asset owners’ captive AUM when it is delegated to asset
managers. Asset owners’ total AUM was sourced from the Preqin database.

29

The Task Force on Climate-related Financial Disclosures

respondents indicated they currently reportto their clients or beneficiaries — 70% of asset
managers and 84% of asset owners, and mostof the remainder indicated they plan to report.
Respondents that indicated they do not plan
to report climate-related financial information
to their clients or beneficiaries — 6% of asset
managers (6) and 5% of asset owners (2) — were
not asked to complete questions about theirreporting practices on information aligned with
the Task Force’s 11 recommended disclosures.
The charts in the middle of Box A9 show
the reasons why asset managers and asset
owners report or plan to report climate-related
information to their clients and beneficiaries,
respectively. The most often cited reason by
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendicesasset managers for reporting was that climaterelated risks are material, followed by requests
from clients. For asset owners, the most often
cited reason was tied — at 57% — between
climate-related risks are material and regulators
are or will be requiring such reporting. Whenreviewing both asset manager and asset
owner respondents that indicated one of thereasons for reporting is because of regulatory
requirements, the Task Force found 50% werelocated in Europe, 31% in North America, 18% in
Asia Pacific, and the remaining 1% in the Middle
East and Africa.
The charts at the bottom of Box A9 show two
common reporting channels asset managers

Box A9

Reporting of Climate-Related Information to Clients and Beneficiaries
Percent of Respondents1

Status of Reporting
All Respondents (150)74%

Asset Managers (106)70%
84%Plan to Report

5%

24%

Asset Owners (44)Currently Report

21%

6%
11%

5%

Do Not Plan to Report

Reasons for Reporting or Planning to Report2
Reasons

Asset Managers (100)Requests from Clients or Beneficiaries

55%

Senior Management Priority

45%

Required by Regulators (or Will Be)

41%
35%

Peers Report Information
Currently Report

Asset Owners (42)68%

Climate-Related Risks are Material

16%
8%

40%
52%

11%

5%

57%
5%

5%
5%

57%

10%

48%

7%

5%

Plan to Report

Channels for Reporting to Clients and Beneficiaries3
81%

Asset Managers (74)
Asset Owners (37)
Publicly Available Reports

46%
95%
11%
Reports Available to Clients or Beneficiaries Only

1. The numbers in parentheses represent the number of respondents.
2. Respondents could select multiple reasons.
3. Only respondents that indicated they currently report to their clients or beneficiaries received this question.

and asset owners use to report climate-related
information to their clients and beneficiaries,
respectively — reports that are publicly
available and those that are made available toclients or beneficiaries only. Only respondents
indicating they currently report climate-related
information to their stakeholders were asked
about the reporting channels they use. The
Task Force was interested in understanding
the extent to which asset managers andasset owners use publicly available reports

to communicate climate-related financial
information to their stakeholders. The majorityof both asset managers (81%) and asset
owners (95%) use publicly available reports
to communicate this information. In addition,nearly half of the asset managers (46%)
indicated they communicate to their clients
through reports that are available only to theclients — the vast majority of which are tailoredto the clients’ holdings.
30

The Task Force on Climate-related Financial Disclosures

TCFD-Aligned Reporting by Asset Managers

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

Overall, nearly two thirds of asset manager
respondents indicated they currently report
information in line with at least five of the
Task Force’s 11 recommended disclosures,and 15% indicated they report on all 11. Figure
A37 provides the percent of asset manager
respondents indicating they currently report,
plan to report, do not plan to report, or are
undecided about reporting to their clients foreach of the 11 recommended disclosures.40 Of
those currently reporting, the highest level ofreporting was a tie between descriptions of
the material climate-related issues identified(Strategy a) and climate-related metrics (Metrics
and Targets a) — both at 65%. These were
followed by reporting on Governance b) and Risk
Management a), both at 61%, and Governancea) at 60%. The lowest level of reporting — at
26% — was on the resilience of strategies under
different climate-related scenarios (Strategy c);
however, 32% of asset managers indicated they
were planning to report on this in the future.41

The survey also asked respondents about sevenspecific climate-related metrics and targets, as
shown in Figure A38 (p. 32). The Task Force wasinterested in the level of reporting on certain
metrics included in its supplemental guidance,
including GHG emissions associated with assets
under management and the weighted averagecarbon intensity for each product or investment
strategy.42 Figure A38 (p. 32) shows the percent
of asset managers that indicated they currently
report on each of the seven metrics to theirclients. Just over half of the asset managers(52%) indicated they report on the GHG
emissions associated with their AUM. This
was the most often reported metric, followedby the weighted average carbon intensity foreach product or investment strategy at 45%.
The least reported metric — at 21% — was theextent to which assets under management alignwith a well below 2°C scenario.
In addition to asking respondents about thetypes of climate-related information theyreport to their clients, the survey asked

Figure A37

Asset Managers: Status of TCFD-Aligned Reporting
Recommendation

Recommended Disclosure

Governancea) Board Oversight

Percent for Each Reporting Option
6%10%b) Management’s Role
Strategy

F.
Insights Gained and View
on Future Work
Appendices

Risk Management

5%

a) C
 limate-Related Metrics

0%
Currently Report

Plan to Report

Do Not Plan to Report

52%

13%

65%

25%

5%
6%

c) C
 limate-Related Targets

57%

33%
30%

4%
6%

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

61%

30%

2%
8%

c) Integration into Overall Risk Management

Legend:

28%

2%
7%

b) R
 isk Management Processes

Metrics and Targets

26%
32%

14%

a) R
 isk ID and Assessment Processes

54%

35%

4%
7%

c) Resilience of Strategy

65%

26%

4%
5%

b) Impact on Organization

61%

27%

4%
8%

a) R
 isks and Opportunities

60%

24%

10%
17%
20%

59%

30%
29%

44%

40%

60%

80%

Undecided

100%

Base size: 100

40

See Table A1 (p. 4) for descriptions of each of the Task Force’s 11 recommended disclosures.

41

Nearly 70% of those that indicated they plan to report on Strategy c) currently report on at least one of the other recommended disclosures.

42

TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, October 14, 2021 (pp. 48–49).

31

The Task Force on Climate-related Financial Disclosures

Figure A38

Asset Managers: Currently Report on Select Metrics and Targets
Metrics and Targets

Percent Responding121%a) Alignment with <2°C Scenario: AUM

22%

Alignment with <2°C Scenario: Products and Strategies2

44%

Other Metricsb) GHG Emissions of AUM

52%
45%

WACI: Products and Investment Strategies3
36%c) Targets Related to GHG Emissions
25%

Other Targets
0%A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

20%

40%

60%

80%
100%
Base size: 100

1. The percentages for Metrics and Targets a), b), and c) in Figure A37 (p. 31) are higher than the percentages
for specific metrics associated with Metrics and Targets a), b), and c) in this figure because respondents wereidentified as currently reporting if they indicated reporting at least one of the metrics listed.
2. Alignment with <2°C Scenario: Products and Investment Strategies.
3. Weighted Average Carbon Intensity (WACI).

about challenges in reporting informationaligned with each of the Task Force’s fourrecommendations — Governance, Strategy, Risk
Management, and Metrics and Targets. Figure
A39 list the challenges identified along with theoverall results as well as by recommendation.
Consistent with a similar survey conducted by
the Task Force last year, insufficient informationfrom investee companies and a lack ofmethodologies were the two most frequently
cited challenges.43 Over 70% of asset manager
respondents indicated insufficient information
is a challenge for their reporting in general andespecially for reporting on metrics and targets,and 53% identified a lack of methodologies.

In anticipation that insufficient information
would be identified as a significant challenge
again this year, the survey asked respondents
to indicate whether the issue of insufficient
information related to public companies, private
investments, sources other than these two,or some combination of the three options. Of
those identifying this challenge, 62% indicatedpublic companies, 49% indicated private
investments, and 45% indicated sources otherthan these two.
The Task Force also reviewed asset managers’
reporting on information aligned with its 11
recommended disclosures based on theirsize using AUM. Figure A40 (p. 33) shows thepercent of asset managers in each size category

Figure A39

Asset Managers: Challenges Reporting Climate-Related Information
Percent of Respondents

Governance

Strategy

Risk Mgmt.

Metrics andTargets

Overall

Insufficient Information from Companies

22%

31%

42%

63%

71%

Lack of Methodologies

14%

27%

32%

40%

53%

Lack of Resources

21%

23%

26%

25%

35%

Lack of Expertise and/or Capabilities

13%

13%

15%

16%

25%

Concern about Negative Scrutiny

12%

8%

6%

14%

23%

Lack of Board / Senior Management Support

3%

3%

4%

3%

6%

Challenge

Base size: 100

43

Legend:Low to high percentage of respondents

TCFD, 2022 Status Report, October 13, 2022 (p. 38).

32

The Task Force on Climate-related Financial Disclosuresindicating they currently report on each
recommended disclosure. The largest asset
managers — those with more than $100 billion
in AUM — have the highest percent of reportingon each of the 11 recommended disclosures.
This is generally consistent with the AI review
results for public companies in which 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 smaller
asset managers do not necessarily report lessthan larger ones. For example, asset managers
with between $1 billion and $9 billion in AUM
have higher levels of reporting for eight of 11
recommended disclosures than asset managers
with between $10 billion and $99 billion in
AUM. Notably, only 8% of asset managers with
between $10 billion and $99 billion in AUM
report on Strategy c) compared with 27% ofasset managers with between $1 billion and $9
billion in AUM and 24% for those with less than
$1 billion in AUM.

Figure A40

Asset Managers: Currently Report TCFD-Aligned Information by Size (AUM)
Percent of Respondents1

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Recommendation
Governance
Strategy

Risk Management

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Metrics and Targets>$100B$10–99B

$1–9B

<$1B

a) B
 oard Oversight

72%

58%

57%

57%

b) M
 anagement’s Role

78%

58%

57%

57%

a) R
 isk and Opportunities

83%

54%

65%

62%

b) Impact on Organization

78%

46%

51%

48%

Recommended Disclosure

(18)

(24)

(37)

(21)

c) R
 esilience of Strategy

50%

8%

27%

24%

a) R
 isk ID and Assessment Proc.

72%

54%

68%

48%

b) R
 isk Management Processes

72%

50%

57%

52%

c) Integration into Risk Mgmt.

72%

42%

51%

48%

a) Climate-Related Metrics

78%

63%

62%

62%

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

78%

58%

59%

43%

c) C
 limate-Related Targets

50%

38%

46%

43%

1. The numbers in parentheses represent the number of respondents.

Figure A41 provides a breakdown of the typesof reports in which asset managers indicatedthey currently report, plan to report, do
not plan to report, or are undecided about
reporting climate-related information to theirclients. Most asset managers currently report insustainability reports or reports available only
to their clients — at 60% and 56%, respectively.
Over 35% indicated they report through climate-

Legend:Low to high percentage of respondents

specific reports, while another 26% indicatedthey are planning to report to clients this way
in the future. Very few — 8% — indicated theyreport to clients through their financial filings,
and only 5% indicated they plan to report thisway in the future. Asset manager respondents,
on average, indicated reporting to their clients
through two types of reports.

Figure A41

Asset Managers: Location of Reporting
Percent of Respondents

Reporting Status

Reporting Type1

Currently Report

Plan to Report

Do Not Plan to Report

Undecided

Financial Filling

8%

5%

8%

10%

Annual Report or Integrated Report

32%

14%

13%

11%

Sustainability Report

60%

21%

2%

9%

Climate-Specific Report

37%

26%

12%

15%

Client Report

56%

20%

3%

12%

Other

8%

0%

0%

0%

Base size: 100
1. Respondents could select multiple report types.

Legend:Low to high percentage of respondents by reporting status

33

The Task Force on Climate-related Financial Disclosures

As mentioned previously, the Task Force also
reviewed the largest asset managers andasset owners’ publicly available reports tobetter understand their reporting practices
to a broader group of stakeholders. The Task
Force’s findings from the review of the top 50

asset managers by AUM are described in Box
A10. Notably, 68% of the top 50 asset managers
reported climate-related information in line withat least five of the 11 recommended disclosures— which is generally consistent with the survey
findings, but only 2% reported in line with all 11.

Box A10Top 50 Asset Managers: TCFD-Aligned Reporting1
Reporting Aligned with the 11 Recommended Disclosures
The highest level of reporting for the top 50 asset managers was for Metrics and Targets a) at 70%, followed by a tie
between Governance a) and Governance b) at 64%, as shown in the figure below. The lowest level of reporting was on
the resilience of asset managers’ strategies under different climate-related scenarios — Strategy c) — at 24%, which isconsistent with results from the survey respondents and previous years’ analyses.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Recommendation

Recommended Disclosure

Governancea) Board Oversight

Percent of Organizations Reporting64%64%b) Management’s Role
Strategya) R isks and Opportunities

60%b) Impact on Organization

40%
24%

c) Resilience of Strategy
Risk Managementa) R isk ID and Assessment Processes

56%

b) R
 isk Management Processes

60%c) Integration into Overall Risk Management
Metrics and Targets

52%

a) C
 limate-Related Metrics

70%

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

46%
46%

c) Climate-Related Targets
0%

20%

40%

60%

80%

100%

Reporting on Specific Metrics and Targets

Metrics and Targets

For climate-related metrics and targets, the Task Force
was most interested in those associated with asset
managers’ AUM versus other types (referred to as
operational). 2 As shown on the right, the highest level ofreporting on climate-related metrics was on WACI of AUM
at 30%, followed by WACI on products and investment
strategies at 22%. For climate-related targets, 56% ofasset managers reported on their operational targets vs.
44% on their GHG emission targets for AUM.

<2°C Alignment: AUM

8%<2°C Alignment: Products and Investment Strategies

16%

GHG Emissions of AUM

20%

WACI: AUM

30%

Percent

WACI: Products and Investment Strategies

22%

Targets: GHG Emissions of AUM

44%Targets: Operational

56%

Directional Comparison with Survey Results
Recognizing these results are not directly comparable to the survey results discussed above since survey respondents
varied in size and were subject to self-selection bias, the Task Force instead compared the most and least disclosed
recommended disclosures from the two groups. The groups were aligned on the least reported recommended
disclosure — Strategy c). They were also aligned on the most reported recommended disclosure — Metrics and Targetsa); however, the survey results showed a tie between Metrics and Targets a) and Strategy a) for the most reported
recommended disclosure.
1. The base size for the chart and table in this figure is 50.
2. Operational targets include those related to the organization’s own carbon footprint, including but not limited to carbon neutrality,
energy efficiency, etc.

34

The Task Force on Climate-related Financial Disclosures

TCFD-Aligned Reporting by Asset Owners

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

The Task Force applied the same approachto asset owners’ survey responses as it did
to asset managers’ responses. As such, thefigures included below generally follow thesame structure and order as those on previous
pages.44 Overall, nearly three quarters of asset
owner respondents indicated they currently
report information in line with at least five of
the Task Force’s 11 recommended disclosures,and 40% indicated they report on all 11. Notably,
the percent of asset owners currently reportingon ten of the 11 recommended disclosures was
67% or higher. Figure A42 provides the percent
of asset owners indicating they currently report,
plan to report, do not plan to report, or are
undecided about reporting to their beneficiaries
for each of the 11 recommended disclosures.
Of those currently reporting, the highest levelof reporting — at 83% — was on Governance b),
which was followed by reporting on Governancea) at 79%. A similarly high level of reporting —at 76% — was on Strategy a). The lowest levelof reporting was on Strategy c) — the resilienceof strategies under different climate-related
scenarios, but 59% of respondents indicatedthey currently report this information andanother 24% indicated they plan to. In addition,very few asset owners indicated they were
not planning to report on the recommended
disclosures, with the exception of Metrics
and Targets b) — 12% indicated they were notplanning to report this information in the future.
The survey asked respondents about sevenspecific climate-related metrics and targets,as shown in Figure A43 (p. 36). The Task Forcewanted to understand the level of reportingon certain metrics included in its supplemental
guidance, including GHG emissions associatedwith assets under management and theweighted average carbon intensity for each fundor investment strategy.45 Figure A43 (p. 36) shows

Figure A42

Asset Owners: Status of TCFD-Aligned Reporting
Recommendation

Recommended Disclosure

D.
TCFD-Aligned Requirements
and Related Initiatives

Governancea) Board OversightE.
Types of Financial Impact
and Associated Drivers

Strategy

Percent for Each Reporting Option2%b) Management’s Role

9%0%b) Impact on Organization

10%

2%

Appendices12%c) Integration into Overall Risk Management
Metrics and Targets

2%

a) C
 limate-Related Metrics

12%

10%

0%
Currently Report

Plan to Report

69%

19%
10%

67%

19%
12%

74%

16%

69%

10%
12%
9%

c) Climate-Related Targets

Legend:

74%

14%

5%
5%

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

59%

24%

b) R
 isk Management Processes
2%

74%

14%

5%

a) R
 isk ID and Assessment Processes

76%

14%

0%

c) Resilience of Strategy
Risk Management

83%

10%
0%
7%

a) R
 isks and Opportunities

F.
Insights Gained and View
on Future Work

79%

10%

Do Not Plan to Report

5%
9%

67%

19%
20%

40%

60%

80%

Undecided

100%

Base size: 42

44

The one exception is that there is no figure on asset owners’ reporting on information aligned with the 11 recommended disclosures based on
their size as there is for asset managers (see Figure A40, p. 33) given the lower number of respondents.

45

TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, October 14, 2021 (pp. 41–42).

35

The Task Force on Climate-related Financial Disclosures

the percent of asset owners that indicated they
currently report on each of the seven metrics totheir beneficiaries. Over 60% of the asset owners
indicated they report on the GHG emissions
associated with their assets under management(under Metrics and Targets b). This was the mostoften reported metric, followed by climaterelated targets related to GHG emissions.

A.
State of Climate-Related
Financial Disclosures

In addition to asking respondents about thetypes of climate-related information they reportto their beneficiaries, the survey asked about
challenges they face in reporting informationaligned with each of the Task Force’s fourrecommendations — Governance, Strategy, Risk
Management, and Metrics and Targets. Figure
A44 lists the challenges identified along with theoverall results as well as by recommendation.

Consistent with a similar survey conducted by
the Task Force last year, a lack of methodologies
and insufficient information were the twomost frequently cited challenges by asset
owners. Over 75% of asset owner respondents
indicated insufficient information from investee
companies as a challenge for their reporting in
general and especially for reporting on metrics
and targets.
In anticipation that insufficient information
would be identified as a significant challenge
again this year, the survey asked respondents
to indicate whether the issue of insufficient
information related to public companies, private
investments, sources other than these two,or some combination of the three options. Of
those identifying this challenge, 78% indicatedFigure A43

B.
Financial Statement
Considerations

Asset Owners: Currently Report on Select Metrics and Targets
Metrics and Targets

Percent Responding143%a) Alignment with <2°C Scenario: AUM

C.
Case Studies on Scope 3
GHG Emissions

38%

Alignment with <2°C Scenario: Products and Strategies2

50%

Other Metricsb) GHG Emissions of AUM

64%
48%

WACI: Funds and Investment Strategies

D.
TCFD-Aligned Requirements
and Related Initiatives

60%c) Targets Related to GHG Emissions
38%

Other Targets
0%

20%

40%

60%

80%

100%
Base size: 42

E.
Types of Financial Impact
and Associated Drivers

1. The percentages for Metrics and Targets a), b), and c) in Figure A42 (p. 35), are higher than the percentages for specific metrics
associated with Metrics and Targets a), b), and c) in this figure because respondents were identified as currently reporting if they
indicated reporting at least one of the metrics listed.
2. Alignment with <2°C Scenario: Funds and Investment Strategies.

F.
Insights Gained and View
on Future Work
AppendicesFigure A44

Asset Owners: Challenges Reporting Climate-Related Information
Percent of Respondents

Governance

Strategy

Risk Mgmt.

Metrics andTargets

Overall

Insufficient Information from Companies

21%

33%

36%

71%

76%

Lack of Methodologies

12%

36%

33%

45%

57%

Lack of Resources

19%

19%

29%

31%

45%

Lack of Expertise and/or Capabilities

21%

21%

24%

26%

38%

Concern about Negative Scrutiny

14%

19%

19%

31%

38%

Lack of Board / Senior Management Support

14%

14%

7%

12%

19%

Challenge

Base size: 42

Legend:Low to high percentage of respondents

36

The Task Force on Climate-related Financial Disclosures

public companies, 84% indicated private
investments, and 59% indicated sources otherthan these two. A lack of methodologies was
also identified as a significant challenge by asset
owner respondents, especially for metrics andtargets (45%). The least identified challenge
for reporting in general was a lack of board
or senior management support, which was
identified by 19% of respondents.
Figure A45 provides a breakdown of the typesof reports in which respondents indicatedthey currently report, plan to report, do

not plan to report, or are undecided about
reporting climate-related information to theirbeneficiaries. Most asset owners indicatedthey currently report to their beneficiaries insustainability reports (64%), climate-specificreports (62%), or annual or integrated reports(60%). In addition, 19% indicated they currently
report climate-related information in theirfinancial filings. Asset owner respondents,
on average, indicated reporting to theirbeneficiaries through at least two different
types of reports.

Figure A45

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Asset Owners: Location of Reporting
Percent of Respondents

Reporting Status

Reporting Type1

Currently Report

Plan to Report

Do Not Plan to Report

Undecided

Financial Filling

19%

7%

14%

2%

Annual Report or Integrated Report

60%

7%

12%

5%

Sustainability Report

64%

14%

10%

2%

Climate-Specific Report

62%

12%

5%

5%

Beneficiaries Report

38%

7%

17%

10%

Other

10%

0%

0%

0%

Base size: 42
1. Respondents could select multiple report types.

Legend:Low to high percentage of respondents by reporting status

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

37

The Task Force on Climate-related Financial Disclosures

As mentioned previously, the Task Force also
reviewed the largest asset managers and asset
owners’ publicly available reports to better
understand their reporting practices to abroader group of stakeholders. The Task Force’s
findings from the review of the top 50 asset
owners by AUM — which consisted primarilyof non-corporate pension funds, insurancecompanies, and sovereign wealth funds — aredescribed in Box A11. Overall, 36% of the top
50 asset managers reported climate-related
information in line with at least five of the 11
recommended disclosures, and 8% reported inline with all 11. Notably, the Task Force foundsovereign wealth funds had the lowest levels ofreporting when compared with non-corporate
pension funds and insurance companies.

Box A11

Top 50 Asset Owners: TCFD-Aligned Reporting1
Reporting Aligned with the 11 Recommended Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

The highest level of reporting for the top 50 asset owners was on Metrics and Targets a) at 44%, followed by Governance a),Governance b), and Strategy a) at 36%, as shown below. The lowest levels of reporting were for Strategy c) and Strategy b) at 18%
and 20%, respectively.

Recommendation

Recommended Disclosure

Governancea) Board Oversight36%b) Management’s Role

36%

Strategy

Risk Management

36%b) Impact on Organization

20%c) Resilience of Strategy

18%
24%

a) R
 isk ID and Assessment Processes

34%
28%

c) Integration into Overall Risk Management

D.
TCFD-Aligned Requirements
and Related Initiatives

F.
Insights Gained and View
on Future Worka) R isks and Opportunitiesb) R isk Management Processes
Metrics and Targets

E.
Types of Financial Impact
and Associated Drivers

Percent of Organizations Reportinga) C limate-Related Metrics

44%

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

30%
30%

c) Climate-Related Targets
0%

20%

40%

60%

80%

100%

Percent

Reporting on Specific Metrics and Targets

Metrics and Targets

For climate-related metrics and targets, the Task Force wasmost interested in those associated with asset owners’
AUM versus other types (referred to as operational). 2 As
shown on the right, the highest level of reporting was ontargets for GHG emissions of AUM. Notably, this was morecommonly reported than operational targets. Reportingon WACI for AUM was the lowest with only 4% of the top 50
reporting on this.

<2°C Alignment: AUM

12%<2°C Alignment: Funds and Investment Strategies

14%

GHG Emissions of AUM

14%

Appendices

WACI: AUM

4%

WACI: Funds and Investment Strategies

14%

Targets: GHG Emissions of AUM

30%

Targets: Operational

22%

Directional Comparison with Survey Results
Recognizing these results are not directly comparable to the survey results discussed above since survey respondents variedin size and were subject to self-selection bias, the Task Force instead compared the most and least disclosed recommended
disclosures from the two groups. The groups were aligned on the least reported recommended disclosure — Strategy c). The
groups were not aligned on the most reported recommended disclosure, which survey respondents identified as Governanceb) whereas the most reported item for the top 50 was Metrics and Targets a).
1. The base size for the chart and table in this figure is 50.
2. Operational targets include those related to the organization’s own carbon footprint, including but not limited to carbon neutrality,
energy efficiency, etc.

Case Studies
This subsection includes two case studies— one from a diversified financial services
company that is both an asset owner and asset
manager and the other from an asset manager.
In the case studies, the organizations describe

their respective experiences in implementing
the Task Force’s recommendations, which
are intended to provide practical insights
on and considerations for other asset
managers and asset owners implementing therecommendations.

38

The Task Force on Climate-related Financial Disclosures

Case Study by a South African Asset
Owner and Asset Manager

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Sanlam is a South African diversified financial
services company that is both an asset owner
and an asset manager. We have a significant
commercial presence across the African
continent and global operations in India andMalaysia. We offer a wide range of services toboth retail and institutional clients, including
insurance, asset and wealth management,
financial planning, retirement, credit, andhealthcare solutions. We develop and deliver
these services through five business clusters,
namely Sanlam Investment Group, Sanlam Lifeand Savings, Sanlam Emerging Markets, Sanlam
Fintech, and Santam. We have been a signatory
to CDP since 2007 and were the first South
African private-sector asset owner to become asignatory to the UN Principles for Responsible
Investing (UN PRI).
We recognize that climate change amplifies
existing challenges related to health, safety,
food security, and socioeconomic development.
This is particularly the case in Africa, where we
conduct a significant portion of our business.
Our clients are already experiencing the impactsof climate change, and we are committed to
becoming an African champion supporting
climate action.

F.
Insights Gained and View
on Future Work

Implementing the recommendations of the
TCFD is, in our view, not only about disclosing
the potential financial impacts for Sanlam
but also a key component of furthering ouractions on climate change. This case study
shows our journey and the challenges we
faced as we first disclosed in line with the TCFD
recommendations for our group-wide business,
including for our investment portfolios.

Appendices

Our TCFD Journey

E.
Types of Financial Impact
and Associated Drivers

Sanlam Group began implementing the TCFD
recommendations in 2021. This was followed by
the publication of our Climate Change Resilience
Report in 2022, which disclosed climate-relatedrisks and opportunities in line with the TCFD
recommendations.46 In this inaugural report,
we provided a comprehensive view of ourprogress in aligning our internal processes toenable TCFD-aligned disclosures. The report
also provided a view of our key priorities for46

advancing our TCFD-aligned reporting in our
integrated annual reporting. Our decision to
pursue TCFD-aligned disclosures is based ona joint effort by the sustainability and risks
teams combined with a need to quantify thefinancial impacts of climate-related risks andopportunities, including those in our investment
portfolios.
We began implementing the TCFD
recommendations by analyzing our global
financial services peers’ reporting practices.
This allowed us to gain insights into thebest practices of integrating the TCFD
recommendations in our industry and thenotable gaps in our processes. We also used
our group-wide enterprise risk management
framework — Own Risk and Solvency
Assessment (ORSA) — to quantify the risks ourindustry faces.
We then commissioned a diagnostic analysis
of our readiness for TCFD-aligned reporting,primarily consisting of interviews with internal
stakeholders on current practices. The
diagnostic report helped guide our efforts
and set attainable integration and disclosure
goals. The analysis emphasized the importanceof raising awareness among board members
and executives about climate-related risks
and opportunities and highlighted the need tointegrate climate-related risk considerations
into our business strategy. The analysis further
confirmed the importance of incorporatingclimate-related risk and opportunity
assessments into our ORSA processes.
We developed a coordinated plan of actionin the form of a five-year roadmap to alignwith the TCFD recommendations and to drive
climate action, prioritizing areas where weestimated high levels of potential financial
impacts. The first phase of our roadmap was
to initiate dialogue on climate change withboth our internal business clusters and our
external stakeholders. The subsequent phase— which we are currently in — consists ofsetting up policies and procedures to monitor,
quantify, and manage risks. The final stage ofour roadmap — which starts in 2024 — will
include the ongoing monitoring, reporting,and management of climate-related risks andopportunities.

Sanlam, Climate Change Resilience Report 2021, August 2022.

39

The Task Force on Climate-related Financial Disclosures

Disclosures
For our inaugural report, we prioritizeddisclosures on climate-related information thatwas readily available. For example, we disclosed
the board’s role in the governance of climaterelated risks and opportunities (see Figure A46),
detailing how two committees advise the board
on identifying and managing climate-relatedrisks and opportunities.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesWe also disclosed our practices on risk
management in the same report — as we hadalready integrated our processes for identifying,assessing, and managing climate-relatedrisks and opportunities across the businessthrough our ORSA process (see Figure A47, p.
41). We also detailed how climate-related risks
impacting our strategy were considered in a
top-down manner while those impacting our
day-to-day operations were considered in abottom-up manner.

Overcoming Challenges
We have encountered and overcome various
challenges in our reporting of climate-related
information. This includes complex stakeholder
management given our multiple businessclusters and large number of stakeholders. To
meet the need to bring everyone to the table,
we established open lines of dialogue andactively engaged with investors, regulators,
and our internal teams. We structured theconversations based on the TCFD framework,
which provided a common language fordiscussing the importance of climate-relatedrisks and opportunities. This informed
dialogue helped us understand stakeholders’expectations, which we incorporated into ourreporting process. This collective engagement
has been instrumental in generating the buy-in
necessary to maintain momentum with our
TCFD-aligned reporting.
Another challenge was our stakeholders’varying levels of maturity in understanding
climate-related information. To ensure that
our employees, board, and executives alikeare well-equipped to address climate-relatedrisks relevant to our business clusters, we havedeveloped resources and provided training on
climate-related risk management. For example,
we conducted a webinar on climate-related risk
for the board, strengthening board members’abilities to effectively respond to climate-related
challenges and opportunities.
We also face a challenge regarding the lack ofavailable climate-related data and information,
specifically from our investee companies. For
example, we are actively working through our
Sanlam Investments business to understand theunderlying carbon footprint of our portfolios.
While obtaining comprehensive self-reported
emissions data from our investee companies
is challenging, we are leveraging third-party
climate data providers that enable themeasurement and analysis of our portfolios’
carbon footprints.

Figure A46

Our Board’s Role in Governance of Climate-Related Risks and Opportunities
The following two Board committees provide oversightand support to the Board and advise the Board regarding
environmental (and climate-related) aspects.
••

The Risk and Compliance committee advises and assists
the Board in overseeing risk governance by setting
the direction for how risk management should beapproached and addressed at Sanlam. This includes(among others) the identification, mitigation andmanagement of climate-related risks that the Groupmight be exposed to. The committee meets quarterly
and provides feedback at every Board meeting.
The Social, Ethics and Sustainability (SES) committeemonitors and advises the Board on all ESG matters,
including climate-related risks and opportunities.

The Chairs of both committees are independent nonexecutive directors and have oversight roles in terms ofclimate change. Depending on the nature of the climaterelated matter submitted to either committee, it will note,
provide approval, monitor or advise on the matter andrelevant related issues that might impact the Group and its
material stakeholders. When necessary, these committees
elevate climate-related matters to the Board for its
consideration and/or approval.
Sustainability matters (non-financial and ESG) are consideredfrom a risk, governance, compliance and opportunity
perspective and are channelled into Sanlam’s enterpriserisk management process. Read more about this process,including management’s role in governing climate-relatedrisk, from page 15.

Sanlam, Climate Change Resilience Report 2021, p. 8
Note: Some content was reformatted in order to fit the page.

40

The Task Force on Climate-related Financial Disclosures

Figure A47

Our Risk Management Process
SANLAM’S ORSA PROCESS

Each cluster’s finance and risk committee/forum
maintain risk registers and reports. Quarterly Business
Review (QBR) cluster forums provide financial, strategic,risk and operational feedback to the Sanlam Life andLimited Boards and feedback on sustainability-related
matters, including climate issues. Significant andemerging climate change risks are thus escalated toGroup level via both structures.

The Group risk function manages the ORSA process anddrafts a quarterly Group ORSA Update report, covering
assessments and analysis of the Group’s top-down
strategic risks, bottom-up operational risks, risk profile,approved risk appetite, stress and scenario testing,and projections over the business planning horizon.
After management review, the report is tabled at thequarterly Sanlam Risk and Compliance committee and
Board meetings.

The Group has a specific focus on emerging risks thatform part of the top-down strategic risk assessment
process. Internal and external scanning of emerging risks
is performed quarterly as part of this process. Internalscanning includes input from key subject matter experts
within the Group regarding emerging risks, whereas theexternal scanning process focuses on external industry
and media risk reports.

The Own Risk and Solvency Assessment (ORSA) is an
overarching process that brings together the resultsfrom various processes embedded at the Sanlam Groupand cluster level as part of the Group Enterprise Risk
Management (ERM) framework. The risk in the ORSA takeaccount of Sanlam’s risk profile, approved risk appetiteand business strategy.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

The Group ORSA process is well established andsupported by parallel ORSA processes at cluster level. All
clusters report on assessments of cluster’s strategic risks,
top bottom-up risks, risk profile, risk appetite, emerging
risks, issues, solvency, stress, and scenario testing withforward-looking projections.

C.
Case Studies on Scope 3
GHG Emissions

Sanlam’s Group-wide enterprise risk management (ERM)
process includes the identification and management ofclimate change risks at different organisational levels:

D.
TCFD-Aligned Requirements
and Related Initiatives• Strategic climate change risks are considered using a
top-down approach.
• Operational climate change risks (related to Sanlam’s
day-to-day operations) are considered using a bottomup approach.

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesAs an insurance provider, Sanlam has a specific focus on
emerging risks such as the ones posed by climate change.
These risks are typically outside of the usual frame ofreference and are often unknown.
The Group ERM Forum initiated the process for assessing
the potential size and scope of identified climate-relatedrisks and opportunities. Risks are categorised intoeither general, financial or business-specific risks. A
sub-category of risks is then determined, with feedback
from key business owners, stakeholders and regulation
into primary risk categories such as strategic, market,
operational, reputational or credit risk.
Sustainability risks are filtered into this process andprioritised based on materiality and impact on thebusiness. Sanlam’s risk appetite statement defines thesubstantive financial or strategic impact. The board sets
the risk appetite statement and is the key mechanism forsetting limits for the identified risk categories.

Sanlam, Climate Change Resilience Report 2021, p. 15
Note: Some content was reformatted in order to fit the page.

Lessons Learned
We have learned that assessing the current
capabilities on climate-related information is
an important step toward reporting in line with
the TCFD recommendations. By thoroughly
reviewing our existing processes and identifying
gaps, we developed a targeted and effective
strategy for TCFD-aligned reporting that has also
helped inform our plan for climate action. The
assessment further serves as the foundation for
ensuring that our internal processes generate
relevant information and that our reporting
efforts are meaningful and accurate.

Another important lesson we learned throughimplementing the TCFD recommendations isthat estimating the potential financial impactsof climate-related risks and opportunities fordifferent business clusters and stakeholders
is incredibly important. This exercise helps
us prioritize our efforts, allocate resources
effectively, and develop targeted strategies
to mitigate climate-related risks. Additionally,it enhances our ability to communicate thefinancial implications of climate change on
our business to our stakeholders, thereby
facilitating informed decision-making andfostering transparency.

41

The Task Force on Climate-related Financial Disclosures

In addition, we have learned the importanceof committing to multi-year roadmaps forcontinuous improvement. Climate-related
disclosures and risk management are ongoingprocesses that require regular monitoring,evaluation, and enhancement. By developing
our roadmap, we ensure that reporting in linewith the TCFD recommendations remains apriority and that our efforts are sustained
over time with clear goals, milestones, andallocated resources. It also demonstrates ourcommitment to transparency, accountability,
and resilience in the face of climate change.

Case Study by a Brazilian Asset Manager
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Bradesco Asset Management (BRAM) is a
Brazilian asset manager and a wholly owned
subsidiary of Banco Bradesco. Given theimportance of the financial sector to the wider
economy, it is important for us to actively
address climate-related risks and mobilizefinancial resources to enable the transition to a
low-carbon economy. We believe that disclosureof climate-related information is essential
in ensuring market participants have theinformation they need for decision making.
The content below describes our TCFD journey
as well as two recent developments related toour disclosure of climate-related information inline with the TCFD recommendations. The firstdevelopment is our assessment of potential
impacts of carbon pricing on our investee
companies, and the second is our calculation of
the GHG emissions associated with our assets
under management.

Journey on TCFD-Aligned Climate-Related
Disclosures
Banco Bradesco started its climate journeyover 15 years ago (see Figure A48, p. 43) andhas been making progress in managing risks
and opportunities, initially focusing on its
operations and more recently on transforming
its businesses to support the development of alow-carbon economy. In line with this journey,
BRAM became a signatory to the UN PRI in
2010. In early 2016, an executive director from
Banco Bradesco joined the TCFD as a vice chair;
and we became a TCFD supporter in 2017.
Since then, we have endeavored — throughBanco Bradesco’s group-wide reports — to47

disclose climate-related information in linewith the TCFD recommendations. For fiscal
year 2022 reporting, the climate report —which is referenced several times in Bradesco’s
2022 annual integrated report — addresses
the Task Force’s recommended disclosures.
We have been seeking to incorporate the
TCFD recommendations into our different
departments through in-house activities,
action plans, and participation in internationaland national initiatives. We expanded our
dedicated climate team in 2022, employing evenmore efforts to advance the internalization ofrecommendations.47

Conducting Carbon Pricing Sensitivity Analysis
on Our Investment Portfolios
One of the more significant improvements
we have made recently to our climate-related
disclosures is the analysis of potential impacts
from carbon pricing on our investee companies,
which is in line with the TCFD strategy
recommendation. We have conducted scenario
analysis in order to test the resilience of ourportfolio to potential climate-related issues. For
example, we believe that Brazil might introduce
carbon pricing regulations in the future andhave therefore conducted scenario analysis toprepare our business for the associated risks
and opportunities. The goal of our scenario
analysis was to assess whether the introductionof a regulated carbon market would affect the
net income of our portfolios.
To assess the potential impact of a regulated
carbon market, we developed four GHG
emissions pricing scenarios based on existing
GHG emissions trading systems in othercountries and external studies on carbon
price estimates for the Brazilian economy.
These scenarios covered both the effectsof taxing GHG emissions and introducing a
trading system for GHG emissions. We appliedthese carbon pricing scenarios to our investee
companies to estimate potential financial losses.
Initially, our scope was to evaluate all companies
in our equity and credit portfolios. However,
due to the lack of GHG emissions disclosuresfrom certain companies, we had to reduce
our sample size. Ultimately, we considered
only companies that had published their GHG
emissions for at least one year in the period
between 2016 and 2021.

This refers to BRAM’s exclusive team that conducts all the commitments of the climate agenda, such as TCFD, PCAF, etc.

42

The Task Force on Climate-related Financial Disclosures

Figure A48

Banco Bradesco Journey on the Climate Agenda

We started thecalculation of the GHG
inventory in line with
the GHG Protocol

We joined the
CDP

2006

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

We have
adopted therecommendationsof the Task Forceon Climate-Related Financial
Disclosures (TCFD)

100% of ourfacilities are
now powered byrenewable energy.
We have joined
the Partnership for
Carbon Accounting
Financials (PCAF)

We have drafted
our first Net-Zerosectoral targets

2017

2020

2022

2008

2007

2011

2019

2021

2023

We prepared
our first GHG
emissionsinventory (basedon ISO 14064)
and offset 100%of Scope 1 and 2
emissions for 2006
and 2007

We have become amember of UNEP FI

We have started
offsetting 100% of
operational carbon
emissions (Scopes 1,
2 and 3).

We have joined the
Net-Zero Banking
Alliance

We have released
our first Exercise of
Net-Zero targets

We have structured
the Eco-efficiency
Master Plan
- focused on
operationalemissions

We conducted the 1st
study of financed
emissions of ourloan portfolio

Banco Bradesco, Integrated Report 2022, p. 185
Note: Some content was reformatted in order to fit the page.

Our results indicated that if Brazil were to
introduce a GHG emissions trading system,
78% of the sample portfolio would not besignificantly impacted, 19% would be negatively
impacted, and 3% would have the opportunity
to sell carbon credits. We also found that 35%of the companies in the sample portfolio would
be directly or indirectly affected by fossil fueltaxation. Finally, our analysis identified thatcertain industries — such as oil refining, steel,chemicals, electricity, transport, and food — areat higher risk than others. In 2022, we disclosed
these results in Banco Bradesco’s Integrated
Report and, in 2023, within the Climate Report.48
We are currently in the process of updating theresults of our carbon pricing study, including byusing public data and estimations to address
the lack of company-reported data. We are also
actively working with our investee companies
to improve their disclosures. Conducting
scenario analyses has helped us gain a deeper
understanding of the climate-related risks andopportunities in our portfolio. This has informed
our investment decision-making and has helped
us develop targeted climate engagement
strategies with our investee companies.

Estimating Invested Emissions
We began calculating GHG emissions
associated with our assets under management— which we refer to as our invested emissions— in 2020 and provided our first disclosure on
this topic in Banco Bradesco 2021 Integrated
Report. 49 In that report, we covered our
fixed income and variable income corporate
investment portfolios, as shown in the top
part of Figure A49 (p. 44). The bottom partof Figure A49 (p. 44) shows our invested
emissions calculations per sector. As part of
Banco Bradesco’s commitment to the NetZero Banking Alliance, we have adopted thePartnerships for Carbon Accounting Financials(PCAF) methodology for calculating the GHG
emissions associated with our assets undermanagement. 50 Following PCAF guidance, we
prioritized investee companies’ reported GHG
emissions, which are considered the highestquality data among potential sources of GHG
emissions data. Wherever this information was
not available, we relied on estimates basedon the economic activity of each client. We
estimated Scope 1 and Scope 2 GHG emissions
with internal calculations.

48

See Banco Bradesco, Integrated Report 2021, June 2022 (p. 174) and Banco Bradesco, Climate Report, June 2023 (p. 53).

49

See Banco Bradesco, Integrated Report 2021, June 2022 (p. 195).

50

Partnership for Carbon Accounting Finance. The Global GHG Accounting and Reporting Standard Part A: Financed Emissions. Second Edition,
December 19, 2022.

43

The Task Force on Climate-related Financial Disclosures

Figure A49

Disclosure of Our Invested Emissions

Disclosure of Our Invested Emissions
Invested emissions
Disclosureof Our Invested Emissions
For investments
by Bradesco
Asset Management, we also calculated invested emissions related toInvestedemissionsDisclosure
ofmanaged
Our Invested
Emissionsﬁxed income and variable income portfolios for the years 2021 and 2022.
For
investments
managed by Bradesco Asset Management, we also calculated invested emissions related toInvestedemissions
For thecalculationsof the income
investedportfolios
portfolio,for
wethe
used
the2021
Unlisted
ﬁxed
incomeand variable
years
and Equity
2022. asset class of the PCAF methodology.
For
investments
managedby
Bradesco
Asset
Management,
wealso
calculated
investedemissionsrelatedto
For thethe calculations
oil and gas andminingsectors,
we calculated
3 using Equity
clientdata,
available,
andthe PCAF
For
of theinvested
portfolio,
we usedscope
the Unlisted
assetwhenclass ofthe PCAF
methodology.
ﬁxed
incomeandremainder,
variable income
portfolios
for the
years
2021
and
2022.
databasefor theresultingin 3.2 MtCO
and
130K
tCO
e
(2021)
and
2.4
MtCO
and
90K
tCO
e
(2022),
2222For
the oil and gas and mining sectors, we calculated scope 3 using client data, when available, and the PCAF
respectively.
For
the calculations of the invested portfolio, we used the Unlisted Equity asset class of the PCAF methodology.
database for the remainder, resulting in 3.2 MtCO2 and 130K tCO2e (2021) and 2.4 MtCO2 and 90K tCO2e (2022),
EMISSIONS– BRADESCOASSETsectors,
INVESTMENTS– TOTALFor
the oil andgas and mining
we calculated
scope 3 using client data, when available, and the PCAF
respectively.
database for the remainder, resulting in 3.2 MtCO2 andDec/2021
130K tCO2Dec/2022
e (2021) and 2.4 MtCO2 and 90K tCO2e (2022),
EMISSIONS– BRADESCO ASSET INVESTMENTS – TOTAL
Valueof the portfolio evaluated (R$ billion)
92.8
126.5
respectively.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Dec/2021 Dec/2022
Financed
Emissions– ScopesASSET
1 and 2 (millions of tCO–2e)TOTAL
1.2
1.1
EMISSIONS– BRADESCO
Value of the portfolio
evaluated (R$INVESTMENTS
billion)
92.8
126.5
Dec/2021
Coverage of ﬁxed and variable income portfolios (%)
100 Dec/2022
100
Financed Emissions – Scopes 1 and 2 (millions of tCO2e)
1.2
1.1
Value of the portfolio evaluated (R$ billion)
92.8
126.5
Coverage of ﬁxed and variable income portfolios (%)
100
100
EMISSIONS– BRADESCO
Financed Emissions– ScopesASSET
1 and 2INVESTMENTS(millions of tCO–2e)SECTORAL 1.2
1.1
Total balance
Scopes 1 and
2Emission Intensity Average Analysis
Coverage of ﬁxed and variable income portfolios(%) covered
100
100
EMISSIONS – BRADESCO ASSET INVESTMENTS– SECTORALEmissions (MtCO2e)(R$ billions)(MtCO2e/R$)
Quality Score
Total
balance covered
Scopes2
Emission
Sector/Year
2021
2022
2021 1 and
2022
2021 Intensity
2022 Average2021 Analysis
2022
EMISSIONS– BRADESCO ASSET INVESTMENTS– SECTORAL(R$ billions)
Emissions(MtCO2e/R$)
Quality2e)Agriculture
0.16
0.16
0.02 (MtCO
0.02
0.10
0.10
1.5 Score
1.5
Total
balance covered
Scopes2
Emission
Sector/Year
2021
2022
2021
2022
2021
2022
2021
2022
Aluminum
0.15
0.11
0.02 1 and
0.02
0.16 Intensity
0.16 Average
1.0 Analysis
1.0(R$ billions)0.16
Emissions(MtCO(MtCO e/R$)
QualityScore
2e)Agriculture
0.16
0.02
0.02
0.10
1.5
1.5
Iron and Steel
0.60
0.35
0.12
0.07
0.20 2 0.10
0.20
2.9
2.9
Sector/Year
2021
2022
2021
2022
2021
2022
2021
2022
Aluminum
0.15
0.11
0.02
0.02
0.16
0.16
1.0
1.0
Power Generation
10.43
14.11
0.45
0.56
0.04
0.04
2.2
2.7
Agriculture
0.16
0.16
0.02
0.02
0.10
0.10
1.5
1.5
Iron
Steel
0.60
0.35
0.12
0.07
0.20
0.20
2.9
2.9
Real andEstate(commercial/residential)
1.24
1.11
0.00
0.00
0.00
0.00
3.3
3.2
Aluminum
0.15
0.11
0.02
0.02
0.16
0.16
1.0
1.0
Power
10.43
14.11
0.45
0.56
0.04
0.04
2.2
2.7
Oil andGeneration
Gas
5.44
3.41
0.33
0.21
0.06
0.06
2.2
2.4
Iron
and
Steel
0.60
0.35
0.12
0.07
0.20
0.20
2.9
2.9
Real
Estate(commercial/residential)
1.24
1.11
0.00
0.00
0.00
0.00
3.3
3.2
Transport
2.38
4.31
0.03
0.06
0.01
0.01
1.9
2.3
Power
Generation
10.43
14.11
0.45
0.56
0.04
0.04
2.2
2.7
Oil
and
Gas
5.44
3.41
0.33
0.21
0.06
0.06
2.4
Mining
2.63
1.82
0.05
0.04
0.02
0.02
2.7
2.4
Real
Estate (commercial/residential)
1.24
1.11
0.00
0.00
0.00
0.00
3.3
3.2
Transport
2.38
4.31
0.03
0.06
0.010.011.92.3Others
69.84
101.2
0.13
0.15
Oil
and Gas
5.44
3.41
0.33
0.21
0.06
0.06
2.2
2.4
Mining
2.63
1.82
0.05
0.04
0.02
0.02
2.7
Note: Bradesco Asset was not exposed to the 2.38
coal and cementin 2021 and2022. 0.01
Transport
4.31 sectors0.03
0.06
0.011.92.3Others
69.84
101.2
0.13
0.15
Mining
2.63
1.82
0.05
0.04
0.02
0.02
2.7
2.4
Note: Bradesco Asset was not exposed to the coal and cement sectors in 2021 and 2022.
Others
69.84
101.2
0.13
0.15
Note: Bradesco Asset was not exposed to the coal and cement sectors in 2021 and 2022.

Banco Bradesco, Integrated Report 2022, p. 196
Notes: The PCAF methodology requires the inclusion of Scope 3 GHG emissions for the oil, gas, and mining sectors for reports published in 2021
onwards, with additional sectors being added from 2023.
Some content was reformatted in order to fit the page.

Appendices

The key challenge we have faced is the limited
availability of climate-related disclosures,
specifically data on GHG emissions from
our investee companies. We have also faced
obstacles in adapting the PCAF methodology to
Brazilian companies given the country’s unique
GHG emissions context. While many countries
may have a majority of GHG emissions emitted
by the energy sector, in Brazil, land use is aparticularly significant source. Estimating GHG
emissions associated with land use requires
additional data and more-complex calculations
and estimations. The lack of company
disclosures has made it challenging for us tomake further advancements in how we calculate
our invested emissions. To overcome thesechallenges, we rely on the support of a technicalclimate consultancy to assist in estimations.

44

The Task Force on Climate-related Financial Disclosures

We also engage with our investee companies
as part of our climate strategy to reduce
GHG emissions and improve climate-related
disclosures. To prepare for engagement, we
actively train our employees. For example, we
educated BRAM employees about our invested
emissions and the climate-related risks in ourinvestments. BRAM analysts and portfolio
managers were also trained on how to engage
with investee companies on climate-related risk
management, including transition planning.
This supports our role in enabling the transition
to a lower-carbon economy and enables us
to continue to advocate for the reporting ofclimate-related information.

Lessons Learned
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Our role as an asset manager places us in aunique position to facilitate positive change
on climate action globally. Often, our investee
companies do not disclose climate-related data,as they are neither familiar with climate-related
reporting nor have the resources to do so. We
have learned that through engagement with
our investee companies, we can influence themto calculate and report their GHG emissions
data, establish climate targets, and join net-zero
initiatives. Engagement has thus driven better
reporting on climate-related information andimproved our own management and disclosuresof climate-related risks and opportunities.
Furthermore, our implementation of the
TCFD recommendations has helped driveinternal alignment with senior leadershipon climate-related issues, which has led to
key strategic business decisions. We have
openly communicated with senior leadershipand the board on climate-related risks andopportunities. For example, we presented
the results of our carbon pricing study.
Leadership’s understanding of and alignment
with our findings led to several important
decisions in terms of managing climate-relatedrisks, including changes to our responsible
investments policy and processes.

We also recognize that it is essential to be
actively involved in global initiatives such as
the TCFD and the United Nations Environment
Programme Finance Initiative in order tokeep abreast of the rapidly evolving reporting
frameworks and regulatory developments.
At a regional level, we are involved in working
groups led by industry associations such
as Investidores pelo Clima, Principles for
Responsible Investment, and Associação deInvestidores no Mercado de Capitais, which
regularly meet to discuss climate-related risks
and governance. Our involvement in these
global and regional initiatives has supported thedisclosure process for the industry as well as
helped us gain important insights that we haveused for our own disclosures.

Examples of Climate-Related Financial
DisclosureThis subsection includes examples of asset
managers and asset owners’ reporting on
information aligned with one or more of the
11 recommended disclosures. The examples
included are not intended to represent “bestpractice” nor demonstrate disclosures thatfully meet the associated recommended
disclosure(s).51 Instead, the examples areprovided because they may help asset
managers and asset owners generate ideas fortheir own reporting.
The examples are divided into two categories —general and U.K. pension schemes. Beginningon October 1, 2021, U.K. pension schemes with
£5 billion or more in assets were required toreport in line with the TCFD recommendations,followed by those with £1 billion or more in
assets on October 1, 2022.52 The last three
examples come from U.K. pension schemes thatare subject to these reporting requirements.

GeneralFigure A50 (p. 46) shows an asset manager’s
interim climate-related targets (Metrics andTargets c) on the proportion of its assets undermanagement initially committed to be managed
in line with net zero.

51

The mention of specific companies does not imply that they are endorsed by the TCFD or its members in preference over other companies of asimilar nature that are not mentioned.

52

See U.K. Parliament, The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021, July 13, 2021.

45

The Task Force on Climate-related Financial Disclosures

Figure A50

Climate-Related Targets
Asset Level 1
Portfolio Coverage Targets

Asset Level 2
Engagement Threshold Targets• Every ﬁve years, meaningfully increase the percentage of• Companies making up 70% of ﬁnanced emissions in material• 100% of AUM in material sectors is considered net zero or• Companies making up 90% of ﬁnanced emissions in material

AUM in material sectors which are considered net zero,aligned or aligning and annually report on progress.

sectors will either be assessed as Net Zero, assessed as aligned
or subject to direct engagement / active management by 2025
sectors will either be assessed as Net Zero, assessed as aligned
or subject to direct engagement / active management by 2030aligned by 2040.

• In support of our clients and investments teams we will

• 100% of assets in material sectors are aligned or achieving

continue to progress collective understanding of Net Zerosolutions as data and methodologies evolve.

Net Zero by 2040, as stipulated in the IIGCC PAII Framework.

Portfolio Level 1
Portfolio Decarbonisation Reference Targets

Coverage of scope 1, 2, and the extent of scope 3 emissions
Our measurements include Scope 1 and 2 top-down portfolio
reduction targets. Given the estimated nature of current scope 3
assessment methodologies available, this measurement is too
immature at this stage to include in portfolio construction against ameaningful net zero target.

• 50% lower carbon footprint as measured by tCO2e per USD mn

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Workprocesses and indicates that climaterelated issues are part of its enterprise risk
management framework.

Figure A51

Risk Identification and Assessment and Integration into Overall Risk Management
Our Enterprise Risk Management Framework incorporates climate change risk, allowing for the different time
horizons over which climate change could impact our business.
ANAGEMENT PRO
CE
KM
SS
RIS

Business and risk strategy alignment
for climate change risk

Climate Change Risk Appetite andPreference Statement

STRATEGYAND
BUSINESSPLANNINGSKRI TIT
PE

AP

E

R
A ES
RI S
O AN
TE D
ST
ING

ST
EN

SC

We acknowledge the science of climate change and the economic
and social implications of the transition from fossil fuels. We
strive to address climate change risks timeously. Our targets andcommitment to reducing carbon emissions aim to measure andmanage financial and non-financial climate change risks andreduce our carbon-based and fossil fuel footprint. We work towards
managing our exposure to the domestic fossil fuel industry in linewith our national policy and international good practice. We seek
to grow our renewable energy and green bonds exposure. Ourcommitment to working with our customers ensures their right to

GROWTHTARGETSFRAMEWORK

MENT
URE E
AS
NS
ME ESPOSK D R
RI AN

We integrate the outcomes of our climate change risk
assessment into our business and risk strategy. These informour response to ensure we remain within our risk appetite andcapitalise on climate-related opportunities.

We use impact and vulnerability assessments to understand our
climate change risks and opportunities and to inform our climate
strategy and target-setting processes. We categorised the risks andopportunities within each segment using the TCFD framework andscored them according to the existing Group risk-scoring process.

RISK

NTIFICATION
IDE

NT
ME
GE
NA
MA

AppendicesFigure A51 provides a description of an asset
owner’s reporting on Risk Management a) andc). This example provides an overview of theasset owner’s risk identification and assessment

FO
U RM
RD AN
LES CED.
TCFD-Aligned Requirements
and Related Initiatives

Invesco Ltd., 2022 Taskforce on Climate-related Financial Disclosures Report, p. 45
Note: Some content was reformatted in order to fit the page.

R
PE H

N
IN G
G

C.
Case Studies on Scope 3
GHG Emissions

Whilst scope 3 emissions are not considered in the top-down
portfolio emissions target (i.e., 50% reduction by 2030), they still are
crucial in assessing the alignment of companies at the issuer-level.

FIN
AN
CIA
L

B.
Financial Statement
Considerations

invested by 2030 versus 2019 baseline of 73 tCO2e per USD mn• Net zero by 2050 against 2019 baseline

BUSINESS AN
D
STRATEGY ALIG RIS
NM K
EN
T

A.
State of Climate-Related
Financial Disclosures

RI T
TO R
NI PO
M O REDAN

is appropriately managed.
We will refine this Climate Change Risk Preference Statement as theGroup progresses in setting measurable targets.

Climate change risk identification
We conducted an extensive risk identification exercise acrossour business to understand the climate change risks we face.
Due to the uncertainty and evolving nature of climate changerisks, we consider climate change in our standard and emerging
risk methodologies.
The Old Mutual Risk Classification Model comprises 12 level 1 risk
categories, which are broken down into level 2 categories and, whereappropriate, level 3 categories. Climate change is a separate risk
category (level 2 external risk) but may also be a cause for other risk
types, such as non-life insurance risk and operational risk. We havefurther categorised climate change into physical risk and transition risk.
Climate change risk (level 2) – The risk that global warming,
extreme weather events and the transition to a low carbon economy
will adversely impact economic growth, asset valuations andinsurance profitability. These, in combination with increased costs ofdoing business could threaten the resilience and sustainability of ourbusiness.

We expanded on our initial impact and vulnerability assessments
through climate scenario planning workshops. The goal of theseworkshops was to identify strategic responses to the risks andopportunities that would generate value across a range of plausible
future scenarios.
When necessary, we partner with climate specialists to ensure bestpractices are applied to the various dimensions of climate changerisk. These dimensions include:» Evaluating the carbon intensity and implied temperature rise of
our investment portfolios» Improving our operational carbon footprint» Deepening our understanding of our natural catastrophe
modelling and quantitative and scenario modelling capabilities
We believe we have made tangible progress in furthering ourunderstanding of climate change risk and our mitigation plansacross these dimensions.

Climate monitoring and reporting
Physical risk (level 3) – Increased damage and loses due to physicalphenomena associated with climate trends (such as changing
weather patterns and sea-level rises) and/or climate events (such as
natural disasters and extreme weather). Physical risks may have a
direct or indirect financial impact, such as property damage leading
to impaired asset value and sovereign risk.
Transition risk (level 3) – Transition to low-carbon economy andthe resulting technology, regulatory and social effects that may
impact the value of assets or the cost of doing business. Transition
risks arise when markets adjust towards a low-carbon economy
due to regulatory and policy changes, disruptive technologies, newbusiness models, shifting sentiment and societal preferences, or
evolving evidence frameworks and legal interpretations.

Climate change risk measurement andresponse
We determine our risk exposure to physical and transition risks
in our areas of operation after considering both the financial
and non-financial impacts on our business. We identity andtrack suitable actions to best mitigate our climate change risks.

We continually monitor our external and internal environment
to understand how it impacts our identified climate changerisks. We identify and monitor appropriate indicators and takeaction as needed. Climate change risks are reported regularly

Climate change risk stress and scenario
testing
We base our internal analysis on the following three NGFS
reference scenarios: orderly transition, disorderly transition, andhot house world. We use the scenarios and their underlying
data sources to better understand our business’ vulnerabilities
to various climate-related risks and opportunities and takemeasures to improve our resilience. Over time, we will introduce
higher granularity to this analysis to accommodate desired
outcomes like the Just Transition.

Old Mutual, Old Mutual Climate Report 2022, p. 19

46

The Task Force on Climate-related Financial Disclosures

U.K. Pension Schemes
Figure A52 shows a U.K. pension fund’sreporting on the potential impact of threedifferent climate-related scenarios on the fund’s
portfolios (Strategy c).

Figure A52

Resilience of Strategy

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Universities Superannuation Scheme, Universities Superannuation Scheme TCFD Report 2022, pp. 16–17
Note: Some content was reformatted in order to fit the page.

47

The Task Force on Climate-related Financial Disclosures

Figure A53 shows a U.K. pension scheme’sreporting on its financed emissions, financed
carbon intensity, and weighted average carbon

intensity as well as benchmarks for each (Metrics
and Targets b).

Figure A53

Portfolio Carbon Footprint Metrics
Equities portfolio: carbon intensity metrics
The December 2021 carbon footprint analysis for our listed Equities aggregate shows substantial
progress from our 2020 footprint analysis, with our weighted average carbon intensity (WACI)
declining by 37 per cent year-on-year. The WACI of the Equity benchmark reduced by over 70 per
cent as a result of the transition to our new climate-aware equity benchmark. This had the direct
PPF Equities carbon metrics

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

350
Tonnes CO2e per $million metricA.
State of Climate-Related
Financial Disclosures

300

F.
Insights Gained and View
on Future Work

257

150
100

243

226

200

154

151

125

122

50

83

70

65
30

0

Benchmarkcarbon emissions(tCO2e/$m
emissionsinvested)(tCO2e/$m invested)

D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

299

250

December 2020

Benchmarkcarbon intensity(tCO2e/$m
intensity (tCO2e/$m
revenues)
revenues)

PPF weighted
average carbon
intensity

Benchmarkweighted averagecarbon intensity

December 2021

Credit portfolio: carbon intensity metrics
This is the second year we have included the corporate bonds in our Strategic Cash, IG Credit, EM
Debt and Absolute Return portfolios as an aggregate. The WACI of our global Credit portfolio
declined by 58 per cent over the year, driven largely by our strategic cash portfolio. The financed
carbon emissions and financed carbon intensity remained largely unchanged.
PPF Credit carbon metrics*

AppendicesTonnes CO2e per $million metric

350
318

300
250

255

200

192

150

204

203

193
133

100
50
0

279

85
53

50

70

BenchmarkBenchmarkcarbon emissions
carbon intensity(tCO2e/$m(tCO2e/$m
emissions
intensity (tCO2e/$m
invested)(tCO2e/$m invested)revenues)
revenues)
December 2020

PPF weighted
average carbon
intensity

Benchmarkweighted averagecarbon intensity

December 2021

Pension Protection Fund, Pension Protection Fund Climate Change Report 2021/2022, p. 20

48

The Task Force on Climate-related Financial Disclosures

Figure A54 shows a U.K. pension scheme’sreporting on its risk management activities
related to its funds at different phases — pre-investment, asset management, and divestment
or exit (Risk Management b).

Figure A54

Climate Risk Management in the Investment Process
Avoid
MitigateA.
State of Climate-Related
Financial Disclosures

ExploitB.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Pooled Fund

Portfolios

Pre-Investment

Asset Management

Divestment/Exit

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices
Avoid

Mitigate

ExploitRailways Pension Scheme, Combined TCFD Report 2022, pp. 57–58
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

49

B.
Financial Statement
Considerations

The Task Force on Climate-related Financial Disclosures

B. Financial Statement Considerations

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

When the Task Force published its final
recommendations in June 2017, it recommended
companies include climate-related financial
information in their public annual financial
filings (see Figure B1).53 As part of its efforts
to monitor companies’ progress in disclosing
information aligned with its recommendations
over the past several years, the Task Forcehas found that companies are more likely todisclose such information in their sustainability
reports than in their annual financial filings.54
While the Task Force recognizes the amount ofclimate-related financial information included infinancial filings has increased over the years, it
believes more progress is needed — especiallyon reporting the impact of climate-related
issues on companies’ businesses, strategies,
and financial planning, including the impact
on financial statements (e.g., balance sheets,
income statements), as appropriate.55 Notably,
the ISSB’s reporting standards published earlier
this year require material climate-related
information to be disclosed in “general purpose
financial reports” (e.g., financial filings) andwere built on the concepts underpinning theInternational Financial Reporting Standards(IFRS).56
In November 2019, a member of theInternational Accounting Standards Board (IASB)
published an article — which was inspired bya joint bulletin issued by Australian standard
setters — providing guidance on the applicationof materiality as the term is defined under IFRS
accounting standards and how it relates toclimate-related and other emerging risks.57 The
article, which was later followed by educational
material from the IFRS Foundation, highlighted
that climate-related risks and other emerging
risks are predominantly discussed outside thefinancial statements; however, “qualitative
external factors, such as the industry inwhich [a] company operates, and investor
expectations may make some risks ‘material’
and may warrant disclosures in financial
statements, regardless of their numericalimpact.” 58

Figure B1

Reporting in Financial Filings
In most G20 jurisdictions, companies with public
debt or equity have a legal obligation to disclosematerial information in their financial filings —including material climate-related information.
In its 2017 report, the Task Force indicated its
recommendations should be useful to companies
in complying more effectively with existing
disclosure obligations.
It also noted that disclosure in financial filings
should foster shareholder engagement andbroader use of climate-related financial
disclosures, thus promoting a more informed
understanding of climate-related risks andopportunities by investors and other users.
Furthermore, publication of climate-related
financial information in annual financial filings
should help ensure that appropriate controls
govern the production and disclosure of therequired information.

In addition, the educational material publishedby the IFRS Foundation describes specificaccounting requirements as well as overarchingrequirements that could be relevant forcompanies when considering climate-related
matters. As to the latter, companies are
required to disclose information not specificallyrequired by IFRS accounting standards and notpresented elsewhere in the financial statements
but is relevant for understanding the financial
statements. In other words, companies needto consider whether to provide additional
disclosures when compliance with the specificrequirements in the accounting standards is
insufficient to enable investors
to understand the impact of climate-related
issues on their financial positions andfinancial performance.59
Moreover, regulatory authorities are
increasingly focusing on companies’ inclusionof climate-related financial information in
their financial filings, including in the financial

53

F inancial 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.

54

T CFD, 2018 Status Report, September 26, 2018 (p. 14); TCFD, 2019 Status Report, June 5, 2019 (p. 9); TCFD, 2020 Status Report, October 29, 2020 (p.
12); and Section A.1. TCFD-Aligned Reporting by Public Companies (p. 2).

55

TCFD, 2022 Status Report, October 13, 2022 (p. 63).

56

IFRS, “Ten Things to Know about the First ISSB Standards,” June 27, 2023.

57

T he Australian Accounting Standards Board and Auditing and Assurance Standards Board, Climate-Related and Other Emerging Risks Disclosures:
Assessing Financial Statement Materiality Using AASB Practice Statement 2, December 2018 (republished April 2019).

58

Nick Anderson, IFRS Standards and Climate-Related Disclosures, November 2019.

59

IFRS, Educational Material: Effects of Climate-Related Matters on Financial Statements, November 2020 (republished July 2023) (p. 2).

51

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Workstatements. For example, the U.S. Securities
and Exchange Commission created a task
force in its Division of Enforcement to identify
potential violations including material gaps
or misstatements in companies’ disclosure ofclimate-related risks under existing rules.60
In addition, the European Securities andMarkets Authority included climate-related
matters as one of its priorities for monitoring
and assessing compliance with relevant
reporting requirements in companies’ 2022
financial filings.61 Finally, the U.K. Financial
Reporting Council conducted a review of how
well companies explained the link between
their net-zero targets and transition plans andtheir financial statements when there was areasonable expectation that there could be amaterial impact on the financial statements.62
In light of the above, the Task Force worked
with professionals in accounting and auditing todescribe the following:• s ome of the general factors considered whenincorporating climate-related issues into
financial statements,• c ommon challenges faced in considering theimpact of climate-related issues on financial
statements, and• b rief descriptions of guidance and otherresources companies may find useful whenincorporating climate-related issues into theirfinancial statements.

In addition, several excerpts from companies’
financial filings that show how they described
the impact of climate-related issues on theirfinancial statements are included at the end of
this section.

1. GENERAL FACTORS CONSIDERED
Climate change affects nearly all economic
sectors; and, based on the Intergovernmental
Panel on Climate Change’s (IPCC’s) recent
report, many climate-related risks are higher
than previously assessed and projected longterm impacts are up to multiple times higher
than currently observed.63 In addition, thereport indicated projected adverse impacts
and related losses and damages from climatechange escalate with every increment of global
warming. While many companies recognize
their exposure to climate-related transitionand physical risks and opportunities and makestrategic and operational decisions in light ofthese, many others may not. Given findingsin the recent IPCC report, it is becoming
increasingly important for companies to assess
and address their climate-related issues —which could affect their financial statements.
When it issued its recommendations inJune 2017, the Task Force acknowledged theinterconnectivity of its recommendations withexisting financial statement and disclosure
requirements. In particular, the Task Forcehighlighted specific standards from two
accounting frameworks — the IFRS and U.S.

Key Takeaways
Investors and other users are interested in companies’ disclosure of their assessments andevaluations of assets for potential impairment, contingencies, and useful lives to understand theimpact of climate-related issues on companies’ financial position and financial performance.

Appendices

Under overarching IFRS accounting requirements, a company must consider whether to provide
additional disclosures when compliance with the specific requirements in IFRS standards is
insufficient to enable investors to understand the impact of climate-related issues on its financial
statements.
Developing estimates — including dealing with measurement uncertainty — is a core componentof companies’ financial reporting, but it also presents certain challenges, especially as the level of
uncertainty increases.
It is important that those responsible for preparing, approving, and auditing a company’s financial
statements have sufficient experience with and knowledge of climate-related risks and thecompany’s exposure to such risks when making judgments about their impact on the financial
statements.

60

Securities and Exchange Commission, “Enforcement Task Force Focused on Climate and ESG Issues,” Accessed July 24, 2023.

61

European Securities and Markets Authority, European Common Enforcement Priorities for 2022 Annual Financial Reports, October 28, 2022.

62

Financial Reporting Council, CRR Thematic Review of Climate-Related Metrics and Targets, July 26, 2023.

63

Intergovernmental Panel on Climate Change, Summary for Policymakers in Climate Change 2023: Synthesis Report, March 20, 2023.

52

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Generally Accepted Accounting Principles (USGAAP).64 The standards that were highlighted
in 2017 related to assessing the impairmentof assets and accounting for provisions anddisclosing contingencies.65,66 Since the 2017
report was published, several organizations
have provided guidance on incorporatingclimate-related issues into the financial
statements, as described in Section B.3.
Resources on Climate-Related Issues in Financial
Statements. The Task Force drew from thesein identifying key considerations that may
be useful to companies as they assess andincorporate the impact of climate-related issues
on their financial statements. One example
of such guidance is educational material
published by the IFRS Foundation that wasdeveloped to help companies determine how to
consider climate-related issues when preparing
their financial statements according to IFRS
accounting standards.67 Some of the standards
included were International AccountingStandard (IAS) 36 Impairment of Assets, IAS
16 Property, Plant and Equipment, and IAS 37
Provisions, Contingent Liabilities and Contingent
Assets, all of which are described below.68
Prior to the discussion of the accounting
standards noted above, it is important tohighlight that a core component of financial
reporting is developing estimates, including
dealing with measurement uncertainty.
Developing estimates presents certain
challenges, especially as the level of uncertainty
increases (see Figure B2 for more information).69
Recent examples of events that introduced
significant uncertainty — and associatedchallenges — for companies in preparing theirfinancial filings relate to the COVID-19 pandemic
and the Russia-Ukraine conflict. Climate-related
issues present similar challenges in termsof measurement uncertainty and may have
implications for both 1) disclosing narrative
information, such as that found in governancestatements and management commentary, and2) measuring and valuing assets and liabilities
reflected in financial statements and notes
to the financial statements. Reporting on theimpact of climate-related issues on the financial

Figure B2

Measurement Uncertainty
in Financial Reporting
In general, “uncertainty” means a state of limited
knowledge where it is impossible or impracticable
to describe exactly an existing state or afuture outcome. Uncertainty exists in financial
statements where measurements “to a large
extent…are based on estimates, judgments, andmodels rather than exact depictions.” As the levelof uncertainty increases, challenges may exist for:• financial statement preparers to estimate thefuture outcome of the uncertainties inherent inmany business transactions,• auditors to verify the subjective judgments
about those uncertainties, and• investors to understand those uncertainties andassess their potential impact on future earnings
or cash flows.

statements can be complex and challenging andoften requires companies to exercise judgment
on factors that they may not have considered or
had to consider in the past.

Impairment of Non-Financial Assets
One of the issues companies may face is how totake climate-related issues into account in their
impairment considerations for non-financial
assets. For instance, jurisdictions’ actions (suchas imposing a carbon tax) as well as companies’
own actions to address climate-related risks(such as reducing their GHG emissions) could
have a significant effect on their future expectedcash flows and result in the impairment ofcertain assets. Some of the potential climaterelated issues companies consider whendeveloping their financial statements inaccordance with IAS 36 Impairment of Assets
are described below.
Identifying Climate-Related Impairment
Indicators. Under IAS 36, companies are
required to assess, at the end of each reporting
period, whether there is any indication thatan asset or cash-generating unit may be

64

The Task Force recognizes that there are other accounting frameworks such as those applied in India, China, and other jurisdictions.

65T he Task Force referred to IFRS, IAS 36 Impairment of Assets, May 2013, and Accounting Standards Codification (ASC) 360 “Long-lived Asset
Impairment” as well as ASC 450 “Contingencies” and IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020.

66

F or the sake of simplicity in this report, the Task Force refers only to standards under the IFRS since the majority of jurisdictions use thesestandards. Based on the IFRS Foundation’s analysis of 168 jurisdictions, which represents 98% of the world’s gross domestic product, 160 of the
168 jurisdictions have a commitment to IFRS Accounting Standards. See IFRS Foundation, “Analysis of the IFRS Accounting Jurisdiction Profiles,”Accessed July 24, 2023.

67

IFRS, Effects of Climate-Related Matters on Financial Statements, November 2020 (republished July 2023).

68

The International Accounting Standards Board (IASB) is the independent accounting standard-setting body of the IFRS Foundation.

69

S ources for Figure B2 are Hubbard, Douglas, How to Measure Anything: Finding the Value of Intangibles in Business, John Wiley & Sons, July 2007 and
FASB, Statement of Financial Accounting Concepts No. 8, August 2018.

53

The Task Force on Climate-related Financial Disclosures

impaired.70,71 An impairment arises when
the carrying amount of an asset or a cashgenerating unit exceeds its recoverable
amount.72 Climate-related issues may give riseto indications that an asset is impaired. For
example, a decline in the demand for dieselbased products of a manufacturing company
could indicate that its production equipment
may be impaired. Significant changes in theenvironment in which the company operates —such as new regulations that limit the amountof GHG emissions that can be produced — mayalso be an indication that a GHG emissions
producing asset could be impaired.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Determining Cash Flows Included. Where the“value in use” method, which is the present valueof future cash flows expected to be derived
from an asset or cash-generating unit, is used indetermining the recoverable amount, a company
is required to make an estimate of future cash
flows. IAS 36 places certain constraints on the
future cash flows that can be incorporated whencalculating the value in use and requires 1) the
cash flows to be estimated for the asset (i.e.,single asset or group of assets) in its current
condition and 2) future capital expenditure thatwould improve the asset’s performance and therelated benefits to be excluded.73
This has raised practical questions on the extent
to which future capital investments related
to climate-related commitments or targets
can be included in the value in use cash flow
projections (that is, whether the expenditure
incurred to reduce the GHG emissions
associated with an asset represents future cash
outflow to enhance the asset or to maintainthe asset to continue operating). As part of its
Business Combinations: Goodwill and Impairment
project, the IASB indicated in March 2023 thatit tentatively decided to propose removing
the existing constraint on cash flows used toestimate value in use in IAS 36.74,75

More specifically, the IASB has tentatively
decided to retain the requirement that future
cash flows shall be estimated for an asset inits current condition. Therefore, companies
would not be prohibited from including cash
flows arising from improving or enhancing an
asset’s performance as long as the asset has
the current potential to generate those future
cash flows. A public consultation on IAS 36 iscurrently expected in the first half of 2024;
and, if the aforementioned proposed changes
were made, they would allow companies toreflect future capital expenditure in response
to climate-related issues in determining therecoverable amount of an asset (or a cashgenerating unit) if the potential for generating
cash flows exists for the asset (or a cashgenerating unit) in its current condition.76
Evaluating Terminal Value Assumptions.
The terminal value reflects the value of anasset after the explicit forecast period. For
many companies, climate-related issues are
expected to affect their businesses in thelonger term; and, as a result, the terminal value
is the value in use component that is likely to
be most affected. A small change in the longterm growth rate — which is a key input in theterminal value calculation — could significantly
change the terminal value amount. Given this,
it is important for companies to consider andreflect the impact of climate-related issues,
including carbon price and physical climaterelated risks, in the long-term growth rate.
The Task Force recognizes there are challenges
in determining an appropriate long-term
growth rate given the uncertainties around theimpact of climate-related risks on a company,
coupled with limited external data.77 Further
challenges may exist when a company needs
to use a forecast period longer than five years
to reach a sustainable level of cash flows thatreflect climate-related issues, considering the70C ash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of cash inflows fromother assets or groups of assets. IFRS, IAS 36 Impairment of Assets, May 2013 (paragraph 36.6).

71

Irrespective of any indicator of impairment, IAS 36 requires goodwill and intangible assets with indefinite useful lives and intangible assets thatare not yet available for use to be tested for impairment annually.

72

T he carrying amount is the amount at which an asset is recognized after deducting any accumulated depreciation (amortization) and accumulated
impairment losses thereon, and the recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of disposal
and its value in use. IFRS, IAS 36 Impairment of Assets, May 2013 (paragraph 36.6).

73

T he effects of upcoming climate-related regulation or legislation may be included in the measurement of the value in use if management’s best
estimate is that there will be an effect on the entity’s future cash flows. See Deloitte, A Closer Look—IAS 36 Impairment of Non-Financial Assets—Reminders and Hot Topics, May 3, 2023.

74

IFRS, “Business Combinations—Disclosures, Goodwill and Impairment,” Accessed July 12, 2023.

75

IFRS, “IASB Update March 2023,” March 20, 2023.

76

IFRS, “IFRS Foundation Work Plan,” Accessed July 12, 2023.

77

IAS 36.33 requires that when measuring value in use, a company must base cash flow projections on reasonable and supportable assumptions
that represent management’s best estimate of the range of economic conditions that will exist over the remaining useful life of the asset andgreater weight should be given to external evidence. IAS 36.33 also requires a company to use a steady or declining growth rate to estimate cash
flow projections beyond the period covered by the most recent budget unless an increasing rate can be justified. IFRS, IAS 36 Impairment of
Assets, May 2013.

54

The Task Force on Climate-related Financial Disclosuresrequirements in IAS 36.35.78 If extending theforecast period is not possible, adjusting the
cash flows and the long-term growth rate in theterminal value formula to reflect the impact ofclimate-related matters can be challenging whendifferent growth rates and/or profit margins are
expected in future periods.

Asset Useful Lives

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

As various jurisdictions work towards
transitioning to low-carbon economies,
companies’ use of certain assets may beaffected. The development or emergence ofnew, lower-carbon technologies may lead tocompanies replacing their production-related
assets earlier than originally expected. In
addition, the introduction of laws and regulations
to limit companies’ GHG emissions — such asa carbon tax — may lead companies to retire
GHG emissions producing assets sooner thanplanned to avoid higher costs. These and otherevents related to climate change could affectthe useful lives of companies’ assets, which they
may need to consider when reviewing the useful
lives of their assets at each annual reporting
date (or more frequently). Companies in carbon
intensive industries such as oil and gas, utilities,coal, and metals and mining likely face a higher
risk of the useful lives assigned to some of theirassets being significantly shortened, resulting inan acceleration of the depreciation/amortization
charged to the income statement.

E.
Types of Financial Impact
and Associated Drivers

An asset’s useful life is defined as the period oftime over which a company expects to use theasset or the number of production or similar
units that it expects to obtain from the asset.79

F.
Insights Gained and View
on Future Work
Appendices

Provisions and Contingent Liabilities
Another section in the financial statements thatinvolves developing estimates with measurement
uncertainty and could be affected by climaterelated issues is provisions and contingent

liabilities.80 As jurisdictions take actions toaddress climate change, they may pass new lawsthat could result in new or changed provisions
or require disclosure of a contingent liability byaffected companies. For example, a law passed
to accelerate the timing for the decommissioningof long-lived assets such as those related to coalor oil and gas could lead to companies needing
to revise existing decommissioning provisions
based on the impact of discounting future cash
flows.81 Where the details of a proposed newlaw have yet to be finalized, the cost that will be
required to meet the legislation is not required
to be recognized until the proposed legislation
is virtually certain to be enacted as drafted.82 In
addition, companies may need to assess whether
constructive obligations have been created bytheir actions or specific public statements related
to climate change.

IAS 37 indicates a constructive obligation may
arise from a company’s actions or sufficiently
specific public statements through which it has
indicated to others that it will accept certain
responsibilities and, as a result, has created avalid expectation that it will discharge
those responsibilities.83

Notably, in March 2023, the IASB announced aproject to explore whether and how companies’
financial statements can provide better
information about climate-related risks (seeSection B.3. Resources on Climate-Related Issues
in Financial Statements).84 The IASB indicatedstakeholders have asked several questions
including why companies that have made netzero commitments do not recognize liabilities
or impair the value of their assets as a resultof those commitments. Regardless of whether
such commitments lead to provisions, investors
and other users have expressed interest in
information on the potential costs to deliver
against climate-related commitments as this78

IAS 36.35 states that detailed, explicit, and reliable financial budgets/forecasts of future cash flows for periods longer than five years are generally
not available. For this reason, management’s estimates of future cash flows are based on the most recent budgets/forecasts for a maximum of
five years. Management may use cash flow projections based on financial budgets/forecasts over a period longer than five years if it is confident
that these projections are reliable and it can demonstrate its ability, based on past experience, to forecast cash flows accurately over that longer
period. IFRS, IAS 36 Impairment of Assets, May 2013.

79

IFRS, IAS 16 Property, Plant and Equipment, May 2020 (paragraph 16.6) and IFRS, IAS 38 Intangible Assets, May 2014 (paragraph 38.8).

80

A provision is a liability of uncertain timing or amount. IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020
(paragraph 37.10).

81A decommissioning or asset retirement obligation may need to be recognized for an obligation associated with the decommissioning or
retirement of a tangible long-lived asset (such as coal, oil and gas, and chemicals and cement plants) to the extent that the company is obliged torectify damage already caused, as per IAS 37.19. IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020.

82

IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020 (paragraph 37.50).

83

IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020 (paragraph 37.10).

84

IFRS, “Connectivity in Practice: The IASB’s New Project On Climate-Related Risks in the Financial Statements,” March 23, 2023.

55

The Task Force on Climate-related Financial Disclosureswould be useful for their financial decision
making.85 Companies could describe these costsin the notes to their financial statements — inaccordance with IAS 1 — if they believe thesecosts would be material to investors.86,87

SummaryA.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

As described previously, the effects ofmaterial climate-related issues disclosed in the
management commentary of companies’ publicfinancial filings may affect the recognition andmeasurement of financial statement amounts
that require some form of estimation. In somecases, these material climate-related issues may
not be factored in when measuring the amounts
in the financial statements due to the recognition
and measurement requirements under IFRS.
In these situations, disclosing the potential
impact of material climate-related issues on theassumptions used or amounts in the financial
statements could provide investors and otherusers with useful information for their financial
decision making.

C.
Case Studies on Scope 3
GHG Emissions

2. COMMON CHALLENGES RELATEDTO CLIMATE CHANGE AND
FINANCIAL STATEMENTS

D.
TCFD-Aligned Requirements
and Related Initiatives

As mentioned previously, the Task Forcedrew from various sources to identify key
considerations that may be useful to companies
as they assess and incorporate the impact ofmaterial climate-related issues into their financial
statements. The Task Force also drew fromthese sources as well as others to identify somecommon challenges that companies may face, as
noted below.

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices• Companies that do not have sufficientexpertise on climate-related issues
across the organization may be at risk ofunderestimating the impact of climate-related
issues on their businesses, strategies, andfinancial planning, including the impact on
their financial statements.
• Data and systems-related issues faced by
preparers may hinder their ability to disclose85

material climate-related informationin financial filings for use by investors
and other users.
Companies that overcome challenges associatedwith considering and disclosing the impact
of material climate-related issues on theirfinancial statements may be better positioned
to provide investors and other users with moredecision-useful information in their financial
filings, which is being increasingly demanded byinvestors and other users (see Box B1, p. 57).

Experience with and Knowledge of
Climate-Related Issues
For companies with limited to no experience
with or knowledge of climate-related issues,
incorporating such issues into their financial
statements can be a challenge. In fact, several
studies and surveys support the notionthat many companies do not have sufficientexpertise (i.e., experience and knowledge) toappropriately assess and address issues related
to climate change.88 Based on a 2022 surveyof senior executives, 82% said they are not“completely confident” that their companies
are properly staffed to meet the demandsof increased environmental, social, andgovernance (ESG) disclosures — including thoserelated to climate change.89 Notably, staffing
concerns related to meeting the demands forincreased disclosure were higher among financeand accounting executives than executives inother areas of the companies. In addition, theAssociation of Chartered Certified Accountants(ACCA) surveyed more than 3,000 accountancy
and finance professionals from around theworld and across corporate, public, financial,and nonprofit sectors and asked how theirorganizations are addressing climate-related
risk.90 Nearly 25% of the respondents indicatedone of the barriers preventing finance teams
from supporting organizations in addressing
climate-related issues was their own lack ofprofessional skills in this area.
Sufficient expertise among boards of directors
and audit committees has also been highlighted
as a challenge. A survey of global companies’
boards of directors found that around 70% ofInvestor alliances, including groups representing over $100 trillion in assets under management, have called on companies to disclose how a
net-zero pathway will affect the companies’ financial positions. See “Investor Groups Call on Companies to Reflect Climate-Related Risks in
Financial Reporting,” September 16, 2020. Another investor group sent letters to 17 of Europe’s largest companies asking why expectations overclimate-related accounting disclosures have failed to be met. See “Investors Put Audit Committee Chairs on Notice over Continued Omission of
Climate Risks in Financial Reporting Ahead of 2022 AGM Season,” April 5, 2022.

86

Climate Disclosure Standard Board, Accounting for Climate: Integrating Climate-Related Matters into Financial Reporting, December 2020.

87

IFRS, IAS 1 Presentation of Financial Statements, February 2021 (paragraph 1.29).

88

B oston Consulting Group, Directors Can Up Their Games on Environmental, Social and Governance Issues, March 30, 2022; Whelan, T., U.S.
Corporate Boards Suffer From Inadequate Expertise in Financially Material ESG Matters, January 2021; and Eversheds Sutherland and KPMG,
Climate Change and Corporate Value: What Companies Really Think, November 11, 2020.

89

Deloitte, ESG Executive Survey Preparing for High-Quality Disclosures, March 31, 2022.

90A ssociation of Chartered Certified Accountants, Climate Action and the Accounting Profession: Building a Sustainable Future, October 2021.

56

The Task Force on Climate-related Financial Disclosures

Box B1

User Demand for Climate-Related Information in Financial Filings
In November 2019, a member of the IASB published an article emphasizing that companies have an obligation undercurrent IFRS rules to disclose material climate-related information and illustrating how companies can use IFRS
guidance when they make materiality judgements related to disclosures about climate-related risks.1
In September 2020, a large group of investors — representing over US $103 trillion in assets under management
globally — published an open letter welcoming the IFRS article and calling upon companies to ensure that their financial
statements accurately report their performance by incorporating material information about climate-related risks.2
The investors also asked for companies to “apply the IASB opinion” in letter and spirit, including showing the key
assumptions that have been made with regard to climate-related risks and auditors to “only sign off on financial
statements [that] are consistent with the IASB opinion” in letter and spirit, including showing the key assumptions thathave been made with regard to climate-related risks.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

In addition, based on a recent survey of investors and analysts, nearly 90% indicated they use financial statements andrelated notes to understand how companies manage their risks and opportunities (including those related to climatechange), with around 60% indicating that they use sustainability reports. 3 The survey respondents also described someof the information they want companies to disclose, as shown below.4

73%

70%

69%

the cost to meet theirsustainability commitments

the effect of sustainability risks and opportunities
on financial statement assumptions

the relevance of sustainability
factors to the business model

1. IFRS, IFRS Practice Statement 2: Making Materiality Judgements, September 2, 2017.
2. The letter was signed by the PRI, the UN Environment Program Finance Initiative, the UN-convened Net-Zero Asset Owner Alliance, the Institutional
Investors Group on Climate Change, Investor Group on Climate Change, the Asia Investor Group on Climate Change, and the Pensions and Lifetime
Savings Association.
3. PwC, PwC’s Global Investor Survey 2022, February 2023.
4. Sustainability commitments, risks, and factors include those related to climate change.

the directors indicated they are only moderately
or not at all effective at integrating climaterelated issues into company strategy andgovernance.91 In addition, based on a global
survey of over 350 audit committee members
and chairs, nearly half of the respondents said
they do not consider their audit committees
to have the resources or background neededto address climate-related issues effectively.
Thirty-four percent (34%) of respondents statedthat their biggest challenge in overseeing climatechange is a shortage of people with the requisite
experience and knowledge.92
Companies that do not have sufficient expertiseon climate-related issues across the organization— at the staff level; in business lines, finance,
and internal audit; among senior management;
and on the board of directors — may be atrisk of underestimating the impact of climaterelated issues on their businesses, strategies,
and financial planning, including the impact
on their financial statements. For example,
companies with senior management and boardsof directors that lack sufficient expertise on
climate change issues and their implications
could result in relevant climate-related issues notreceiving the appropriate level of assessment

and consideration. For companies with material
climate-related risks, this could result in notaccounting for impairment or provisions related
to climate factors, potentially affecting thequality, accuracy, and completeness of suchcompanies’ financial statements.
External auditors also play an important role inthe context of companies’ financial statements
as they may be required to conduct independent
assessments of those financial statements andrelated disclosures and consider whether there is
any key information missing — including related
to climate-related issues — that could bear onwhether the disclosures are fairly presented andfree of material misstatement. As a result, it isequally important that the external auditors
have sufficient expertise on issues related toclimate change.

Data and System-Related Issues
Complete, accurate, and reliable data are critical
inputs for companies when preparing theirfinancial statements and, ultimately, disclosing
decision-useful information investors andothers rely on when making financial decisions.
In the ACCA global survey of accountancy
and financial professionals mentioned

91

B oston Consulting Group, Directors Can Up Their Games on Environmental, Social and Governance Issues, March 30, 2022. Another study based on
U.S. companies found that 47% of executives said their boards of directors have poor climate expertise (PwC, Board Effectiveness: A Survey of the
C-Suite, May 2023).

92

Deloitte, The Audit Committee Frontier – Addressing Climate Change, November 2021.

57

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendicespreviously, 28% of respondents indicated oneof the barriers preventing finance teams fromsupporting organizations in addressing climaterelated issues was “poor data to work with.” In
addition, a study by the U.K. Financial Reporting
Council Lab found that the production of ESG
data (including climate-related data) used forfinancial reporting as well as other purposes is
associated with several challenges.93 The study
noted challenges related to obtaining data fromthird-party suppliers, the manual input of data
and associated risk of human error, and theinconsistency of data resulting from differencesin jurisdictional requirements. As an example,
collecting data on Scope 3 GHG emissions
and ensuring its quality poses a significant
challenge for some companies, as most of these
GHG emissions are from activities not under
the companies’ ownership or direct control.94
Another data issue relates to market prices that
may not fully reflect climate-related physicaland transition risks. Under IFRS standards,
companies are required to report certain assets
and liabilities in their financial statements
at fair value. In measuring the fair value of acompany — or its assets or liabilities, IFRS 13
requires that companies prioritize the use of
unadjusted market prices (e.g., prices quoted
on a stock exchange) over unobservable
ones (e.g., prices that cannot be verified
with external sources but were developed
internally by companies to reflect their own
assumptions).95 However, as highlighted ina 2022 study, while climate-related risks arestarting to be reflected in market prices,concerns are growing that current market
prices do not fully reflect the risks.96 In
addition, a survey of investment professionals
in 20 jurisdictions managing $34.5 trillionof investments found that the majority ofparticipants believed climate-related issues
are not adequately incorporated into market
prices.97 Requirements to use market prices
for assets and liabilities — despite such prices
not fully reflecting the impact of climaterelated issues — may lead to valuations infinancial statements that do not fully reflect
such issues.
Moreover, the systems for climate-related andother ESG data have likely been used for adifferent purpose than those used for financial
data and, therefore, are not necessarily subject
to internal controls intended to ensure theintegrity of the information.98 For example,
collecting and maintaining climate-related andother ESG data may be siloed within business
units or functions with little governance orformal processes supporting them. In addition,
the data collected may not be defined clearlyor consistently across a company, leading todifferences in the types of information collected
and inability to aggregate the information.
These types of issues can pose challenges tousing climate-related data in the same way
financial data are used.

3. R ESOURCES ON CLIMATE-RELATEDISSUES IN FINANCIAL STATEMENTS
This subsection summarizes an IASB project
on climate-related risks in financial statements
as well as guidance published by standard
setters, regulators, and other organizations
that may be helpful for companies inconsidering the impact of climate-related issues
in their financial statements based on current
accounting standards.

IASB Project
In March 2023, the IASB announced a project to
explore whether and how companies’ financial
statements can provide better information
about climate-related risks. As part of theannouncement, the IASB indicated stakeholders
have asked the following questions:• W hy do companies that are expected to beaffected by climate-related risks not provide
information about these effects in theirfinancial statements?
• W hy do companies that have made net-zerocommitments not recognize liabilities or impair
the value of their assets as a result of thosecommitments?
• H ow should companies factor long-term
uncertainties into the measurement of amounts
in the financial statements? 99

93

Financial Reporting Council Lab, Improving ESG Data Production, August 2022.

94

W orld Resources Institute and World Business Council for Sustainable Development, The Corporate Value Chain (Scope 3) Accounting andReporting Standard, April 16, 2013.

95

IFRS, IFRS 13 Fair Value Measurement, May 2011.

96

B
 ank for International Settlements, BIS Papers No 130 Pricing of Climate Risks in Financial Markets: A Summary of the Literature,
December 9, 2022.

97

KPMG, “Can Capital Markets Save the Planet,” October 28, 2021.

98

Financial Reporting Council, FRC Statement of Intent on Environmental, Social and Governance Challenges, July 2021.

99

IFRS, “Connectivity in Practice: The IASB’s New Project on Climate-Related Risks in the Financial Statements,” March 23, 2023.

58

The Task Force on Climate-related Financial Disclosures

As part of the project, the IASB indicated it would
explore the nature and causes of stakeholder
concerns about the reporting of climate-relatedrisks in the financial statements, which would
help inform appropriate actions to take. It further
noted that one of the causes of those concerns
could be that investors’ information needs go
beyond the objective of financial statements
and that such information needs are outside thescope of the project. It indicated the ISSB’s climate-related standard addresses these informationneeds.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

In September 2023, the IASB provided an updateon the project, indicating that the project objective
was expanded to cover reporting on the effects
of uncertainties more broadly (rather than justclimate-related uncertainties).100 The IASB also
indicated it would explore 1) whether to create
examples to illustrate how to apply requirements
in IFRS accounting standards to reporting theeffects of climate-related and other uncertainties
and 2) clarifying or enhancing requirements in
IFRS accounting standards in relation to disclosing
information about estimates.

Guidance on Climate-Related Issues in
Financial Statements
Effects of Climate-Related Matters on Financial
Statements (Republished July 2023): IFRS
educational material that reminds stakeholdersof the long-standing requirements in IFRS
accounting standards to report on the effects
of climate-related matters in the financial
statements when those effects are material.
IFRS for SMEs® Accounting Standard (May 2023):
IFRS educational material similar to the Effects of
Climate-Related Matters on Financial Statements
but tailored to entities that do not have public
accountability and publish general purpose
financial statements for external users.

Standards Board educational material thatprovides investors and other interested parties
with an overview of the intersection of ESG
matters with financial standards. It also provides
examples of how an entity may consider theeffects of material ESG matters when applying
current accounting standards.
CRR Thematic Review of TCFD Disclosures andClimate in the Financial Statements (July 2022):
U.K. Financial Reporting Council report
describing results of a thematic review of1) TCFD disclosures and 2) climate-related
reporting in the financial statements of 25 listedcompanies. The report includes examples of
disclosure that show good practices and areasthat need further improvement.
Accounting for Climate (December 2020): Climate
Disclosure Standards Board guidance on
integrating climate-related matters into thefinancial statements.

4. E
 XAMPLES OF CLIMATE-RELATEDDISCLOSURES IN FINANCIAL
STATEMENTS
This subsection includes examples of disclosure
contained in financial statements. The Task
Force sought to include examples that coversome of the standards described above, such as
IAS 36 Impairment of Assets and IAS 16 Property,
Plant and Equipment. The examples included
contain primarily qualitative information andare not intended to represent “best practice”
or demonstrate disclosures that meet theassociated accounting standards. Instead,the examples are provided because they may
be useful to other companies to assess andincorporate the impact of climate-related issues
into their financial statements.

Intersection of Environmental, Social andGovernance Matters with Financial AccountingStandards (March 2021): Financial Accounting

100

IFRS, "Climate-Related and Other Uncertainties in the Financial Statements,” Accessed September 27, 2023.

59

The Task Force on Climate-related Financial Disclosures

Figure B3 shows an extract from the financial
statements of a British mining and mineral
resources company describing the sensitivity
testing of cash-flows performed to assess theimpairment of certain assets under a scenario
they consider to be Paris-aligned (namely, the“Aspirational Leadership” scenario).

Figure B3

Use of Sensitivities to Paris Aligned Accounting

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Under the Aspirational Leadership scenario, which is not used in the preparation of these financial statements, nor forbudgeting purposes, the economic performance of copper and aluminium is expected to be stronger under supply anddemand forward pricing curves which we believe will be consistent with the Paris Agreement. It is possible therefore, under
the right conditions, that historical impairments associated with these assets could reverse. We recognised an impairment of
US$202 million during the year for the Boyne smelter cash-generating unit, triggered by economic and operating performanceof the smelter (note 4). When measuring the recoverable amount for this cash-generating unit we utilised net present valueof cash flows to the end of the existing joint venture agreements in 2029, which also coincides with the Group’s targetedcarbon emission reductions by 2030. The Group continues to evaluate lower emission power solutions for the smelter that
could extend its life to at least 2040. In such circumstances, the net present value of forecast future cash flows could support
the reversal of past impairments. Both the recorded outcome and the sensitivity represent a reduction in emissions that we
considered to be Paris-aligned.
In the Aspirational Leadership scenario the prices for lower-grade iron ore are supported in the medium term by an assumed
underlying increase in GDP-driven demand. However, in the longer term we assume the pricing for lower grade iron ore to be
weaker than in our core scenarios. This will depend on the development of low-emissions steel technology, the pace of whichis uncertain, but is expected to be offset by higher prices for higher-grade iron ore. This is unlikely to give rise to impairment
triggers for 2022 or in the foreseeable future due to the high returns on capital employed in the Pilbara.
Rio Tinto, Annual Report, p. 154
Note: Some content was reformatted in order to fit the page.

Figure B4 shows an extract from note 8 to thefinancial statements of a British industrials
company describing the impairment testing ofintangible assets (including goodwill) for theirrelevant cash-generating units (CGUs) in a
1.5°C scenario.

Figure B4

Impairment Testing of Intangible Assets
The Group believe there are significant business growth opportunities to come from Rolls-Royce playing a leading role in thetransition to net zero, whilst at the same time climate change poses potentially significant risks. The assumptions used by the
Directors are based on past experience and external sources of information. The main climate-related areas that have been
considered are the risk that regulatory changes could materially impact demand for its products (and hence the utilisationof the products whilst in service and their useful lives) and shifting investment focus towards more sustainable products andsolutions. Based on the climate scenarios prepared, the forecasts do not assume a significant deterioration of demand for Civil
Aerospace (including Rolls-Royce Deutschland) programmes given that all commercial aero-engines will be compatible withsustainable fuels by the end of 2023. Similarly, the most popular reciprocating engines in Power Systems will be compatible
with sustainable fuels by the end of 2023. The investment required to ensure our new products will be compatible with net zero
operation by 2030, and to achieve net zero scope 1 and 2 GHG emissions is reflected in the forecasts used.
A 1.5°C scenario has been prepared using key data points from external sources including Oxford Economics, Global Climate
Service and Databank and the International Energy Agency. This scenario has been used as the basis of a sensitivity. It is
assumed that governments adopt stricter product and behavioural standards and measures that result in higher carbon pricing.
Under these conditions it is assumed that markets are willing to pay for low carbon solutions and that there is an economic
return form strategic investments in low carbon alternatives. The sensitivity has considered the likelihood of demand changes
for our products based on their relative fuel efficiency in the marketplace and the probability of alternatives being introduced
earlier than currently expected. The sensitivity also reflects the impact of a broad range of potential costs imposed by policy or
regulatory interventions (through carbon pricing). This sensitivity does not indicate the need for an impairment charge.
Rolls Royce plc, Annual Report and Audited Financial Statements, p. 82
Note: Some content was reformatted in order to fit the page.

60

The Task Force on Climate-related Financial Disclosures

Figure B5 shows an extract from the note 13
to the financial statements of an Australian
resources company describing the assessmentof indicators of impairment or impairment

reversal of non-current assets including impacts
from risks related to climate change and thetransition to a low carbon economy.

Figure B5

Estimation of Useful Lives of Property, Plant, and Equipment
Key judgements and estimates
Judgements: Assessment of indicators of impairment or impairment reversal and the determination of CGUs for impairment
purposes require significant management judgement.
Indicators of impairment may include changes in the Group’s operating and economic assumptions, including those arising fromchanges in reserves or mine planning, updates to the Group’s commodity supply, demand and price forecasts, or the possible
additional impacts from emerging risks including those related to climate change and the transition to a low carbon economy.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Climate change
Impacts related to climate change and the transition to a low carbon economy may include:- demand for the Group’s commodities decreasing, due to policy, regulatory (including carbon pricing mechanisms), legal,
technological, market or societal responses to climate change, resulting in a proportion of a CGU’s reserves becoming
incapable of extraction in an economically viable fashion- physical impacts related to acute risks resulting from increased frequency or severity of extreme weather events, and thoserelated to chronic risks resulting from longer-term changes in climate patterns
The Group’s assessment of the potential impacts of climate change and the transition to a low carbon economy continues tomature. As outlined in the Basis of Preparation, where sufficiently developed, the potential financial impacts on the Group ofclimate change and the transition to a low carbon economy have been considered in the assessment of
Indicators of impairment, including:- the Group’s current assumptions relating to demand for commodities and carbon pricing, including their impact on theGroup’s long-term price forecasts- the Group’s operational emissions reduction strategy
Estimates: The Group performs a recoverable amount determination for an asset or CGU when there is an indication of
impairment or impairment reversal.
When the recoverable amount is measured by reference to FVLCD, in the absence of quoted market prices or binding saleagreement, estimates are made regarding the present value of future post-tax cash flows. These estimates are made from theperspective of a market participant and include prices, future production volumes, operating costs, capital expenditure, closureand rehabilitation costs, taxes, risking factors applied to cash flows and discount rates. The cash flow forecasts may include
net cash flows expected from the extraction, processing and sale of material that does not currently qualify for inclusion in ore
reserves. Reserves and resources are included in the assessment of FVLCD to the extent that it is considered probable that amarket participant would attribute value to them.
When recoverable amount is measured using VIU, estimates are made regarding the present value of future cash flows basedon internal budgets and forecasts and life of asset plans. Key estimates are similar to those identified for FVLCD, although someassumptions and values may differ as they reflect the perspective of management rather than a market participant.
All estimates require management judgements and assumptions and are subject to risk and uncertainty that may be beyond thecontrol of the Group; hence, there is a possibility that changes in circumstances will materially alter projections, which may impact
the recoverable amount of assets/CGUs at each reporting date. While no indicators of impairment, or impairment reversal, wereidentified across the Group’s CGUs at 30 June 2022, with the exception of the Cerro Colorado CGU, the carrying value of the Spence
CGU is the most susceptible to changes in the significant estimates outlined below in the next reporting period.
BHP, Annual Report, p. 155
Notes: Abbreviations used include CGU for cash generating units, FVLCD for fair value less cost of disposal, and VIU for value in use.
Some content was reformatted in order to fit the page.

61

The Task Force on Climate-related Financial Disclosures

Figure B6 shows an extract from note 1.5 tothe financial statements of a British power
generation company describing the estimationof the useful lives of assets considering factors
arising from climate transition.

Figure B6

Estimation of Useful Lives of Property, Plant and Equipment
Property, plant and equipment represents a significant proportion of the asset base of the Group, primarily due to power plants
owned, being 59.6% (2021: 63.2%) of the Group’s total assets. Estimates and assumptions made to determine their carrying
value and related depreciation are significant to the Group’s financial position and performance. The annual depreciation
charge is determined after estimating an asset’s expected useful life and its residual value at the end of its life. The useful
lives and residual values of the Group’s assets are determined by management at the time the asset is acquired and reviewed
annually for appropriateness. The Group derives useful economic lives based on experience of similar assets, including useof third party experts at the time of acquisition of assets, and these lives may exceed the period covered by contracted powerpurchase agreements.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

Emerging governmental policies are also considered when reviewing the appropriateness of useful economic lives, including
whether asset life assessments could be impacted by factors arising from climate transition or other regulatory and market
factors. This includes consideration of government energy transition policies, and how our thermal assets are expected to be
used, in particular to provide a secure supply during a medium to long-term transition to renewables. In particular, during2022 the expiration of the Maritsa PPA in February 2024 was considered together with the emerging geopolitical issues and thecontinued high dependency on the asset in the region which outweigh the climate transition factors in the short to medium
term. As a result, during the year, the useful life of the asset was increased. The impact on depreciation was not material.
A decrease in the average useful life by one year in power plant assets would result in a decrease in the net book value of$16.0 million (2021: $21.1 million).
ContourGlobal Limited, Annual Report and Financial Statements, p. 69
Note: Some content was reformatted in order to fit the page.

D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

62

C.
Case Studies on Scope 3
GHG Emissions

The Task Force on Climate-related Financial Disclosures

C. Case Studies on Scope 3 GHG Emissions
In October 2021, the Task Force publishedguidance on metrics, targets, and transition
plans in which it encouraged all companies toreport their Scope 3 GHG emissions (see Box
C1).101 The Task Force noted growing demand for

Scope 3 GHG emissions by investors and otherusers for financial decision-making but also
recognized there are challenges associated withdisclosing this information — including data andmethodological challenges.102
103

1.

Box C1

Scope 3 GHG Emissions Categories
Based on the GHG Protocol Corporate Accounting and Reporting Standard, Scope 3 GHG emissions are thosethat occur in the value chain of a company. Under this standard, Scope 3 GHG emissions can be broken down
into 15 categories, as shown below.
purchased electricity, steam,
CO2

A.
State of Climate-Related
Financial Disclosures

CO2

CH4
CO2

N2O N2OSF6
CH4 CO2 CO2N2O CH4 CHHFCs
PFCsHFCselectricity,
SF6 PFCs PFCs
4
heatingpurchased
forHFCs
own usesteam,
CO2
CH4
N2O& coolingcooling
HFCs
PFCs
for own use
CO2CH
N2O heating &Scope
HFCs
PFCs
1
Scope
2
4
CO2 N2OCH4 HFCsN2O PFCs
HFCs SF6PFCs
SF6DIRECT
INDIRECT
CO2CHpurchased
N2O steam, company
HFCselectricity,
4purchased electricity, steam,heating & cooling for own
usepurchased

CH4

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

capitalHFCs
goods

fuel and
PFCs
energy related
activities

facilities

SF6

PFCs

purchased
goods andservices

processing ofsold products
company
facilities

SF6 processing oftransportationtransportation
processingofcapitalandand distribution
soldfuel
products
and distribution
products
goods
energysold
relatedactivities

company
facilitiescompany
SF6transportation
processing offacilities
fuel anduse of sold sold products
end-of-life and distribution
transportation
processingofpurchased goods capitalenergy related
fuel andpurchased electricity, goods
steam,and
products
treatment of
anddistribution
soldproducts
goods andgoods activities
energy related
businesstransportation
waste
servicespurchased
steam,
purchased electricity, steam,heatingpurchased& electricity,cooling forown
useelectricity, steam,
INDIRECT
sold products
INDIRECT
services
activities
traveland distribution
generated inbusinesstransportation
waste
company&
cooling
own foruseownheating & cooling for ownheatingusepurchased
electricity,
steam,
heating& forcoolinguse
use of soldend-of-life
company
operations
traveland distribution
generatedinfacilities
purchased
electricity,
steam,
heating&cooling forown usetransportation
processingof end-of-life
use of soldproducts
transportation
processingof treatmentofpurchasedfuel and
operations
steam, for own
heating & coolinguse facilities capitalpurchased electricity, steam, purchased electricity,
company
products
treatment ofand distribution
sold products
and distribution
sold products
sold products
Purchased
capital & coolingfuelgoods and waste goods
energy related vehicles
forandowntransportationuse
heating & coolingfor own use heatingtransportation
processing ofpurchased
electricity, steam, businesssold products
Goods andgoods
energy related
services generated
activities
businesstransportation
waste
travelTransportation
processingofand distributionintransportation
processingofand distribution
sold products
heating & cooling for own use
transportation
processing ofServices
activities
company
traveland distribution
generated
incompany
and Distribution
sold products
operations
anddistribution
sold products
processing
andtransportation
distribution
soldproductsof
companyuse of sold
Purchased Electricity, Steam,
end-of-life
facilities
operations
facilities
assetstransportation
processingof leasedtreatment
employee
anddistribution
sold products
purchased electricity,
steam,
Heating& Cooling for Own Use
usevehicles
of soldcompany
end-of-life
products
ofInvestments
company
capitalfuelandprocessing
ofsold products
capitalfuelandand products
distribution
commuting
LeasedAssets company
employeetransportation
processing of transportation
investments
heating purchased&purchased
cooling for own use
leased assets sold franchises
vehiclescompany
products
facilitiesCompanytreatment of
goods
and
goods
energyrelatedbusinessanddistribution
sold products
transportation
waste
commutingand distribution
sold products
goods andgoods
energyrelatedsoldproducts
facilities
facilities
purchased
capital businessfuel andtransportation
processing ofcompany
Facilities
services
activities
transportation
waste
travelanddistribution
generatedinservices
activities
fuel and fuel andpurchased
Capital purchased
fuel and capitaltransportation
processing ofcompany
goods andgoods capitaland distribution
sold products
facilities
purchased
travel energy related
and distribution
generatedin
operations
anddistribution
sold products
andenergyrelatedgoods and
Goods goods
energyrelatedcompany
assetsemployeeinvestments
facilities
purchased
capitalfuel
andleased
use of sold leased assets
services
activities
end-of-life company
Franchises
goods
and goodscompany
goods
energyrelatedoperations
use of sold leased assets
company
servicespurchased
leased assets
Employeeservices
activities
investments
facilities
capitalfuelandtransportation
Processingof end-of-life
commutingfranchises
goods andgoodsactivities
energyrelatedfacilities
treatmentof vehiclesproducts
services
activities
company
company
products
treatment
ofsoldvehiclesuse ofend-of-lifepurchased
capitalfuel and energy
Commutingandgoods
relatedand distribution
Sold
Productspurchased
capitalFuel andgoods
services
activities
sold products
facilities
facilities
useof soldbusiness
end-of-lifeend-of-lifetransportation
use of soldtreatment
end-of-life
products
ofsold products
goods
and
energyuse of sold
servicesgoodscapital waste
activities
purchased
fuelrelated
andgoods andgoods
EnergyRelatedpurchased
capitalfuel andbusinesstransportation
waste
products
traveltreatmentofanddistribution
generatedinproducts
treatment
of
goods
and
goods
energyrelateduseofsold
end-of-life
soldproducts
services
activities
products
treatment ofservices
Activities
Business company
goods
and
goods
energyrelatedtransportation
travelactivities
andservices
distribution waste
generatedinsold products
operations
use productsof sold
soldproducts
end-of-life
treatment
soldproductsof
leasedassetsCompany investments
employee
Leased Assets
franchises
business
wasteoperations
business generated
transportation
wastetransportation
facilities
Travel businessservices
activities
and distributionintransportation
wasteof Sold products
of
use
of
soldleasedend-of-life
end-of-lifesoldUseproducts
use of sold treatment
end-of-lifeleasedassetsemployeeinvestments
company
Vehiclesassetsfranchises
andindistribution
generatedin wastein travel commuting
traveland distribution
generatedpurchased
capitalfuel andbusiness
operations
travelandTransportation
distribution
generated
products ofsold products
treatment of treatment
Products
products
treatment ofcompany
commutingvehiclesuse of soldEnd-of-life
operations
operations goods
businessgoods andenergyrelatedWaste company
transportation
travelsold products sold products
and Distribution
generatedin
operations
companybusiness
sold productsvehiclescompany
transportation
waste
products
Treatment ofbusiness
waste
services transportation
activities
Generatedinvehicles travel
anddistribution
businesstransportation
waste
travelvehicles vehicles
anddistribution
generated
in operations
company
Sold Products
travelgenerated
in Operations
traveloperations
and distribution
generated in and distribution
company
companybusiness
vehiclestransportation investments
waste
use ofleased
sold assets
employee
end-of-life
franchises
operations leased assets
vehiclesoperations
company
vehiclescompany
traveland distribution
generated in
products
commutingtreatment ofassetsemployeeinvestments
assetsfranchises
vehiclesoperations vehicles
leased leased
assetsemployeeinvestments
leasedassetsleased
franchises
sold products
company
Downstream
activities
Upstream
activities
Reportingcompany
commutingbusinessleasedassetsemployee
waste
investments
leased assets
employeetransportation
investments
leasedassetsfranchises
leased assets
franchises
commutingleased assets
employeeinvestments
vehiclesleased assets
franchises
leasedassetsemployeeinvestments
leased assets
franchises
travelleased assets
commutingand distribution
generatedincommuting
employeeinvestments
leased assets
franchises
commutingcommutingoperations
leased assets
employeeinvestments
commutingleasedassetsfranchises
company
Note: Theemployee
items
numberedfrom 1investments
to 15 refer to Scope 3 GHG emissions
categories.franchises
leased assets
commutingleased assets
employeeleased assets
investments
leased assets
franchises
vehiclescommutingcommutingleased assets
employeeinvestments
leased assets
franchises
commuting

CO2

B.
Financial Statement
Considerations

Ngoods2O andheating & cooling for own use

SF6
SF
6
transportation
SFand
6 distribution

servicespurchased
electricity,
steam, HFCs
CH4 electricity,
N2Osteam,purchasedpurchasedheatingcooling
forownown
use capitalheating &&cooling
for
use

PFCs

1

9

8

2

5

3

4

Scope 3

Scope 315

10

7company
vehicles

12

11

14
13

Adapted from World Resources Institute and World Business Council for Sustainable Development, The Corporate Value Chain (Scope 3) Accounting
leasedassetsemployeeinvestments
leased assets
franchises
and ReportingStandard,
April
16, 2013
commutingNote: Some content was reformatted in order to fit the page.

As part of its efforts to support companies in
implementing its recommendations, the Task
Force worked with five companies to develop
case studies describing their respective
approaches to estimating and disclosing Scope
3 GHG emissions, including the challenges
they face.103 In the case studies that follow, thecompanies highlight challenges related to thelimited availability of supplier- or customer-

specific GHG emissions data, costs associatedwith making GHG emissions estimates, double
counting of GHG emissions, and accuracy ofassumptions related to downstream processing
and end-of-life of products. The Task Forcebelieves the case studies offer insights that
may be useful to other companies as they facesimilar challenges in estimating and disclosing
Scope 3 GHG emissions.

Key Takeaways
Scope 3 GHG emissions are often a significant portion of companies’ GHG emissions inventories
and represent an important driver of climate-related issues.

101

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

102

In a 2022 TCFD survey, 71% of companies indicated disclosing Scope 3 GHG emissions was difficult, with data collection in the value chain noted
as a challenge (TCFD, 2022 Status Report, October 13, 2022). Similarly, in a survey conducted by the SBTi, 85% of respondents that estimatedScope 3 GHG emissions highlighted data access as a challenge (SBTi, Catalyzing Value Chain Decarbonization, February 2023).

103

There is also a case study in Section A.3. TCFD-Aligned Reporting by Asset Managers and Asset Owners that covers Scope 3 GHG emissions.

64

The Task Force on Climate-related Financial Disclosures

Key Takeaways (continued)
For companies beginning to measure and report on Scope 3 GHG emissions, it may be helpful todevelop initial estimates that can be improved over time.
Companies indicated continuous improvements to their systems and processes; coordination withvarious internal teams; engagement with companies in the value chain; and active participation
in industry initiatives on GHG emissions measurement are important to overcome the various
challenges related to Scope 3 GHG emissions measurement and to achieve reliable andcomprehensive reporting.

Case Study by a Resources Company

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

BHP is a resources company headquarteredin Melbourne, Australia. We operate globally
across a range of commodities, including ironore, copper, nickel, and metallurgical andthermal coal, and are working toward our firstpotash production.
We have long been focused on the business
implications of climate change and oncommunicating those implications andour response to our investors and otherstakeholders. For example, we released ourClimate Change: Portfolio Analysis in September
2015 to provide investors with more information
regarding how climate-related risk might affectour portfolio and our response to climatechange.104,105 In addition, we were one of thefirst companies to align our climate-related
disclosures with the recommendations of the
Task Force, of which our Group Climate Change
and Sustainability Officer, Dr. Fiona Wild, hasbeen a member since its inception in late 2015.
In fact, we have been reporting in line with the
Task Force’s 11 recommended disclosures since
they were released in 2017. More recently, we
published our Climate Transition Action Plan
(CTAP) in 2021, which outlines our approach to
the reduction of GHG emissions and managing
climate-related risks for our operations and in
our global value chain.106 The latest updates on
our CTAP progress are available in our Annual
Report 2022.107
Our broader corporate strategy defines ourapproach to decarbonization, which includes
pursuit of our long-term goal of net-zero Scope
3 GHG emissions by 2050. Downstream Scope
3 GHG emissions are the largest contributor to

our GHG emissions inventory and achievementof our goal is uncertain, particularly given
the challenges of a net-zero pathway for ourcustomers in steelmaking. It is, therefore, ofparticular importance for us to report on Scope
3 GHG emissions. Engaging with our value
chain is also important as we cannot ensure
the outcome of our long-term goal alone. In thesections that follow, we describe key aspectsof — and lessons learned from — our efforts toimprove our disclosures with respect to Scope 3
GHG emissions.

Our Approach to Scope 3 GHG Emissions
Disclosures and Challenges Faced
We disclose both upstream and downstream
Scope 3 GHG emissions in our Annual Report.
Downstream GHG emissions disclosures include
Processing of Sold Products (category 10) and
Use of Sold Products (category 11).108 Scope 3
GHG emissions from third-party processingof our products (predominantly iron ore andmetallurgical coal for steelmaking) are the mostmaterial, constituting approximately 76% of our
total reported Scope 3 GHG emissions inventoryin financial year (FY) 2022 (see Figure C1, p.
66). Use of Sold Products comprises mainly
combustion of sold energy coal, post the mergerof our petroleum business. The remaining GHG
emissions in this category are anticipated todecrease significantly following the anticipatedclosure of our energy coal mine in New South
Wales, Australia, by the end of FY 2030. To
highlight our commitment to transparency —one of the key principles of the GHG Protocol— we publish a detailed methodology thatprovides information on Scope 3 GHG emission
calculations and assumptions.109

104

BHP, Climate Change: Portfolio Analysis, September 29, 2015.

105

We have also provided periodic updates on this information since then. For example, see BHP, Climate Change: Portfolio Analysis – Views after
Paris, October 11, 2016 and BHP, Climate Change Report 2020, February 2020.

106

BHP, Climate Transition Action Plan 2021, September 14, 2021.

107

BHP, Annual Report 2022, September 6, 2022.

108

World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD), Technical Guidance for Calculating Scope 3
Emissions, April 23, 2013.

109

BHP, Scope 1, 2 and 3 GHG Emissions Calculation Methodology 2022, September 6, 2022.

65

The Task Force on Climate-related Financial Disclosures

Figure C1

Breakdown of Our Scope 3 GHG Emissions by Category in FY 2022 Disclosures
Scope 3 GHG emissions by category (MtCO2-e)1Year ended 30 June

Upstream
Purchased goods and services(including capital goods)2
Fuel and energy related activities
Upstream transportation and distribution3
Business travel4
Employee commuting4
Downstream
Downstream transportation and distribution5
Investments (i.e. our non-operated assets)6
Processing of sold products7
GHG emissions from steelmaking8– Iron ore processing to crude steel– Metallurgical coal processing to crude steel9
Copper processing10
Nickel processing11
Total processing of sold products
Use of sold products
Energy coal12,13
Natural gas13
Crude oil and condensates13
Natural gas liquids13
Total use of sold products
Total Scope 3 GHG emissions
Total Scope 3 GHG emissions(adjusted for divested operations)14

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

2022

2021

2020

9.9
1.0

10.1
1.1

9.8
1.2

4.6
0.1
0.3

4.8
0.1
0.4

4.6
0.1
0.2

3.2
2.7

3.1
2.7

2.9
2.7

305.3
270.8
34.5
1.0
0.3
306.7

300.5
260.7
39.8
1.0

292.9
252.8
40.1
1.0

301.5

294.0

37.6
17.4
15.9
1.7
72.6
401.2

38.3
19.5
16.8
1.8
76.4
400.1

56.4
20.6
17.9
1.9
96.8
412.3

364.3

359.7

369.5

BHP, Annual Report 2022, pp. 50–51
Note: Footnotes 1–14 can be found in BHP’s 2022 Annual Report.

Our approach to calculating Scope 3 GHG
emissions is aligned with the GHG Protocol.
We calculate GHG emissions from Processingof Sold Products by each of our significant
commodities. We also make assumptions on
the most common process type the significant
commodities can go through and the associatedindustry-average GHG emission factor per input
volume of our commodity.110 The commodities
not covered have comparably lower volumes— and associated GHG emissions — and thevariety of end uses associated with thesecommodities means applying a meaningful
average GHG emission factor is challenging.

The following paragraphs describe an exampleof how we calculate GHG emissions from theprocessing of iron ore to steel. For calculationof Processing of Sold Products, we use the“average-data” method outlined in the Technical
Guidance for Calculating Scope 3 Emissions,which involves applying industry average
emission factors to production volumes foreach commodity to determine a GHG emissions
estimate.111 As part of our annual reporting,
we obtain independent limited assurance overcertain sustainability data and disclosures in
our Annual Report, which includes Scope 3 GHG
emissions and the calculation approach.112

110

For example, we use data from the International Energy Agency’s Iron and Steel CCS Study, April 2013 and Iron and Steel Technology Roadmap,
October 2020. For details, refer to pages 18 and 19 and Appendix 1 in BHP Scope 1,2 and 3 GHG Emissions Calculation Methodology 2022,
September 6, 2022.

111

WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.

112

Refer to Independent Assurance Report in section 7.19 of our Annual Report 2022 for further details.

66

The Task Force on Climate-related Financial Disclosures

Example Calculation: GHG Emissions
from Steelmaking
Most steelmaking by our customers occurs
through a process that follows the blast
furnace-basic oxygen furnace (BF-BOF)
route.113 We estimate the volume of crude steel
that can be produced from our iron ore andapply the International Energy Agency’s (IEA’s)
industry average GHG emission factor per tonof crude steel for the BF-BOF route. This GHG
emission factor may not accurately represent(geographically, technologically, or temporally)
the actual GHG emissions intensities of ourcustomers’ facilities, but it is consideredsufficiently representative of average industry
conditions to provide a meaningful estimation.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

We have entered several collaborative
partnerships with customers and research
institutions to support the trial and pilotingof solutions designed to reduce the GHG
emissions intensity of existing steelmaking
routes — and to help support the establishmentof low-emission production routes. We arealso currently working with our customers
in the steel sector to understand their ability
to provide GHG emission factors to allow us
to improve the accuracy of our calculations
over time. Some of the challenges associatedwith a more accurate calculation include GHG
emissions measurement capability and maturity
in our customer locations, commercial andconfidentiality concerns regarding data sharing,and the potential for inconsistent measurement
approaches to be applied across ourcustomer base.
Another challenge in the calculation of Scope
3 GHG emissions from steelmaking is theoverlap of reporting boundaries. In addition
to iron ore, steel production from the BF-BOF
process route consumes metallurgical coal as
an input, a portion of which is also produced
by BHP. Therefore, some form of allocationof GHG emissions is needed to avoid double
counting within the Scope 3 GHG emissions
inventory for these two commodities. Currently,
no guidance exists on how to manage thisallocation, however we have approached thisby an apportionment of the steelmaking Scope
3 emissions based on the mass ratio of iron ore
and metallurgical coal needed to produce a tonof crude steel.

Developing Industry-Specific Guidance
The lack of industry-specific guidance on Scope
3 GHG emissions calculation is a key challenge
for us. At the time of this report, there is no113

GHG Protocol Scope 3 guidance specific to themining industry, and the general guidancehas sometimes been difficult to apply to ourparticular circumstances. For example, someof our products have a number of potential
downstream applications, each of which will
have a different GHG emissions profile — andthe eventual end uses of our products may be
unknown. In these cases, we must make various
assumptions about the most likely processing
route or end use and, in doing so, unavoidably
introducing an additional source of uncertainty
into our reported Scope 3 GHG emissions
inventory. To improve consistency of reporting
across the industry on these issues, we are now
working with the International Council of Mining
and Metals to develop supplementary guidance.

Lessons Learned
We have learned that improving the accuracyof disclosures — in addition to efforts by ourcustomers and suppliers to reduce Scope 3
GHG emissions — has, and will continue to,require time. A large share of our reported
Scope 3 GHG emissions inventory comesfrom processes that are considered hard-toabate (particularly steelmaking and shipping)
and will require investment in research, earlypilots, and commercial trials intended tobring low-emission solutions to maturity. In
these industries, investment now is crucial.
Steelmaking assets are capital-intensive
and have a long life, so opportunities for
substantial decarbonization exist primarily in
two timeframes — when a new asset is built or
when an asset undergoes major refurbishment,
which typically occurs 15 to 20 years into
its operational life. For these reasons, early
investment in pilots and trials to decarbonize
the steelmaking industry may not achievematerial GHG emissions reductions for decades
to follow. We also know that measurement
improvements are vital to accurately accountfor Scope 3 GHG emissions reductions in thevalue chain. It is challenging both to influence
Scope 3 GHG emissions reductions in the value
chain and to see improvement in the accuracyof Scope 3 GHG emissions measurement. To
manage these challenges, we have learned toprioritize wherever our efforts can have thehighest potential impact.
To support both improved data accuracy andprogress towards GHG emissions reduction,
engagement across the value chain is required
to align incentives. We have learned that themost impactful partnerships can be created
where the source of Scope 3 GHG emissions

See the following to learn more about different steelmaking processes: World Steel Association, The Steelmaking Process, January 23, 2022.

67

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendicesin our inventory is material and where wehave influence — which depends both on ourleverage in the value chain and the maturityof the value chain. The maturity of the value
chain in relation to climate-related issues
differs between industries. Both materiality
and influence must be considered in orderto evaluate the potential impact that canbe achieved. For example, we are a major
charterer of ships and — although this is aless-material Scope 3 GHG emissions source
for us than steelmaking — we can have asignificant influence on the industry throughour procurement decisions and vessel selection.
We have implemented a decision support andreporting system that allows us to take into
account GHG emissions in our vessel selection
criteria. We also look for opportunities toinfluence progress towards the decarbonizationof the shipping industry by tendering for new
and emerging low-emissions vessels andfuels. This helps to provide a demand signal
and supports the industry in overcomingcommercial barriers.
Finally, we have learned that — in addition
to alignment of value chain incentives —alignment with both internal and external
stakeholders such as investors is important.
Management of our approach to Scope 3 GHG
emissions occurs across lines of business,markets, and functions. We have therefore
made a targeted effort to build capacity aroundclimate-related issues in the organization
and with our external stakeholders. It has
proven important to engage with senior
management across relevant functions aswell as our external stakeholders as early as
possible to ensure everyone is aligned in theirunderstanding of the risks and challenges
associated with Scope 3 GHG emissions, interms of both reporting and achieving our
reduction goals. It is becoming increasingly
important that people throughout ourorganization continue to build theirknowledge and closely monitor climate-related
developments in order to understand where
they can have the most influence in their role.

Case Study by a Global Risk
Assessment Firm
Moody’s is an integrated risk assessment
firm that provides credit ratings, risk analysis,
research, and other services. We have set andvalidated near- and long-term net-zero targets
with the goal of achieving decarbonization
across our value chain. As such, our targets are
centered on reducing all three scopes of our
GHG emissions and increasing the proportion of
suppliers that have set science-based targets.114
For example, we set a target that 60% of the
suppliers of our purchased goods and services— by spend — have science-based targets by
2025.115,116 See Figure C2 (p. 69) for more detailon our targets.
Our response to the TCFD recommendations
followed the initial confirmation of support
signed by our Chief Executive Officer andChief Financial Officer in June 2017; andRichard Cantor, Vice Chairman of Moody’s
Investors Service, serves as a member of the
Task Force. We have been disclosing in linewith the TCFD recommendations — including
our GHG emissions inventory — since then.
Our annual disclosures of the GHG emissions
inventory are important to support theachievement of our targets. We disclose
our GHG emissions inventory through our
Stakeholder Sustainability Report, TCFD Report,
and response to the CDP Climate Change
questionnaire.117 Scope 3 GHG emissions
comprise 99% of our total Scope 1, 2, and 3
GHG emissions inventory (see Figure C3, p. 69,
for disclosure of our GHG emissions). Our mostmaterial category of Scope 3 GHG emissions iscategory 1, Purchased Goods and Services. As
a result, supplier data are a key area of focus inour disclosures.

114

We also have carbon offset projects that were chosen based on funding certified projects, the geographies where we operate, and alignment
with the Sustainable Development Goals. Although carbon offsets neither reduce our own carbon footprint nor are considered in our net-zerotarget, they do support voluntary carbon market development and reduction of GHG emissions elsewhere in the global economy.

115

We are also targeting 15% Scope 3 GHG emissions reductions in the categories of fuel and energy-related activities, business travel, andemployee commuting. Actions to achieve this include the following: 1) lower business travel by imposing an internal carbon price on air travel, 2)
lower employee commuting by implementing a hybrid work model and supporting work-from-home capabilities, and 3) reduce fuel and energyrelated activities that cause GHG emissions by implementing initiatives that promote energy efficiency across our global real estate portfolio andto procure 100% renewable electricity for global operations.

116

GHG emissions and targets are calculated in accordance with the GHG Protocol Reporting Standard and the SBTi guidance — and are externallyvalidated in accordance with the latest SBTi Target Validation Protocol.

117

See Moody’s, 2022 Stakeholder Sustainability Report, May 3, 2022; Moody's, 2022 TCFD Report, April 19, 2023; and Moody’s, Moody’s Corporation
2022 CDP Response, July 28, 2022.

68

The Task Force on Climate-related Financial Disclosures

Figure C2Our Science-Based Targets

50%

15%

Reduction in absolute Scope 1 andScope 2 GHG emissions by 20231

Reduction in Scope 3 GHG emissions
from fuel and energy-related activities,business travel and employee
commuting by 20251,2

60%

Of our suppliers by spend coveringpurchased goods and services andcapital goods to have science-basedtargets by 2025
Target in progress

92%
Exceeding target

95%

92%

81%

76%
Exceeding target

2020

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

2021

2022

2020

49%
68%

2021

2022

25%

24%

2019

2020

28%
2021

2022

Moody’s, 2022 Stakeholder Sustainability Report, p. 25
Note: Some content was reformatted in order to fit the page.

Figure C3

Our Total Absolute GHG Emissions
GHG emissions (mtCO e)
2019

2020

2021

2022

Scope 1

1,744

919

851

810

Scope 2 market-based2

13,591

2,745

432

440

Scope 3

171,260

112,158

121,290

137,981

Purchased goods and services 122,500

86,000102,900

106,100

Capital goods

5,600

12,200

7,900

9,900

Business travel

23,100

3,300

1,480

10,300

Employee commuting

10,400

3,100

208

1,300

Investments

6,100

6,900

8,500

10,100

Other 3

3,560

658

302

281

186,595

115,822

122,573

139,231

0.20%4D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesTotal Scope 1, Scope 2
market-based, Scope 3

0.94%
7.32%
7.46%
7.17%

2022 Scope 3
emissionsbreakdown
76.89%[...]

2019, 2020 and 2021 purchased goods and services (Scope 3, Category 1), capital goods (Scope 3, Category 2) and fuel and energy-related activities (Scope 3, Category 3) GHG emissions were restated as a result ofchange in methodology and access to improved data.
Scope 2 location-based emissions were as follows: 2022 – 7,696 mtCO2e, 2021 – 6,878 mtCO2e, 2020 – 8,767 mtCO2e and 2019 – 14,035 mtCO2e.
3
Other includes fuel and energy-related activities (2022 – 200 mtCO2e, 2021 – 230 mtCO2e, 2020 – 590 mtCO2e and 2019 – 3,100 mtCO2e) and waste generated in operations (2022 – 81 mtCO2e, 2021 – 72 mtCO2e
2020 – 68 mtCO2e and 2019 – 460 mtCO2e).
4
Moody’s,
2022fuel
TCFD
p. 36activities (0.14%) and waste generated in operations (0.06%).
Other includes
andReport,
energy-related
5
Emissions
all ofﬁces
ﬁnancial control.
Squaremanagedofﬁceswas
and excludes
shared-spaceofﬁcesdue to data limitations. The impact is expected to be not material, with em
Note:
Someinclude
content
wasunderreformatted
in ordertofootage
fit theincludes
page; Moody’s
and some
content
removed,denotedby […].
in shared-space ofﬁces accounting for approximately 0.7% of total GHG inventory in 2022.
1

2

Our Approach to Scope 3 GHG Emissions
Disclosures and Challenges Faced
We calculate Scope 3 GHG emissions from our
supply chain according to the GHG Protocol
and use a methodology based on supplierspecific data, when available.118 We leverage

118

industry-based emissions factors to augment
gaps in supplier-specific data. Doing so allows
us to have more precise and complete data
and aligns us with the GHG Protocol guidanceon supply chain Scope 3 GHG emissions. It alsoenables us to effectively track progress on ourdecarbonization targets.

WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.

69

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

We measure supply chain Scope 3 GHG
emissions for nearly 500 of our top suppliers —by spend — which jointly cover approximately
90% of our total spend. Our top 500 suppliers’
Scope 1, Scope 2, and upstream Scope 3 GHG
emissions are calculated based on their CDP
responses which are accessible in standardized
data types. We attribute the company-level
GHG emissions to our Scope 3 supply chain GHG
emissions based on our spend. For suppliers
that do not report to CDP, we use a spendbased methodology that estimates Scope 3
GHG emissions inventories by multiplying our
spend with a particular supplier by inflationadjusted industry-based GHG emissions factorsthat are sourced from the GHG Protocol Scope
3 Evaluator tool.119 Results from our top 500
suppliers are then extrapolated to our
total spend.

a time-consuming effort, and it can be difficult
to evaluate what the most appropriate NAICS
code for our suppliers’ activities are and matchthat with emissions factors.

Expansion of the Coverage of Suppliers

We actively engage with our suppliers toencourage them to respond to the CDPquestionnaire so that we can leverage their
specific emissions data. The engagement further
aims to encourage suppliers to set sciencebased targets in line with our targets. In 2022,
we engaged nearly 500 suppliers in partnershipwith CDP’s supply chain membership andconducted targeted engagement with suppliers
that have the highest impact on our targets.
In certain cases, this included incorporating
language that addresses how to meet climate
requirements in our contracts. Additionally, wearranged one-on-one discussions between key
suppliers and leaders from our executive team.

Since first reporting our supply chain Scope
3 GHG emissions in 2019, we have worked to
improve our disclosures, the cornerstone ofwhich has been expanding the coverage ofsupplier-specific GHG emission data across our
supply chain. When we first began reporting
supply chain Scope 3 GHG emissions, wecollected supplier-specific data for our top 100
suppliers, which we increased to 500 in 2021.
In the same year, we restated our Scope 3
GHG emissions for 2019 and 2020 to include
our top 500 suppliers and merger andacquisition activity.
As we expanded our coverage of suppliers,
mapping company names between our internal
systems and the CDP database required manual
effort. Given that many company names arecoded in CDP differently from our internal
systems, mapping our suppliers to the CDP
database became a key challenge. Certain
suppliers disclose through a parent company
or by using identifying details — such as trade
names — that may be entered differently in
the CDP database. Our mapping allows us topartially automate the process, reducing theeffort required in the future.
Identifying the most appropriate GHG
emissions factor for the suppliers that do notreport climate-related information requires
manually identifying the most relevant
industry GHG emissions factors. This involves
categorizing each company with a North
American Industry Classification System(NAICS) code, which classifies business activities
across more than a thousand industries. This is

Increased Use of Supplier-Specific Data
We are further making efforts to move fromindustry-based GHG emission factors to
supplier-specific data in order to better track
the progress of our suppliers’ GHG emissions.
Increasing the use of supplier-specific data ischallenging, as many suppliers do not reportclimate-related information. In particular, manysmaller companies do not respond to CDP, as
it can be a challenge to fill out the extensive
questionnaire. It should also be noted that
CDP’s data are at the company level; andproduct-level climate-related data arevery scarce.

We have also put in place internal policies andincentives that further advance our supply
chain Scope 3 GHG emissions disclosures. For
example, Moody’s Supplier Code of Conduct
encourages suppliers to disclose their carbon
footprint and set science-based targets of theirown. Starting in 2022, sourcing managers —managers in our procurement function who are
involved with sourcing vendors — are required
to complete a responsible sourcing training
module that focuses on how to incorporate
responsible sourcing metrics, such as sciencebased targets, into contract decisions.
Additionally, we provide incentives for certain
employees to proactively manage and address
climate-related issues.120

Lessons Learned
In developing calculations for supply chain
Scope 3 GHG emissions, we have come torealize how important it is for us to prioritize
our efforts. In our first year in this endeavor,

119

Quantis, “Scope 3 Evaluation Tool,” Accessed July 1, 2023.

120

See Moody’s, Moody’s Corporation 2022 CDP Response, July 28, 2022 (pp. 7–8) for additional information about these incentives.

70

The Task Force on Climate-related Financial Disclosures

we prioritized collecting supplier-specific dataand industry-based emission factors from our
top 100 suppliers by spend. Since then, we havesignificantly increased the number of suppliers
to cover 90% of our spend; however, we are notcollecting GHG emissions data for all of them.
That remaining share of suppliers comprises
thousands of companies, and because collecting
data for each of them would add only limited
accuracy at a substantial effort. We instead
cover these suppliers by extrapolating GHG
emissions data from the other suppliers forwhich we have that information.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

We have also learned that there can bea material difference between industrybased emission factors and reported GHG
emissions from our suppliers. Effective supplierengagement to encourage transparency of GHG
emissions is critical to improve our disclosuresof supply chain Scope 3 GHG emissions anddecarbonization actions such as science-basedtarget setting — as decarbonization of our
upstream Scope 3 GHG emissions depends on
the actions of our suppliers.
This requires close collaboration between the
procurement and sustainability teams, as the
procurement team is best suited to engage
with suppliers, while the sustainability teamhas specific expertise. It is important that thesustainability team provide the procurement
team with a technical review and detailed
documentation to guide the engagement.
Finally, it has become clear that the restatingof Scope 3 GHG emissions due to changes
in the organization or improvement of themethodology is a natural part of the process.
We are continuously working on improving
our disclosures, which in some years has
required us to restate our disclosed Scope
3 GHG emissions. With clear explanationsof the updates, our experience is that such
restatements have been well-received by
the stakeholders.

Case Study by a Global
Automotive GroupFORVIA is a French-domiciled automotive
group recently formed through the acquisitionof HELLA by Faurecia. We produce vehicle
interiors, seating systems, mobility systems,lighting, and electronics for automated vehicles
that are produced and sold globally. Climatechange is one of the more urgent disruptions
the world is facing, and we believe that, as acompany, we play a key role in facing up to thischallenge. We can have a positive impact on theplanet through, for example, reducing our GHG
emissions and offering solutions for sustainablemobility. We have committed to the Science
Based Targets initiative's (SBTi's) most ambitious
standard and are aiming to — by 2045 — reduce
our absolute Scope 1, 2, and 3 GHG emissions
by 90% from 2019. To support decisions in linewith this commitment, we developed an internalcarbon dioxide (CO2) price in 2021.121
Scope 3 GHG emissions constitute the majorityof our emissions and category 1, Purchased
Goods and Services, is one of the moresignificant contributors to those emissions.
Faurecia has been working with Ecovadis since2017 for in-depth assessment of our suppliers'
ethical, social, and environmental practices. This
year, HELLA will be included in the scope of thisassessment as well.
Faurecia has applied the TCFD framework in our
climate-related disclosures since 2019. Accurate
disclosures of GHG emissions are importantfor us to support the achievement of ourdecarbonization targets and inform businessstrategy. We further need to frequently
update our GHG emissions — at least twice
annually — in order to monitor performance.
Manually calculating Scope 3 GHG emissions
would be a time-consuming endeavor, as
we have thousands of suppliers. We havetherefore developed tools that automate certain
calculations and parts of the data collection
process for upstream Scope 3 GHG emissions.
In the following pages, we describe how wedeveloped these tools as well as the insights wehave gained.

Our Approach to Scope 3 GHG Emissions
Disclosures and Challenges Faced
FORVIA follows the GHG Protocol to quantify
and categorize Scope 3 GHG emissions. We
disclose our Scope 3 GHG emissions acrossall 15 categories of the GHG Protocol in ourannual universal registration document, alongwith a qualitative estimate of uncertainty anda description of the methodologies used (seeFigure C4, p. 72). Within our upstream Scope 3
GHG emissions, category 1, Purchased Goods
and Services, and category 4, Upstream Transportand Distribution, are most significant.122
FORVIA uses dedicated tools to collect dataand calculate upstream Scope 3 GHG emission
categories. To reduce the uncertainty of thesecalculations, it is necessary to collect primary

121

FORVIA, Sustainability Report 2021–22, November 1, 2022.

122

WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.

71

The Task Force on Climate-related Financial Disclosures

Figure C4

Breakdown of Our Scope 3 GHG Emissions by Category
Faurecia

FORVIA

Faurecia

FORVIA

Faurecia

FORVIA

Level ofuncertainly

Scope 1 directemissions

156,000

213,000

173,000

231,000

121,000

170,000

low

Scope 2 indirectemissions

707,000

992,000

526,000

804,000

478,000

660,000low

SCOPES 1 AND 2(INTERNAL EMISSIONS)

863,000

1,205,000

699,000

1,035,000

599,000

830,000

LOW

Purchased goods andservices

6,218,000

8,102,000

5,227,000

7,103,000

6,502,000

8,177,000

mediumCapital goods

389,000

614,000

253,000

530,000

304,000

573,000

high

Fuel & energy related
emissions

245,000

359,000

208,000

319,000

203,000

302,000

low

Upstream transportand distribution

783,000

944,000

909,000

1,094,000

1,079,000

1,262,000

mediumWastes generated

186,000

202,000

121,000

134,000

119,000

141,000

medium2019 baseline

Scope 1

Downstream

B.
Financial Statement
Considerations

Scope 3

A.
State of Climate-Related
Financial Disclosures

Controlled

Upstream

Scope 2C.
Case Studies on Scope 3
GHG Emissions

Business travel

68,00076,00018,00020,00042,00050,000medium

Employee commuting

176,000

230,000

137,000

179,000

175,000

209,000

mediumUpstream leased
assets

50,00058,00054,00062,00058,00065,000medium

Downstream transportand distribution

118,000

167,000

112,000

168,000

127,000

183,000

mediumProcessing of soldproducts

85,000278,000

73,000239,000

81,000275,000

high

Products end of life

228,000

681,000

219,000

668,000

331,000

682,000

medium

Downstream leased
assetsF.
Insights Gained and View
on Future Work
Appendices

Uncontrolled

E.
Types of Financial Impact
and Associated Drivers

N/A
N/A

Franchises
23,00096,00023,00080,00026,00065,000mediumSCOPES 1, 2 AND
CONTROLLED SCOPE 3(EXCLUDING THE USE
OF PRODUCTS)

9,432,000

13,012,000

8,053,000

11,631,000

9,646,000

12,814,000

MEDIUM

Use of products sold in
the car19,240,000

23,776,000

14,029,000

18,148,000

18,627,000

22,817,000

mediumSCOPE 3 TOTAL

27,809,000

35,583,000

21,383,000

28,744,000

27,674,000

34,801,000

MEDIUMSCOPES 1, 2 AND 3
TOTAL

28,672,000

36,788,000

22,082,000

29,779,000

28,273,000

35,631,000

MEDIUM

Investments

D.
TCFD-Aligned Requirements
and Related Initiatives

2022

2021

Forvia, 2022 Universal Registration Document, p. 330
Note: Some content was reformatted in order to fit the page.

data at the most granular level possible.
To do so, we use automated tools to collectprimary and secondary data and perform GHG
emissions calculations, applying proprietary
methodologies we have designed in-house. The
tools increase accuracy while saving time forour teams to focus on analyzing the results anddecarbonization plans.

Calculation of Emissions from Purchased Goods
and Services
For the calculation of GHG emissions fromPurchased Goods and Services, our tool collects
data from our Enterprise Resource Planningsystem — such as item type and supplier details— and then finds and applies the most accurate
cradle-to-gate GHG emission factor available.
We give priority to supplier-specific emission
factors, and if they are not available, we use —by order of availability — quantity-based, thenspend-based emission factors.
We currently cover around 55% of Faurecia’s
total purchased goods emissions with supplierspecific or quantity-based GHG emission
factors. We aim to refine our estimates bycollecting more supplier-specific factors moving
forward; however, the automotive industry
is not yet mature in terms of calculating andsharing products’ GHG emission data. The
complexities surrounding the products andvalue chains are significant, largely due tothe multiple materials, process stages, andsuppliers involved with each. Hence, we havestarted to collect supplier data for commodities
within less-complex value chains and large
players used to calculating and reporting GHG
emissions (e.g., steel, chemicals).
72

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesIn the case of calculations using quantitybased emission factors, we have an internal
database of cradle-to-gate GHG emission
factors for materials and components byweight. The weight by material of the purchased
items is first collected from the International
Material Database System through which
automotive companies provide details of thematerial and component composition of theirsold products.123 The tool then proceeds tomatch the item with the most appropriate
GHG emission factors — using the material
segmentation — to estimate the Scope 3 GHG
emissions. The spend-based emission factors,
used as a last resort, are calculated using
the Scope 3 GHG emissions of similar “proxypurchases” for which quantity-based emission
factors can be used.
For purchased services, Faurecia has partneredwith a digital solution to offer the suppliersa high-level GHG emission estimation at alower cost. We also use this tool to send aquestionnaire to our service providers to collect
their total GHG emissions data, which we use to
estimate a spend-based GHG emission factor
that we apply to our spend with them. We alsocollect other climate-related information fromour suppliers via this tool to better understandtheir transition plans.

Calculation of Emissions from Upstream
Transportation and Distribution
For Upstream Transportation and Distribution,
we have implemented a Transport Management
Solution that allows us to collect — for eachtrip — the actual load weight and distancetraveled, the name of the carrier, and the meansof transport. We have also partnered with aservice provider to collect GHG emission factors
by carrier. Coupling these data points allows us
to calculate GHG emissions. We plan to improve
our calculations by increasing the coverageof the Transport Management Solution andcollecting more GHG emission factors
from carriers.

Lessons Learned
Calculating the GHG emissions of our major
Scope 3 categories for Faurecia twice instead of
only once per year has significantly improved
our monitoring of progress towards ourdecarbonization targets. This frequency helps
us evaluate our initiatives to ensure efficiency
and supports strategic and operational
decisions. Further, it supports a continuous
dialogue with internal and external stakeholders
regarding our Scope 3 GHG emissions.

123

Calculations of Scope 3 GHG emissions twicea year would not have been realistic without adedicated tool that supports the calculation anddata collection processes.
Building a proprietary tool for GHG emission
calculations requires having the right IT
infrastructure in place. When we began, ourIT systems did not support GHG emissions
calculations as these calculations requireconnecting systems and databases fromdifferent parts of the organization. For example,
we had to connect our Enterprise Resource
Planning system to databases containing
emission factors. To enable this, we had toconsolidate GHG emission factors in a single
database, which had not been systematizedprior to the project. Today, we have around6,000 GHG emission factors in our database andare adding more to further improve granularity
and accuracy. The database is maintained
centrally with a strict governance policy toensure accuracy and traceability.
Further, when building a tool for GHG emissions
calculation, it can be useful to leverage external
databases and off-the-shelf tools. Building
everything in-house becomes very timeconsuming and there are often products thatcan be tailored and integrated as part of asolution. An example is the external solution fortransport management we recently purchased
and integrated into our calculation tool.

Case Study by an Integrated Energy
and Chemicals Company
Sasol is a South African integrated energy andchemicals company, and our products are sold
across 118 countries. We are committed toaddressing the challenges of climate change andtaking steps to reduce our carbon footprint inline with our 2050 net-zero ambition. To achieve
this goal, we are applying a three-pillar action
framework that involves reducing emissions,transforming our business, and shifting ourportfolio to low carbon product solutions (seeFigure C5, p. 74). The implementation of the
TCFD recommendations is a key part of ourtarget-setting and evaluation processes, andwe have embraced the TCFD framework in
our reporting since 2018 as one of the earliest
adopters in the region.

Our Approach to Scope 3 GHG
Emission Disclosures
Scope 3 GHG emissions are an important partof our target-setting and TCFD-aligned

See “International Material Database System,” Accessed July 1, 2023.

73

The Task Force on Climate-related Financial Disclosures

Figure C5

Our Target Setting Approach
Our target-setting approach centered on the three-pillar emission-reduction framework

Sasol’s target setting and roadmap development approach
What is expected?

What can we achieve?

Holistically assess and phase options

Top-down

Bottom-up

People, Planet and Profit lens

Evaluate technical mitigation
options for scope 1, 2 and 3

REDUCE• Fair share and other science-based1
target setting methodologies• Nationally Determined
Contribution (NDC) implications• Benchmarking• Understanding carbon budgets

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

TRANSFORM

ENVIRONMENTSOCIALSHIFT

FINANCIAL AND
OTHER• Required enablers• Risk• Emission abatement • Business case• Schedule andpotential
timing• Ease of integration

Just
Transition

Develop pathways to 2025
Integrate, package andapprove final targets
and ambition

C.
Case Studies on Scope 3
GHG Emissions

Assurance

Test robustness

Qualitativerobustness testingD.
TCFD-Aligned Requirements
and Related Initiatives• Combine top-down and bottom-up
approaches• Apply CDR offset approach• GEC and Board decision-making

E.
Types of Financial Impact
and Associated Drivers• Second and third-party audits• C omparative assessment against
external studies

Current Pathway
Cooperative World
Accelerating to
1,5oC

1. Science-based target initiative (SBTi) is still in the process of finalising an oil and gas and chemicals module, which was not available for use.
Other science-based approaches were used. We continue to monitor the landscape and will assess the applicability of these methodologies
once released.

F.
Insights Gained and View
on Future Work

Sasol, Climate Change Report 2021, p. 8
Note: Some content was reformatted in order to fit the page.

Appendicesdisclosures.124 Today, Scope 3 GHG emissions
total 37,557 CO2e (kilotons), and areapproximately 37%, of the company’s total
emissions (see Figure C6, p. 75). The largest
portion of these emissions originates fromthe use of our sold products in South Africa.
We acknowledge the need to also reduce our
Scope 3 GHG emissions. Accordingly, we set
an interim target to reduce absolute Scope
3 emissions for GHG Protocol category 11(Use of Sold Products) by 20% by 2030, withthe ambition of achieving net zero for theseemissions by 2050. We are cognizant of ourrole in the economy and the global energy andchemicals ecosystem, and as such we approachclimate management of our downstream and124

upstream operations with the care and nuancenecessary to ensure that our actions have apositive impact on society at large.
We began reporting our Scope 3 GHG
emissions in 2010 and have made significant
improvements to our calculation methodologies
over this period. Today, our approach to
calculating these emissions is tailored to each
emission category. We strive to use the mostappropriate methodologies for each category
while aligning with the principles of the
GHG Protocol.
It can be difficult to determine how to best apply
existing standards and guidance documents
to our complex operations given the rapidly
evolving Scope 3 GHG emissions reporting

WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.

74

The Task Force on Climate-related Financial Disclosures

Figure C6

GHG Emissions per Category
Category

)

)

)

)

Accounting
accuracy

N/A

Not measured
N/A
Baseline under development

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

N/A

Total
Highly Certain

Moderate Certainty

Low Certainty

Unknown

Not applicable

Subjected to external assurance.

Sasol, Climate Change Report 2022, p. 32

landscape. As such, we augment existingguidance with internal research and expertise,
as well as a wide range of external sources
most applicable to each category. However,
it is important to recognize that Scope 3
GHG emission calculations rely on a varietyof assumptions and, therefore, attaining
complete accuracy is not always feasible.

Examples of Category-Level Methodologies
In the case of category 1, Purchased Goods
and Services, we use data on the volume ofpurchased goods and services obtained from
our internal data management systems withcradle-to-gate emission factors from a variety
of data sources, including Sphera’s Life Cycle
Assessment (referred to as GaBi), the U.K.
Department for Environment Food and Rural
Affairs (DEFRA) as well as our internal lifecycle
inventory database. For our most significant
category, Use of Sold Products (category 11),
we assume complete combustion of applicablesold products and use emission factors from
our internal analysis, augmented by additional
details from DEFRA and GaBi as necessary(see Figure C7, p. 76). Having access to thesethird-party data sources has been helpful inboth validating our initial assumptions as wellas improving on them. We also leverage external
auditing, which has been helpful in confirmingthat the requisite checks and balances are inplace, while working internally to strive towards
improved data accuracy.

Improving the Reliability of Scope 3 GHG
Emission Estimates
Over the past few years, we have taken several
measures to strengthen the robustness of our
Scope 3 GHG emission calculations. Although
our Scope 3 GHG emissions program focuses on
all 15 categories of emissions (some of which are
not relevant to our operations), we have paid
particular attention to improving the calculation
approach of our largest Scope 3 GHG emissions
source, category 11.
For example, we conducted extensive internalstudies to identify emission sources and refine
our internal emission factors. Given our positionin the supply chain, we developed detailed
factors for combustion emissions, which we use
to increase the reliability of our calculations.
Although the amount of work needed to arriveat detailed estimates for this category wassignificant, we have found the results helpful
beyond Scope 3 GHG emission calculations.
One way our detailed knowledge of category 11
factors is particularly useful is in our internal
emission reduction planning. For instance,
knowing how feedstock substitutions impact
our emissions is extremely useful in targeting
our reduction efforts given that our emissions
profile is by and large the result of feedstock
choice.

75

The Task Force on Climate-related Financial Disclosures
Figure C7

Our Methodologies for Categories 1 and 11
1 Purchased

goods andservices
Upstream
emissions fromthe products
purchased or
acquired

Activity data

Volume of purchased goods and services obtained from internal business data
management systems.

Emission factors

Cradle-to-gate emission factors obtained from data sources, such as GaBi, DEFRA and
Sasol’s Lifecycle Inventory Database, based mainly on primary data.

Methodology and assumptions1

Cradle-to-gate emissions, including transport and indirect emissions were used
together with appropriate emission factors. A weighted product carbon footprint wascalculated where country specific emission factors were available.

Value-chain engagement

Continued supplier engagement programme to improve accuracy of emission factors.

Changes to data 2022

Emissions reduced overall, primarily due to the use of more accurate emission factors
for crude oil sourcing.

1. GWP values refer to the time horizon of 100 years, sourced from IPCC, AR5, 2013.

[...]11 Use of sold
Products

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Emissionsfrom the useof good andservices soldActivity data

Complete combustion of all products sold to our customers to generate energy intheir operations.

Emission factors

Derived from internal analysis and also sourced from DEFRA and GaBi database.

Methodology and assumptions

The direct use phase emissions of sold products over their expected lifetime wasconsidered from combustion of natural gas, diesel, petrol and exported coal.

Value-chain engagement

Not applicable

Changes to data 2022

Decrease in emissions primarily due to lower coal sales.

Sasol, Climate Change Report 2022, pp. 61–63
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

While category 11 has been a priority for us,
we have also taken steps to address othercategories. For example, we have reviewed
opportunities to improve reporting of category
1 emissions associated with crude oil sourcing,which provides a more accurate baseline forreporting. This deep dive has also created
opportunities to engage crude oil suppliers
and transporters to investigate potential
emission reduction interventions. We also
implemented measures to increase efficiency in
our vehicles and driver techniques and initiatedan engagement project with our clients andcustomers to improve emission factors. In
addition, we have also fully offset our businesstravel emissions for fiscal year 2021.

Challenges in Scope 3 GHG Emissions
Reporting
We have faced several challenges on our path
to implement the TCFD recommendations. At
the onset, our sustainability team worked hardto generate the necessary internal support andrecognition of the importance of TCFD-aligned
disclosures. With support from our seniorleadership, we made steady progress in ourreporting through methodological improvements
each year.
We also acknowledge that our work to improve
the robustness of our Scope 3 GHG emissions
calculations will need to continue. As of today, we
have several categories for which the certaintyof our emission estimates is lower or unknown,such as Upstream Transportation and End-oflife Treatment of Sold Products. We recognized
early on the need to work more closely with ourclients and suppliers and are actively engaging inthis area to support them in their own climaterelated disclosure processes on which our Scope
3 GHG emissions calculations depend.
A particularly challenging area is in thequantification of GHG emissions from Endof-life Treatment of Sold Products (category12). The complexity of accurately determining
the fate of thousands of products sold into
an even greater number of applications andcountries is particularly difficult. Throughpeer benchmarking, we identified the World
Business Council for Sustainable Development
methodology as being the most appropriate
for undertaking these calculations. These
calculations use the product’s carbon
content and region-specific disposal data toestimate emissions. However, even within thismethodology certain assumptions need tobe made that can yield a range of calculated
outcomes for this category. We are working todevelop a deeper understanding of this categoryof emissions.

Lessons Learned
Our TCFD-aligned disclosure approach has
allowed us to make significant strides in refining
our baseline for Scope 3 GHG emissions, aswell as gain a better understanding of theseemissions to be able to pinpoint opportunities
to reduce them. We acknowledge that
achieving significant reductions will necessitate
fundamental changes to our business model,
which we are currently evaluating in line with
our net-zero ambition by 2050.
76

The Task Force on Climate-related Financial Disclosures

We have learned that reliable Scope 3
GHG emission calculations and continuous
improvements therein cannot be achievedby one team alone. Instead, it requires
integration of various teams from multiple
disciplines within the company (e.g., supply
chain, operations, finance, human resources,
infrastructure management, etc.), managed
through an overall centralized effort. We havefound that a certain degree of centralizationis helpful in both establishing clear roles
and procedures as well as ensuring that
institutional memory is maintained.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

For companies starting out on their Scope
3 GHG emissions reporting journey, it isvaluable to ensure that the reporting systems
being developed have the flexibility to adapt
to the evolving and nuanced reporting
requirements. In addition, it is important thatthe reporting system can accommodate data
and adjustments from a variety of sources,
including internal data systems.
Openly discussing the evolution of our
methodologies builds confidence in ourreporting and supports the growth of TCFDreporting in our industry and across our peers.
Our hope is that our own disclosures will help
others in our value chain to start disclosing
in alignment with the requirements of TCFD,
which in turn will help us improve our scope
calculation approaches through greatercollaboration with our value chain partners.

Case Study by a Global Gaming,
Hospitality, and Entertainment Company
MGM Resorts International is a global gamingand entertainment company with both domestic
and international locations. In 2019, we
conducted a formal ESG materiality assessment
through which we identified climate change as
the highest priority issue for our company. As
a result, we have developed a comprehensive
approach to address the challenges of climatechange, including a long-term climate strategy
and climate governance framework. We
have been committed to voluntary climate
disclosures for a decade and aligned ourreporting with the TCFD recommendations in
2022 when we issued our first TCFD report.
Our climate strategy focuses on reducing
GHG emissions, increasing energy efficiency,
sourcing renewable energy, and advocating forthe transition to a lower carbon economy. We
have established targets for all major areas ofour strategy, including 50% reductions in our
Scope 1 and Scope 2 GHG emissions by 2030.
As of April 2023, we had registered a near-term
commitment with SBTi to reduce absolute Scope

1 and Scope 2 GHG emissions by 50% by 2030
over 2019 figures and to reduce absolute Scope
3 GHG emissions from Purchased Goods andServices, Fuel- and Energy-Related Activities,
Waste Generated in Operations, and Employee
Commuting by 30% within the same timeframe.

Our Approach to Scope 3 GHG
Emission Disclosures
As of today, Scope 3 GHG emissions accountfor a significant portion of our total GHG
emissions (see Figure C8, p. 78). Of these,
51% are attributable to Purchased Goods andServices. Our path to our current Scope 3 GHG
emissions inventory and related calculation
processes began with the GHG Protocol’s
spend-based method using data acquired
from our procurement department. The initial
iterations of our process involved a significant
amount of manual work, including reviewing
and categorizing purchase data to identify theapplicable Scope 3 GHG emission categories
and emission factors. Although our initial
spend-based assessment was labor intensive,
it was an important effort to undertake, as itallowed us to quickly identify Purchased Goods
and Services as the category accounting for thelargest share of our Scope 3 GHG emissions.
More specifically, we identified the Foodand Beverage category (F&B) as the greatest
contributor to our Scope 3 GHG emissions.
As we continuously seek new and different ways
to improve our methods for calculating GHG
emissions, today, we calculate Scope 3 GHG
emissions inventory based on a combinationof methods. For example, we use both weightand industry emission factors to estimate thefootprint associated with our beef consumption.
Our procurement department has recently
begun implementing changes to our internal
systems in order to improve data availability
and quality, which are essential for reliably
assessing our Scope 3 GHG emissions.

Increasing the Specificity of
Our Disclosures
We are working to increase the specificity of
our Scope 3 GHG emissions across our entire
spend, specifically focusing on the F&B category,
which is the single largest emissions segmentof our Purchased Goods and Services. Our aim
is to disclose at a sufficient level of detail in themain categories — including beef and dairy — toallow for more effective supplier engagement
and spend management.
We have partnered with the World Resources
Institute’s “Coolfood” initiative to help calculate
the carbon footprint of our served meals at the77The Task Force on Climate-related Financial Disclosures

Figure C8

GHG Emissions Metrics

A.
State of Climate-Related
Financial Disclosures(i) Any data point that is blue has received external assurance. We submitted our 2022 data for independent third-party verification in April 2023. Seehere for an archive of GHG emission verification statements. Metrics that are externally verified may differ slightly from other reported metrics given
the time of external assurance.
(ii) Absolute Scope 1 and 2 carbon emissions data in this table are unadjusted for the Circus Circus Las Vegas divestiture completed in December 2019.
(iii) Beginning in 2022, Scope 2 emissions have been calculated using both location-based and market-based approaches. Our location-based
emissions reflect the average emissions intensity of grids where our electricity is consumed, whereas our market-based calculation reflects theelectricity that we have chosen through our energy procurement strategies.
(iv) Emissions from purchased goods and services in 2021 differ from our 2021 CDP Climate Change filing, reflecting an update to our activity data
exclusions. The change is an increase in emissions in this category by 42,829 MTCO2e. Additionally, 2019 purchased goods and services differ from
CDP reported metrics based on guidance from SBTi, as part of our climate target baseline validation.
(v) Emissions from capital goods are susceptible to high annual variability due to changes in annual capital expenditures. Examples include purchases
related to major renovation projects.

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesMGM, TCFD Report, p. 23
Note: Some content was reformatted in order to fit the page.

ingredient level (see Figure C9, p. 79).125 Emission
factors sourced from Coolfood help us combine
spend and weight data with publicly-facing andthird-party validated emission factors at the
product level, which increases our confidence inthe resulting estimations. Additionally, Coolfood
goes beyond the supply chain GHG emissions
that are typically reported to also include thecarbon opportunity costs associated with eachfood type. Carbon opportunity costs estimate
the missed potential carbon capture if the land
used for food production — such as cleared
land for cattle feedlots — were instead able toreturn to native vegetation, including forests.
For some of our operations, we also use the
GHG Protocol Scope 3 Evaluator tool from
Quantis to inform our calculations.126
One key challenge we face is the inability toconsistently obtain specific GHG emissions datafrom our suppliers. For example, many of our
suppliers are bulk distributors that may nothave data on the origins of ingredients beyond
a country level. We also source ingredientsfrom smaller companies, many of which are
in an early stage of maturity with regard to

GHG emissions disclosures. Another challenge
we face concerns spend data and today’s
historically high levels of inflation, which inturn can inflate our emissions estimates if
not addressed correctly. Finally, the cost oftransporting goods to our resorts (a distinct
category of Scope 3 GHG emissions per the
GHG Protocol) is often embedded in the costs
we use for our spend-based analysis. This maylead to overestimated Purchased Goods andServices GHG emissions and underestimatedUpstream Transportation GHG emissions.

Managing Our Clients and Suppliers
In addition to seeking more specific data fromour suppliers, we are also beginning to place agreater emphasis on conducting assessments
on how suppliers manage GHG emissions
themselves. As a first step, we have identified
the largest contributors to our Scope 3 GHG
emissions inventory and are exploring ways
to actively engage them to reduce the GHG
emissions in our own supply chain. For example,
we are working with our largest F&B suppliers
to source new products and enhance menu
options, with a target of having 10% of our

125World Resources Institute, “Coolfood,” Accessed July 1, 2023.		

126

Quantis, “Scope 3 Evaluation Tool,” Accessed July 1, 2023.

78

The Task Force on Climate-related Financial Disclosures

Figure C9

Food and Beverage Emissions
Metrics and Goals
MetricAgriculture Supply Chain
Emissions, MTCO2e

Goal

Carbon Opportunity Cost,
MTCO2eTotal Food-Related
Emissions, MTCO2e25%
reduction

2019
Baseline

2022
Performance

2030
TargetChangeNeeded fromBaseline

ChangeAchieved
by 2022

ProgresstoTarget240,401

200,284

180,301(60,100)(40,118)66.8%

953,007

714,755

240,401(238,252)(156,898)

65.9%

1,193,408

895,056

240,401(298,352)(197,016)

66.0%

Proportion of Food-Related Emissions

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Category

Ruminant
Meats

Dairy

Pork

Poultry

Seafood

Eggs

GrainsPercent

66%

12%

7%

6%

4%

3%

2%

MGM, Internal Data.

F&B offerings being low-carbon. We are also
encouraging our clients — including event
organizers — to embrace low carbon menus
and reduce waste through smaller portion sizes.
While important, these efforts are still in theirnascent phases. We are also seeking ways toovercome such challenges as navigating lengthy
contract terms during which changes are noteasy to implement.
Supplier engagement is critical to driving
progress on emissions reduction, and we
intend to leverage the significant work MGM
Resorts has already done in the arena ofsupplier diversity to inform our engagement
strategy regarding embedded carbon. Our
suppliers report their diversity qualifications
in order to enable our reporting, just as theirenvironmental characteristics (e.g., emission
factors) enable greater carbon accounting.
Our Supplier Diversity program has a large
education component and we mentor small,diverse-owned business leaders to give them
the tools they need to do business withMGM Resorts. Incorporating environmental
sustainability and carbon reduction measures
into this education and mentorship program
will help us continue to prepare small
business enterprises to meet the reporting
requirements of MGM Resorts and otherlike-minded companies.

Taking Action to Reduce Scope 3 GHG
Emissions Across Our Own Operations
We recognize that meeting our GHG emission
targets requires dedicated action from MGM
Resorts across the most material Scope 3 GHG
emission categories. In addition to our actionsin Purchased Goods and Services, we are also

reducing our GHG emissions in the category
Waste Generated in Operations. For example,
we aim to reduce the amount of materials
disposed in landfills or by incineration by 75%
by 2030. We are accomplishing this in partthrough significant manual intervention todivert materials from landfills. At Mandalay Bay,for example, materials from throughout theresort are brought to one of eleven recycling
docks where they are hand-sorted for recycling,reuse, composting, or disposal. Reducing foodwaste — and its associated GHG emissions— is particularly important for us as a U.S.
Environmental Protection Agency (EPA) Food
Loss and Waste 2030 Champion, so we conduct
targeted waste-stream audits to identify foodwaste and strategies for diversion.

Lessons Learned
The key lesson we have learned is the importanceof starting with the available data, even if it is not
perfect or complete. Using the spend data as astarting point has helped us to identify our mostsignificant Scope 3 GHG emissions categories
and to prioritize our efforts accordingly.
We have realized that refining our Scope 3
GHG emission calculation across the board as
we move from manual reviews to using datafrom our improved procurement systems isan ongoing process that requires dedicatedtime and effort to improve. As we continue thisjourney, we anticipate that our methodology
will mature, and the usefulness of our data will
expand. Moving forward, we aim to incorporate
more specific data into our procurement
systems, which will help us better understandand manage our GHG emissions across ourvalue chain.
79

D.
TCFD-Aligned Requirements
and Related Initiatives

The Task Force on Climate-related Financial Disclosures

D. T
 CFD-Aligned Requirements andRelated Initiatives
Over the past year, the Task Force has seencontinued momentum around and support
for its recommendations. For example, since
the Task Force released its 2022 status report,over 800 additional companies and otherorganizations have indicated support for the
TCFD, bringing the total number of supporters
to just over 4,850.127,128 Of these supporters,
4,486 are companies and 369 are otherorganizations (e.g., industry associations,
governments). The companies supporting the
TCFD represent a broad range of sectors, withA.
State of Climate-Related
Financial Disclosures

Box D1

Number and Geographic Distribution of TCFD Supporters

B.
Financial Statement
Considerations

4,141
297
1,681

1,681
92

D.
TCFD-Aligned Requirements
and Related Initiatives

Appendices

29%

206
1,360

952

F.
Insights Gained and View
on Future Work

4,855
369
1,831

2,983

C.
Case Studies on Scope 3
GHG Emissions

E.
Types of Financial Impact
and Associated Drivers

a combined market capitalization of $29.5
trillion, including more than 1,800 financial
institutions responsible for assets of $222.2
trillion. These supporters come from allaround the world — as shown in Box D1 —with the Asia Pacific region having the highest
percent of supporters at 51%, largely driven by
supporters in Japan. In addition, 97 of the 100
largest companies in the world have declared
support for the TCFD, report in line with the
TCFD recommendations, or both.129

485
375
2019

Legend:

2,163

115

841

15%

2,655

North
America

1,372

2021

Non-Financial

Other

1–9

Legend:Asia Paciﬁc

Middle East
and Africa

Latin
America

2022 2023 YTD

Financial

2%

3%

725
2020

51%

Europe

10–49

50–99

100–199 200-499 500-999>1000

Number of supporters by country

Another example of the momentum around theTask Force’s recommendations relates to thecontinued efforts of governments, regulators,
stock exchanges, and standard setters toincorporate the TCFD recommendations — infull or in part — into laws, rules, and guidanceon climate-related disclosure or reference therecommendations as a basis for their disclosure
requirements. The Task Force believes its
recommendations have been a key driver ofgreater consistency among major climaterelated disclosure regimes that existed when
the Task Force was created as well as climaterelated disclosure requirements and standards
that have been developed more recently.

As indicated in its 2017 report, “[t]he Task
Force’s recommendations provide a common
set of principles that should help existing
disclosure regimes come into closer alignment
over time. […] The Task Force also encourages
standard setting bodies to support adoptionof the recommendations and alignment withthe recommended disclosures."130

By 2019, several major climate-related
disclosure regimes had incorporated the TCFD
recommendations into their requirements
and guidance, including the Principles for

127

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

128

There were nearly 4,000 supporters at the time the Task Force released its 2022 status report.

129

Forbes, “The World’s Largest Public Companies,” Accessed June 8, 2023. In reviewing the 100 largest public companies, the Task Force identified
whether a company indicated that it reported in line with the TCFD recommendations or planned to.

130

TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017 (p. 33).

81

The Task Force on Climate-related Financial Disclosures

Responsible Investment, the Climate DisclosureStandards Board, and CDP.131 More recently,
the U.S. Securities and Exchange Commission,
the European Parliament, and the ISSB havedrawn on the TCFD recommendations indeveloping proposed climate-related disclosure

requirements or directly incorporated them into
their climate-related disclosure requirements
and standards.132 Figure D1 provides a summaryof these final and proposed requirements andstandards and how they compare to the 		
TCFD recommendations.

Figure D1

TCFD Recommendations Support Alignment across Disclosure Regimes
United States

European Union

International
Standards

Framework

Laws/Regulations

Organization

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Short Title

Recommendations

IFRS S1 and S2

ESRS

CSRD

SEC Proposal

Focus

Climate Change

Sustainability

Sustainability

Sustainability

Climate Change

Required1

Voluntary

Voluntary

Required

Required

RequiredMateriality2

Financial

Financial

Financial/Impact

Financial/Impact

Financial

Finalized

2017

2023

20223

2022

Proposed

Incorporate or draw from the Task Force’s 11 recommended disclosures
1. IFRS S1 and S2 are not required until jurisdictional authorities mandate their use.
2. See Figure D2 (p. 85) for descriptions of materiality.
3. EFRAG delivered final draft standards to the European Commission in late 2022. In July 2023, the European Commission adopted thefirst set of standards.

The rest of this section is organized into threesubsections, as described below.
• T he first subsection provides information
on jurisdictions that have issued final
or proposed climate-related disclosure
requirements that incorporate or draw fromthe TCFD recommendations (referred to as
TCFD-aligned disclosure requirements).
• T he second subsection provides brief
descriptions of efforts — occurring since

the publication of the last status reportin October 2022 — by governments,
regulators, stock exchanges, and internationaland regional standard setters that
support the implementation of the TCFD
recommendations.
• The third subsection provides brief
descriptions of efforts — since October
2022 — by private-sector groups that
support the implementation of the
TCFD recommendations.

Key Takeaways
The number of TCFD supporters has grown this year to just over 4,850, largely driven by support in
the Asia Pacific region.
In June 2023, the ISSB finalized its general sustainability-related and climate-related standards,
which incorporate and build on the TCFD recommendations.
The majority of jurisdictions with final or proposed climate-related disclosure requirements specify
that such disclosures be reported in financial filings or annual reports.

131

See Principles for Responsible Investment, “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework,” December 18, 2017;
the Climate Disclosure Standards Board (now part of the IFRS Foundation), Framework for Reporting Environmental and Social Information,
January 2022; CDP, “How CDP is aligned to the TCFD,” Accessed June 21, 2023; and the Sustainability Accounting Standards Board (now part of
the IFRS Foundation), TCFD Implementation Guide, May 1, 2019.

132

U.S. Securities and Exchange Commission, “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for
Investors,” March 21, 2022; European Parliament and Council of the European Union, Directive 2022/2464 as Regards Corporate Sustainability
Reporting, December 14, 2022; International Sustainability Standards Board, “ISSB Issues Inaugural Global Sustainability DisclosureStandards,” June 26, 2023.

82

The Task Force on Climate-related Financial Disclosures

1. FINAL AND PROPOSED TCFD-ALIGNEDDISCLOSURE REQUIREMENTS
This subsection summarizes final and proposed
climate-related disclosure requirementsthat incorporate or draw from the TCFD
recommendations and were issued bygovernments, regulatory authorities, or stock
exchanges, as shown in Table D1. Currently,
companies in 14 jurisdictions are subject to
TCFD-aligned disclosure requirements, andcompanies in another two jurisdictions will
be subject to such requirements by 2025.133

In addition, three jurisdictions have proposed
disclosure requirements that incorporate or
draw from the TCFD recommendations. These
19 jurisdictions account for close to 60% of
global 2022 gross domestic product.134 In
addition, the requirements cover a range ofcompany types, with some applying to certain
listed issuers, others applying to specificfinancial institutions, and still others applying
to some combination of financial institutions
and large companies. The time frames includedin the table refer to the first fiscal year to which
the requirements apply. 135 136 137 138 139 140 141 142 143 144

Table D1

A.
State of Climate-Related
Financial Disclosures

TCFD-Aligned Disclosure Requirements in Select Jurisdictions
Final Requirements
Threshold

Time
Frame

Brazil: Central Bank of Brazil

Regulated institutions except Segment 5135

FY 2022

Brazil: Securities and Exchange Commission

Regulated issuers

FY 2022

Canada: Office of the Superintendent of
Financial Institutions

Federally regulated financial institutions136

FY 2024

Colombia:
Financial Superintendent of Colombia

Large issuers137

FY 2023

D.
TCFD-Aligned Requirements
and Related Initiatives

Egypt: Financial Regulatory Authority138

Issued capital or net ownership >E£500M

FY 2022

European Union: European Commission139

Large issuers on EU regulated markets140

FY 2023E.
Types of Financial Impact
and Associated Drivers

European Union:
European Parliament and Council

Large EU undertakings subject to NFRD141

FY 2024

Large EU undertakings142

FY 2025

Small and medium EU undertakings143

FY 2026

Non-EU undertakings144

FY 2028

Japan: Financial Services Agency

All issuers

FY 2023

Kenya: Central Bank of Kenya

Licensed institutions

FY 2023

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

F.
Insights Gained and View
on Future Work
Appendices

Jurisdiction: Authority

133

Scope

ReportType

If a jurisdiction has TCFD-aligned requirements in effect now as well as requirements that go into effect in the future, it is counted as a jurisdiction
with requirements currently in effect. This applies specifically to the European Union.

134

For 2022, global GDP was $100.2 trillion (IMF, “IMF Datamapper,“ Accessed June 14, 2023).

135

The requirements address qualitative aspects of governance, strategy, and risk management. Segment 5 includes institutions that account forless than 0.1% of GDP and 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.

136

The requirements apply to 1) domestic systemically important banks and internationally active insurance groups beginning on or after October 1,
2024 and 2) small and medium-sized deposit taking institutions and all other federally regulated insurers beginning on or after October 1, 2025.

137

TCFD-aligned reporting requirements apply to “Group A” issuers, which are defined in Annex 2 of External Circular 031.

138

The Egyptian Financial Regulatory Authority’s announcement is in Arabic; however, the United Nations Sustainable Stock Exchanges Initiatives
provides a summary of the announcement in English.

139

See Article 449a of Regulation 575/2013/EU. While the regulation does not mention the TCFD, the European Banking Authority published final
draft implementing standards on uniform disclosure formats—as required under Article 434a—that incorporate several TCFD elements.

140

The regulation applies to large institutions as defined in Article 4(146) of Regulation 575/2013/EU.

141

The EU issued Directive 2014/95/EU (the Non-Financial Reporting Directive or NFRD) in late 2014 which required large companies to disclose
information on environmental (including climate-related) and other matters beginning in their 2017 financial year reports.

142

See Article 3(4) of Directive 2013/34/EU.

143

See Article 3(2) and Article 3(3) of Directive 2013/34/EU.

144

See Article 40a of Directive 2013/34/EU.

83

The Task Force on Climate-related Financial Disclosures
Table D1

TCFD-Aligned Disclosure Requirements in Select Jurisdictions (continued)
Final Requirements
Jurisdiction: Authority

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Scope

Time
Frame

Threshold

Malaysia: Bursa Malaysia Stock Exchange

Specific listed issuers145

FY 2025

Mauritius: Central Bank of Mauritius

Licensed banks and deposit taking non-banks

FY 2022

New Zealand: New Zealand Government

Issuers: securities >NZ$60M

FY 2023

Banks: assets >NZ$1B

FY 2023

Asset managers: AUM >NZ$1B

FY 2023

Insurers with premium income >NZ$250M

FY 2023

Philippines:
Securities and Exchange Commission

All registrants146

FY 2022

Singapore: Singapore Exchange

Specific industries147

FY 2023

Specific industries148

FY 2024

Employees ≥500 and assets >₣20M or revenues>₣40M

FY 2024

Switzerland:
Financial Market Supervisory Authority

Assets >₣100B or AUM >₣500B

FY 2021

Taiwan: Financial Supervisory Commission

Banks and insurance companies149

FY 2023

Thailand: Central Bank of Thailand

All financial institutions

FY 2023

United Kingdom: Financial Conduct Authority

Issuers of standard-listed shares and GDR

FY 2022

Asset managers: AUM >£50B
Asset owners: AUM >£25B

FY 2022

Switzerland: Federal Council

United Kingdom: U.K. Parliament

Asset managers and asset owners: AUM >£5B

FY 2023

Specific U.K. companies and LLPs >500 employees150

FY 2022

Occupational pension schemes: assets >£5B

FY 2022

Occupational pension schemes: assets >£1B

FY 2023

Threshold

Time
Frame

ReportType

Proposed Requirements
Jurisdiction: Authority

Scope

PhasedAustralia: Treasury

Large entities151

Canada: Canadian Securities Administrators

Regulated issuers

PhasedHong Kong: Hong Kong Stock Exchange

All issuers

FY 2024

Singapore: The Accounting and Corporate
Regulatory Authority and Singapore Exchange

All issuers and large non-listed companies153

PhasedUnited States:
Securities and Exchange Commission

All registrants154

Phased152

LEGEND
Scope (footnotes)145 146 147 148 149 150 151 152 153 154

The

Listed Companies

Task

Financial Institutions

Listed and Private Companies

ReportType

Report Type

Force
Other
reviewed whether these

Financial Filing/Annual Report
Sustainability Report

Other

final and proposed

145

TCFD-aligned reporting requirements apply to “Main Market” listed issuers, which are defined in the Main Market Listing Requirements.

146

All issuers were required to report on a “comply or explain” basis beginning with their 2019 annual reports; and mandatory reporting became
effective three years later, with 2022 annual reports.

147

All issuers are required to report on a “comply or explain” basis for the year beginning on January 1, 2022. See SGX Group, Practice Note 7.6
Sustainability Reporting Guide, June 20, 2016. Issuers in the financial; agriculture, food, and forest products; and energy industries were subject
to mandatory reporting beginning on January 1, 2023.

148

Issuers in the transportation and materials and buildings industries are subject to mandatory reporting beginning on January 1, 2024.

149

See the press releases for “Guidelines for Domestic Banks’ Climate Risk Financial Disclosure” and “Guidelines on Climate-Related Financial
Disclosures of Insurance Companies.”

150

See The Companies Regulations 2022 and The Limited Liability Partnerships Regulations 2022.

151

See p. 6 of the proposed requirements for a summary of the types of large listed and unlisted companies and financial institutions in scope.

152

See Proposed National Instrument 51-107 Disclosure of Climate-Related Matters, October 18, 2021 (pp. 6-11).

153

See pp. 15-16 of the consultation paper for a summary of the phase in for listed companies and large non-listed companies.

154

See p. 290 of the proposed rule for a summary of the phase-in for specific types of registrants.

84

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

TCFD-aligned disclosure requirements specify
how companies should determine materiality
for climate-related reporting purposes. In
its 2017 report, the Task Force indicated thatcompanies should determine materiality forclimate-related issues consistent with how they
determine the materiality of other information
included in their annual financial filings (i.e.,
financial materiality).155 Since then, the EU
issued a directive that requires information
to be reported from a double materiality
perspective whereby companies are required
to report information necessary to understandtheir respective developments, performance,and positions (financial materiality) as wellas the impact of their respective activities onenvironmental, social, and employee matters,
respect for human rights, anti-corruption, andbribery matters (impact materiality). Of the
19 jurisdictions with final and proposed TCFDaligned disclosure requirements, the Task Forcefound that seven included explicit guidanceon materiality in the requirements — either
financial materiality or double materiality (bothfinancial and impact materiality).156 Figure D2
summarizes financial materiality and impact
materiality.
The Task Force also reviewed the final andproposed TCFD-aligned disclosure requirements
to determine whether some form of assurance
is required on the information reported. Of therequirements reviewed for the 19 jurisdictions,
the Task Force found that seven explicitly

require some form of assurance of the climaterelated information that is reported, while fiveindicated that assurance is not required.

2. GOVERNMENTAL, REGULATORY, AND
OTHER DEVELOPMENTS
This subsection summarizes efforts anddevelopments by governments, regulatory
authorities, international and regional standard
setters, and stock exchanges that support theimplementation of the TCFD recommendations
and occurred since the Task Force published
its previous status report in October 2022. To
the extent a government, regulatory authority,or stock exchange mentioned in Table D1 (p.
83) issued a final or proposed TCFD-aligned
disclosure requirement during this period, a brief
description of the requirement is included below.

Governmental and Regulatory
Developments
Australia: In June 2023, the AustralianGovernment Treasury published for consultation
proposed climate-related financial disclosure
requirements, which are generally in line with the
TCFD recommendations and ISSB standards. As
proposed, the requirements would apply to large
listed and unlisted companies as well as financial
institutions and would be phased in over athree-year period beginning with the 2024–2025
reporting year. Feedback received on a previous

Figure D2

Financial Materiality and Impact Materiality
In financial reporting, the term “material” generally refers to information whose omission or misstatement could
influence the economic decisions that users make based on a company’s financial statements. This type of materiality— financial materiality — is the basis upon which the TCFD recommendations were developed. In its Corporate
Sustainability Reporting Directive, the European Commission indicated that reporting should be viewed from two
perspectives: one consistent with financial materiality and the other based on the impact of the company on theenvironment and people (impact materiality).

FINANCIAL MATERIALITYIMPACT MATERIALITY

Information related to the impact ofclimate change on a company

Information on a company’s impact
on the environment

COMPANY

Climate change
impact on company

CLIMATE

Primary Audience: Investors, Lenders, and Insurance
Underwriters

COMPANY

Company impact on
the environment

CLIMATE

Primary Audience: Consumers, Civil Society, Employees,
and Investors

THE TCFD RECOMMENDATIONSCORPORATE SUSTAINABILITY REPORTING DIRECTIVE
Adapted from European Commission, Guidelines on Reporting Climate-Related Information, June 17, 2019, p. 7

155

See TCFD, Recommendations of the Task Force on Climate-related Financial Disclosures, June 2017 (p. 41).

156

See Article 19a(1) and Article 29a(1) of Directive 2013/34/EU.

85

The Task Force on Climate-related Financial Disclosuresconsultation, conducted between December
2022 and February 2023, informed the proposed
requirements.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Canada: In October 2022, the Canadian
Securities Administrators (CSA) issued a press
release on the status of its proposed TCFDaligned disclosure requirements for reporting
issuers published in October 2021. The CSA
announced it was reviewing the U.S. Securities
and Exchange Commission’s proposed climaterelated disclosure requirements and the ISSB’s(then proposed) standards on disclosing
sustainability-related and climate-related
financial information to consider how those
proposals may impact or further inform its
proposed disclosure requirements. In March
2023, the Office of the Superintendent of
Financial Institutions released guidance on
climate-related risk management for financial
institutions that also includes its expectations on
climate-related financial disclosure. The guidanceon disclosure references an annex that outlines
minimum mandatory climate-related financial
disclosure expectations, which incorporate theTask Force’s 11 recommended disclosures.
European Union: In December 2022, the EU
Parliament and Council approved a sustainability
reporting directive (the Corporate Sustainability
Reporting Directive or CSRD), which supersededa previous reporting directive. The CSRD went
into effect on January 5, 2023; and companies
subject to the previous reporting directive
are required to report in line with the CSRD
beginning with fiscal year 2024. Other large
companies are required to report beginning withfiscal year 2025; small and medium-sized publiccompanies are required to report beginningwith fiscal year 2026; and non-EU companies
are required to report beginning with fiscal year
2028. Companies subject to the CSRD will have toreport according to the sustainability reporting
standards developed by EFRAG (formerly
known as the European Financial Reporting
Advisory Group), which are aligned with the TCFD
recommendations.157
Hong Kong: In August 2023, the Hong Kong
Monetary Authority (HKMA) released a circularwith high-level principles to assist authorized
institutions in planning for a net-zero transition.
The HKMA developed the high-level principles
based on the findings and recommendations ofinternational bodies, including findings in the
Task Force's Guidance on Metrics, Targets, andTransition Plans.

157

Japan: In January 2023, the Japan Financial
Services Agency announced new rulesthat require listed companies to disclosesustainability information — including
climate-related information — in four
categories generally aligned with the TCFD
recommendations. The governance and risk
management categories are required, while thestrategy and indicators and targets (i.e., metrics
and targets) categories are subject to materiality.
The rules went into effect on January 31, 2023,
and apply to securities registration statements
and annual securities reports for fiscal years
ending on and after March 31, 2023.
New Zealand: In November 2022, the Ministryof Business, Innovation and Employment andthe Ministry for the Environment publisheda consultation paper on the inclusion of anassurance requirement in New Zealand’s
climate-related disclosure law. The law, passedin October 2021, applies to large publicly listedcompanies, insurers, banks, non-bank deposit
takers, and investment managers and required
the development of climate-related standards
based on the TCFD recommendations.
Singapore: In July 2023, the Accounting andCorporate Regulatory Authority and Singapore
Exchange Regulation launched a public
consultation on climate-related reporting inline with the ISSB standards and the TCFD
recommendations. The Singapore Exchange
currently has climate-related disclosure
requirements for listed issuers in selectindustries, and this consultation paper proposes
expanding the companies subject to disclosure
requirements to all listed issuers and large nonlisted companies.
Switzerland: In November 2022, the Federal
Council of Switzerland finalized an ordinanceon climate-related reporting for large Swisscompanies that enters into force on January
1, 2024. Under the ordinance, large publiccompanies, banks, and insurance companies
are required to make disclosures based on the
TCFD recommendations and its implementation
guidance, which was updated in 2021.
Thailand: In January 2023, the Thai Securities
and Exchange Commission published guidelines
for asset managers on managing and disclosing
climate-related risks and opportunities.
The guidelines on disclosure describe howasset managers could disclose information
to stakeholders in accordance with the TCFD
recommendations. In addition, the BankEFRAG, Draft European Sustainability Reporting Standards, April 29, 2022 and EFRAG, Draft European Sustainability Reporting Standards
Appendix IV – TCFD Recommendations and ESRS Reconciliation Table, November 2, 2022. See Section D.2. International and Regional Standard
Setting for more information. On January 21, 2022, the European Financial Reporting Advisory Group changed its name to EFRAG.

86

The Task Force on Climate-related Financial Disclosuresof Thailand released a policy statement in
February 2023 requesting that all financial
institutions disclose climate-related informationin line with the TCFD recommendations at least
once a year beginning in 2024.

International and Regional
Standard Setting

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

In November 2022, EFRAG delivered draft
sustainability reporting standards (theEuropean Sustainability Reporting Standards
or ESRS), which the EU Parliament and Council
integrated into the CSRD in December 2022.
The ESRS align with the TCFD recommendations
and the ISSB standards. In July 2023, after apublic consultation, the European Commission
adopted the first set of ESRS.
In December 2022, New Zealand’s External
Reporting Board (XRB) finalized its climaterelated disclosure standards, whichwere developed in line with the TCFD
recommendations as required under legislation
passed in October 2021. The XRB’s standards
include Climate-Related Disclosures; Adoptionof Aotearoa New Zealand Climate Standards;
and General Requirements for Climate-Related
Disclosures — all of which went into effect onJanuary 1, 2023.
In June 2023, the ISSB finalized its generalsustainability-related disclosure standards(IFRS S1) and climate-related disclosures
standards (IFRS S2). Both IFRS S1 and IFRS
S2 build upon the TCFD recommendations,with the latter integrating elements of all 11
recommended disclosures. In July 2023, the
ISSB published a comparison document thatsummarizes some differences between thecore content requirements in IFRS S2, including
associated application guidance, and the TCFD’s
recommendations, recommended disclosures,and guidance.
Also in June 2023, the International Public
Sector Accounting Standards Body announced
it would begin developing the first sustainability
reporting standard for the public sector on
climate-related disclosures and publishedan overview of the project that indicates thestandard would be built off IFRS S2, which isbased on the TCFD recommendations.

Stock Exchange Developments
In December 2022, the Swiss Stock Exchange
released an investor relations handbook to help
listed companies comply with upcoming Swiss
regulations on climate-related disclosures in linewith the TCFD recommendations.

In March 2023, the Prague Stock Exchangeannounced the release of sustainability
reporting guidelines to help companies in the
Czech Republic understand their obligations
under the CSRD and ESRS. The guidelines
encourage companies to adopt TCFD in 2023
to support compliance with the CSRD and easeconvergence with IFRS S1 and S2.
In April 2023, the Hong Kong Stock Exchange
released a consultation paper on revising
its ESG reporting framework to require allissuers to disclose climate-related informationin their ESG reports in line with the TCFD
recommendations and ISSB standards (vsthe current “comply and explain” approach).
If adopted, the rule would go into effect onJanuary 1, 2024, with an expected phased
implementation approach for certain
disclosure elements.

3. INDUSTRY-LED INITIATIVESThis subsection provides brief descriptionsof efforts by private-sector groups that
support the implementation of the TCFD
recommendations and occurred since the Task
Force published its previous status report in
October 2022.
In October 2022, the We Mean BusinessCoalition in conjunction with CDP, Ceres, and theEnvironmental Defense Fund released a reporton transition action plans that mentions the
TCFD recommendations as well as its guidanceon Scenario Analysis for Non-Financial Companies
and Risk Management Integration and Disclosure
along with other materials to support climatetransition planning.
In October 2022, the Japan TCFD Consortium
published the third edition of its guidanceon climate-related financial disclosures,
which describes the content of the TCFD
recommendations to help Japanese companies
with TCFD implementation and reporting.
In November 2022, the U.K. Transition Plan
Taskforce (TPT) released guidelines on climatetransition plans for private-sector financial
and non-financial companies for consultation
until February 2023. The guidelines included
a disclosure framework and implementation
guidance, with the former building on the
Task Force’s guidance on transition planning.
In October 2023, the U.K. TPT published its
final framework.
In November 2022, the Glasgow Financial
Alliance for Net Zero (GFANZ) released a report87The Task Force on Climate-related Financial Disclosuresthat provides voluntary guidance for financial
institutions on developing net-zero transition
plans. The report’s recommendations buildon the Task Force’s work as well as the work ofothers. See Figure D3 for more information ontransition plans.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

In November 2022, the World Business Council
for Sustainable Development (WBCSD) launcheda climate scenario tool, with climate-relatedtransition risk scenarios designed specificallyfor companies in the Food, Agriculture, andForest Products industry. The scenario tool
was accompanied by a guide that describes
the features of the scenario tool and outputsof scenario analysis and includes several
case studies. The scenario tool and guide areintended to help companies effectively apply
scenario analysis, better assess the resilience of
their strategies, and disclose information in linewith the TCFD recommendations. In the guide,
the WBCSD also indicated a companion guide on
using scenarios to support transition planning— as outlined in the Task Force’s Guidance on
Metrics, Targets, and Transition Plans — would
be forthcoming. The companion guide waspublished in February 2023.
In January 2023, the Centre for Sustainable
Finance and the Cambridge Institute for
Sustainability Leadership (i.e., ClimateWise)
released an independent review analyzing theinsurance industry’s role in mitigating climatechange. The report suggests that insurers use
the TCFD framework as the industry standard.
The report also noted that TCFD disclosures by
the insurance industry have increased over time.
In January 2023, SBTi released guidance for thefinancial sector describing suggested pathways
for financial institutions that want to adopt the
SBTi-FI framework or the TCFD framework
or both.
In February 2023, the WBCSD released a report
describing proposals for a business-relevant
climate scenario analysis reference approach forcompanies in the energy system — as requested

Figure D3

Transition Plan Resources
In October 2021, the Task Force issued guidanceon metrics, targets, and transition plans. Since
the release of this guidance, there have been
several groups that have released guidance andtools to help companies develop transition plans.
Due to ongoing interest in this topic, the Task
Force has compiled the following list of resourceson developing a transition plan:• The Transition Plan Taskforce Disclosure
Framework (U.K. TPT)• Climate Transition Action Plans (We Mean
Business Coalition et al.)• OECD Guidance on Transition Finance: Ensuring
Credibility of Corporate Climate Transition Plans(OECD)• Transition Planning and Climate Scenario
Analysis: Food, Agriculture and Forest Products(WBCSD)• Financial Institution Net-Zero Transition Plans(GFANZ)• CDP Technical Note: Reporting on Climate
Transition (CDP)• The Good Transition Plan (Climate Safe
Lending Network)by the Task Force. The business-relevant
climate scenario analysis reference approachis intended to support energy companies inusing scenario analysis to assess the resilienceof their strategies to climate-related risks and to
inform disclosures made in line with the TCFD
recommendations.
In March 2023, the U.K. Climate Financial
Risk Forum published an updated guide for
U.K. companies to disclose climate-relatedrisks in line with the TCFD recommendations.
The guide includes example disclosures andspecific suggestions for asset managers,banks, and insurers.

88E.
Types of Financial Impact
and Associated Drivers

The Task Force on Climate-related Financial Disclosures

E. Types of Financial Impact and Associated Drivers

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

A key goal of the Task Force’s work has been
to promote better disclosure by companies
on the financial impact of climate-relatedrisks and opportunities on their businesses,
strategies, and financial planning. Investors,
lenders, and insurance underwriters (i.e.,
users) need such information to make informed
financial decisions — by understanding how
climate-related issues could potentially affect acompany’s financial performance and financial
position as reflected in its income statement,
cash flow statement, and balance sheet. The
Task Force recognizes the challenges associatedwith making such disclosures — some of which
are described in Section B. Financial Statement
Considerations. The Task Force also recognizes
that, while climate change affects nearly all
economic sectors, the level of exposure andthe impact of climate-related issues may
differ by industry, geography, and company.
Furthermore, the financial impact of climaterelated issues on companies is not always clear
or direct; and, for many companies, identifying
the issues, assessing potential impacts, andensuring material issues are reflected infinancial filings may be challenging.
Since issuing its final recommendations in
2017, and at the request of the FSB, the Task
Force has monitored companies’ reporting of
TCFD-aligned information and issued annual
status reports that describe both current
practices related to such reporting as wellas other topics. Some of the topics coveredin past status reports include the challenges
faced by companies in implementing the TCFD
recommendations and the types of climaterelated financial information investors andother users find most useful in making
financial decisions.
Based on its previous work, the Task Forceunderstands that companies find its Strategy
recommendation — which asks companies
to disclose the actual and potential impactsof climate-related risks and opportunities
on their businesses, strategies, and financial
planning (see Figure E1) — particularly difficult
to implement.158 In fact, as described in thepast five status reports as well as in this one,the lowest level of disclosure across all 11

Figure E1Strategy Recommendation
Disclose the actual and potential impacts ofclimate-related risks and opportunities on thecompany’s businesses, strategy, and financial
planning wherever such information is material.
a) Describe the climate-related risks
and opportunities the company has
identified over the short, medium,and long term.
b) Describe the impact of climaterelated risks and opportunities on thecompany’s businesses, strategy, andfinancial planning.
c) Describe the resilience of the company’s
strategy, taking into considerationdifferent climate-related scenarios,
including a 2°C or lower scenario.

recommended disclosures relates to Strategy c).
This recommended disclosure asks companies
to describe the resilience of their strategies
under different climate-related scenarios, andthe associated guidance encourages themto describe the potential impact of climaterelated issues on their financial performanceand financial position.159 Notably, as part of a2021 survey, the Task Force asked companies
whether they disclosed the impact of climaterelated issues on their financial performanceand financial position. Of the 100 companies
responding, 20% indicated they disclosed theimpact on their financial performance, while only
14% indicated they disclosed the impact on theirfinancial position.160
Also as part of its previous work, the Task Forcehas solicited views from users of climate-related
financial disclosures to understand whichtypes of information they find most useful for
decision-making. In a 2020 survey of users,
respondents identified the single-most useful
disclosure element — out of nearly 60 specificdisclosure elements drawn from the TCFD
recommendations and related guidance — asa company’s description of how its climate-

158

TCFD, 2019 Status Report, June 5, 2019 (pp. 56–57) and TCFD, 2022 Status Report, October 13, 2022 (pp. 61–62).

159

Financial performance refers to a company’s income and expenses as reflected in its income and cash flow statements (actual) or potential
income and expenses under different climate-related scenarios. Financial position refers to a company’s assets, liabilities, and equity as reflected
on its balance sheet (actual) or potential assets, liabilities, and equity under different climate-related scenarios.

160

TCFD, 2021 Status Report, October 14, 2021 (p. 57).

90

The Task Force on Climate-related Financial Disclosuresrelated risks and opportunities have affected its
business and strategy.161 In addition, in a 2021
survey, the Task Force asked users about theusefulness of several types of climate-related
metrics, including the impact of climate-related
issues on a company’s financial performanceand financial position. Of the 106 users
responding, over 70% indicated a company’s
disclosure of the impact on its financial
performance (75%) and financial position (73%)
is very useful.162 Of the ten metrics rated, theonly two that were higher were Scope 1 andScope 2 GHG emissions at 91% and Scope 3
GHG emissions at 80%.163

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Given users’ views on the usefulness of
information associated with the Task Force’s
Strategy recommendation — especiallyinformation on financial performance andfinancial position — and the relatively low
level of disclosure of such information, theTask Force sought to provide companies
with information and insights on the typesof financial impacts associated with specificclimate-related risks and opportunities that
other companies have identified. This section

describes common types of financial impact
and associated drivers and includes casestudies from companies on their experiencesin implementing aspects of the Strategy
recommendation. The Task Force believes
such information may be useful to companies
beginning to implement Strategy b) and c) (seeFigure E1, p. 90) and, ultimately, disclosing inline with those recommended disclosures.

1. SCOPE AND APPROACH
To gather information on the types andassociated drivers of financial impact thatcompanies have identified, the Task Forceused companies’ responses to the CDP
Climate Change 2022 Questionnaire (2022questionnaire).164 The Task Force’s analysis
focused on the approximately 5,000 companies
that provided public or non-public responses
to the 2022 questionnaire based on investor
requests made through CDP.165 While the 2022
questionnaire included nearly 300 questions,
the Task Force reviewed responses to a set

Key Takeaways
Of the over 4,000 companies that identified climate-related issues with potential substantive
impact, 68% provided estimates of the potential financial impact — either as single amounts or as
ranges.

E.
Types of Financial Impact
and Associated Drivers

The most common type of financial impact estimated for climate-related risks was increased
indirect operating costs. For climate-related opportunities, it was increased revenues fromincreased demand.

F.
Insights Gained and View
on Future Work

There are inherent uncertainties in estimating potential financial impact from climate-related issues.
Transparency — particularly on assumptions made — is important to highlight these uncertainties
to investors and other stakeholders.

Appendices

Estimating potential financial impact from climate change requires expertise from different functions
within a company. As a result, it may be useful to set up a cross-functional team for such efforts.

161

TCFD, 2020 Status Report, October 29, 2020 (pp. 29–31).

162

TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021 (p. 16).

163

Ibid (p. 14).

164

The Task Force wishes to thank CDP for sharing select reporting results from the CDP Climate Change 2022 Questionnaire (CDP, “CDP Climate
Change 2022 Questionnaire,” Accessed May 1, 2023). The reporting results provided a standardized source of information on climate-relatedrisks and opportunities and associated potential financial impacts identified by thousands of companies. Collecting information similar to thatprovided by CDP would entail reviewing individual companies’ reports, which would take thousands of hours and would not be feasible for the
Task Force.

165

Of the approximately 5,000 companies, around 3,600 made their responses public. Only public responses are available on the CDP website.

91The Task Force on Climate-related Financial Disclosuresof ten questions that asked companies toprovide information on climate-related risks
and opportunities with the potential to havesubstantive financial or strategic impact on theirbusinesses.166 These questions asked companies
about which specific types of climate-relatedrisks and opportunities they identified as wellas the types and magnitudes of associatedpotential financial impacts. The types of climaterelated risks and opportunities used in the2022 questionnaire were the same as thosedescribed in the Task Force’s 2017 report.167 (SeeFigure E2 for more information on CDP.)

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

Box E1 and Box E2 (p. 93) provide an overview ofthe distribution of the roughly 5,000 companies
that responded to the 2022 questionnaire basedon their respective locations, sectors, and sizes.
The companies were headquartered all aroundthe world, with 40% in Asia Pacific and 32% in
Europe. In addition, companies were grouped
into sectors, as shown in the chart on the leftin Box E2 (p. 93).168 Eighty eight percent (88%)
came from non-financial sectors, and 12%
came from the financial sector. As shown in thechart on the right, 61% of the companies had amarket capitalization of at least $1.5 billion.169
In addition, 86% of the companies were publiccompanies, representing nearly $65 trillion ofmarket capitalization. The vast majority of theremaining 14% were private companies, forwhich financial information was not available.

Figure E2

About CDP
CDP is a global non-profit that runs anenvironmental disclosure platform forcompanies, cities, states and regions. Foundedin 2000 and working with more than 740
financial institutions with over $130 trillion
in assets, CDP works with capital markets
and corporate procurement to encouragecompanies to disclose their environmental
impacts, and to reduce greenhouse gas
emissions, safeguard water resources, andprotect forests. Nearly 20,000 organizations
around the world disclosed data through CDP
in 2022, including more than 18,700 companies
worth half of global market capitalization, andover 1,100 cities, states, and regions.
CDP was an early supporter of the TCFD andaligned its climate change questionnaire with
the TCFD’s recommendations in 2018. CDP
also operates the TCFD Knowledge Hub, which
provides a wide range of resources—including
free training courses—for companies and otherorganizations interested in understanding andimplementing the TCFD recommendations. CDP
is also a founding member of the Science Based
Targets initiative, We Mean Business Coalition,
The Investor Agenda, and the Net Zero AssetManagers initiative.
Source: CDP Staff

Box E1

Demographics by Region and Top 5 Countries
Percent and Number of Companies

F.
Insights Gained and View
on Future Work

Distribution by Region
Top 5 Countries by Number of Companies

Appendices32%
Europe

22%

2%

North
America4%Middle East
and Africa

Japan

40%
Asia Pacific

1,101

United States of America

916

United Kingdom

391

Republic of Korea

179

France171

Latin
America

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Base size: 5,021

166

The TCFD Secretariat reviewed questions from the “Risks and Opportunities” and “Business Strategy” modules of the 2022 questionnaire.

167

TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017 (pp. 10–11).

168

Companies were categorized based on the Global Industry Classification Standard (GICS) sector assigned to each company in the Bloomberg
Professional Service. For companies not found in the Bloomberg Professional Service or where GICS sectors were not assigned, the mostappropriate GICS sector was assigned to each company based on its primary activity as defined in the data provided by CDP.

169

Market capitalization is as of September 30, 2022, which is the date the CDP platform closed for 2022 reporting.

92

The Task Force on Climate-related Financial Disclosures

Box E2

Demographics by Sector and Company Size
Percent of Companies

Distribution by Market Capitalization

Distribution by Sector
22%

Industrials
Consumer Discretionary

13%

Information Technology

12%

Materials

12%

Financials

12%8%

Consumer Staples
Health Care

Banks (5%)
Insurance (2%)
Other (5%)

5%Utilities

5%

Real Estate4%

Communication Services

4%

Energy3%A.
State of Climate-Related
Financial Disclosures

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

B.
Financial Statement
Considerations

2. SUMMARY OF RESULTS

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesThis subsection summarizes — at an
aggregate level — the types and magnitudes
of financial impacts associated with specificclimate-related risks and opportunities thatcompanies identified in their responses tothe 2022 questionnaire. The Task Force also
reviewed such information at a sector level,
which is summarized in Appendix 4: Additional
Information on Financial Impact. The Task Forcebelieves companies that are in the early stagesof incorporating financial issues related toclimate change into their internal processes may
find this information useful in understanding
the types of climate-related risks andopportunities to which they may be exposed aswell as the types and potential size of associatedfinancial impacts.
Box E3 (p. 94) provides a breakdown of the
5,021 companies that responded to the 2022
questionnaire based on investor requests interms of whether they identified climate-relatedrisks or opportunities with the potential to havesubstantive financial or strategic impacts on
their businesses (referred to as “substantive
risks” and “substantive opportunities”). Of thesecompanies, 80% identified substantive climaterelated risks and 83% identified substantive
opportunities. Of the companies that did not
identify substantive climate-related risks oropportunities, 28% and 37%, respectively,
said they were in the process of evaluating

170

Data Not
Available,
14%$1.5 – $6B,
31%

>$6B,
30%
<$1.5B,
25%

Base size: 5,021

their climate-related risks or opportunities. In
terms of estimating potential financial impacts
associated with their climate-related risks andopportunities, over 50% of the companies
provided such estimates.170 The percentages
shown in Boxes E3 through E6 and Figures E3
and E4 are based on those companies that
identified substantive climate-related issues
and provided estimates of potential financial
impacts. It is important to note that companies
used their own definitions of substantive impact
and were not required to include all substantive
climate-related issues they identified. Given
this, the percentages of companies identifying
specific substantive climate-related issues
may be greater than those shown in Boxes E3through E6 and Figures E3 and E4.
The Task Force also reviewed the types ofsubstantive climate-related issues that wereidentified by companies that provided estimatesof potential financial impacts. As shown in
Box E4 (p. 94), the most common type ofclimate-related risk identified was policy andlegal risk at 73%, followed by acute physicalrisks at 56%. Notably, of the companies that
identified policy and legal risk, the vast majority
selected risks related to current and emerging
regulations, with only 4% identifying risks
related to their exposure to litigation. For
substantive climate-related opportunities, 70%
identified opportunities related to products andservices, followed by resource efficiency at 38%.

This does not include companies that indicated in the 2022 questionnaire that they were able to provide potential financial impact estimates but
did not include such estimates in their responses. Two percent (2%) of companies responded this way on climate-related risks, and 3% responded
this way on climate-related opportunities.

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The Task Force on Climate-related Financial Disclosures

Box E3Companies Identifying Substantive Issues and Estimating Impacts
Number and Percent of Companies

Companies Identifying Substantive Climate-Related Risks and Estimating Impacts
5,021(100%)

994
(20%)

4,027
(80%)

1,272
(25%)

Identified
Substantive Risks

Did Not Provide
Impact Estimates

2,755
(55%)

Reasons for No Substantive Risks
Non-Substantive Risk Only (39%)
Evaluation in Progress (28%)
Not Yet Evaluated (21%)
No Response (8%)
Other (4%)

Responded to
Questionnaire

A.
State of Climate-Related
Financial Disclosures

D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

5,021(100%)

835
(17%)

4,186
(83%)

2,675
(53%)

Non-Substantive Opportunities Only (20%)
Unable to Realize Opportunities (5%)
Evaluation in Progress (37%)
Not Yet Evaluated (23%)
No Response (11%)
Other (5%)

Responded to
Questionnaire

Did Not Identify
Substantive Opportunities

Identified Substantive Did Not Provide
Opportunities
Impact Estimates

Provided Impact
Estimates

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Box E4

Types of Substantive Climate-Related Issues Identified
Percent of Companies

Types of Substantive Opportunities

Transition

73%

Policy and Legal

33%

MarketAppendices

1,511
(30%)

Reasons for No Substantive Opportunities

Types of Substantive Risks

F.
Insights Gained and View
on Future Work

Provided Impact
Estimates

Companies Identifying Substantive Climate-Related Opportunities and Estimating Impacts

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

Did Not Identify
Substantive Risks

Reputation
Technology

18%

35%

Markets

Physical
Chromic

38%

Energy Source
Products and Services

14%

Resilience

56%

Acute

Resource Efficiency

70%
24%
11%

30%
Base size: 2,755

Base size: 2,675

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Box E5 (p. 95) shows the seven most frequently
estimated types of potential financial impacts
for both climate-related risks and opportunities.
For climate-related risks, the most common
type of financial impact that companies
estimated was increased indirect operating
costs at 49%, which was closely followed byincreased direct costs at 46% — both of which
relate to a company’s financial performance.
Companies provided estimates of financial

impacts related their financial positions at
a much lower rate, with 5% of companies
estimating decreased access to capital and
7% estimating decreased asset values or
useful lives of assets. For climate-related
opportunities, the most frequent type offinancial impact that companies estimated wasincreased revenues resulting from increased
demand for products and services at 63%.
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The Task Force on Climate-related Financial Disclosures

Box E5

Types of Potential Financial Impact Estimated for Substantive Issues
Percent of Companies

Types of Potential Financial Impact for Substantive Climate-Related Risks1
Increased Indirect Operating Costs

31%

Increased Direct Costs

29%

Decreased Revenues from Reduced Demand

30%

3% 2% 35%

Decreased Revenues from Reduced Production Capacity 2%27%

1% 30%

Increased Capital Expenditures

7%2% 5% 7%

Decreased Access to Capital

5% 5%Legend:Transition Risks Only

Physical Risks Only

10%
8%

49%
46%

1% 14%

6%

Decreased Asset Value or Useful Life

8%
9%Both Transition and Physical Risks

Base size: 2,755

Types of Potential Financial Impact for Substantive Climate-Related Opportunities

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices63%

Increased Revenues from Increased Demand
Reduced Indirect Operating Costs

34%

Reduced Direct Costs

24%

Increased Revenues from New Markets

23%

Returns on Investment in Low-Emission Technology

9%

Increased Access to Capital

6%

Increased Revenue from Increased Production Capacity

4%
Base size: 2,675

1. Percentages in bold represent the total percent of companies estimating a given type of financial impact.
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Figure E3 and Figure E4 (p. 96) provide abreakdown on the specific climate-related risks
and opportunities, respectively, driving thetypes of potential financial impact included in
Box E5. As shown in Figure E3, policy and legalrisk was the most frequently identified risk
type driving increased operating costs (by 74%
of companies) and increased direct costs (by
64% of companies). Market risk was the mostfrequently cited risk type driving decreased
revenues from reduced demand (by 53% ofcompanies). Acute physical risk was the mostfrequently identified risk type driving decreased
revenues from decreased production capacity(by 71% of companies), decreased asset value or
useful life (by 54% of companies), and increased
capital expenditure (by 38% of companies).

Figure E3

Potential Financial Impacts and Associated Drivers: Climate-Related Risks
Percent of Companies

Transition Risk Types

Physical Risk Types

Policyand Legal

MarketAcute

Chronic

Increased Indirect Operating Costs (1,350)

74%

10%

2%

4%

22%

17%

Increased Direct Costs (1,267)

64%

19%

2%

6%

24%

16%

Decreased Revenues from Reduced Demand (958)

17%

53%

28%

13%

7%

7%

Decreased Rev. from Reduced Prod. Capacity (816)

4%

3%

2%

1%

71%

32%

Increased Capital Expenditures (408)

31%

5%

2%

22%

38%

15%

Decreased Asset Value or Useful Life (198)

18%

8%

3%

11%

54%

14%

Decreased Access to Capital (129)

11%

16%

71%

1%

2%

1%

Types of Potential Financial Impact1

1. The numbers in parentheses represents the base size.
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Reputation Technology

Legend:Low to high percentage of companies

95

The Task Force on Climate-related Financial Disclosures

As shown in Figure E4, opportunities related
to products and services were most frequently
associated with increased revenues fromincreased demand (by 89% of companies),increased revenues through access to newmarkets (by 58% of companies), and increased
revenues from increased production capacity(by 44% of companies). Resource efficiency
was the most frequently identified driverof reduced indirect operating costs (by 59%
of companies) and reduced direct costs (by
57% of companies). Opportunities related toenergy source were most frequently associatedwith returns on investment in low-emissions
technology (by 58% of companies).
Further, 65% and 56% of companies thatprovided estimates of potential financial
impact from their climate-related risks oropportunities, respectively, had estimates thatwere less than 5% of their revenue, as shown in
Box E6.171 In addition, 15% and 16% ofcompanies provided estimated financial impacts
from climate-related risks or opportunities,
respectively, that ranged between 6% and 15%of their revenue.172,173

Figure E4A.
State of Climate-Related
Financial Disclosures

Potential Financial Impacts and Associated Drivers: Climate-Related Opportunities
Percent of Companies

Opportunity Types
Resource
Efficiency

EnergySourceProducts
and Services

Markets

Resilience

Increased Revenues from Increased Demand (1,690)

4%

6%

89%

11%

3%

Reduced Indirect Operating Costs (919)

59%

44%

5%

2%

8%

C.
Case Studies on Scope 3
GHG Emissions

Reduced Direct Costs (647)

57%

41%

9%

2%

8%

Increased Revenues from New Markets (620)

2%

7%

58%

40%

3%

Returns on Inv. in Low-Emissions Technology (230)

15%

58%

17%

7%

7%

D.
TCFD-Aligned Requirements
and Related Initiatives

Increased Access to Capital (173)

6%

8%

18%

62%

9%

Increased Rev. from Increased Prod. Capacity (110)

25%

15%

44%

8%

14%

B.
Financial Statement
Considerations

E.
Types of Financial Impact
and Associated Drivers

Types of Potential Financial Impact1

Legend:1. The numbers in parentheses represents the base size.
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Low to high percentage of companies

F.
Insights Gained and View
on Future WorkBox E6

Appendices

Percent of Revenue Climate-Related Risks

Percent of Revenue Climate-Related Opportunities

0% to 5%0% to 5%

Potential Financial Impacts Associated with Drivers as Share of Revenue
Percent of Companies

6% to 15%

65%

56%

6% to 15%

15%

16%

16% to 30%

7%16% to 30%

8%31% to 50%

3%

31% to 50%

4%Over 51%

5%Over 51%

5%

Data Not Available

Data Not Available

Base size: 2,755

11%
5%
Base size: 2,675

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

171

Revenue figures are from the Bloomberg Professional Service as of September 30, 2022, which is the date the CDP platform closed for2022 reporting.

172

Companies could provide a single-figure estimate or an estimated range. When a range was provided, the average of the minimum andmaximum estimates was used.

173

Companies could disclose multiple climate-related risks and opportunities with their potential financial impacts. In such cases, the sumof a company’s financial impacts was used for its estimated potential financial impact.

96

The Task Force on Climate-related Financial Disclosures

3. CASE STUDIES ON FINANCIAL IMPACT
Given both users’ interest in understanding
the impact of climate-related issues oncompanies to support their financial decisionmaking processes and preparers’ challenges
in disclosing financial impacts associatedwith climate-related issues, the Task Forcesought to provide a selection of case studies
on companies’ approaches to, challenges
encountered on, and lessons learned fromdetermining potential financial impacts
associated with climate change and disclosing
those impacts.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesThis subsection includes case studies byfour companies — a forest, pulp, and paper
company; a global mining and metals
company; a financial services company; anda global insurance company. The case studies
describe each company’s experience andlessons learned in implementing the Strategy
recommendation. They are intended toprovide practical insights for other companies
on implementing and disclosing the actualor potential impacts of climate-related risks
and opportunities on companies’ businesses,
strategies, and financial planning.

Case Study by a Forest, Pulp, andPaper Company
Klabin is an integrated forest, pulp, and paper
company headquartered in Brazil that manages
over 700,000 hectares of land. Approximately
60% of the land is planted with species forindustrial applications and the remaining kept
as native preserved forests, with an importantbiodiversity. Many of our assets and operations
are tied to nature, and we recognize that climatechange may cause important impacts on ourbusiness. Sustainability issues, including thoserelated to climate change, are incorporated
into our business strategy. In addition, we were
one of the first Brazilian companies to have ourdecarbonization targets approved by the Science
Based Targets initiative (SBTi) in May 2021.174
In 2020, we took an important step in oursustainability journey with the launch of theKlabin 2030 Agenda, called Klabin Objectives
for Sustainable Development (KODS). KODS
are a set of short- (2021), medium- (2025), andlong-term (2030) commitments that are alignedwith the Sustainable Development Goals of
the United Nations, including goal number 13
on climate change. The KODS commitments
174

are a priority for the company. They are tied
to our strategic growth plan, and we disclose
the progress on these targets annually. The
same year as the KODS were launched, we also
became a TCFD supporter and began to follow
the Task Force’s recommendations. Even with all
our experience on climate change issues, we still
face challenges with disclosing in line with the
TCFD recommendations — in particular, a lackof standardized data and methodologies forreporting climate-related financial information.
We decided to transform these challenges
into opportunities and aim to become aleading example for the Brazilian market.
We partnered with a specialized consultancy
firm to prepare our first TCFD disclosures thesame year we became supporters. The TCFD
framework provided critical guidance forstandardized disclosures of climate-related
information and better understanding of ourclimate-related risks.
In the pages that follow, we provide insightsfrom our experiences in evaluating andreporting information aligned with the TCFD
recommendations over the past three years.
More specifically, we give details on our
approach to estimate and present potential
climate-related financial impacts and how
we use the estimated results to support our
strategic decision-making.

Our Approach for Estimating Potential
Financial Impact and Challenges Faced
To better understand the potential financial
impacts of climate change on our company,
we have developed a risk identification andassessment process tailored to our specificrisks. Because of the range of physical andtransition risks we face — and their uniquecharacteristics — we are unable to apply one
standardized methodology across all risks.

Identifying and Assessing ClimateRelated Risks
We began our process by identifying all
potential risks we face based on a rangeof different climate-related scenarios. For
identification of physical risks, we used theIntergovernmental Panel on Climate Change
Representative Concentration Pathways(RCPs) RCP 2.6 and RCP 8.5 scenarios;and for transition risks, we used the IEA’s“Sustainability Development Scenario.”175,176
Next, we performed a qualitative assessment

Klabin, Sustainability Report, June 2021.

175

Riahi, Keywan et al., RCP 8.5—A Scenario of Comparatively High Greenhouse Gas Emissions, August 13, 2011.

176

International Energy Agency, The Sustainability Development Scenario, December 4, 2019.

97

The Task Force on Climate-related Financial Disclosuresof our potential vulnerability and potential
impact to assign each risk a criticality ratingof critical, high, medium, or low. An internal
multidisciplinary working group is responsible
for the input to this risk assessment process,contributing with their broad expertise in
several areas, including business strategy, forest
research, climate change, and risk management.

Calculating Potential Financial Impact

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Our risk assessment process identified
water scarcity caused by climate change,
regulatory changes such as carbon pricing,
and temperature increases as the highestpriority risks. We then calculated the potential
financial impact of each of these risks basedon methodologies tailored to each risk type.
Calculating potential financial impacts waschallenging in the current absence of a global,
standardized calculation methodology anda lack of guidance on which climate-related
scenarios to use. Therefore, we leveraged
external research and studies to develop
assumptions in the calculation process — forexample, a study on projected carbon pricing
in Brazil. We aimed to be transparent with
our assumptions and disclose the detailsof our potential financial impact calculation
methodologies in our TCFD ESG Panel.
We calculated potential financial impact as apercentage of earnings before interest, taxes,
depreciation, and amortization (EBITDA) andthe required investment in resilience strategy.
Figure E5 shows an example of our calculations
and describes how we quantified the potential
financial impact from water scarcity. One of ourmost significant physical risks was water scarcity.
Our analysis of this risk was based on the climatic
history of the region for the period 1981–2010
and climate-related scenarios, including RCP
8.5. Informed by these scenarios, we conductedinternal studies on current and future climate
conditions and the impact of climate change on
the regions in which we have forestry operations.
The potential climate-related effects — including
reduced water availability — could directly
impact forest productivity, especially by reducing
the growth of our planted forests. Based on
research from our internal forest research team,the loss could be on average 3% to 5% for ourforest productivity between 2020 and 2035. We
estimated the potential financial impact of thislower productivity to be 0.15% of EBITDA.

Figure E5

Potential Financial Impacts of Temperature Increases
Faster pace of forest pests and drop in forest productivity
Description

Time
Frame

The distribution and frequency of pests depends on a set of
ecological and agroclimatic factors. The rise in the region’s
average temperature and other associated climate changes canaccelerate pest proliferation cycles.
PESTS: Attack rate: 50% Volume of infested eucalyptus: 3,756,845
tons. Volume of infested pine: 5,461,349 tons. DISEASES:
Infestation risk rate: 15% (eucalyptus) and 10% (pine) Volume
of infested eucalyptus: 1,502,738 tons. Volume of infested pine:
1,456,360 tons

MediumTerm

Amount and frequency of intense drought, minimum
temperature, average temperature, potential evapotranspiration
and water deficit are factors that affect the growth of the planted
pine and eucalyptus forest. Thus, the rise in temperature, all themore constant, can imply an increase in evapotranspiration, andconsequent reduction of forest productivity for both pine andeucalyptus. This effect can be intensified by increased periods ofdrought or reduction of average precipitation.
Klabin has developed specific studies that pointed to an overall
trend of rising temperatures in the Paraná region, with an averagerise of 0.32°C per decade. For 2020-2035, these studies estimate aloss of forest productivity of 3% for eucalyptus and 5% for pine.

Amount of
EBITDA
Investment
Financial Percentage in Resilience
Impact(2021)and Strategy

Medium

1.61%

BRL
3,669,666.00

Long
Term

Low

0.41%

Klabin, “ESG Panel: Task Force on Climate-Related Disclosures,” Accessed May 11, 2023.
Notes: Medium term is defined as two to three years, and long term is defined as beyond four years.
Some content was reformatted in order to fit the page.

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The Task Force on Climate-related Financial Disclosures

Informing Actions to Mitigate Risk
For each of the highest-priority risks, wedeveloped and disclosed a corresponding
resilience strategy, each of which describes
how to mitigate our identified risk. For risks
related to water scarcity, for example, we
described our actions to reduce and monitor
water consumption and our projects toincrease the reuse of water. The assessment offinancial impacts from risks has proven crucial
for effectively prioritizing our risk mitigation
actions. Our risk management function
organizes quarterly review meetings to reassess
the risks and monitor the implementation of ourresilience strategies.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesLessons Learned 			We have learned that it is important to have aconsistent and broad methodology to assess,compare, and prioritize risks. The definitions ofrisk criticality must be very clear, and a groupthat includes multi-disciplinary expertise isbest positioned to prioritize risks. The breadthof perspective is particularly important in
the assessment of vulnerability. To achieve
this breadth, we considered vulnerability
across different time frames, scenarios, andsocioeconomic trajectories.
We have also come to appreciate that disclosing
the potential financial impact in the form of
tangible financial metrics, such as EBITDA,
facilitates communication with internal andexternal stakeholders as it can easily beunderstood by a wide range of stakeholders.
This approach enables us to provide a clear
picture of our exposure to climate-related risks,demonstrate our commitment to manage theserisks, and effectively prioritize actions internally.
Finally, we recognize the need for continuous
improvement in our evaluation and disclosureof climate-related risks and intend to update
our risk model to identify risks based on new
scenarios, including a net-zero scenario. We
acknowledge that improving our models will
require ongoing effort and collaboration withexperts in the field. However, we believe that
this is a critical step to enable resilience of ourbusiness in terms of climate change.

Case Study by a Global Mining andMetals Company			Anglo American is a global mining company
headquartered in the U.K. We produce adiversified range of metals and minerals whichplay a significant role in meeting the needs ofa growing global population, in terms of basic
infrastructure and improvements in living
standards, and are critical raw materials formany of the systems and technologies required
to deliver the energy transition. We recognizethat climate change presents both significant
risks and opportunities for our business model,
including the potential to cause material
financial impact. We assess and disclose theserisks and opportunities in our climate-related
disclosures, including our integrated annual
report and climate change report, which wehave been preparing in alignment with the
TCFD framework since 2019. We have a target
to be carbon neutral across Scope 1 and Scope
2 GHG emissions by 2040, and an ambition to
reduce our Scope 3 GHG emissions by 50% by
the same year.
Sustainability considerations — including thoserelated to climate change — are fully integrated
into our work and are central to our strategy
and decision-making, most notably in decisions
related to our asset portfolio maintaining aresilient and competitive position. Accordingly,
understanding the resilience of our current
portfolio to the financial implications of climatechange is essential for ourselves and our
stakeholders. We undertake comprehensive
assessments of the resilience of our productportfolio. Given their material impact on our
industry and operations, we focus specificallyon transition risks and opportunities, including
understanding the potential impact acrossdifferent climate-related scenarios. In thefollowing pages, we describe our three-stepprocess of quantifying potential financial impact
and the learnings we have gained.

Our Approach to Quantifying Potential
Financial Impacts
Our three-step quantification process begins
by selecting and benchmarking climate-related
scenarios, which we use to establish end-sector
technology pathways that inform commodity
demand estimates. In the past, we have usedin-house climate-related scenarios based on
IEA’s Current Policies, Announced Policies, andSustainable Development scenarios. For ourmost recent analysis, we opted to use scenarios
from Wood Mackenzie’s Energy Transitions
Service, as it offers a comprehensive set ofthird-party-developed global scenarios thatprovide sufficient detail on relevant sectors thatuse our metals and minerals. Wood Mackenzie’s
scenarios also meet the conditions outlined by
the IPCC for a 1.5°C pathway and are within thebenchmarks of other IPCC-recognized scenarios.

99The Task Force on Climate-related Financial Disclosures

Where existing scenarios do not containsufficient information for our needs, we
augment them with internal assessments
developed by our research teams. For example,
in the case of the platinum group metals,
for which external scenarios do not provide
sufficient detail, we have developed internal
estimates using the Wood Mackenzie scenario
variables as inputs.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Next, we use proprietary models to develop
product demand, supply, and price forecasts
by scenario. Our models are continuously
improved and refined based on our in-house
knowledge of markets’ supply and demand foreach product. The forecasts produced by themodels help us assess how various profit pools
might develop in the future, and to estimate
potential impacts on cash flows and other key
metrics in the financial statements.
Finally, we use the results of our forecasting toassess the strategic resilience of our productportfolio. Our aim is to understand how Anglo
American’s asset positioning and ability togenerate cash flow may be impacted basedon the different climate-related scenariosand profit pool forecasts. To focus on theresilience of our current portfolio, at thisstage of analysis, we keep production volumes
constant and consider only existing assets andorganic growth opportunities. It is important
to note that the results of the assessments are
not meant to be taken as definitive results orfinancial guidance.

Insights That Support Our Resilience
Planning and Influence Our
Business Strategy
Performing scenario analysis provides
our external stakeholders — through ourdisclosures — a deeper understanding ofour business. One of the main benefits is theenhanced understanding of the sensitivity ofour product profit pools to the energy transition
and the associated long-term resilience of ourportfolio (see Figure E6). Our climate-related
scenario analysis and modelling show thatour portfolio is resilient in our consideredscenarios, largely due to the high quality
and long expected life of our assets, ourexposure to metals and minerals that support
a lower carbon future and the diversified mixof products in our portfolio, as well as ourpotential organic growth pathways.

Figure E6

Results of Our Analysis Translated into Outlooks on the Resilience of Our Portfolio
Recommended
disclosures

References[…]c) Describe theresilience of theorganisation’s
strategy, taking
into considerationdifferent climaterelated scenarios,
including a 2°C or
lower scenario.

Summary: Anglo American’s strategy seeks opportunities in the metal and mineral needs of the
future, including, critically, the impacts of climate change and the energy transition. The resilience ofour portfolio to a changing climate also forms a key part of the Group’s strategy. We draw on multiple
sources to judge the contribution that individual assets would make to the portfolio under different
climate scenarios and, amongst other things, this informs the way that we allocate capital.
Integrated Annual Report 2022: Pages 28–35 and page 46 describe the Group’s portfolio strategy
and evolution and how that has been influenced by climate change. Pages 40–41 describe thetechnological innovations being delivered across the Group to reduce energy and water consumption,and pages 43–44 describe the efforts of our Marketing business to deliver products that help enable
our customers to achieve their climate change ambitions. Page 46 gives more detail on our strategy
to deliver a future-enabling portfolio and Page 65 describes our approach to capital allocation toachieve our carbon reduction targets, including the carbon pricing we use when appraising investment
decisions. Pages 45–46 describe our approach to transition risk and explain how we believe Anglo
American will remain resilient in a 1.5˚C future. Pages 64–66 describe how broader sustainability
considerations, including climate change, are embedded in our capital allocation decisions.
Climate Change Report 2021: Pages 15–19 give a detailed overview of Anglo American’s strategic andfinancial resilience to a 3°C, 2°C and 1.5°C scenario, including potential impacts on cash flow (upsideand downside).
Climate Change Report 2022: Page 15 explains the strategic principles that guide our portfolio choices
and how we assess the resilience of our portfolio in a 1.5˚C world. Page 17 gives further details on therole we believe our products have to play in a low carbon future, including the risks and opportunities
related to each of the products and commodities we produce as we make that transition. Pages 19–22
describe our approach to adaptation and physical resilience in the face of a changing climate.

Anglo American, Integrated Annual Report, pp. 116–117
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

100

The Task Force on Climate-related Financial Disclosures

As described in our reporting, the results of ouranalyses indicate our cash flows should remain
relatively stable across ~3°C, 2°C, and 1.5°C
scenarios. However, there is a greater variationof outcomes in the lower temperature scenarios
given the broad range of potential pathways
involved. For example, in the next decade,under a 1.5°C scenario our cash flow could be
up to 30% higher than under a ~3°C scenario,
while in the subsequent decade, our cash flow
could be 20%–25% lower under a 1.5°C scenario
than a ~3°C scenario.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Although there is still more work to do infurther improving our analysis and disclosures,the scenario-based quantification of financial
risks and opportunities has allowed us to gaina deeper understanding of the role of our
products in the low-carbon transition andhow to maintain a portfolio of products that isresilient to the risks and opportunities of the
low-carbon transition.

Lessons Learned
Our scenario analysis benefits from externallysourced climate-related scenarios, which provide
an integrated, dynamic view of global energy
transition pathways with sufficient detail toenable us to understand the financial implicationsof different product demand scenarios. Giventoday’s pace of change, we also believe it isnecessary to update our scenarios on an ongoingbasis. When choosing between various scenario
options, we take various factors into account,
including whether the data is openly available toand accessible by our stakeholders and whether it
has been validated by external parties.
One of the most significant learnings from ourdisclosure process is that it is often necessary toaugment existing global climate-related scenarios
to better fit our individual circumstances andbetter understand potential financial impacts
on our business. A one-size-fits-all approach isusually not sufficient. We augment scenarios frompublic sources and third-party vendors using
our proprietary knowledge of the markets inwhich we operate for the results to maximize ourunderstanding of the implications of changes insupply and demand for our products.
It is particularly difficult to assess the impact of
a 1.5°C scenario on future product prices andprofit pools because there are many scenario
variables that could radically diverge, such as
macroeconomic inputs, underlying costs of mined

production, and trade flows. During the scenario
process, we tend to limit the variables we adjustin order to keep the analysis and its impact astransparent as possible.
Quantifying financial impacts of climate change
requires engagement across several internalfunctions and the task cannot be accomplishedby climate subject-matter experts alone. Ourquantification process depends on a range of
in-house experts on product-specific markets,
overall business strategy, and the evolution of
government policies and regulations.
Finally, analyzing impact at the product levelis critical to understanding how resilient ourbusiness is to climate change. By analyzing
the potential impacts on specific products
and their respective profit pools, we canidentify areas where we can optimize growthand profitability while mitigating climaterelated risks. This approach also enables us todetermine which products are most impacted
by climate change, allowing us to develop
strategies to reduce associated risks andcapture related opportunities.

Case Study by a Financial
Services Company
Mitsubishi UFJ Financial Group (MUFG) is afinancial services group headquartered in Japan.
We provide commercial banking services toclients in all major markets — including markets
in advanced economies (such as Europe and theU.S.) and developing economies (such as Asia).
We have existing lending relationships withclients in a wide range of industries, including
GHG emissions-intensive sectors that are having
to adapt their business models as part of thetransition to a low-carbon economy. Given theexisting exposures we have, facilitating ourclients’ transition to become net-zero aligned
is an essential step for our net-zero journey.
This transition is expected to result in majorchanges to the global and regional industrial
landscape, creating both climate-related risks
and opportunities for our clients — which inturn represent risks and opportunities for us.
Supporting our clients in accelerating theirclimate transition journeys by providing themwith transition finance is at the center of ourstrategy for managing and mitigating climate
related risks. In 2021, we pledged to achieve netzero GHG emissions from our finance portfolio

101

The Task Force on Climate-related Financial Disclosuresby 2050.177 We are the first Japanese financial
institution to have joined the Net-Zero Banking
Alliance (NZBA) — and our representative leads
the NZBA’s work on developing a guideline fortransition finance.178
As both a preparer and user of climate-related
disclosures, we aim to “lead by example” bydisclosing information to investors and otherstakeholders in line with the TCFD framework
through our Sustainability Report and TCFD
Report.179 We have been TCFD supporters since
the TCFD recommendations were first publishedin 2017. In particular, the following describes
how we assess, manage, and disclose potential
financial impact associated with transition risks.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Our Approach to Estimating Potential
Financial Impact and Challenges Faced
Based on the recommendations of the TCFD,
we disclose our analyses of physical andtransition climate-related risks and associatedpotential impacts for major risk categories
including, but not limited to, credit risk, market
risk, and liquidity risk. We have identified
climate change as one of our priority risk
drivers on which to focus and, therefore, have
expanded our classification and disclosure ofclimate-related risks and integrated them into
our Risk Appetite Framework.

Top-Down and Bottom-Up Analysis ofPotential Financial Impact

E.
Types of Financial Impact
and Associated Drivers

We conduct scenario analysis to estimate thetotal potential impact of our exposure to bothtransition risks and physical risks. Since 2019,

F.
Insights Gained and View
on Future Work

Figure E7

we have participated in a pilot project led
by United Nations Environment Programme
Finance Initiative (UNEP-FI) that supports thedevelopment of industry practice for climaterelated financial disclosures for the banking
industry. Based on the results of this pilot, wehave conducted an analysis of transition risks
up to the year 2050 and physical risks through2100. We have disclosed the results of ourscenario analyses and estimated the potential
impact of transition risks to range from 1.5
billion to 28.5 billion yen in total credit losses onan annual basis (see Figure E7).
Our comprehensive approach to determining
potential financial impact combines a top-down
method at the sector level with a bottomup method at the individual company level.
The top-down approach entails conducting
sensitivity analyses under different climaterelated scenarios. This is done in order toassess the potential impact of transition risks
on credit ratings and on credit portfolios incertain prioritized sectors. Our analysis is basedon scenarios provided by IEA and Network forGreening the Financial System (NGFS), including
the IEA sustainable development well-below 2°C
scenario and the NGFS 1.5°C scenario.
In the bottom-up method, we engage
with clients in prioritized sectors to better
understand their strategies and transition plans.
Accordingly, both publicly disclosed client data
and direct inputs from our client engagements
serve as inputs into our analysis. To improve
the accuracy of this analysis, we have improved
the granularity of our bottom-up approach

Potential Financial Impact Analysis for Climate-Related Transition Risk

Appendices•

Various scenarios, including the sustainable development scenario (the [less than]
2°C scenario) of the IEA and the 1.5°C scenario that the NGFS has released•

An integrated approach is adopted to assess the impact by combining the bottomup approach at the individual company level and the top-down approach at thesector level. Using this approach, the impact on credit ratings in each scenario isanalyzed along with the effect on the overall financial impact of the sector’s credit
portfolio.

Target sector•

Energy, utilities, automotive, steel, air, and maritime sectors

Target period•

Until 2050 using the end of March 2022 as the standard

Result of analysis•

Single-year basis: 1.5 billion yen to 28.5 billion yen

Scenario

Analytical method

MUFG, Sustainability Report 2022, p. 99
Note: Some content was reformatted in order to fit the page.

177

MUFG, Carbon Neutrality Declaration, May 2021.

178

MUFG, “MUFG Appointed as a Lead for the Net Zero Banking Alliance Financing & Engagement Work Track Group,” November 22, 2021.

179

MUFG, Sustainability Report 2022, September 2022 and MUFG, TCFD Report 2022, October 2022.

102

The Task Force on Climate-related Financial Disclosureswhile also verifying the validity of the sensitivity
analyses conducted as a part of the top-down
approach. Results show that a deep engagementwith our clients and support for their transitions
are necessary to mitigate climate-related risks
and the associated potential financial impacts
within our own portfolio.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

The challenges we faced are mainly related
to data availability and sector-specific future
outlooks. Indeed, the lack of a fully standardized
disclosure format required us to gather clientspecific data with ad hoc forms for different
clients. In addition, for certain sectors for which
scenario outlooks were not fully provided by
IEA and NGFS, we had to develop supplemental
outlooks internally as inputs for our analysis.
In these cases, we validated our approachby consulting relevant divisions within ourorganization and third parties.

Approach to Mitigating ClimateRelated Risks
To achieve our net-zero commitment while alsobuilding a resilient portfolio, we must take aclient-centric approach to risk mitigation andtransition planning. We have disclosed our
climate targets as part of a roadmap to carbon
neutrality in our Progress Report 2023 (seeFigure E8, p. 104).180 The initiatives within ourroadmap are designed to mitigate climaterelated financial risks, support our clientsas they pursue decarbonization through theprovision of transition finance, and reduce
financed GHG emissions to net zero by
2050. As part of the initiatives to reach thismission, we are committed to supporting thedecarbonization of our clients through theprovision of financial services, including theinitiative to provide a total of 35 trillion yen (ofwhich 18 trillion yen is earmarked for climatechange) in sustainable financing from FY 2019
through FY 2030.
The insights from the assessment of thepotential financial impact confirm theimportance of managing and mitigating climaterelated risks and opportunities. Rather thandivesting from high-emitting sectors andclients, we are committed to engaging withour clients to support them in developing
and implementing credible transition plansto reduce their GHG emissions. Thus far, wehave engaged with more than 1,500 corporateclients globally to understand and support their180

MUFG, Progress Report 2023, April 2023.

181

MUFG, Transition Whitepaper 2022, October 26, 2022.

transition plans and provide financial solutions,
including transition finance.

Lessons Learned
While our disclosure of the potential financial
impacts of climate-related transition risk has
been positively received by our stakeholders, it
has not been without its challenges, such as thecomplexity of applying scenario analysis for riskover the long term until 2050. Since the analysis
results are based on many assumptions — andthe level of uncertainty around them is high —it is necessary to carefully incorporate theminto our strategy and financial planning — andat the same time, continuously improve
our methodology.
The process of quantifying the potential financial
impacts of climate-related risks has provided
important insights that inform the actions ofour management team. We have come to realizethat the qualitative information we gain fromengagement with our clients is often just as
useful as the outcome of the quantification.
Through both engagement with our clientsand internal research, we have learned theimportance of acquiring a full understandingof the unique characteristics of an industry
or region as well as each client’s transition
strategy.181 In fact, engagement with our clientsin Japan and the rest of Asia has allowed us tounderstand that a “whole of economy” transition
is required. The key sectors to unlock this journey
to accelerate energy transition are the power
and industrial sectors — as approximately 70%
of GHG emissions in Japan and the South East
Asian region are from these sectors (almost
50% from power) — which we have therefore
prioritized for our scenario analysis. Energy
transition in any given economy requires an “allhands-on-deck” approach, including engaging
with not only the local government but also theentire supply chain. We believe that providing
transition finance for the purpose of executing
credible energy transition plans will unlock
decarbonization opportunities in other sectors,
including those that are GHG emissions intensive.
Our engagement strategy — informed byour scenario analysis — is premised on theunderstanding that to reach a single target(i.e., net zero by 2050), each of our clients will
have a different starting point and pathway
depending on their business model — as wellas on the countries and regions in which they103

The Task Force on Climate-related Financial Disclosures

Figure E8

Roadmap for Achieving Carbon Neutrality

Milestones

2019

2020

2021

Power: Interim Target for 2030
(emission intensity)

328
gCO2e/kWh307
gCO2e/kWh299
gCO2e/kWh156-192
gCO2e/kWhOil & Gas: Interim Target for2030 (emission reduction rate)

84
MtCO2e81
MtCO2e76 MtCO2e(from FY
2019 -9%)-15%- -28%

1 Net Zero GHG Emissions
from the Financed Portfolio

2022

...

2030

NEW

(year)...

2040

Real Estate: Interim Target for2030 (emission intensity)

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Commercial Real Estate

65
kgCO2e/m2

44-47
kgCO2e/m2

Residential Real Estate

27
kgCO2e/m2

23
kgCO2e/m2

Steel: 2030 Interim Target(emission reduction rate)
Shipping: 2030 Interim Target(PCA Score1)

through2 Decarbonization
Financial Services
Sustainable Finance (Total
since FY2019)
Credit balance targets forcoal-fired power generation
Project finance (FY)Corporate finance (FY)22
MtCO2e-22%
PCA +0.6%

19.4 trillion
3.7 trillion yen 7.9 trillion yen 14.5 trillion yen yen through(including 2.2 (including 2.2 (including 2.2 the first half
trillion yen
trillion yen for trillion yen for (including 6.6
trillion yen
for thethe environ- the environfor theenvironment)
ment)
ment)
environment)

USD 3.58
billionUSD 3.77
billionUSD 2.95
billionApprox. 120
billion yen

Approx. 90
billion yen

Zero GHG Emissions
3 Net
from Own Operations

PCA ≤ 0%35.0 trillion yen(including 18.0
trillion yen for
the environment)

From FY2019
50%
reduction

Zero
Zero

Shifted to 100%
Shifted to 100%
renewable
renewableenergyenergyGroup andprocured at
procuredNet zero GHG
globalall domestic
domestically
Domestic
GHG
emissions emissions fromconsolidated
by the Bank,own operations
50%
subsidiaries emissions 2/3
the Trust Bank,
reduction reduction fromfor their own
and thefrom
FY2020
FY2020contracted
Securities HD(FY2025)(FY2026)
electricity

initiatives
4 Decarbonization
as an Asset Manager

Appendices

Reduce GHG
emissions per
economic intensity by 50% from2019 for 55%
of assets undermanagement

1. A measure of consistency that indicates the difference from the required level across the portfolio. Calculates the Vessel Climate Alignment(VCA) of individual vessels providing financing as a weighted average of the percentages in the loan portfolio.

MUFG, Progress Report 2023, p. 3
Note: Some content was reformatted in order to fit the page.

operate. We will continue to engage with ourclients to understand their transition strategies,
respectfully challenge their transition plans,
and provide financing to support them. We areconfident that this approach will allow us to seize
this opportunity to reduce our — and our clients’— climate-related risks over time.

104

The Task Force on Climate-related Financial Disclosures

Case Study by a Global
Insurance Company
AXA is an insurance company headquarteredin France. We are engaged in insurance,
reinsurance, asset management, and banking
businesses on a global scale — and as such, weare exposed to a wide variety of risks, including
market risks, credit risks, insurance risks,
operational risks, and other material risks. We
invest in companies that have a clear path to
reduce emissions and limit warming to 1.5°C,
based on ambitious science-based targets.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Addressing climate-related risks is part of ourrisk management framework and disclosures.
We have published climate-related disclosuressince 2016 and have been TCFD supporters
since its recommendations were first released in2017. Since our first publication, we have tested
different approaches to analyzing climaterelated risks and opportunities of our various
asset classes. Scenario analysis has been central
to our approach to understanding different
potential outcomes. We engage with industry
groups and data providers to continuously
refine our methodologies.
We have been experimenting with various
methods of analyzing the impact of climaterelated events on our investments since 2016.
Today, we use a host of climate-related metrics
to measure and monitor our climate impact
and climate-related risk and opportunities forour asset classes.182 For example, we collectand analyze data on building-level impacts ofextreme events on our real assets expressedin absolute monetary terms. For each metricand asset class, we have developed a tailoredmethodology. Some of the methodologies use
in-house models while others are produced
by external providers such as MSCI andS&P Trucost.

Our Approach for Estimating Potential
Financial Impact and Challenges Faced
Our Investment and Risk Management teamhas developed Natural Catastrophe models(henceforth called “NatCat” models) to estimate
the potential financial losses from climatechange-related hazards.

Developing In-House NatCat Modelling and
Forward-Looking Risk Frameworks
Our in-house NatCat models include different
hazards depending on asset type, region, andother factors. To identify perils and regions thatwill most likely be impacted by climate change,
we have developed maps using data from the
IPCC and other scientific reports. In assessing
risk exposure to natural hazards, our models
are based on asset-level data, which include
the geolocation of buildings and their primaryusage. Whenever possible, we also incorporate
more detailed information from real estate
managers about the physical characteristics
of each building, as doing so can provide more
precise and asset-specific results. From a risk
modelling perspective, it is critical to include
detailed information regarding vulnerability inorder to have an accurate representation of therisk leveraging internal data or national data
(e.g., eventual flood defense system presence).
Therefore, our models consider up to 200
vulnerability curves.183
Furthermore, our NatCat modelling informs
our forward-looking analysis up to 2050. This
analysis depends on climate scenarios andtime horizons considered (e.g., IPCC climate
scenarios RCP 2.6, 4.5, and 8.5).184 AXA
identified different approaches that range from
simple to sophisticated to assess the futureof natural hazards risks based on exposure todifferent peril and region combinations. The
simple approach relies on available literatureand datasets (e.g., open-source datasets forfloods) that provide a percentage of impact(projection factors) for hazard, exposure,and vulnerability at different time intervals.
This provides insights on where the risk may
significantly evolve — along with the associateduncertainties — and enables AXA to identify
and prioritize areas requiring further study.
The most sophisticated approach integrates
a modified view of hazard, exposure, andvulnerability within the NatCat models inorder to capture forward-looking scenarios.
One challenge we have dealt with is the levelof uncertainty around certain assumptions at
the basis of our analysis. This is particularly
the case for natural climate variability, climate
model uncertainty, and scenario uncertainty(i.e., RCPs). Since this uncertainty cannot be
eliminated from such work, it is appropriate
to acknowledge and — wherever possible —assess it. In order to do so, our multi-model
approach leverages an ensemble of datasetsthat provide a more comprehensive viewof climate change impact across different

182

For more details, see AXA, Climate and Biodiversity Report, June 29, 2023 (p. 19).

183

A vulnerability curve describes the relationship between the hazard intensity and the degree of damage to a given asset or group of assets.

184

Representative Concentration Pathways have been defined by IPCC experts and used as climate model inputs to evaluate the impact of different
mitigation policies (from no mitigation actions to the complete cessation of high-carbon activities).

105

The Task Force on Climate-related Financial Disclosuresscenarios. Further, it is important to betransparent about these assumptions anduncertainties, and to properly communicate them.

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesWe leverage our in-house risk modelling
framework to assess the potential direct financial
impact of physical climate-related risks on
our real estate portfolio (building damages)
following possible extreme whether events inthe current climate. In 2022, this assessment
covered more than €45 billion in direct property
investments and analyzed the financial impact offloods, windstorms, and hail in 20 countries. The
results are disclosed as average annual losses
and losses from a one-in-a-fifty-year event for
the full portfolio. Furthermore, the results arebroken down by country and event. Based on ourassessment, our portfolio’s highest risk exposureis from flooding (representing 40% of potential
average annual losses), followed by windstorms(32%) and hail (28%) (see Figure E9).

Figure E9

Breakdown of Average Annual Losses by Peril and Country
2023 Climate and Biodiversity Report

B.
Financial Statement
Considerations

2023 2023
ClimateClimateand Biodiversity
and Biodiversity
ReportReportA.
State of Climate-Related
Financial Disclosures

We also faced challenges in gathering data at
the required level of granularity. The assetlevel data we use to run the analysis currently
relies on the geolocation of buildings and theirmain occupancy: datasets that have limited
granularity. We have also been working to
improve the process over time to incorporate
more detailed information about the physicalcharacteristics of buildings into the model,
which can generate more refined and assetspecific results. Currently, such detailed
information is not systematically available forthe real estate portfolio, but we have started
to engage with real estate managers to source
granular information about a given building’s
structure, year of construction, height and floor
levels owned, total value, and insured value.

Quantifying the Financial Impacts of Climate
Change on Our Real Estate Investments

Austria,
Austria,
Poland,Poland,Australia,
Australia,
Belgium,
Belgium,
Denmark,
Denmark,
Finland,Finland,
Austria,
Poland,Australia,
France,France,Ireland,
Ireland,
Italy,
Italy,
Belgium,
Denmark,
Finland, Japan
Japan
Luxembourg,
Luxembourg,
Netherlands,
Netherlands,
France,Ireland,
Italy,
2%2%
Norway,Norway,Portugal,Portugal,Spain,
Spain,
SwedenSwedenJapan
Luxembourg, Netherlands,
UnitedUnitedKingdom
Kingdom<1%<1%Norway, Portugal, Spain, Sweden 2% 7%7%
UnitedKingdom<1%7%Germany
Germany
46%
46%
Germany
46%

€2m
€2m
€2m

Switzerland
Switzerland
21%
21%
Switzerland
21%

UnitedUnitedStatesStates24%
24%
United States
24%
Average
Averageannualannualflood
flood
lossloss
perpercountry
country
Average annual flood loss per country
Sweden,Sweden,Australia,
Australia,
Poland,Poland,Austria,
Austria,
FinlandFinland
Norway,Norway,Italy,
Italy,
Portugal,Portugal,
Spain
Spain
1%1%
Sweden, Australia, Poland, Austria,
Finland<1%<1%
Luxembourg
Luxembourg
Norway, Italy, Portugal, Spain 1%
1%1%<1% Luxembourg
Denmark
Denmark1%
1%1%
IrelandDenmarkIreland
3%3% Switzerland
1%
Japan
Japan
IrelandSwitzerland
5%5%
23%
23%
3% Switzerland
UnitedUnitedKingdom
Kingdom
Japan
5% 6%6%23%
United Kingdom
Belgium
Belgium
6%
6%6%
€1.6m
€1.6m
Belgium
Netherlands
Netherlands
6%7%
7%
€1.6m
Netherlands
7%
UnitedUnitedStatesStatesGermany
Germany
20%
20%
7%
7%
United States
Germany
20%
7%FranceFrance19%
19%
France19%
Averageannualwindstorm
lossloss
perpercountry
Averageannualwindstorm
country

Finland,Finland,
Ireland,
Ireland,Sweden,Sweden,Luxembourg
Luxembourg
Denmark,
Denmark,
Poland,Poland,Austria,
Austria,
1%1%
Finland,
Ireland,Sweden,Luxembourg
Norway,Norway,Italy,
Italy,
Japan,
Japan,
UnitedUnitedKingdom
Kingdom
Denmark, Poland,
Austria,1%
Portugal,Portugal,
Spain
Spain
1%1%
Norway, Italy, Japan,
Kingdom<1%<1%United
Netherlands
Netherlands
Portugal, Spain 1%
1%1%<1% Netherlands
Belgium
Belgium
1% 2%2%
Belgium
Germany
Germany
2% 8%8%Germany
8% Australia
Australia
10%
10%
€1.4m
€1.4m
Australia
10%€1.4m
UnitedUnitedStatesStates47%
47%
United States
47%

Switzerland
Switzerland
14%
14%
Switzerland
14%

FranceFrance16%
16%
FranceAverage
Averageannualannualhail
hail
lossloss
perpercountry
country
16%
Average annual hail loss per country

Average annual windstorm loss per country

AXA, Climate and Biodiversity Report, p. 38

106

The Task Force on Climate-related Financial Disclosures

We incorporate the results of the potential
financial impact assessment of real estate
directly into our investment decision-making
processes. For example, we leverage the outputsof our analysis during acquisition processes —specifically in the technical due diligence phase— as well as in designing adaptation strategies
for assets where required.

Lessons Learned

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Although there is a common misconceptionthat climate-related risks are only related tohazards, in order to assess potential financial
impacts, it is important to take into accountall the components of climate risk: physicalhazards, exposures, and vulnerability. Each ofthese elements plays a unique role in driving
climate-related risks and the associated actualand potential financial impact.

variety of specific expertise, such as actuaries,
engineers, and climate risk researchers. At thesame time, it is critical to build and engage a
network of external collaborations, including
scientists and academics, to ensure that data
and methodologies are aligned with the mostadvanced studies and research on an ongoingbasis. To foster collaborations with external
stakeholders, AXA has a dedicated climate
research team that is involved in several joint
research initiatives.
We believe that openly sharing our
methodologies and results has significant value
for research and industry communities working
on these topics. Introducing climate into risk
assessment processes is a complex exercise;
therefore, we are fostering a collaborative
approach with our stakeholders to accelerate
best practices being defined and then shared.

Developing internal climate risk models
requires a multidisciplinary team with aC.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

107

F.
Insights Gained andView on Future WorkThe Task Force on Climate-related Financial Disclosures

F. Insights Gained and View on Future WorkA.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

On July 6, 2023, the Financial Stability Board(FSB) announced that the International
Sustainability Standards Board’s (ISSB's)
general sustainability-related and climaterelated disclosure standards — released inJune 2023 — can be seen as a culminationof the Task Force’s work.185 As such, the FSB
disbanded the TCFD with the release of thisstatus report and asked “the ISSB to deliver areport in 2024 on progress in firms’ disclosures,[…] including early take-up of the ISSB standard
for climate-related disclosures and progress inachieving interoperability.”186 The Task Forcewishes to commend the FSB on its leadershipin establishing the TCFD as an industry-led task
force to develop voluntary recommendations
on climate-related financial disclosure and forsupporting its work to promote and monitor
adoption of the recommendations for the past
several years. Since this is the Task Force’s
last report, it reflected on its experiences andinsights gained over the past eight years as well
as areas that warrant continued focus or further
work, as described below.

1. MEETING THE REMIT FROM THE FSB
The FSB created the Task Force in late 2015
and asked it to make recommendations
on consistent climate-related financial
disclosures for use by companies in providing
information to investors, lenders, and insurance
underwriters.187 The FSB also emphasized thatany disclosure recommendations by the Task
Force would be voluntary and would need to 1)
incorporate the principle of materiality; 2) weighthe balance of costs and benefits; and 3) not add
to the already well developed body of existingclimate-related disclosure schemes.188
In developing its recommendations, the Task
Force sought to balance the needs of the users
of disclosures with the challenges faced by the
preparers and was keenly aware of 1) companies’
concerns that multiple climate-related disclosure
frameworks increase the administrative
burden and cost of their disclosure efforts and1852) investors and other users’ identification of
non-comparable reporting by companies as amajor obstacle to incorporating climate-related
issues into their financial decisions.189 In light ofthese concerns and consistent with its remit, theTask Force drew on existing climate-related
disclosure regimes to develop a singular,
accessible framework for climate-related
financial disclosure.
In addition, when it released its recommendations
in June 2017, the Task Force indicated its
recommendations provide a common set ofprinciples that should help existing disclosure
regimes come into closer alignment over time.
It further noted that 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
encouraged standard setting bodies to support
adoption of the recommendations and alignment
with the 11 recommended disclosures.

The Task Force believes its recommendations,which provide a singular, accessible
framework for climate-related financial
disclosure, have helped existing disclosure
regimes come into closer alignment over time.

In reflecting on its work (see Box F1, p. 110)
and related developments over the past eight
years, the Task Force believes it has successfully
met its remit. The TCFD recommendations
have been a key driver of greater consistency
among major climate-related disclosure
regimes that existed when the Task Force wascreated as well as climate-related disclosure
requirements and standards that have beendeveloped more recently, effectively reducing
fragmentation and supporting consistency
across reporting regimes. For example,
by 2019, several major climate-related
disclosure regimes had incorporated the TCFD
recommendations into their requirements

FSB, “FSB Plenary Meets in Frankfurt,” July 6, 2023.

186

FSB, FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report, July 13, 2023.

187

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

188

FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.

189

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

109

The Task Force on Climate-related Financial Disclosuresand guidance.190 In addition, as described
elsewhere in this report and previous reports,
several governments, regulators, and standard
setters have incorporated or drawn fromthe TCFD recommendations in developing
climate-related reporting requirements andstandards, including the U.S. Securities andExchange Commission, the U.K. Parliament,
the European Commission, and the ISSB.191,192
Furthermore, the International Organizationof Securities Commissions endorsed the ISSB
standards and called on its 130 member
jurisdictions “to consider ways in which theymight adopt, apply or otherwise be informedby the ISSB standards within the context of
their jurisdictional arrangements, in a waythat promotes consistent and comparable
climate-related and other sustainability-related
disclosures for investors.”193

Box F1

TCFD Major Milestones 2016–2023
2016

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

March 2016: Consultation on Phase I Report

Public Consultation
Phase 1 Report

Sought feedback on the scope and objectives of the Task Force’s work todevelop recommendations on climate-related financial disclosures.

Public Consultation
TCFD Recommendations

December 2016: Consultation on TCFD Recommendations

1

2017

100+ TCFD Supporters

Final TCFD Recommendations
TCFD Recommendations
Supported by 100+ CEOs
390 Investors Called on G20
Leaders to Support TCFD
Recommendations

2018

D.
TCFD-Aligned Requirements
and Related Initiatives~500 TCFD Supporters

TCFD Knowledge Hub
WBCSD TCFD Preparer
Forum Report
First TCFD Status Report

E.
Types of Financial Impact
and Associated Drivers

Task Force on Climate-Related Financial Disclosures—Phase I Report

CDP, CDSB, and PRI Alignedwith TCFD

2019~800 TCFD Supporters

Japan TCFD Consortium

F.
Insights Gained and View
on Future Work

Second TCFD Status Report
European Commission
Guidelines in Line with TCFD
Recommendations

Appendices

WBCSD TCFD Preparer Forum Reports

Sought feedback on the draft TCFD recommendations and engaged with users, preparers,
and other stakeholders in relevant industries and sectors around the world.

2016–2017: Engagement with Over 2,700 Individuals in 43 Countries
128 Industry Interviews and 5
Focus Groups in 20 countries

10 Webinars and 793
Attendees in 30 countries

523 Responses on Public
Consultations from 34 countries

Outreach Events in
13 countries
DRAFT – FOR DISCUSSION PURPOSES ONLY

June 2017: Final TCFD Recommendations

Final Report

Published its final recommendations on climate-related financial disclosures alongwith implementation guidance and a technical supplement on scenario analysis.

Recommendations of
the Task Forceon Climate-related
Financial Disclosures

June 2017

Recommendations of the Task Force on Climate-related Financial Disclosuresi

2017–2018: Conferences and Workshops Held to Drive Adoption
Held two scenario analysis conferencesin Europe and North America.

Hosted three implementation workshops inEurope and Asia Pacific.

May 2018: TCFD Knowledge Hub
Launched the TCFD Knowledge Hub to help companies implement the
TCFD recommendations.
DRAFT – FOR DISCUSSION PURPOSES ONLY

September 2018: The Task Force’s First Status Report2018 Status Report
DRAFT

Included an overview of TCFD-aligned disclosure practices disclosure examples
user case studies describing how TCFD-aligned information is used.

Task Force on
Climate-related
Financial Disclosures:
Status Report

September 2018

The Task Force on Climate-related Financial Disclosuresi

2018–2019: TCFD Implementation and Use Survey
Surveyed preparers on implementing the TCFD recommendations and related challenges
and users on the usefulness, availability, and quality of TCFD-aligned disclosures.

June 2019: 2019 Status Report2019 Status Report

Included an overview of TCFD-aligned disclosure practices disclosure examples
user case studies survey results insights on disclosing strategy resilience.

Task Force on
Climate-related
Financial Disclosures:
Status Report

June 20192020

1,500+ TCFD Supporters

WBCSD TCFD Preparer Forum Report

The Task Force on Climate-related Financial Disclosuresi

March 2020: User Survey on Decision-Useful Information
Surveyed expert users on most useful climate-related information for financial decisionmaking. Expert users rated 60+ disclosure elements drawn from the TCFD framework.

Risk Management Guidance

Legend:190

TCFD Reports and Other Resources

Support from Prepares, Users, and Official Bodies

External Engagement

See Principles for Responsible Investment, “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework,” December 18, 2017;
Climate Disclosure Standards Board (now part of the IFRS Foundation), Framework for Reporting Environmental and Social Information, January2022; CDP, “How CDP is aligned to the TCFD,” Accessed June 21, 2023; and Sustainability Accounting Standards Board (now part of the IFRSFoundation), TCFD Implementation Guide, May 1, 2019.

191

See Section D. TCFD-Aligned Requirements and Related Initiatives for additional information.

192

U.S. Securities and Exchange Commission, “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosuresfor Investors,” March 21, 2022; U.K. Parliament, “Companies Act 2006 s414(CA),” (as amended), Accessed June 21, 2023; European Parliamentand European Council, Directive 2022/2464 as Regards Corporate Sustainability Reporting, December 14, 2022; IFRS Foundation, “ISSB Issues
Inaugural Global Sustainability Disclosure Standards,” June 26, 2023.

193

International Organization of Securities Commissions, “IOSCO Endorses the ISSB’s Sustainability-Related Financial Disclosures Standards,”
July 25, 2023.

110

The Task Force on Climate-related Financial Disclosures

Box F1

TCFD Major Milestones 2016–2023 (continued)
Scenario Analysis Guidance
Third TCFD Status Report
Public Consultation: Forward-Looking
Financial Sector Metrics

2021

2,600+ TCFD Supporters

WBCSD TCFD Preparer Forum Report

October 2020: Guidance on Risk Management and Scenario Analysis

Task Force on
Climate-related
Financial Disclosures
Guidance on Risk Management
Integration and Disclosure

Task Force on
Climate-related
Financial Disclosures

Issued guidance on 1) integrating climate-related issues into existing risk
management processes and disclosing relevant information and 2) conducting
climate-related scenario analysis for non-financial companies.

Guidance on Scenario Analysis
for Non-Financial Companies

October 2020

October 2020

October 2020: 2020 Status Report
Included an overview of TCFD-aligned disclosure practices disclosure examples
insights from users on most useful TCFD-aligned information for financial
decision-making case studies by preparers regulatory developments.

Task Force on
Climate-related
Financial Disclosures
2020 Status Report

October 2020

Public Consultation: Metrics, Targets,
and Transition Plans

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

2020–2021: Consultations on Metrics, Targets, and Transition Plans

Metrics, Targets, and Transition
Plans Guidance

Sought feedback on various forward-looking,climate-related metrics for the financial sector
in October 2020.

Updated Implementation Guidance

October 2021: 2021 Status Report

Fourth TCFD Status Report

Included an overview of TCFD-aligned disclosure practices disclosure
examples insights on disclosing financial impact of climate-related issues
regulatory developments.

FSB Report Encouraging Use of the
TCFD Framework

Sought feedback on proposedguidance on metrics, targets, andtransition plans in June 2021.

ISSB to Develop Standards Basedon TCFD

October 2021: Guidance on Metrics, Targets, and Transition Plans
and Updated Implementation Guidance

Mexico TCFD Consortium

Issued guidance on seven, core cross-industry metrics and transition plans
and updated implementation guidance to reflect industry developments.

Task Force on
Climate-related
Financial Disclosures
2021 Status Report

October 2021

Task Force on
Climate-related
Financial Disclosures

Guidance on Metrics, Targets,
and Transition Plans

Task Force on
Climate-related
Financial Disclosures
Implementing the Recommendationsof the Task Force on Climate-related
Financial Disclosures

October 2021

October 2021

2022

3,900+ TCFD Supporters

This document updates and supersedes the 2017 Annex "Implementing
the Recommendations of the Task Force on Climate-related Financial Disclosures"

February 2022: TCFD Workshop Presentation Series

U.S. SEC Proposed Rules
Leveraging TCFD

Released a set of five presentations to support TCFD implementation.

ISSB Draft Standards Based on TCFD

Sought input from asset managers andasset owners on reporting of climaterelated information to clients andbeneficiaries, respectively.

EFRAG Draft Standards in Line
with TCFD
Fifth TCFD Status Report2023

4,850+ TCFD Supporters

ISSB Final Standards
First Set of Final EFRAG Standards
Last TCFD Status Report
TCFD Disbanded

Legend:TCFD Reports and Other Resources

February and March 2022: Surveys on Reporting Trends and Challenges
Sought input from preparers on TCFD
implementation over five-year period
and from users on using TCFD-aligned
information for decision-making.

October 2022: 2022 Status Report
Included an overview of TCFD-aligned disclosure practices disclosure
examples progress and challenges with TCFD implementation over past
five years users’ views of the usefulness of TCFD-aligned disclosuresregulatory developments.

Task Force on
Climate-related
Financial Disclosures
Overview

December 2022

October 2023: The Task Force’s Last Status Report
Included an overview of TCFD-aligned disclosure practices disclosure
examples regulatory developments case studies by preparers
climate-related issues in financial statements insights gained over the
past eight years areas of continued focus and further work.

Support from Prepares, Users, and Official Bodies

Task Force on
Climate-related
Financial Disclosures
2023 Status Report

October 2023

External Engagement

Appendices2. I NSIGHTS GAINED FROM THE TASKFORCE’S WORK
As part of reflecting on its experiences (seeBox F1, p. 110) and insights gained over the past
eight years, the Task Force considered reasons
why its voluntary climate-related financial
disclosure recommendations and overall
framework were well received by both theprivate sector and the public sector, ultimately
serving as the foundation upon which several
jurisdictional and international climate-related
reporting requirements and standards werebuilt. The Task Force attributes the global spreadof the TCFD recommendations to the support

and willingness of thousands of companies toimplement the recommendations on a voluntarybasis; the tremendous support from investors
and others in asking companies to disclose
information in line with the recommendations;and the FSB’s work to promote use of the TCFD
recommendations by governments, regulators,
and standard setters as a basis for climaterelated financial disclosure requirements. The
Task Force believes the insights gained fromits work could be useful for similar types of
initiatives. As such, the Task Force summarizes
the major contributing factors to the successof its recommendations in Table F1 (p. 112) andprovides further details in the paragraphs below.

111

The Task Force on Climate-related Financial Disclosures

Table F1

Major Contributing Factors to Success of the TCFD Recommendations
Supported by the FSB, including encouraging financial authorities to promote the TCFD
framework
Focused on decision-useful information structured around companies’ strategy, risk
management, and governance processes
Developed by a global, industry-led group of expert preparers and users to ensure relevanceand balance
Backed by preparers, users, and industry associations from the start, with continuous
involvement and support throughout
Developed as a voluntary framework to allow for gradual development of reporting
approaches based on experienceA.
State of Climate-Related
Financial Disclosures

Supplemented by guidance based on practical experience to facilitate learning, support
implementation, and direct attention to areas identified by preparers as challenging

B.
Financial Statement
Considerations

Built on existing frameworks and practices with a strong commitment from the outset topromote convergence and simplification of reporting

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Supported by full time, professional secretariat staff with strong private-sector and publicsector experience

FSB Support: The FSB created the Task Forceand asked it to make recommendations on
consistent climate-related financial disclosures
for use by companies in providing information
to investors and other users for financial
decision-making. With the release of the Task
Force’s recommendations in 2017 and eachyear thereafter, the FSB asked the Task Forceto continue its work — promoting adoptionof the TCFD framework; providing further
guidance; supporting educational efforts;monitoring climate-related financial disclosure
practices in terms of their alignment with the
TCFD recommendations; and preparing annual
status reports. In addition, in July 2021, the
FSB published its Report on Promoting ClimateRelated Disclosures, in which it encouraged
financial authorities “to use a framework basedon the TCFD Recommendations across all
sectors (non-financial corporates and financial
institutions) for climate-related financial
disclosures, in line with jurisdictions’ regulatory
and legal requirements.”194
Concurrent with its Report on Promoting ClimateRelated Disclosures, the FSB also published the

FSB Roadmap for Addressing Climate-Related
Financial Risks, which laid out a comprehensive
and coordinated plan for addressing climaterelated financial risks. In the report, the
FSB welcomed the IFRS Foundation’s “workto develop a baseline global sustainability
reporting standard under robust governanceand public oversight, built from the TCFD
framework and the work of an alliance ofsustainability standard setters.”195 The FSB also
recognized that some jurisdictions were alreadytaking domestic steps in a more accelerated
timeframe than the IFRS’s work and indicatedthe following:“[t]he TCFD framework provides a basis for
initiatives that jurisdictions may wish to take,based on domestic regulatory frameworks,
while work towards a global baseline corporate
reporting standard progresses. This would be
an important step forward on the path towards
a global baseline standard that is interoperablewith jurisdiction-specific requirements in orderto achieve comparability in disclosures.”

194

FSB, Report on Promoting Climate-Related Disclosures, July 7, 2021.

195

FSB, FSB Roadmap for Addressing Climate-Related Financial Risks, July 7, 2021.

112

The Task Force on Climate-related Financial Disclosures

The Task Force recognizes that the FSB’s supportof the Task Force and promotion of the TCFD
recommendations as a foundation for financial
authorities to use in developing climate-related
reporting requirements were critical factors to
the success of the TCFD recommendations andtheir incorporation into the ISSB standards,
which were endorsed by the International
Organization of Securities Commissions.196

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Decision-Useful Information: In developing
the recommendations, the Task Force focusedon the types of information needed byinvestors, lenders, and insurance underwriters
to appropriately assess and price climaterelated risks and opportunities as part of theirfinancial decision-making. The Task Forcestructured its recommendations around fourthematic areas that represent core elements of
how companies operate: governance, strategy,
risk management, and metrics and targets. In
addition, the Task Force focused specificallyon the impact of climate-related risks andopportunities on a company rather than acompany’s impact on the environment, with thelatter being the focus of most of the existingclimate-related disclosure regimes at the time.
Global Industry Experts: In creating the Task
Force, the FSB modeled it on its successful
Enhanced Disclosure Task Force (EDTF), which
was an industry-led group established in 2012
to make recommendations on financial risk
disclosures for banks.197 The EDTF comprised
preparers, auditors, and users of banks’financial statements. Similarly, in identifying
TCFD members, the FSB selected preparers andusers of climate-related financial disclosuresfrom across the G20’s constituency, covering abroad range of sectors.
Given the Task Force’s remit and expertiseof its members, it sought to develop a set ofrecommendations on climate-related financial
disclosure — for inclusion in mainstream
financial filings — that could be adopted bycompanies of all sizes across sectors andjurisdictions. As such, the Task Force engaged
with key stakeholders throughout thedevelopment of its recommendations to ensurethat its work would 1) promote alignment
across existing disclosure regimes; 2) consider
the perspectives of users and the concernsof preparers of climate-related financial
disclosures; and 3) be efficiently implemented

by companies and other organizations in theirfinancial reporting.
The Task Force conducted extensive outreachand engagement — through public consultations,industry interviews, focus groups, outreach
events, and webinars — to support thedevelopment of its recommendations. Suchengagement served two primary purposes —1) to raise the level of awareness and educate
stakeholders on the Task Force’s work and 2) tosolicit feedback from stakeholders on the Task
Force’s proposed recommended disclosures andimplementation guidance. In total, more than
2,700 individuals in 43 countries were included in
the Task Force’s outreach and engagement. The
Task Force believes its members’ expertise andextensive stakeholder engagement were key indeveloping a singular, accessible framework forclimate-related financial disclosure.
Involvement and Support of Preparers,
Users, and Others: Another contributing factor
to the success of the TCFD recommendations
relates to the support received from individualcompanies, investor groups, and industry
groups. When the final TCFD recommendations
were published in 2017, over 100 CEOs andtheir companies with a combined market
cap of around $3.5 trillion and financial
institutions responsible for assets of about$25 trillion publicly committed to support
the recommendations. In addition, several
investor groups expressed support for the
TCFD recommendations over the past several
years. One of the first investor-led initiatives
to support the TCFD was a combined groupof 390 investors — coordinated by the Asia
Investor Group on Climate Change; CDP;
Ceres; Investor Group on Climate Change;
Institutional Investors Group on Climate
Change; and signatories of the Principles
for Responsible Investment — that calledon G20 leaders and their nations to support
the TCFD recommendations.198 In addition,
Climate Action 100+ engaged the world’s
largest corporate greenhouse gas emittersto strengthen climate-related disclosures byimplementing the TCFD recommendations.
The Task Force also received support fromseveral industry associations or groups,
including the World Economic Forum, the World
Business Council for Sustainable Development(WBCSD), the Institute of International Finance,

196

T he International Organization of Securities Commissions endorsed the ISSB standards and called on its 130 member jurisdictions, regulating
more than 95% of the world’s financial markets, to consider ways in which they might adopt, apply, or otherwise be informed by the ISSB
standards within the context of their jurisdictional arrangements. International Organization of Securities Commissions, “IOSCO Endorses the
ISSB’s Sustainability-Related Financial Disclosures Standards,” July 25, 2023.

197

FSB, “FSB Announces the Formation of the Enhanced Disclosure Task Force,” May 10, 2012.

198

Asia Investor Group on Climate Change, et al., “Letter from Global Investors to Governments of the G20 Nations,” July 3, 2017.

113

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendicesas well as others. These groups provided
support for the TCFD recommendations invarious ways, such as providing forums inwhich companies learned more about the TCFD
recommendations and their implementation
as well as developing implementation guidancefor companies in specific sectors. For example,
the WBCSD established the TCFD Oil and Gas
Preparer Forum in October 2017, with input
from the TCFD Secretariat. The forum brought
together four major oil and gas companies toshow how they were implementing the TCFD
recommendations and give practical examplesof effective climate-related disclosure.199 Overthe past six years, the WBCSD has led several
other industry-specific TCFD forums, includingones for the following sectors: electric utilities;
chemical; automotive; construction and building
materials; and food, agriculture, and forest
products. It also published a business-relevant
approach to climate-related scenario analysis inline with TCFD’s recommendations.
The Task Force wishes to emphasize that
there have been many different groups andorganizations — more than 80 — that provided
support related to TCFD implementation since
the recommendations were finalized. The Task
Force believes that this support significantly
contributed to the willingness of thousands ofcompanies to implement the recommendations
on a voluntary basis.

The Task Force expresses its deep gratitude
to all the investor groups, industry associations,and other groups that provided invaluable
support to preparers and users in
implementing the TCFD recommendations andusing them for financial decision-making.

Voluntary Framework: Importantly, theTask Force developed a voluntary framework
on climate-related financial disclosures,
which allowed companies to develop andrefine reporting approaches gradually basedon experience and ongoing feedback frominvestors and other users.
Guidance Based on Practical Experience: Given
the composition of its members, the Task Forcewas keen to provide preparers with guidance
and other insights based on practical experience.
Over the past six years, the Task Force publishedguidance on several topics to support preparers
in implementing the TCFD recommendations.
199

In 2017, it published general and sector-specificguidance on implementing the recommendations(referred to as the annex) and a technicalsupplement on conducting climate-related
scenario analysis to support the developmentof TCFD-aligned disclosures. In 2020, the Task
Force published guidance on risk management
and scenario analysis to clarify certain topics
and address feedback received from companies
and other organizations implementing therecommendations. It also released a consultation
paper on forward-looking metrics for thefinancial sector. In 2021, the Task Force publishedguidance on metrics, targets, and transition plans
and updated its annex.
In addition, in its annual status reports, theTask Force addressed various topical issues
to further support implementation. For
example, for its 2020 status report, the Task
Force conducted a survey to better understandspecific types of climate-related informationthat investors and others find the most usefulfor decision-making — the purpose of which
was to help preparers develop more effective
climate-related financial disclosures. In addition,
all the status reports include examples ofcompanies’ disclosures that align with therecommendations; and many include casestudies from companies preparing disclosuresor organizations using TCFD-aligned disclosuresfor decision-making. The Task Force believes
its efforts to continually support preparers in
implementing the recommendations helped
drive greater adoption of the recommendations
and better disclosure over time.
Convergence and Simplification of Reporting:From the outset, the Task Force sought todevelop a climate-related financial disclosure
framework that would simplify reporting forcompanies and lead to convergence of climaterelated disclosure regimes over time. The Task
Force believes its recommendations, which
provide a singular, accessible framework forclimate-related financial disclosure, helped
existing disclosure regimes come into closeralignment over time.
Professional Secretariat: The Task Force
was chaired by Michael Bloomberg — Chair
and Founder, Bloomberg LP and Bloomberg
Philanthropies — and supported by full-time,
professional Secretariat staff with strong
private-sector and public-sector experience.

WBCSD, Climate-Related Financial Disclosure by Oil and Gas Companies: Implementing the TCFD Recommendations, July 18, 2018.

114

The Task Force on Climate-related Financial Disclosures

3. A REAS OF CONTINUED FOCUS OR
FURTHER WORKA.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

The Task Force also reflected on areas that it
believes warrant continued focus or further
work by the ISSB or other appropriate bodies,
as described below and summarized in Table F2.
Importantly, the Task Force recognizes some of
the issues highlighted below are part of the ISSB’s
current and planned work over the next two
years, including ensuring interoperability of thestandards with other sustainability standards;
supporting implementation of the standards;
and researching targeted enhancements to thestandards.200 As the ISSB and other appropriate
bodies continue to drive improvements inclimate-related financial disclosure and support
companies’ efforts to make such disclosures, theTask Force believes it is especially important torecognize the dynamic nature of climate-related(as well as broader sustainability) issues and theneed for ongoing assessment and adjustment, as
appropriate, as practices continue to evolve. In
addition, the Task Force strongly encourages the
ISSB and other appropriate bodies to consider
the insights gained by the Task Force over the
past eight years as they further develop otherareas of sustainability reporting. In particular,
the Task Force believes an effective model
for such work is to create a group of expert
practitioners — representing preparers, users,
and other stakeholders — supported by a strong
Secretariat to develop voluntary disclosure

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

recommendations that are supplemented
by implementation guidance and promoted,
monitored, and refined based on learning
experiences.

Interoperability
As indicated by the FSB, the ISSB’s publicationof general sustainability and climaterelated disclosure standards is a substantial
achievement and represents a culmination of
the Task Force’s work.201 Since the ISSB standards
are meant to serve as a global framework forsustainability (and climate-related) disclosuresand support consistent reporting by different
companies around the world, the Task Forcebelieves ensuring interoperability of the ISSB
standards with jurisdictional frameworks is
critical. In particular, the Task Force emphasizes
the importance of consistent company reporting
across jurisdictions and avoiding the need forcompanies to report through multiple venues.

Implementation Guidance
As noted previously, the Task Force believes
its efforts to continually support preparers
in implementing the recommendations —through the development of guidance, casestudies, examples of disclosure, and soforth — helped drive greater adoption of therecommendations and better disclosure overtime. As such, the Task Force encourages the
ISSB and other appropriate bodies to continue
this type of work.

Table F2

Areas Warranting Continued Focus or Further Work
Ensuring interoperability of the ISSB standards with jurisdictional frameworks to supportconsistent company reporting across jurisdictions and avoid the need for companies to reportthrough multiple venues.

Appendices

Developing implementation guidance on topics such as climate-related physical risk assessment
and adaptation planning, climate-related scenario analysis at a sector or industry level, and Scope
3 GHG emissions measurement at a sector or industry level.
Continuing to focus on companies’ disclosure of the resilience of their strategies under
different climate-related scenarios, including a climate-related scenario aligned with the latest
international agreement on climate change.
Continuing to focus on decision-useful disclosure on other sustainability topics — such as
biodiversity, water, and social issues — and consider the linkages between climate-related andother sustainability issues (for example, in the context of companies’ transition plans).
Developing a consistent climate-related financial disclosure framework for use by countries
and other sovereign entities. Consistent and comparable reporting by sovereigns would support
companies in preparing comprehensive TCFD-aligned disclosures and transition plans thatappropriately reflect their operating environment.

200

ISSB, Consultation on Agenda Priorities, May 4, 2023.

201

FSB, FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report, July 13, 2023.

115

The Task Force on Climate-related Financial Disclosures

Some of the areas where the Task Force 		sees the need for additional guidance are 		described below.
• Physical Risk Assessment and Adaptation
Planning: Over the years, the Task Forcehas received feedback that companies areinterested in guidance on climate-related
physical risks, including on developing
adaptation plans. The Task Force encourages
the appropriate bodies to further explore anddevelop the type(s) of guidance needed by
the industry.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices• Climate-Related Scenario Analysis:
Another area warranting further guidance
relates to companies performing climaterelated scenario analysis; assessing theresilience of their strategies under different
climate-related scenarios; and disclosing
any resulting material information. The Task
Force published guidance on scenario analysis
in June 2017 and October 2020 to support
preparers in using climate-related scenario
analysis for purposes of disclosing in line with
its recommendations. 202 However, the Task
Force believes further guidance — such as
guidance on climate-related scenario analysis
at a sector or industry level — would help
preparers in disclosing the resilience of theircompanies’ strategies. A recent example ofsuch guidance is the WBCSD’s Climate Scenario
Analysis Reference Approach for companies inthe energy system. 203• Scope 3 GHG Emissions: The Task Force isaware that many companies find calculating
and disclosing Scope 3 GHG emissionsdifficult. The development of sector-specificguidance on calculating such emissions may
be useful in improving the consistency ofcompanies’ disclosures. One example ofsuch guidance relates to the Partnership for
Carbon Accounting Financials’ standard forthe financial sector that provides detailed
methodological guidance on measuring anddisclosing financed and insurance-associated
GHG emissions. 204 The Task Force encourages
the appropriate bodies to consider developing
other sector-specific guidance on measuring
Scope 3 GHG emissions.

Disclosing Resilience of Strategy underDifferent Climate-Related Scenarios
In its 2017 report, the Task Force indicated that
one of its key recommended disclosures is on
the resilience of a company’s strategy under
different climate-related scenarios, including
a 2°C or lower scenario (i.e., a scenario alignedwith the latest international agreement on
climate change). 205 The Task Force emphasizedthat a company’s disclosure of how its strategy
might change to address potential climaterelated risks and opportunities is a key step tobetter understanding the potential implicationsof climate change on the company. The Task
Force continues to believe companies should
disclose the resilience of their strategies under
different climate-related scenarios, including a
scenario aligned with the latest international
agreement on climate change. Investors andothers use such information to inform their
expectations about the future performance ofcompanies.

Decision-Useful Disclosure on Other
Sustainability Topics
The Task Force recognizes there are several
other sustainability-related issues — such as
biodiversity, water, and social issues — that may
warrant further consideration by the appropriate
bodies in terms of promoting decision-useful
disclosure.206 Further, these issues may havelinkages with climate-related issues that areimportant for investors and others to consider,for example, in the context of companies’
transition plans. The Task Force is encouraged
by current work underway — such as thatby the Taskforce on Nature-related Financial
Disclosures to develop a risk managementand disclosure framework on nature-relatedrisks and the Science Based Targets Network
to develop corporate science-based targets fornature — and recognizes that such areas warrant
continued attention in the future.207

Climate-Related Disclosure by Sovereigns
While the Task Force believes more companies
should be disclosing decision-useful climaterelated financial information, it also recognizes
significant progress has been made over the202

T CFD, Technical Supplement – The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities, June 29, 2017 and TCFD,
Guidance on Scenario Analysis for Non-Financial Companies, October 29, 2020.

203

WBCSD, Climate Scenario Analysis Reference Approach, February 1, 2023.

204

Partnership for Carbon Accounting Financials (PCAF), The Global GHG Accounting and Reporting Standard Part A: Financed Emissions (Second
Edition), December 19, 2022 and PCAF, The Global GHG Accounting and Reporting Standard Part C: Insurance-Associated Emissions, November
16, 2022.

205

The Task Force used the phrase “a 2°C or lower scenario” in its report based on the Paris Agreement and views the phrase “a scenario alignedwith the latest international agreement on climate change” as consistent with its intent in using “a 2°C or lower scenario.”206

The Organization for Economic Cooperation and Development, Biodiversity: Finance and the Economic and Business Case for Action, December 6,
2019.

207

Taskforce on Nature-related Financial Disclosures, “About the Taskforce on Nature-related Financial Disclosures,” Accessed July 24, 2023 andScience Based Targets Network, “Our Mission, Science Based Targets Network,” Accessed July 24, 2023.

116

The Task Force on Climate-related Financial Disclosures

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendicespast several years. For example, the percentage
of companies disclosing information in linewith the Task Force’s recommendations has
steadily increased each year as has the amountof TCFD-aligned information companies disclose(see Box A1, p. 4). Furthermore, based on asurvey conducted last year, the vast majority of
respondents that use climate-related financial
disclosures for decision-making or otherpurposes saw an increase in the availability
and quality of such disclosures since 2017. The
Task Force expects further progress will bemade given the ISSB’s finalization of its climaterelated disclosure standards — which are basedon the TCFD recommendations — and various
jurisdictions’ efforts to require such disclosures.
In light of this, the Task Force believes animportant next step is the development of aconsistent climate-related financial disclosure
framework for use by countries and othersovereign entities — consistent with the
TCFD recommendations and ISSB standards,
as appropriate — and is encouraged by
the International Public Sector AccountingStandards Body's (IPSASB's) plans to develop
a climate-related disclosure standard for the
public sector. 208

Need for Sovereigns’ Disclosure of ClimateRelated Information
Both preparers and users have an interest in
countries and other sovereign entities’ (referred
to as sovereigns) disclosure of climate-related
information. For preparers, understanding
the latest international agreement on climatechange and the associated commitments in thejurisdictions in which they operate is criticalin conducting scenario analysis to assess theresilience of their companies’ strategies anddeveloping transition plans. Furthermore,
understanding jurisdictions’ actions as they
relate to climate-related commitments andtheir climate-related risks is important forcompanies in preparing comprehensive TCFDaligned disclosures and transition plans. For
example, information on a jurisdiction’s GHG
emissions reduction targets and plans to reachthose targets provides important context
for companies in setting their own climaterelated targets. Likewise, such information
is useful to investors and other users whenevaluating companies’ climate-related financial

disclosures and transition plans. Investors andother users are also increasingly interested
in understanding sovereigns’ exposure toclimate-related risks and actions they are taking
to address these risks given that sovereign
debt represents half of the $129 trillion global
bond market (see Figure F1). 209,210 In addition,
sovereign debt plays a central role as areference rate for the pricing of other financial
instruments — which is important to bothpreparers and users.
Figure F1

Global Bond Market,
December 2022
Supranationals and Regionaland Local Governments andAgencies
11%

Corporate
33%

Governmental Banks
4%

Sovereigns
52%

Source: Bloomberg Finance L.P.

In early 2022, the World Bank publisheda report calling for the development of areporting framework or guidance tailoredto sovereigns for reporting on climate andnature issues. 211 In the report, the WorldBank indicated “[s]overeign reporting would
help meet the needs of investors who areincreasingly requesting such disclosures for
all asset classes in their portfolios so that they
can measure portfolio alignment with the Paris
Agreement.” 212 The World Bank encouraged the
IPSASB to lead such an effort.

IPSASB Climate-Related Disclosure Standard
In May 2022, the IPSASB issued a consultation
paper seeking feedback on developing public
sector sustainability reporting guidance —which it proposed to align with the ISSB’s workand the TCFD recommendations. 213 On June
14, 2023, the IPSASB announced its decision todevelop a climate-related disclosure standard

208

IPSASB, “IPSASB Begins Development of Climate-Related Disclosures Standard for the Public Sector,” June 14, 2023.

209

For example, the ASCOR (Assessing Sovereign Climate-related Opportunities and Risks) project is focused on developing a tool to help investors
assess sovereign exposure to climate-related risk. ASCOR is comprised of investor networks, asset owners, and asset managers.

210

As of December 2022, sovereign debt was 52% of the total global bond market (source: Bloomberg Professional Service).

211

World Bank, Sovereign Climate and Nature Reporting: Proposal for a Risks and Opportunities Disclosure Framework, January 31, 2022.

212

Ibid, p. vii.

213

IPSASB, Consultation Paper: Advancing Public Sector Sustainability Reporting, May 9, 2022.

117

The Task Force on Climate-related Financial Disclosures

for the public sector. 214 The IPSASB indicatedthat there was “strong global stakeholder
support for the proposals in its consultation
paper,” with significant support for developing
guidance on climate-related disclosures first.
The Task Force is encouraged by the IPSASB’s
efforts to date and believes development of aconsistent climate-related financial disclosure
framework for sovereigns — consistent
with the TCFD recommendations and ISSB
standards, as appropriate — is importantfor both preparers and users of climaterelated financial disclosures. Consistent andcomparable reporting by sovereigns would
support companies in preparing comprehensive
TCFD-aligned disclosures and transition plansthat appropriately reflect their operating
environment. Such reporting would also
improve investors’ ability to appropriately
assess and price their climate-related risks andeffectively allocate capital.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

214

IPSASB, “IPSASB Begins Development of Climate-Related Disclosures Standard for the Public Sector,” June 14, 2023.

118

Appendices

The Task Force on Climate-related Financial Disclosures

Appendix 1: Task Force Members
CHAIRMAN AND VICE CHAIRSMichael Bloomberg
Chair
Founder
Bloomberg LP and Bloomberg Philanthropies
Denise Pavarina
Vice Chair
Board Member
Banco Bradesco S.A.

A.
State of Climate-Related
Financial Disclosures

Graeme Pitkethly
Vice Chair
Chief Financial Officer
Unilever

Yeo Lian Sim
Vice Chair
Special Advisor, Diversity
Singapore Exchange

MEMBERSB.
Financial Statement
Considerations

Jane Ambachtsheer
Global Head of Sustainability
BNP Paribas Asset Management

David Blood
Senior Partner
Generation Investment Management

C.
Case Studies on Scope 3
GHG Emissions

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
Co-founder
Mexico TCFD Consortium

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
Partner, Oceania Chief Sustainability Officer
EY

Catherine Saire
Partner, Sustainability Services
Deloitte

Ashley Schulten
Head of ESG Investment, Global Fixed Income
BlackRockD.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

120

The Task Force on Climate-related Financial Disclosures

Martin Skancke
Chair, Risk Committee
Storebrand

Roslyn SteinGroup Head of Climate and Biodiversity
AXA(Until August 2023)

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

A.
State of Climate-Related
Financial Disclosures

Jon Williams
Partner, Sustainability and Climate Change
PwC(Until June 2023)

B.
Financial Statement
Considerations

SPECIAL ADVISORC.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

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

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

F.
Insights Gained and View
on Future Work

Mara Childress
Director, Global Public Policy
Bloomberg LP
Stacy Coleman
TCFD Secretariat
Curtis Ravenel
TCFD Secretariat

Appendices

FINANCIAL STABILITY
BOARD OBSERVERS
Rupert Thorne
Deputy to the Secretary General

Jürgen Kirchhof
Secretariat Member

This report was developed with the support of Bloomberg LP’s Tom Coleman and Boston Consulting
Group’s Roy Choudhury, Veronica Chau, Lorenzo Fantini, Jesper Nielsen, Arjun Nath, Mahmoud
Raya, Giovanni Covazzi, Alexander Puutio, Sofia Wiklund, Maria Vittoria Maranzano, Roni Grader,
Kristin John, Em Cruz, and Kieran Anderson.

121

The Task Force on Climate-related Financial Disclosures

Appendix 2: Company Selection and AI
Review Methodology
As described in Section A.1. TCFD-Aligned
Reporting by Public Companies and Section A.2.
TCFD-Aligned Reporting by Public Companies by
Region, the Task Force used artificial intelligence(AI) technology to review the alignment of
information included in companies’ public
reports with the TCFD recommendations. Thisappendix describes the Task Force’s process forselecting the companies included in the reviews,
the types of documents reviewed, and the AI
review methodology.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesCompanies Included in the AI Reviews
The AI technology was used to review financial
filings, annual reports, integrated reports,
sustainability reports, and other relevant
reports of public companies from five regions
in eight industries. 215 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. To
incorporate other types of companies that
may be exposed to climate-related risks, two
additional industries — Technology and Mediaand Consumer Goods — were also included.
For the AI review population used in Section A.1.
TCFD-Aligned Reporting by Public Companies,
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 using the following methodology:• I dentified a set of public companies —companies with public debt or equity — inthe eight selected industries using the 29
subindustries listed in Figure A2-1 (p. 123).
The 29 sub-industries are adapted fromthe Global Industry Classification Standard
subsectors and industries.
• R emoved subsidiaries to avoid double
counting of companies. Identified companies
that shared the same industry and ultimate
parent for capital structure purposes andretained the company with the largest annual
revenue (for non-financial industries) or thelargest total assets (for financial industries).
This approach was followed to avoid, as muchas possible, including companies thatpublished annual reports separate from theirparent 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. 123).
• 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.
• This methodology resulted in a final review
population of 1,701 companies.
To identify the final review population for the
past three status reports — including this one,
the Task Force began with the list of companies
included in the final review population for theprevious year’s status report and removed
companies that no longer existed or did nothave annual reports available for the three
relevant fiscal years. For this status report,
the Task Force began with an initial review
population of 1,434 companies, which was
the final review population used in the 2022
status report. Of the 1,434 companies, 69 were
removed based on the criteria mentioned
above, leading to a final review population of
1,365 for this report. 216
For this year’s report, the Task Force also used
the AI technology to review fiscal year 2022
reports for a larger and more geographicallydiverse set of public companies (around 3,100)
to provide AI review results for each of theeight industries by region (Asia Pacific, Europe,
Latin America, Middle East and Africa, andNorth America). The Task Force used the same
AI technology and followed the same generalapproach described above. The one difference
related to the scope of public companies
included in the review.

215

Other relevant reports include those specifically focused on climate change or the TCFD recommendations.

216

In 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.

122

The Task Force on Climate-related Financial Disclosures

Figure A2-1

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

Sub-Industries

Banking

Regional Banks
Large, Diversified Banks

Investment and AssetManagement Firms

Multi-line Insurance
Property and Casualty InsuranceLife and Health Insurance
Reinsurance

Oil and Gas
Coal

Utilities

Air Freight
Passenger Air Transportation
Maritime Transportation

Rail Transportation
Trucking Services
Automobiles

Chemicals
Construction Materials
Capital Goods

Metals and Mining
Real Estate Management
and Development

Beverages
Agriculture

Packaged Foods and Meats
Paper and Forest Products

292 Companies

Technology Hardwareand Equipment

Interactive Mediaand Services

Consumer Goods

Consumer Retailing

Textiles and Apparel

608 Companies

Insurance
246 Companies

Energy483 Companies

Transportation
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

456 Companies

Materials and Buildings
1,580 Companies

Agriculture, Food, & Forest
325 Companies

Technology and Media

456 Companies
Total: 4,446 Companies

The Task Force began with the 1,365 companies
used in the review of the past three fiscal yearsof reporting, which was originally identified
using specific size thresholds so that only thelargest companies were included. To achieve
statistically significant AI review results at anindustry level for each region, the Task Force
supplemented the AI review population withan additional 1,748 companies, which required
including companies of all sizes. In addition,
because the AI technology cannot processreports in languages other than English, thenumber of companies that could be includedin the reviews for Asia Pacific, Europe, Latin
America, and the Middle East and Africa wassmaller than it otherwise would be.

To determine the number of companies neededto achieve statistically significant results ina given region, the Task Force began with aconfidence level of 95% and then lowered it
for regions where many companies reported
in languages other than English.217 The lowest
confidence level used was 80%, and, for someindustries in Latin America, there were still notenough companies with reports in English toprovide AI review results that were statisticallysignificant at this level. 218

217

T he confidence level for Asia Pacific and Europe was 90%, 85% for the Middle East and Africa, 80% for Latin America, and 95% forNorth America.

218

A nalysis was not feasible due to there not being enough companies with reports in English for Consumer Goods and Technology
and Media in Latin America.

123

The Task Force on Climate-related Financial Disclosures

Documents Reviewed
The Task Force focused on companies’
fiscal year 2020, 2021, and 2022 financial
filings, annual reports, integrated reports,
sustainability reports, and other relevant
reports. These documents were identified using
the Bloomberg Terminal.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices• F inancial 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).
• S ustainability Reports (including Corporate
Social Responsibility and Environmental,
Social, and Governance reports): Reportsthat describe companies’ impact on theenvironment and society as well as theircorporate governance.
• Other Relevant Reports: Reports that
describe how climate change may affectcompanies’ businesses, strategies, or financial
planning, including those focused on the
TCFD recommendations.

AI-Based Review Methodology
The AI technology used to review companies’
publicly available reports for this report wasdifferent from the AI technology used in the
Task Force’s previous status reports. The
goal of the AI review was to automatically
identify information in financial filings andother company reports that aligned with one
or more of the 11 recommended disclosures(referred to as TCFD-aligned information). Oneof the challenges in designing an automatedAI technology to review company reports
for TCFD-aligned information is that thelanguage and semantics used to describe aparticular recommended disclosure could differ
across countries, sectors, and even between
companies in the same sector. To help addressthese challenges, the AI technology used219

language models that can represent wholesentences and paragraphs mathematically andcapture meaning in context. 219
Training the AI Model
The AI technology employed a language
model that was trained to identify TCFDaligned information. The model was basedon a deep learning-based natural language
processing model trained on a large databaseof text — namely, Robustly Optimized
Bidirectional Encoder Representations fromTransformers Pretraining Approach (RoBERTa).
RoBERTa encodes text into a mathematicalrepresentation based on its context. For
instance, while other approaches might haveencoded the word “cement” in the two phrases“GHG emissions per ton cement” and “cement
our approach” in the same way, RoBERTatakes the context into account and provides adifferent representation for “cement” in thetwo phrases. This allows RoBERTa models (andother similar architectures) to consider thecontextual meaning of words while making
classification decisions.
A language model built on the RoBERTaarchitecture was trained jointly with aproprietary dataset of climate-related text
and passages of text or excerpts identified asaligning with the Task Force’s 11 recommended
disclosures — referred to as labeled data. To
create the labeled data, a panel of subject matter
experts developed a “definition” for each of
the 11 recommended disclosures and trained“annotators” to classify text passages according
to these definitions. Once the annotators’
performance on identifying TCFD-aligned
information was deemed satisfactory, they
reviewed a large sample of text passages andlabelled them. The annotators’ labelling wascontinuously checked by subject matter experts.
Review of Company Reports
As part of the review process, text passages
were first extracted from the documents
available for review using a separate AI modelthat incorporated computer vision techniques,
which enables identification of paragraphs andallows certain types of information — such asthat included in tables — to be evaluated as
text. Millions of text passages and tables wereidentified across the available documents. Given
the large number of text passages, a “prefilter”
was used to identify text passages and tables
containing specific keywords and phrases
that could indicate the potential presence of

Liu et al., RoBERTa: A Robustly Optimized BERT Pretraining Approach, July 26, 2019.

124

The Task Force on Climate-related Financial Disclosures

TCFD-aligned information.220 The text passages
identified by the prefilter were input into
the trained language model, which assessedalignment with the 11 recommended disclosures.
Performance Validation
The performance of the AI technology wasassessed by comparing model predictions
with the human-annotated labels on a set oftext passages. The set of text passages thatwas used to evaluate performance was only
run once through the model to ensure thatthe model prediction was unbiased. If themodel’s determination of whether a passage
sufficiently captured a particular recommended
disclosure matched the label, it was marked ascorrectly classified.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Two important measures of model performanceare recall and precision. Recall is the proportionof true positives captured by a model, while
precision is the proportion of positive model
predictions that are true positives. The F1 scoreis the harmonic mean of precision and recall
and hence an indicator of the performanceof a model. 221 The F1 score is commonly usedin machine learning applications to evaluate
performance. The model F1 scores andthe human reviewers’ F1 scores for the 11
recommended disclosures are shownin Figure A2-2.
There is often a tradeoff between precisionand recall — tuning the model to be stricter onclassifying a passage as a relevant disclosure
can increase precision at the expense of recall.
The model was tuned such that precision
matched recall and hence was not biased. One
exception was on Strategy a) where the prefilter
was found — based on a sample of qualitative“manual” reviews — to not identify certain typesof disclosures. In order to reduce bias andFigure A2-2

Paragraph-Level Model
Performance
Recommended
Disclosure

F1 Score
Model
Human1Governance a)

0.85

0.88

Governance b)

0.86

0.88

Strategy a)

0.65

0.78

Strategy b)

0.38

0.53

Strategy c)

0.69

0.74

Risk Management a)

0.66

0.53

Risk Management b)

0.53

0.46

Risk Management c)

0.80

0.87

Metrics and Targets a)

0.85

0.91

Metrics and Targets b)

0.88

0.94

Metrics and Targets c)

0.90

0.91

1. Human F1 scores serve as reference points to the corresponding
model F1 scores and represent the performance of annotators’
assessments in comparison to subject matter experts’assessments.

maintain a balance between precision and recall,the model was tuned to require high recall, which
lowered the F1 score for Strategy a) to 0.58.
Outcome
The AI technology was applied to the excerpts
from the reports of the reviewed companies.
If a company had a text paragraph in anyof its reports for a given fiscal year thatwas classified as aligning with one of the 11
recommended disclosures, the company wasclassified as reporting in line with that specificrecommended disclosure for that year. The
results were aggregated for analysis.

220

F or instance, “Board of Directors also oversees climate-related issues” was one such phrase used to identify a potential disclosure ofGovernance a). Many phrases were included to ensure all relevant content was detected. The prefilter was designed with support from thesubject matter experts.

221

T he harmonic mean is the reciprocal of the arithmetic mean of the reciprocals of the values.

125

The Task Force on Climate-related Financial Disclosures

Appendix 3: AI Review Results by Industry
As summarized in Section A.1. TCFD-Aligned
Reporting by Public Companies, the Task
Force developed an approach using artificial
intelligence (AI) technology to review thealignment of information included in publiccompanies’ fiscal years 2020, 2021, and 2022
reports with the Task Force’s 11 recommended
disclosures. This appendix provides the AI
review results for companies in each of theeight industries covered as follows: Banking;Insurance; Energy; Materials and Buildings;
Transportation; Agriculture, Food, and Forest
Products; Technology and Media; andConsumer Goods.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

The AI technology reviewed reports from 235
banks in three sub-industries: investment andasset management firms, large and diversifiedbanks, and regional banks. The 235 banks
ranged in size from about $4 billion to $5 trillion
in assets, with a mean asset size of nearly $337
billion in assets. The AI review results for banks
are shown in Figure A3-1. The largest increasein disclosure between 2020 and 2022 for thebanking industry was 35 percentage points for
Strategy a).

Figure A3-1

Banking Review Results
Pt. Change
2020–2022

Percent of Companies Disclosinga) Board Oversight

22

35%

b) Management’s Role

18a) Risks and Opportunities

35

34%

b) Impact on Organization

13

22%
27%
35%

c) Resilience of Strategy

7a) Risk ID and Assessment
Processes

24b) Risk Management Processes

26

20%

c) Integration into Overall Risk
Management

21

17%

a) Climate-Related Metrics

16b) Scope 1,2,3 GHG Emissions

18c) Climate-Related Targets

19

Recommendation

Recommended Disclosure

Governance

Strategy

51%
57%

22%
34%
40%
58%
69%

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Banking

Risk Management

2%
7%
9%
16%

Appendices

Metrics andTargets

FY 2020

FY 2021

FY 2022

40%

37%
46%

28%

38%
45%
54%
61%
40%
49%
58%
28%
41%
47%

0%
Legend:

29%

20%

40%

60%

80%

100%

Base size: 235

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The Task Force on Climate-related Financial Disclosures

Insurance
The AI technology reviewed reports from
117 insurance companies in four categories:
multiline insurance, property and casualty
insurance, reinsurance, and life and healthinsurance. The 117 insurance companies
reviewed ranged in size from about $1 billion
to $1.6 trillion in assets, with a mean asset sizeof around $129 billion in assets. The AI review
results for these companies are shown in Figure
A3-2. In 2022, insurance companies most often
disclosed information aligned with Strategy a)
at 68%. Additionally, between 2020 and 2022,
the percent of insurance companies reporting
information aligned with Risk Management a)
increased by 26 percentage points.

Figure A3-2

Insurance Review Results
Recommended Disclosure

Governancea) Board Oversight16b) Management’s Role

13a) Risks and Opportunities

17b) Impact on Organization

13c) Resilience of Strategy

8a) Risk ID and Assessment
Processes

26

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Strategy

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Risk Management

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Pt. Change
2020–2022

Recommendation

Metrics andTargets

Appendicesb) Risk Management Processes17c) Integration into Overall Risk
Management

16a) Climate-Related Metrics

7b) Scope 1,2,3 GHG Emissions

9c) Climate-Related Targets

18

Percent of Companies Disclosing
49%
60%
65%
31%
44%
44%
51%
60%
68%
32%
38%
45%
5%

FY 2020

FY 2021

FY 2022

33%

44%

34%
48%
51%
20%
36%
36%
49%
53%
56%
44%
47%
53%
32%
46%
50%

0%
Legend:

13%
13%
18%

20%

40%

60%

80%

100%

Base size: 117

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The Task Force on Climate-related Financial Disclosures

EnergyThe AI technology reviewed reports from205 energy companies in three categories:
oil and gas, coal, and utilities. The 205 energy
companies ranged in size from about $118
million to $399 billion in annual revenue, with amean annual revenue of nearly $26 billion. The
AI review results for these companies are shownin Figure A3-3. In 2022, energy companies,

on average, disclosed information in line withmore of the 11 recommended disclosures thancompanies in other industries (see Figure A3,
p. 6). For all three years of reporting reviewed,
the energy companies reviewed had the highest
percent of disclosure across all industries for
information aligned with Governance a) and b),
Strategy b), and Metrics and Targets a), b), and c).

Figure A3-3

Energy Review Results

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Recommended Disclosure

Governancea) Board Oversight16b) Management’s Role

18a) Risks and Opportunities

21b) Impact on Organization

17c) Resilience of Strategy

7a) Risk ID and Assessment
Processes

21

Strategy

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Risk Management

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Pt. Change
2020–2022

Recommendation

Metrics andTargetsb) Risk Management Processes

15c) Integration into Overall Risk
Management

14a) Climate-Related Metrics

11b) Scope 1,2,3 GHG Emissions

13c) Climate-Related Targets

20

Percent of Companies Disclosing
60%
74%
76%
39%
49%
57%
49%
71%
70%
41%
55%
58%
9%
14%
16%
21%

31%

42%

30%
44%
45%
18%
26%
32%
70%
78%
81%
64%
71%
77%
60%
75%
80%

Appendices0%
Legend:FY 2020

FY 2021

FY 2022

20%

40%

60%

80%

100%

Base size: 205

128

The Task Force on Climate-related Financial Disclosures

Materials and Buildings

in annual revenue, with a mean annual revenueof $14 billion. The AI review results for thesecompanies are shown in Figure A3-4. In 2022,
the highest level of reporting for materials andbuildings companies was on Metrics and Targetsa) at 81%, followed by Metrics and Targets c)
at 77%.

The AI technology reviewed reports from
345 materials and buildings companies infive categories: capital goods, chemicals,
construction materials, metals and mining, andreal estate management and development. The
345 materials and buildings companies ranged
in size from about $298 million to $255 billion

Figure A3-4

Materials and Buildings Review Results

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Recommended Disclosure

Governancea) Board Oversight29b) Management’s Role

21a) Risks and Opportunities

27b) Impact on Organization

21c) Resilience of Strategy

9a) Risk ID and Assessment
Processes

26b) Risk Management Processes20c) Integration into Overall Risk
Management

14a) Climate-Related Metrics

11b) Scope 1,2,3 GHG Emissions

13c) Climate-Related Targets

30

Strategy

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Risk Management

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Pt. Change
2020–2022 Percent of Companies Disclosing

Recommendation

Metrics andTargets

Appendices

42%
58%

39%
46%
39%
57%
66%
25%
40%
46%
3%
9%
12%
14%

FY 2020

FY 2021

FY 2022

28%

40%

18%
30%
38%
8%
19%
22%
70%
76%
81%
62%
69%
75%
47%
69%
77%

0%
Legend:

71%

25%

20%

40%

60%

80%

100%

Base size: 345

129

The Task Force on Climate-related Financial Disclosures

Transportation
The AI technology reviewed reports from 126
transportation companies in six categories: air
freight, automobiles, maritime transportation,passenger air transportation, rail transportation,and trucking services. The 126 transportationcompanies ranged in size from $812 million to$294 billion in annual revenue, with a meanannual revenue of over $19 billion. The AI
review results are shown in Figure A3-5. In
2022, transportation companies most often

disclosed information aligned with Metrics andTargets c) at 73%. Transportation companies
had the largest increase in the average numberof recommended disclosures reported percompany for any industry, increasing by 2.3
recommended disclosures between 2020 and
2022. In addition, the recommended disclosure
with the largest increase in reporting was
Governance a), with an increase of 37 percentage
points between 2020 and 2022.

Figure A3-5

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

Recommended Disclosure

Governancea) Board Oversight37b) Management’s Role

23a) Risks and Opportunities

26b) Impact on Organization

23c) Resilience of Strategy

3a) Risk ID and Assessment
Processes

20b) Risk Management Processes

24

13%

c) Integration into Overall Risk
Management

9

12%
18%
21%

a) Climate-Related Metrics

16b) Scope 1,2,3 GHG Emissions

17c) Climate-Related Targets

31

Strategy

C.
Case Studies on Scope 3
GHG Emissions

Risk Management

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Percent of Companies Disclosing
33%
52%
70%

B.
Financial Statement
Considerations

D.
TCFD-Aligned Requirements
and Related Initiatives

Pt. Change
2020–2022

Recommendation

Metrics andTargets

21%
40%
44%
29%

17%
35%
40%
3%
7%
6%
10%

FY 2020

FY 2021

FY 2022

23%
30%
25%

37%

54%
65%
70%
47%
58%
64%
42%
69%
73%

0%
Legend:

48%
55%

20%

40%

60%

80%

100%

Base size: 126

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The Task Force on Climate-related Financial Disclosures

Agriculture, Food, and Forest Products
The AI technology reviewed reports from
115 agriculture, food, and forest products
companies in four categories: beverages,
packaged foods and meats, agriculture, andpaper and forest products. The 115 agriculture,
food, and forest products companies ranged insize from about $276 million to $102 billion in
annual revenue, with a mean annual revenueof over $12 billion. The AI review results
for these companies are shown in Figure
A3-6. In 2022, agriculture, food, and forest
products companies most frequently disclosed
information on Metrics and Targets a), at 71%,
although reporting on the recommended
disclosure decreased by one percentage point
between 2021 and 2022. Between 2020 and
2022, the largest increase in disclosure — at 30
percentage points — was for Strategy a).

Figure A3-6

Agriculture, Food, and Forest Products Review Results

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Recommended Disclosure

Governancea) Board Oversight26b) Management’s Role

23a) Risks and Opportunities

30

27%

b) Impact on Organization

22

27%

c) Resilience of Strategy

14

3%
10%
17%

a) Risk ID and Assessment
Processes

26

10%Strategy

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Risk Management

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Pt. Change
2020–2022

Recommendation

Metrics andTargets

Appendices

Percent of Companies Disclosing
31%
49%
57%
16%
23%

50%
57%

FY 2020

41%
49%

23%
36%

b) Risk Management Processes

20

15%

c) Integration into Overall Risk
Management

11

7%
13%
18%

a) Climate-Related Metrics

10b) Scope 1,2,3 GHG Emissions

14

50%

c) Climate-Related Targets

20

49%

30%
35%

61%
72%
71%
62%
64%
63%
69%

0%
Legend:39%

FY 2021

FY 2022

20%

40%

60%

80%

100%

Base size: 115

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The Task Force on Climate-related Financial Disclosures

Technology and MediaThe AI technology reviewed reports from91 technology and media companies in two
categories: interactive media and services andtechnology hardware and equipment. The 91
technology and media companies ranged insize from about $733 million to $394 billion in
annual revenue, with a mean annual revenueof $22 billion. The AI review results for thesecompanies are shown in Figure A3-7. In 2022,
reporting on Risk Management c) decreased
by 6%, making the disclosure the second least
reported across all recommended disclosures at
7%. In 2022, technology and media companies,
on average, reported on fewer recommended
disclosures (3.7) than any of the other industries
reviewed (see Figure A3, p. 6).

Figure A3-7

Technology and Media Review Results

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Recommended Disclosure

Governancea) Board Oversight32b) Management’s Role

25a) Risks and Opportunities

20

18%

b) Impact on Organization

12

15%

c) Resilience of Strategy

4

1%
2%
5%

a) Risk ID and Assessment
Processes

12

2%
8%

b) Risk Management Processes

137%c) Integration into Overall Risk
Management

5a) Climate-Related Metrics

26b) Scope 1,2,3 GHG Emissions

30

Strategy

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives

Risk Management

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Pt. Change
2020–2022

Recommendation

Metrics andTargets

Appendices

Percent of Companies Disclosing
11%
40%
43%
7%
26%
32%
29%
38%
26%
27%

14%
18%
20%

2%
7%

13%
41%
56%
67%
35%
56%
65%

c) Climate-Related Targets

24%

32

44%
56%

0%
Legend:FY 2020

FY 2021

FY 2022

20%

40%

60%

80%

100%

Base size: 91

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The Task Force on Climate-related Financial Disclosures

Consumer Goods
The AI technology reviewed reports from 131
consumer goods companies in two categories:
consumer retailing and textiles and apparel.
The 131 consumer goods companies ranged insize from $599 million to $611 billion in annual

revenue, with a mean annual revenue of morethan $26 billion. The AI review results forthese companies are shown in Figure A3-8. In
2022, consumer goods companies most often
disclosed information aligned with Metrics andTargets c) at 63%.

Figure A3-8

Consumer Goods Review Results

A.
State of Climate-Related
Financial Disclosures

Recommended Disclosure

Governancea) Board Oversight34b) Management’s Role

19a) Risks and Opportunities

23b) Impact on Organization

10c) Resilience of Strategy

5

3%
5%
8%

a) Risk ID and Assessment
Processes

148%b) Risk Management Processes17c) Integration into Overall Risk
Management

8a) Climate-Related Metrics

15b) Scope 1,2,3 GHG Emissions

14

40%

c) Climate-Related Targets

24

39%

Strategy

B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

Risk Management

D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

Pt. Change
2020–2022

Recommendation

Metrics andTargets

F.
Insights Gained and View
on Future Work
Appendices

Percent of Companies Disclosing
24%
51%
58%
13%
28%
32%
23%
46%
46%
18%
27%
28%

18%
22%
12%
24%
29%
3%

47%

FY 2020

FY 2021

FY 2022

59%
62%

52%
54%
54%

0%
Legend:

9%
11%

20%

40%

63%

60%

80%

100%

Base size: 131

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The Task Force on Climate-related Financial Disclosures

Appendix 4: Additional Information on
Financial Impact
As summarized in Section E. Types of Financial
Impact and Associated Drivers, the Task Forceanalyzed responses from the approximately
5,000 companies — or subsets of thesecompanies — that provided public or non-public
responses to the CDP Climate Change 2022
Questionnaire (2022 questionnaire). 222
This appendix provides additional informationon this analysis, including the following:A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices• companies’ identification of substantive
climate-related issues and estimation ofpotential financial impacts by sector and• the types of substantive climate-relatedrisks and opportunities companies identified
by sector.

Climate-Related Issues Identified andEstimated Impact by Sector
The Task Force reviewed companies’ identificationof substantive climate-related issues andestimation of potential financial impacts bysector, as shown in Figure A4-1. Notably, 95% of
the companies in the utilities sector identified
substantive climate-related risks, and 72%
provided estimated potential financial impacts.
In addition, a high percentage of companies
in the energy sector and materials sector
identified substantive climate-related risks
and estimated the potential financial impacts— 94% and 60%, respectively, for the energy
sector — and 91% and 67%, respectively, for thematerials sector. The percentage of companies
that identified substantive climate-related

Figure A4-1

Companies Identifying Substantive Issues and Estimating Impacts by Sector
Percent of Companies

Total

Banks

Insurance

Other
Financial

EnergyUtilities

Materials

Identified
Substantive Risks

80%

81%

84%

64%

94%

95%

91%

Provided
Estimated Impact

55%

58%

60%

36%

60%

72%

67%

Health Care

Information
Technology

Comm.
Services(5,021)

Real Estate

(235)

(110)

(234)

Consumer
ConsumerIndustrials Discretionary
Staples

(174)

(238)

(581)

(218)

(1,116)

(634)

(404)

(262)

(600)

(215)

Identified
Substantive Risks

82%

80%

82%

87%

71%

66%

70%

Provided
Estimated Impact

63%

53%

53%

60%

48%

43%

50%

Total

Banks

Insurance

Other
Financial

EnergyUtilities

Materials(5,021)

(235)

(110)

(234)

(174)

(238)

(581)

Identified
Substantive Opp.1

83%

87%

87%

74%

93%

96%

92%

Provided
Estimated Impact

53%

62%

57%

35%

55%

72%

63%

Real EstateConsumer
ConsumerIndustrials Discretionary
Staples

Information
Health Care Technology

Comm.
Services(218)(1,116)

(634)

(404)

(262)

(600)

(215)

Identified
Substantive Opp.1

83%

85%

83%

86%

73%

74%

73%

Provided
Estimated Impact

58%

53%

52%

59%

47%

40%

48%

1. Identified Substantive Opportunities
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Legend:Low to high percentage of companies

 CDP, “CDP Climate Change 2022 Questionnaire,” Accessed May 1, 2023.

222

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The Task Force on Climate-related Financial Disclosures

opportunities and estimated the associatedpotential financial impacts followed asimilar pattern.

Types of Climate-Related Risks andOpportunities Identified by Sector
Figure A4-2 and Figure A4-3 show thepercentage of companies in each sector
that identified substantive climate-related risks
by type (transition or physical) and provided
estimates of their potential financial impacts.
The most common transition risk companies
identified was policy and legal risk at 73%,

with over half of companies that identified
substantive risks in every sector selecting atleast one substantive policy and legal risk.
The least identified transition risk type wastechnology risk at 14% for companies overall —the range across the sectors was from 6% for
insurance companies to 18% for industrials andreal estate companies. For physical risks, 56% ofcompanies identified acute physical risks, witha range from 39% for companies in the energy
sector to a high of 83% for companies in theinsurance sector.

Figure A4-2

Types of Substantive Climate-Related Transition Risks by Sector
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Percent of Companies1

Total

Banks

Insurance

Other
Financial
Services

EnergyUtilities

Materials(2,755)

(136)

(66)

(85)

(104)

(172)

(390)

Policy & Legal

73%

73%

50%

74%

83%

56%

81%

Market

33%

24%

29%

24%

38%

25%

34%

Reputation

18%

21%

24%

28%

22%

12%

13%

Technology

14%

12%

6%

7%

16%

13%

13%

Real EstateConsumer
ConsumerIndustrials Discretionary
Staples

Information
Health Care Technology

Comm.
Services

(137)

(593)

(339)

(244)

(126)

(256)

(107)

Policy & Legal

80%

74%

73%

75%

67%

72%

69%

Market

45%

37%

33%

29%

25%

33%

32%

Reputation

27%

16%

15%

17%

19%

22%

24%

Technology

18%

18%

14%

10%

9%

15%

10%

1. Includes companies that identified substantive climate-related risks andprovided estimates of potential financial impacts of these risks.
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Legend:Low to high percentage of companies

Figure A4-3

Types of Substantive Climate-Related Physical Risks by Sector
Percent of Companies1

Total

Banks

Insurance

Other
Financial
Services

EnergyUtilities

Materials(2,755)

(136)

(66)

(85)

(104)

(172)

(390)

Acute

56%

65%

83%

51%

39%

66%

52%

Chronic

30%

22%

24%

25%

20%

44%

29%

Real EstateConsumer
ConsumerIndustrials Discretionary
Staples

Information
Health Care Technology

Comm.
Services

(137)

(563)

(339)

(244)

(126)

(256)

(107)

Acute

49%

50%

59%

53%

63%

57%

64%

Chronic

46%

25%

29%

49%

26%

23%

28%

1. Includes companies that identified substantive climate-related risks and provided
estimates of potential financial impacts of these risks.
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Legend:Low to high percentage of companies

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The Task Force on Climate-related Financial Disclosures

Figure A4-4 shows further detail on the typesof substantive climate-related opportunities
companies identified by sector. Seventy percent(70%) of companies identified substantive
opportunities related to products and services— ranging from 65% to 80% across sectors.
Fewer companies identified other climate-

related opportunities such as opportunities in
new markets (24%) — which ranged from 13%
for consumer discretionary companies to 52%
for insurance companies — and resilience at
11%, with a range from 3% for companies in theenergy sector to 20% for companies in the realestate sector.

Figure A4-4

Types of Substantive Climate-Related Opportunities Identified by Sector
Percent of Companies1

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work

Total

Banks

Insurance

Other
Financial
Services

EnergyUtilities

Materials(2,675)

(145)

(63)

(83)

(96)

(172)

(366)

Resource Efficiency

38%

32%

24%

30%

34%

22%

34%

Energy Source

35%

16%

13%

20%

46%

50%

36%

Products & Services

70%

80%

70%

67%

65%

69%

72%

Markets

24%

39%

52%

35%

20%

27%

24%

Resilience

11%

5%

16%

14%

3%

10%

10%

HealthCare

Information
Technology

Comm.
Services

Real EstateConsumer
ConsumerIndustrials Discretionary
Staples

(127)

(589)

(327)

(238)

(124)

(242)

(103)

Resource Efficiency

52%

34%

40%

53%

60%

40%

47%

Energy Source

50%

29%

35%

49%

49%

31%

36%

Products & Services

65%

74%

73%

59%

40%

77%

68%

Markets

31%

27%

13%

17%

17%

17%

19%

Resilience

20%

8%

13%

17%

14%

11%

12%

1. Includes companies that identified substantive climate-related risks andprovided estimates of potential financial impacts of these risks.
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Legend:Low to high percentage of companies

Appendices

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The Task Force on Climate-related Financial Disclosures

Appendix 5: Glossary
Glossary
ANNUAL OR INTEGRATED REPORTS refer toreports that describe companies’ activities for thepreceding year (annual reports) or the broader
range of measures that contribute to companies’
long-term value and the role they play in society(integrated reports).

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
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.”223
CLIMATE-RELATED OPPORTUNITY refers to
the potential positive impacts related to climatechange on a company. Efforts to mitigate
and adapt to climate change can produce
opportunities for companies, such as throughresource efficiency and cost savings; the adoption
and utilization of low-emission energy sources;
the development of new products and services;and building resilience along the supply chain.
CLIMATE-RELATED RISK refers to the potential
negative impacts of climate change on a company.
Physical risks emanating from climate change
can be event driven (acute) such as increased
severity of extreme weather events (e.g., cyclones,
droughts, floods, and fires). They can also relate
to longer-term shifts (chronic) in precipitation andtemperature and increased variability in weather
patterns (e.g., sea level rise). Climate-related risks
can also be associated with the transition to a
low-carbon global economy, the most commonof which relate to policy and legal actions,
technology changes, market responses, andreputational considerations.
FINANCIAL FILINGS refer to the annual
reporting packages in which companies are
required to deliver their audited financial
results under the corporate, compliance, or
securities laws of the jurisdictions in which they
operate. While reporting requirements differinternationally, financial filings generally containfinancial statements and other informationsuch as governance statements andmanagement commentary.224
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 used in pursuit of short andlong-term objectives. As part of financial planning,
companies often create “financial plans” thatoutline the specific actions, assets, and resources(including capital) necessary to achieve theseobjectives over a one-to-five-year period.
However, financial planning is broader than thedevelopment of a financial plan as it includes longterm capital allocation and other considerations
that may extend beyond the typical three-to-fiveyear financial plan (e.g., investment, research anddevelopment, manufacturing, and markets).
GOVERNANCE refers to the system bywhich a company is directed and controlled
in the interests of shareholders and otherstakeholders.225 Governance involves a set of
relationships between a company’s management,
its board, its shareholders, and otherstakeholders. Governance provides the structure
and processes through which the objectives of thecompany are set, progress against performance ismonitored, and results are evaluated.226
GREENHOUSE GAS (GHG) EMISSIONSSCOPE LEVELS227• Scope 1 refers to all direct GHG emissions.
• S cope 2 refers to indirect GHG emissions fromconsumption of purchased electricity, heat,or steam.
• S cope 3 refers to other indirect emissions
not covered in Scope 2 that occur in the value
chain of the reporting company, including both
upstream and downstream emissions. Scope
3 GHG emissions could include: the extraction
and production of purchased materials andfuels, transport-related activities in vehicles not

223

O rganization of Economic Cooperation and Development (OECD), G20/OECD Principles of Corporate Governance, November 30, 2015, OECD
Publishing, Paris.

224

B ased on CDSB, CDSB Framework for Reporting Environmental Information, Natural Capital and Associated Business Impacts,
April 1, 2018.

225

C adbury, A., Report of the Committee on the Financial Aspects of Corporate Governance, December 1, 1992.

226

O ECD, G20/OECD Principles of Corporate Governance, November 30, 2015, OECD Publishing, Paris.

227

W orld 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.

137

The Task Force on Climate-related Financial Disclosures

owned or controlled by the reporting entity,
electricity-related activities (e.g., transmission
and distribution losses), outsourced activities,
and waste disposal. 228
MANAGEMENT refers to those positions
a company views as executive or senior
management positions.
RISK MANAGEMENT refers to a set of processes
that are carried out by a company’s board andmanagement to support the achievement of its
objectives by addressing its risks and managing
the combined potential impact of those risks.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions

SCENARIO ANALYSIS is a process for
identifying and assessing a potential range ofoutcomes of future events under conditionsof uncertainty. In the case of climate change,for example, scenarios allow a company to
explore and develop an understanding of how
the physical and transition risks of climatechange may impact its businesses, strategy, andfinancial performance over time.
SECTOR refers to a segment of companies
performing similar business activities in an
economy. A sector generally refers to alarge segment of the economy or groupingof business types, while “industry” is used todescribe more specific groupings of companies
within a sector.
STRATEGY refers to a company’s desired
future state. A company’s strategy establishes
a foundation against which it can monitor
and measure its progress in reaching thatdesired state. Strategy formulation generally
involves establishing the purpose and scopeof the company’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’s impact on society,often addressing environmental, social, andgovernance issues.
TRANSITION PLAN refers to an aspect of acompany’s overall business strategy that laysout a set of targets and actions supporting
its transition toward a low-carbon economy,
including actions such as reducing its
GHG emissions.

D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices228

WRI and WBCSD, The Corporate Value Chain (Scope 3) Accounting and Reporting Standard, April 16, 2013.

138

The Task Force on Climate-related Financial Disclosures

Appendix 6: References
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A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Association of Chartered Certified Accountants. Climate Action and the Accounting Profession:
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139

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BHP. Climate Change: Portfolio Analysis – Views after Paris. October 11, 2016.
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bhpbillitonclimatechangeporfolioanalysis2016.pdf.
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documents/investors/annual-reports/2021/210914_bhpclimatetransitionactionplan2021.
BHP. Scope 1, 2 and 3 GHG Emissions Calculation Methodology 2022. September 6, 2022.
https://www.bhp.com/-/media/documents/investors/annual-reports/2022/220906_
bhpscope12and3emissionscalculationmethodology2022.pdf.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Boston Consulting Group (BCG). Directors Can Up Their Games on Environmental, Socialand Governance Issues. March 30, 2022. https://web-assets.bcg.com/7e/71/
fc29b62542e6bac1732ebd890bbc/bcg-directors-can-up-their-game-on-environmental-socialand-governance-issues-mar-2022.pdf.
BCG. “From Tailwinds to Turbulence.” May 25, 2022. https://www.bcg.com/publications/2022/
tailwinds-to-turbulence-for-global-assets-under-management.
Brazil Government. Resolução CVM 59. December 22, 2021. https://conteudo.cvm.gov.br/export/sites/cvm/legislacao/resolucoes/anexos/001/resol059consolid.pdf.
Bursa Malaysia. “Bursa Malaysia Enhances Sustainability Reporting Framework with New Climate
Change Reporting.” September 26, 2022.
https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/content_
entry5c11a9db758f8d31544574c6/63312a2439fba20d86ba8e16/files/26Sept_2022_Bursa_
Malaysia_Enhances_Sustainability_Reporting_Framework_With_New_Climate_Change_
Reporting.pdf.
Bursa Malaysia. Main Market Listing Requirements. June 1, 2023.
https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/content_
entry5ce3b50239fba2627b2864be/64e730445b711a1c197fda7f/files/29MainLR_1July2023__1_
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Cadbury, A. Report of the Committee on the Financial Aspects of Corporate Governance. December 1,
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Canadian Office of the Superintendent of Financial Institutions. Climate Risk Management Guideline.
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csa_20211018_51-107_disclosure-update.pdf.
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aire&page=1&tags=TAG-646%2CTAG-605%2CTAG-600.
CDP. CDP Technical Note: Reporting on Climate Transition Plans. February 16, 2023. https://cdn.cdp.
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https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd.

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Cemex. 2022 Integrated Report. March 29, 2023.
https://www.cemex.com/documents/d/cemex/integratedreport2022.
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.
Central Bank of Brazil. Resolution 4,553 of January 30, 2017. January 30, 2017.
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Docs/ResolutionCMN4553.pdf.
Central Bank of Kenya. Guidance on Climate-Related Risk Management. October 15, 2021.
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A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers

Climate Disclosure Standards Board (CDSB). Accounting for Climate: Integrating Climate-Related
Matters into Financial Reporting. December 2020.
https://www.cdsb.net/sites/default/files/cdsb_climateaccountingguidance_s_110121.pdf.
CDSB. CDSB Framework for Reporting Environmental Information, Natural Capital and AssociatedBusiness Impacts. April 1, 2018.
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CDSB. Framework for Reporting Environmental and Social Information. January 2022.
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Climate Financial Risk Forum. Climate Financial Risk Forum Guide 2023 Climate Disclosures Dashboard
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Climate Wise. The ClimateWise Principles Independent Review for 2022. January 23, 2023.
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Coca-Cola FEMSA. 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report. August2023. https://coca-colafemsa.com/wp-content/uploads/2023/08/TCFD-ingles.pdf.
ContourGlobal Limited. Annual Report and Financial Statements. April 19, 2023.
https://www.contourglobal.com/sites/default/files/2023-04/contourglobal_limited_annual_
report_and_financial_statements_-_31_december_2022_signed_pwc.pdf.

F.
Insights Gained and View
on Future Work

Deloitte. A Closer Look — IAS 36 Impairment of Non-Financial Assets — Reminders and Hot Topics.
May 3, 2023. https://www.iasplus.com/en/publications/global/a-closer-look/reminders/at_
download/file/A%20Closer%20Look%20-%20IAS%2036%20reminders.pdf.

Appendices

Deloitte. ESG Executive Survey Preparing for High-Quality Disclosures. March 31, 2022.
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Deloitte. The Audit Committee Frontier – Addressing Climate Change. November 2021.
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EFRAG. Draft European Sustainability Reporting Standards Appendix IV – TCFD Recommendations
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assetUrl=%2Fsites%2Fwebpublishing%2FSiteAssets%2F21%2520Appendix%2520IV%2520%2520TCFD-EFRAG%2520Comparative%2520analysis%2520final.pdf.
EFRAG. Draft European Sustainability Reporting Standards Cover Letter. November 2022.
https://efrag.org/Assets/Download?assetUrl=%2Fsites%2Fwebpublishing%2FSite
Assets%2F01%2520EFRAG%2527s%2520Cover%2520Letter%2520to%2520the%2520fir
st%2520set%2520of%2520ESRS%252022%2520November%25202022.pdf.
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Enel Américas. Integrated Annual Report Enel Américas 2022. April 11, 2023. https://beyondreporting.
enelamericas.com/content/dam/eneldhafcprogram/americas/pdf/memoria-enel-americas2022-english.pdf.
European Commission (E.C.). Commission Implementing Regulation (EU) 2022/2453 of 30 November
2022 Amending the Implementing Technical Standards Laid Down in Implementing Regulation (EU)2021/637 as Regards the Disclosure of Environmental, Social and Governance Risks. November 30,
2022. http://data.europa.eu/eli/reg_impl/2022/2453/oj.
E.C. “European Sustainability Reporting Standards - First Set.” Accessed July 31, 2023.
https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13765-Europeansustainability-reporting-standards-first-set_en.
E.C. Guidelines on Reporting Climate-Related Information. June 17, 2019. https://ec.europa.eu/finance/
docs/policy/190618-climate-related-information-reporting-guidelines_en.pdf.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesE.C. “The Commission Adopts the European Sustainability Reporting Standards.” July 31, 2023.
https://finance.ec.europa.eu/news/commission-adopts-european-sustainability-reportingstandards-2023-07-31_en.
European Parliament and European Council. Directive 2013/34/EU of The European Parliament and of
the Council of 26 June 2013 on the Annual Financial Statements, Consolidated Financial Statements
and Related Reports of Certain Types of Undertakings, Amending Directive 2006/43/EC of theEuropean Parliament and of the Council Directives 78/660/EEC and 83/349.EEC. June 26, 2013 (asamended January 5, 2023). http://data.europa.eu/eli/dir/2013/34/2023-01-05.
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
and Diversity Information by Certain Large Undertakings and Groups. October 22, 2014.
http://data.europa.eu/eli/dir/2014/95/oj.
European Parliament and European Council. Directive (EU) 2022/2464 of the European Parliament andof the Council of 14 December 2022 Amending Regulation (EU) No 537/2014, Directive 2004/109/
EC, Directive 2006/43/EC and Directive 2013/34/EU, as Regards Corporate Sustainability Reporting.
December 14, 2022. http://data.europa.eu/eli/dir/2022/2464/oj.
European Parliament and European Council. Regulation (EU) No 575/2013 of the European Parliament
and the Council of 26 June 2013 on Prudential Requirements for Credit Institutions Amending
Regulation (EU) No 648/2012. June 26, 2013 (as amended June 28, 2023).
https://eur-lex.europa.eu/eli/reg/2013/575/2023-06-28.
European Securities and Markets Authority. European Common Enforcement Priorities for 2022 Annual
Financial Reports. October 28, 2022. https://www.esma.europa.eu/sites/default/files/library/esma32-63-1320_esma_statement_on_european_common_enforcement_priorities_for_2022_
annual_reports.pdf.
Eversheds Sutherland and KPMG. “Climate Change and Corporate Value: What Companies ReallyThink.” November 11, 2020. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2021/03/
climate-change-and-corporate-value.pdf.
External Reporting Board (XRB). "Aotearoa New Zealand Climate Standards." December 15, 2022.
https://www.xrb.govt.nz/standards/climate-related-disclosures/aotearoa-new-zealandclimate-standards/.
XRB. Aotearoa New Zealand Climate Standard 1: Climate-related Disclosures. December 2022.
https://www.xrb.govt.nz/dmsdocument/4770.
XRB. Aotearoa New Zealand Climate Standard 2: Adoption of Aotearoa New Zealand Climate Standards.
December 2022. https://www.xrb.govt.nz/dmsdocument/4763.
XRB. Aotearoa New Zealand Climate Standard 3: General Requirements for Climate-related Disclosures.
December 2022. https://www.xrb.govt.nz/dmsdocument/4764.

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Exxaro Resources Limited. Exxaro Resources Limited Integrated Report 2022. April 14, 2023. https://
exxaro-prod.azureedge.net/sitestorage/media/kk2fcz0q/exxaro_ir_2022_singles_hires.pdf.
Falabella. Annual Report 2022. April 4, 2023. https://s22.q4cdn.com/351912490/files/doc_financials/
annual/2023/Falabella-Annual-Report-2022.pdf.
Financial Accounting Standards Board (FASB). “Accounting Standards Codification Topic 360.”
Accessed June 14, 2023. https://asc.fasb.org/.
FASB. “Accounting Standards Codification Topic 450.” Accessed June 14, 2023. https://asc.fasb.org/.
FASB. Intersection of Environmental, Social and Governance Matters with Financial AccountingStandards. March 2021. https://www.fasb.org/Page/ShowPdf?path=FASB_Staff_ESG_
Educational_Paper_FINAL.pdf.
FASB. Statement of Financial Accounting Concepts No. 8. August 2018. https://d2x0djib3vzbzj.
cloudfront.net/Concepts%20Statement%208%20Chapter%203%20As%20Amended.pdf.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesFinancial Conduct Authority. Enhancing Climate-Related Disclosures by Asset Managers, Life Insurers
and FCA-Regulated Pension Providers. December 17, 2021.
https://www.fca.org.uk/publication/policy/ps21-24.pdf.
Financial Reporting Council (FRC). CRR Thematic Review of Climate-Related Metrics and Targets. July26, 2023. https://www.frc.org.uk/getattachment/5ecb5ecf-cb99-4085-918d-8fd767b4e594/
CRR_Thematic_review_of_climate-related_metrics_and_targets_2023.pdf.
FRC. CRR Thematic Review of TCFD Disclosures and Climate in the Financial Statements. July 2022.
https://www.frc.org.uk/getattachment/65fa8b6f-2bed-4a67-8471-ab91c9cd2e85/FRC-TCFDdisclosures-and-climate-in-the-financial-statements_ July-2022.pdf.
FRC. FRC Statement of Intent on Environmental, Social and Governance Challenges. July 2021.
https://www.frc.org.uk/getattachment/691f28fa-4af4-49d7-a4f5-49ad7a2db532/FRC-LABESG-Paper_2021.pdf.
Financial Reporting Council Lab. Improving ESG Data Production. August 2022.
https://media.frc.org.uk/documents/FRC_Lab_Report_Improving_ESG_Data_Production.pdf.
Financial Stability Board (FSB). “Formation of the Enhanced Disclosure Task Force.” May 10, 2012.
https://www.fsb.org/wp-content/uploads/pr_120510.pdf.
FSB. “FSB Plenary Meets in Frankfurt.” July 6, 2023.
https://www.fsb.org/wp-content/uploads/R060723.pdf.
FSB. FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report. July 13,2023. https://www.fsb.org/wp-content/uploads/P130723.pdf.
FSB. “FSB to Establish Task Force on Climate-related Financial Disclosures.” December 4, 2015.
https://assets.bbhub.io/company/sites/60/2015/12/12-4-2015-Climate-change-task-forcepress-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.
Financial Superintendent of Colombia. Annex 2: Disclosure of Information on Social and Environmental
Issues, Including Climate Related Issues. December 2021. https://www.superfinanciera.gov.co/descargas/institucional/pubFile1058634/ance031_21_english.docx.
Financial Superintendent of Colombia. External Circular 031. December 22, 2021. https://www.
superfinanciera.gov.co/descargas/institucional/pubFile1058633/ce031_21_english.docx.

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Financial Supervisory Commission (FSC) Republic of China (Taiwan). “Guidelines on Climate-related
Financial Disclosures of Insurance Companies.” November 30, 2021.
https://www.fsc.gov.tw/en/home.jsp?id=54&parentpath=0&mcustomize=multimessage_view.
jsp&dataserno=202112140009&dtable=News.
FSC Republic of China (Taiwan). “Guidelines for Domestic Banks’ Climate Risk Financial Disclosure.”
November 30, 2021. https://www.fsc.gov.tw/en/home.jsp?id=54&parentpath=0,2&mcustomize=multimessage_view.jsp&dataserno=202112230005&dtable=News.
Forbes. “The World’s Largest Public Companies.” Accessed June 8, 2023.
https://www.forbes.com/global2000/list/2/#tab:overall.
FORVIA. Sustainability Report 2021-22. November 1, 2022. https://www.faurecia.com/sites/groupe/
files/documents/FORVIA_Sustainability%20Report%202021-2022.pdf.
FORVIA. Universal Registration Document 2022. February 28, 2023. https://www.faurecia.com/sites/
groupe/files/documents/FAU2022_FORVIA_URD_EN_MEL_V2_compressed.pdf.
A.
State of Climate-Related
Financial Disclosures

Glasgow Financial Alliance for Net Zero. Financial Institution Net-Zero Transition Plans: Fundamental,
Recommendations, and Guidance. November 3, 2022. https://assets.bbhub.io/company/
sites/63/2022/09/Recommendations-and-Guidance-on-Financial-Institution-Net-zeroTransition-Plans-November-2022.pdf.

B.
Financial Statement
Considerations

Hong Kong Monetary Authority. Planning for Net-Zero Transition. August 29, 2023. https://www.
hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2023/20230829e1.pdf.

C.
Case Studies on Scope 3
GHG Emissions

Hong Kong Stock Exchange. Enhancement of Climate-related Disclosures Under the Environmental,
Social and Governance Framework. April 2023. https://www.hkex.com.hk/-/media/HKEXMarket/News/Market-Consultations/2016-Present/April-2023-Climate-related-Disclosures/Consultation-Paper/cp202304.pdf.

D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Hubbard, Douglas. How to Measure Anything: Finding the Value of Intangibles in Business. July 2007.
International Energy Agency (IEA). Iron and Steel CCS Study. April 2013. https://ieaghg.org/
publications/technical-reports/reports-list/9-technical-reports/1001-2013-04-iron-and-steelccs-study-techno-economics-integrated-steel-mill.
IEA. Iron and Steel Technology Roadmap. October 21, 2020. https://iea.blob.core.windows.net/assets/
eb0c8ec1-3665-4959-97d0-187ceca189a8/Iron_and_Steel_Technology_Roadmap.pdf.
IEA. The Sustainability Development Scenario. December 4, 2019. https://iea.blob.core.windows.net/
assets/ebf178cc-b1c9-4de9-a3aa-51a080c0f8c3/SDS-webinar-2019-draft06.pdf.
Intergovernmental Panel on Climate Change (IPCC). Summary for Policymakers in Climate Change
2023: Synthesis Report. March 20, 2023.
https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_SPM.pdf.
IPCC. Synthesis Report of the IPCC Sixth Assessment Report. March 20, 2023.
https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_LongerReport.pdf.
International Federation of Accountants. Climate-Related Disclosures Project Brief and Outline. June
2023. https://ifacweb.blob.core.windows.net/publicfiles/2023-06/Final%20Draft%20Climaterelated%20Disclosures%20Project%20Brief%20-%20Clean.pdf.
International Financial Reporting Standards (IFRS) Foundation. “Analysis of the IFRS Accounting
Jurisdiction Profiles.” Accessed July 24, 2023. https://www.ifrs.org/use-around-the-world/useof-ifrs-standards-by-jurisdiction/#analysis-of-the-168-profiles.
IFRS Foundation. “Business Combinations — Disclosures, Goodwill and Impairment.” Accessed July12, 2023. https://www.ifrs.org/projects/work-plan/goodwill-and-impairment/.
IFRS Foundation. “Climate-Related and Other Uncertainties in the Financial Statements.” Accessed
September 27, 2023. https://www.ifrs.org/projects/work-plan/climate-related-risks-in-thefinancial-statements/.
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IFRS Foundation. Comparison IFRS S2 Climate-related Disclosures with the TCFD Recommendations.
July 2023. https://www.ifrs.org/content/dam/ifrs/supporting-implementation/ifrs-s2/ifrs-s2comparison-tcfd-july2023.pdf.
IFRS Foundation. “Connectivity in Practice: The IASB’s New Project on Climate-Related Risks in the
Financial Statements.” March 23, 2023. https://www.ifrs.org/news-and-events/news/2023/03/
connectivity-in-practice-the-iasbs-new-project-on-climate-related-risks-in-the-financialstatements/.
IFRS Foundation. Draft IFRS S1 General Requirements for Disclosure of Sustainability-related
Financial Information. March 2022. https://www.ifrs.org/content/dam/ifrs/project/generalsustainability-related-disclosures/exposure-draft-ifrs-s1-general-requirements-for-disclosureof-sustainability-related-financial-information.pdf.
IFRS Foundation. Draft IFRS S2 Climate-Related Disclosures. March 2022. https://www.ifrs.org/
content/dam/ifrs/project/climate-related-disclosures/issb-exposure-draft-2022-2-climaterelated-disclosures.pdf.
A.
State of Climate-Related
Financial Disclosures

IFRS Foundation. “Effects of Climate-Related Matters on Financial Statements.” July 2023.
https://www.ifrs.org/content/dam/ifrs/supporting-implementation/documents/effects-ofclimate-related-matters-on-financial-statements.pdf.

B.
Financial Statement
Considerations

IFRS Foundation. Exposure Draft IFRS® Sustainability Disclosure Standard. March 1, 2022. https://www.
ifrs.org/content/dam/ifrs/project/general-sustainability-related-disclosures/exposure-draftifrs-s1-general-requirements-for-disclosure-of-sustainability-related-financial-information.pdf.

C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

IFRS Foundation. IAS 1 Presentation of Financial Statements. February 2021. https://www.ifrs.org/
content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ias-1-presentationof-financial-statements.pdf?bypass=on.
IFRS Foundation. IAS 16 Property, Plant and Equipment. May 2020. https://www.ifrs.org/content/
dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ias-16-property-plant-andequipment.pdf?bypass=on.
IFRS Foundation. IAS 36 Impairment of Assets. May 2013. https://www.ifrs.org/content/dam/ifrs/
publications/pdf-standards/english/2021/issued/part-a/ias-36-impairment-of-assets.pdf.
IFRS Foundation. IAS 37 Provisions, Contingent Liabilities and Contingent Assets. May 2020.
https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/
part-a/ias-37-provisions-contingent-liabilities-and-contingent-assets.pdf?bypass=onSee.
IFRS Foundation. IAS 38 Intangible Assets. May 2014. https://www.ifrs.org/content/dam/ifrs/
publications/pdf-standards/english/2021/issued/part-a/ias-38-intangible-assets.pdf.
IFRS Foundation. IFRS 13 Fair Value Measurement. May 2011. https://www.ifrs.org/content/dam/
ifrs/publications/pdf-standards/english/2022/issued/part-a/ifrs-13-fair-value-measurement.
pdf?bypass=on.
IFRS Foundation. IFRS for SMEs® Accounting Standard. May 16, 2023. https://www.ifrs.org/content/
dam/ifrs/supporting-implementation/smes/smes-effectsclimaterelatedmatters-may2023.pdf.
IFRS Foundation. “IFRS Foundation Welcomes Culmination of TCFD Work and Transfer of TCFD
Monitoring Responsibilities to ISSB from 2024.” July 10, 2023. https://www.ifrs.org/news-andevents/news/2023/07/foundation-welcomes-tcfd-responsibilities-from-2024/.
IFRS Foundation. “IFRS Foundation Work Plan.” Accessed July 12, 2023.
https://www.ifrs.org/projects/work-plan/.
IFRS Foundation. “IFRS - IASB Update March 2023.” March 20, 2023.
https://www.ifrs.org/news-and-events/updates/iasb/2023/iasb-update-march-2023/#4.
IFRS Foundation. IFRS Practice Statement 2: Making Materiality Judgements. September 2, 2017.
https://www.ifrs.org/content/dam/ifrs/publications/amendments/english/2017/ifrs-practicestatement-2-making-materiality-judgements.pdf.
145

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IFRS Foundation. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial
Information. June 26, 2023. https://www.ifrs.org/issued-standards/ifrs-sustainabilitystandards-navigator/ifrs-s1-general-requirements.html/content/dam/ifrs/publications/htmlstandards-issb/english/2023/issued/issbs1/.
IFRS Foundation. IFRS S2 Climate-Related Disclosures. June 26, 2023. https://www.ifrs.org/issuedstandards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-disclosures.html/
content/dam/ifrs/publications/html-standards-issb/english/2023/issued/issbs2/.
IFRS Foundation. “ISSB Issues Inaugural Global Sustainability Disclosure Standards.” June 26, 2023.
https://www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/.
IFRS Foundation. “Ten Things to Know about the First ISSB Standards.” June 27, 2023. https://www.
ifrs.org/news-and-events/news/2023/06/ten-things-to-know-about-the-first-issb-standards/.

A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations

Institutional Investors Group on Climate Change. “Investors Put Audit Committee Chairs on Noticeover Continued Omission of Climate Risks in Financial Reporting Ahead of 2022 AGM Season.”
April 5, 2022. https://web.archive.org/web/20230602193203/https:/www.iigcc.org/news/
investors-put-audit-committee-chairs-on-notice-over-continued-omission-of-climate-risks-infinancial-reporting-ahead-of-2022-agm-season/.
International Materials Data System. “IMDS.” Accessed July 1, 2023.
https://www.mdsystem.com/imdsnt/startpage/index.jsp.
International Monetary Fund. “Datamapper, GDP, current prices.” Accessed June 14, 2023.
https://www.imf.org/external/datamapper/NGDPD@WEO/WEOWORLD.

C.
Case Studies on Scope 3
GHG Emissions

International Organization of Securities Commissions. IOSCO Endorses the ISSB’s Sustainabilityrelated Financial Disclosure Standards. July 25, 2023.
https://www.iosco.org/news/pdf/IOSCONEWS703.pdf.

D.
TCFD-Aligned Requirements
and Related Initiatives

International Public Sector Accounting Standards Board (IPSASB). Consultation Paper: Advancing
Public Sector Sustainability Reporting. May 9, 2022.
https://www.ipsasb.org/publications/login/59185.

E.
Types of Financial Impact
and Associated Drivers

IPSASB. “IPSASB Begins Development of Climate-Related Disclosures Standard for the Public
Sector.” June 14, 2023. https://www.ipsasb.org/news-events/2023-06/ipsasb-beginsdevelopment-climate-related-disclosures-standard-public-sector.

F.
Insights Gained and View
on Future Work
AppendicesInternational Sustainability Standards Board. Consultation on Agenda Priorities. May 4, 2023.
https://www.ifrs.org/content/dam/ifrs/project/issb-consultation-on-agenda-priorities/issbrfi-2023-1.pdf.
Invesco Ltd. 2022 Task Force on Climate-Related Financial Disclosures Report. December 29, 2022.
https://www.invesco.com/emea/en/insights/climate-change-report.html.
Japan Financial Services Agency. “Regarding the Results of Public Comments on the Proposed
Amendments to the ‘Cabinet Office Ordinance on Disclosure of Corporate Information, etc.’”
January 31, 2023. https://www.fsa.go.jp/news/r4/sonota/20230131/20230131.html.
Klabin. “ESG Panel: Task Force on Climate-Related Disclosures.” Accessed May 11, 2023.
https://esg.klabin.com.br/en/tcfd-asg#aumento-temperatura-impacto-negocios.
Klabin. Sustainability Report. June 2022. https://rs.klabin.com.br/en/sustainability-report-2021.
Konica Minolta. Sustainability Report 2022. August 2022. https://www.konicaminolta.com/about/csr/
csr/download/2022/pdf/Konicaminolta_Sustainability_E_2022.pdf.
KPMG. “Can Capital Markets Save the Planet,” October 28, 2021. https://kpmg.com/xx/en/home/insights/2021/10/can-capital-markets-save-the-planet.html.
Liu, Y. et al. RoBERTa: A Robustly Optimized BERT Pretraining Approach. July 26, 2019.
https://arxiv.org/pdf/1907.11692.pdf.

146

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MGM. TCFD Report. May 18, 2023. https://www.mgmresorts.com/content/dam/MGM/corporate/csr/
disclosures/mgm-resorts-tcfd-report-2022.pdf.
Mitsubishi UFJ Financial Group (MUFG). Carbon Neutrality Declaration. May 2021.
https://www.mufg.jp/dam/csr/environment/cnd/cnd_en.pdf.
MUFG. “MUFG Appointed as a Lead for the Net Zero Banking Alliance Financing & Engagement Work
Track Group.” November 22, 2021.
https://www.mufg.jp/dam/pressrelease/2021/pdf/news-20211122-001_en.pdf.
MUFG. Progress Report 2023. April 2023.
https://www.mufg.jp/dam/csr/report/progress/202304_en.pdf.
MUFG. Sustainability Report 2022. September 2022.
https://www.mufg.jp/dam/csr/report/2022/sr2022_en.pdf.
MUFG. TCFD Report 2022. October 2022.
https://www.mufg.jp/dam/csr/report/2022/tcfd2022_en.pdf.
A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

MUFG. Transition Whitepaper 2022. October 26, 2022.
https://www.mufg.jp/dam/csr/report/transition/wp2022.pdf.
Moody’s. 2022 Stakeholder Sustainability Report. May 3, 2022. https://www.moodys.com/sites/
products/ProductAttachments/Sustainability/2022-stakeholder-sustainability.pdf.
Moody’s. 2022 TCFD Report. April 19, 2023. https://www.moodys.com/sites/products/
ProductAttachments/Sustainability/2022-tcfd-report.pdf.
Moody’s. Moody’s Corporation 2022 CDP Response. July 28, 2022.
https://www.moodys.com/sites/products/ProductAttachments/BX14244_
Moody%E2%80%99s%202022%20CDP%20Response.pdf.
New Zealand Government. Assurance over Climate-Related Disclosures: Occupational Regulationand Expanding the Scope of Assurance. November 2, 2022. https://www.mbie.govt.nz/
dmsdocument/25652-assurance-over-climate-related-disclosures-occupational-regulationand-expanding-the-scope-of-assurance.
New Zealand Government. Financial Sector (Climate-Related Disclosures and Other Matters)
Amendment Act 2021. October 27, 2021.
https://www.legislation.govt.nz/act/public/2021/0039/latest/LMS479633.html.
Nick Anderson. IFRS Standards and Climate-Related Disclosures. November 2019. https://www.ifrs.
org/content/dam/ifrs/news/2019/november/in-brief-climate-change-nick-anderson.pdf.
Old Mutual. Old Mutual Climate Report 2022. April 14, 2023. https://www.oldmutual.com/v3/assets/
blt566c98aeecc1c18b/blt6a0662e7367e63c0/64463cb5d2002548587a26b2/Climate_Report_2022.pdf.
Organization of Economic Cooperation and Development (OECD). Biodiversity: Finance and theEconomic and Business Case for Action. December 6, 2019.
https://www.oecd-ilibrary.org/environment/biodiversity-finance-and-the-economic-andbusiness-case-for-action_a3147942-en.
OECD. G20/OECD Principles of Corporate Governance. November 30, 2015.
https://www.oecd.org/corporate/principles-corporate-governance/.
OECD. OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans.
October 3, 2022. https://www.oecd-ilibrary.org/environment/oecd-guidance-on-transitionfinance_7c68a1ee-en.
Partnership for Carbon Accounting Financials (PCAF). The Global GHG Accounting andReporting Standard Part A: Financed Emissions. Second Edition. December 19, 2022.
https://carbonaccountingfinancials.com/files/downloads/PCAF-Global-GHG-Standard.pdf.

147

The Task Force on Climate-related Financial Disclosures

PCAF. The Global GHG Accounting and Reporting Standard Part C: Insurance-Associated Emissions.
November 16, 2022. https://carbonaccountingfinancials.com/files/downloads/pcaf-standardpart-c-insurance-associated-emissions-nov-2022.pdf.
Pension Protection Fund. Pension Protection Fund Climate Change Report 2021/2022. June 18, 2023.
https://www.ppf.co.uk/-/media/PPF-Website/Public/Years/2022-08/P/Pension_Protection_
Fund_Climate_Change_Report_2022.pdf.
Pensions and Investments. “The Largest Money Managers.” December 31, 2021.
https://www.pionline.com/largest-money-managers/2022-full-list.
Philippines Securities and Exchange Commission. Sustainability Reporting Guidelines for PubliclyListed Companies. February 15, 2019.
https://www.sec.gov.ph/wp-content/uploads/2019/10/2019MCNo04.pdf.
Prague Stock Exchange. “Prague Stock Exchange Launches Sustainability Reporting Guidelines.”
March 9, 2023. https://www.pse.cz/en/news/prague-stock-exchange-launches-sustainabilityreporting-guidelines.
A.
State of Climate-Related
Financial Disclosures

Prague Stock Exchange. Sustainability Reporting Guidelines. March 2023.
https://www.pse.cz/userfiles/related_documents/cs/ESG-Guidelines.pdf.

B.
Financial Statement
Considerations

Principles for Responsible Investment (PRI). “Investor Groups Call on Companies to Reflect ClimateRelated Risks in Financial Reporting.” September 16, 2020. https://www.unpri.org/accountingfor-climate-change/investor-groups-call-on-companies-to-reflect-climate-related-risks-infinancial-reporting/6432.article.

C.
Case Studies on Scope 3
GHG Emissions

PRI. “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework.” December 18,
2017. https://www.unpri.org/climate-change/meeting-the-tcfd-recommendations-in-the-2018pri-reporting-framework/763.article.

D.
TCFD-Aligned Requirements
and Related Initiatives

PwC. Board Effectiveness: A Survey of the C-Suite. May 2023. https://www.pwc.com/us/en/services/
governance-insights-center/library/assets/board-effectiveness-and-performanceimprovement.pdf.

E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

PwC. PwC’s Global Investor Survey 2022. February 2023.
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Riahi, Keywan et al. RCP 8.5 — A Scenario of Comparatively High Greenhouse Gas Emissions. August 13,
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files/2022-12/SASOL_CC%20Report%202022%20%202.pdf.

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Science Based Targets initiative (SBTi). Catalyzing Value Chain Decarbonization. February 2023.
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A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Singapore Exchange (SGX). Climate and Diversity: The Way Forward. December 15, 2021.
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TCFD. 2022 Status Report. October 13, 2022.
https://assets.bbhub.io/company/sites/60/2022/10/2022-TCFD-Status-Report.pdf.
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https://assets.bbhub.io/company/sites/60/2021/07/2021-Metrics_Targets_Guidance-1.pdf.

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TCFD. Guidance on Risk Management Integration and Disclosure. October 29, 2020.
https://assets.bbhub.io/company/sites/60/2020/09/2020-TCFD_Guidance-Risk-ManagementIntegration-and-Disclosure.pdf.
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TCFD. Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures.
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A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
AppendicesTata Steel. Integrated Report and Annual Accounts 2021-22. May 2023.
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U.K. Parliament. The Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations
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https://www.uss.co.uk/-/media/Project/USSMainSite/files/How-we-invest/TCFD-2022.pdf.

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U.S. Securities and Exchange Commission (SEC). “Enforcement Task Force Focused on Climate and
ESG Issues.” April 11, 2023. https://www.sec.gov/securities-topics/enforcement-task-forcefocused-climate-esg-issues.
U.S. SEC. “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related
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Leadership. October 31, 2022. https://www.wemeanbusinesscoalition.org/wp-content/
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A.
State of Climate-Related
Financial Disclosures
B.
Financial Statement
Considerations
C.
Case Studies on Scope 3
GHG Emissions
D.
TCFD-Aligned Requirements
and Related Initiatives
E.
Types of Financial Impact
and Associated Drivers
F.
Insights Gained and View
on Future Work
Appendices

Whelan, T. U.S. Corporate Boards Suffer From Inadequate Expertise in Financially Material ESG Matters.
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World Bank. Sovereign Climate and Nature Reporting: Proposal for a Risks and Opportunities Disclosure
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WRI and WBCSD. Corporate Value Chain (Scope 3) Accounting and Reporting Standard. April 16, 2013.
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Nothing in this document constitutes an offer or a solicitation of an offer to buy or sell a security or financial instrument orinvestment advice or recommendation of a security or financial instrument. The Task Force on Climate-related Financial
Disclosures believes the information herein was obtained from reliable sources but does not guarantee its accuracy. Copyright2023 The Task Force on Climate-related Financial Disclosures.