This guidance supports public sector bodies to include climate-related financial disclosures in their annual reports, in line with the Task Force on Climate-related Financial Disclosures TCFD framework. Who this applies to
The guidance applies to all ministerial and non-ministerial departments, as well as other central government e.g., larger Arms Length Bodies and wider public sector bodies that meet certain criteria or are directed to follow it by their relevant authority or parent department. Other bodies may choose to apply the guidance voluntarily, in full or in part. When this applies from
HM Treasury has adopted a three-year phased approach to implementation for central government, on a comply or explain basis. Other public sector bodies should follow the direction set by their relevant authority1. What the requirements are
Phase 1 2023-24
In-scope reporting entities must include the following in their annual reports and accounts
a TCFD Compliance Statement - summarising compliance, any gaps, and plans for improvement
Governance disclosures
a the boards oversight of climate-related risks and opportunities
b managements role in assessing and managing climate-related issues
b Scope 1 and 2 greenhouse gas GHG emissions with Scope 3 emissions where they are deemed material2. Phase 2 2024-25
This application guidance3 is additive. Building on Phase 1, Phase 2 requires
a on the processes for identifying and assessing climate-related risks. b on the processes for managing climate-related risks. c on how processes for identifying, assessing, and managing climate-related risks are integrated into the organisations overall risk management. Where climate is a principal risk or the related information is considered material e.g., climate-related opportunities
a on the metrics used to assess climate-related risks and opportunities in line with its strategy and risk management process. c on the targets used to manage climate-related risks and opportunities and performance against targets. Phase 3 2025-26
Phase 3 expands on the existing reporting requirements for Phase 1 and Phase 2. Where climate is a principal risk, a significant component of another principal risk or the information is otherwise deemed material in-scope reporting entities must include
a on the climate-related risks and opportunities identified over the short, medium, and long term. b on the impact of climate-related risks and opportunities on the organisations operations, strategy, and financial planning. c on the resilience of the organisations strategy, taking into consideration different climate scenarios. The application guidance for Phase 3 combines all three phases into a single complete document. This follows the consultation on the TCFD-aligned disclosure Exposure Draft for Phase 3 over summer 2024.
The responses and the resulting modifications have been summarised on the consultation page. 1 Each relevant authority sets the requirements for entities in their jurisdiction, including HM Treasury for central government bodies, other national governments for their Arms-Length Bodies ALBs in the devolved administrations Scotland, Wales and Northern Ireland, the Department for Health and Social Care DHSC for NHS bodies, and CIPFA-LASAAC for local government. 2 For central government, this aligns with existing requirements in the Sustainability Reporting Guidance SRG.