TCFD Reporting Guide: Climate-Related Financial Disclosures

Overview

The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board in 2015 and published its landmark recommendations in June 2017. Over the following years, the TCFD framework became the dominant global standard for climate-related financial disclosure, adopted by thousands of companies, endorsed by governments, and embedded into regulatory frameworks worldwide.

In October 2023, the TCFD formally disbanded, transferring monitoring responsibilities to the IFRS Foundation and the ISSB. However, the TCFD's legacy is firmly embedded in the regulatory landscape. The ISSB's IFRS S2 standard fully incorporates the TCFD's four-pillar framework. California's SB 261 requires TCFD-aligned reporting. New Zealand, the UK, Japan, Hong Kong, Singapore, and Brazil have all implemented mandatory or comply-or-explain TCFD-aligned disclosure regimes.

Understanding TCFD remains essential because its architecture—governance, strategy, risk management, and metrics and targets—continues to define how companies communicate climate risk to investors and regulators. Whether you are reporting under ISSB, CSRD, SEC rules, or California state law, you are working within a framework that the TCFD established.

Who Does It Apply To?

While the TCFD itself was a voluntary framework, mandatory TCFD-aligned reporting now applies across multiple jurisdictions:

• United Kingdom: Premium-listed companies, large private companies, and FCA-regulated financial institutions under mandatory TCFD rules since 2022.
• New Zealand: Large financial institutions, insurers, and listed issuers under the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act since FY 2023.
• Japan: Prime-market listed companies on the Tokyo Stock Exchange under revised Corporate Governance Code.
• Hong Kong: Listed companies under HKEX climate-related disclosure requirements from 2025.
• Singapore: Listed companies under SGX mandatory climate reporting from FY 2025.
• California: Companies with >$500M revenue doing business in California under SB 261.

Beyond regulatory mandates, TCFD-aligned reporting is expected by CDP (which has incorporated TCFD into its questionnaire), major asset managers, and institutional investors globally.

Key Requirements

1. Governance Disclose the board's oversight of climate-related risks and opportunities and management's role in assessing and managing them. Best practice includes describing specific board committees, the frequency of climate-related agenda items, how climate informs strategic decisions, and management's reporting lines for climate risk.

2. Strategy Describe climate-related risks and opportunities over the short, medium, and long term. Explain their impact on the organization's businesses, strategy, and financial planning. Describe the resilience of the organization's strategy under different climate-related scenarios, including a 2°C or lower scenario.

3. Risk Management Describe processes for identifying, assessing, and managing climate-related risks. Explain how these processes are integrated into the organization's overall risk management. The emphasis is on integration—climate risk should not be a standalone process.

4. Metrics and Targets Disclose metrics used to assess climate-related risks and opportunities. Report Scope 1, 2, and (if appropriate) 3 GHG emissions. Describe targets and performance against them. Metrics should include both cross-industry metrics (applicable to all sectors) and industry-specific metrics relevant to your business.

5. Scenario Analysis While technically part of the strategy pillar, scenario analysis merits specific attention as it is often the most challenging element. The TCFD recommends analyzing the resilience of your strategy under at least two scenarios: an orderly transition scenario (2°C or below) and a disorderly or high-warming scenario. Quantitative scenario analysis—translating climate scenarios into financial impacts—represents mature TCFD practice.

6. Forward-Looking Integration TCFD disclosures should be forward-looking, connecting current risk exposure to future strategic resilience. This requires collaboration between sustainability, risk, strategy, and finance functions—TCFD cannot be produced by the sustainability team alone.

Timeline & Milestones

Step-by-Step Compliance Roadmap

Step 1: Governance Foundation

Ensure board-level oversight of climate risk is formalized and documented. Assign climate risk responsibilities to specific board committees and management roles. Establish regular reporting cadences from management to the board on climate-related issues. Review board competency on climate topics and address gaps through training or advisory appointments.

Step 2: Risk and Opportunity Identification

Conduct a comprehensive assessment of climate-related risks and opportunities across your value chain. Categorize risks as physical (acute events and chronic shifts) and transitional (policy, technology, market, and reputational). Map risks to time horizons. Quantify potential financial impacts where possible, using a combination of bottom-up asset-level analysis and top-down scenario modeling.

Step 3: Scenario Analysis

Select or develop climate scenarios that are relevant to your business and geography. At minimum, use a Paris-aligned scenario (1.5°C–2°C) and a higher-warming scenario (3°C–4°C). Apply these scenarios to your business operations, supply chain, and markets. Translate physical and transition impacts into financial metrics (revenue, costs, asset values, capital requirements). Document assumptions, models, and limitations transparently.

Step 4: Metrics, Targets, and Reporting

Compile GHG emissions data (Scope 1, 2, and where material, 3). Identify additional climate-related metrics relevant to your sector (e.g., carbon intensity, energy mix, climate-related capital expenditure). Set and disclose targets aligned with science-based pathways where appropriate. Prepare the TCFD report following the recommended disclosure structure.

Step 5: Integration and Continuous Improvement

Embed climate risk management into enterprise risk frameworks, strategic planning processes, and capital allocation decisions. Use each reporting cycle to deepen scenario analysis, improve data quality, and expand coverage. Seek external feedback from investors, assurance providers, and peer benchmarking to identify improvement opportunities.

Common Pitfalls

Boilerplate governance disclosures. Investors can identify generic governance descriptions that lack substance. Effective governance disclosure includes specific examples: the board's discussion of a particular climate risk, a strategic decision influenced by climate analysis, or a management response to a scenario analysis finding.

Qualitative-only scenario analysis. Early TCFD reporters often describe scenarios in qualitative terms without translating them into financial impacts. The expectation has shifted significantly—mature TCFD practice involves quantified financial impact analysis under different scenarios, with transparent documentation of assumptions and uncertainties.

Treating TCFD as an annual exercise. TCFD reporting reflects underlying risk management processes. Companies that produce TCFD reports annually without integrating climate risk into ongoing business decisions will produce disclosures that feel disconnected from their strategy. The report should document processes that happen continuously, not analysis conducted solely for disclosure purposes.

How Council Fire Can Help

Council Fire's climate risk and resilience expertise aligns directly with the TCFD framework's core demands. We help organizations conduct rigorous climate risk assessments, build scenario analysis capabilities, and integrate climate considerations into governance and strategy.

Our physical risk assessment capabilities are particularly strong for coastal, marine, and water-dependent operations—sectors where generic climate models often lack the granularity needed for meaningful analysis. Council Fire combines global climate projections with location-specific data to produce risk assessments that inform actual strategic decisions.

We help clients develop scenario analyses that bridge the gap between climate science and financial impact, working with finance and strategy teams to translate physical and transition risks into metrics that boards and investors can act on.

Council Fire's communication expertise ensures TCFD reports tell a coherent, credible story about climate strategy rather than presenting disconnected data points. In a landscape where investors compare TCFD reports across companies, the quality of your narrative matters.

Frequently Asked Questions

Is TCFD still relevant now that the taskforce has disbanded?

Absolutely. The TCFD disbanded because its framework was so successful that it was absorbed into permanent regulatory structures. ISSB's IFRS S2 fully incorporates the TCFD recommendations. Mandatory TCFD-aligned reporting continues in multiple jurisdictions. CDP's questionnaire is TCFD-aligned. The four-pillar framework (governance, strategy, risk management, metrics and targets) remains the universal architecture for climate-related financial disclosure.

What scenarios should we use for scenario analysis?

The TCFD recommends at least a 2°C or below scenario plus additional scenarios relevant to your business. Common choices include the IEA's Net Zero by 2050 scenario, the NGFS scenarios (used extensively by central banks), and IPCC Representative Concentration Pathways or Shared Socioeconomic Pathways. Select scenarios that are relevant to your sector, geography, and time horizon. The key is analytical rigor and transparency, not the specific scenario chosen.

How detailed should our TCFD disclosure be?

Aim for specificity over length. A concise disclosure with specific risk assessments, quantified scenario analysis, and concrete examples of how climate informs strategy is far more valuable than a lengthy document filled with generalities. Investors consistently report wanting more quantitative detail, clearer linkages between climate risk and financial impact, and more specific information about transition plans and target progress.