Since its launch, 97 of the world’s 100 largest companies have declared support for the Task Force on Climate-related Financial Disclosures (TCFD) or report in line with its recommendations, highlighting its global significance. As a mandatory requirement for large UK businesses, TCFD reporting provides a structured, internationally recognised framework for assessing and disclosing climate-related financial risks and opportunities. By integrating TCFD into corporate sustainability strategies, businesses can enhance climate resilience, strengthen risk management, and drive long-term value creation in an increasingly climate-conscious economy. Keep reading as we dive into the FCA TCFD and break down its reporting requirements.
What is TCFD reporting?
TCFD reporting refers to climate-related financial disclosures aligned with the TCFD framework. Established by the Financial Stability Board (FSB), TCFD provides a structured approach for companies to disclose how climate-related risks and opportunities impact their financial performance. The framework helps investors, regulators, and stakeholders assess an organisation’s climate resilience and risk management strategies.
Objectives of TCFD reporting
The TCFD was established to create a framework for companies to report on climate-related financial risks and opportunities. Its key objectives include:
- Enhancing transparency – Providing investors, lenders, and stakeholders with consistent, comparable, and reliable climate-related financial disclosures.
- Improving risk management – Helping organisations assess and manage financial risks associated with climate change, including physical and transition risks.
- Aligning climate and financial strategy – Encouraging businesses to integrate climate-related considerations into their strategic planning and financial decision-making.
- Facilitating capital allocation – Enabling investors to make informed decisions by assessing climate risks within companies’ financial disclosures.
- Supporting global climate goals – Aligning corporate climate reporting with global sustainability initiatives such as the Paris Agreement, Net-Zero Targets, and ESG frameworks.
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TCFD reporting requirements UK
The TCFD framework is structured around four core pillars, each with specific reporting expectations:
1. Governance
- Describe the board’s oversight of climate-related risks and opportunities.
- Outline management’s role in assessing and managing climate-related financial risks.
2. Strategy
- Identify climate-related risks and opportunities over the short, medium, and long term.
- Assess the impact of climate change on business models, operations, and financial planning.
- Perform scenario analysis to evaluate climate-related financial risks under different climate trajectories.
3. Risk Management
- Outline processes for identifying, assessing, and managing climate-related risks.
- Explain how climate-related risks are integrated into overall risk management frameworks.
- Describe how organisations prioritise and monitor climate risks.
4. Metrics and Targets
- Report on climate-related metrics, such as Scope 1, 2, and 3 emissions.
- Disclose climate-related financial impacts, including carbon pricing and transition costs.
- Set and track climate-related targets, such as net-zero goals or renewable energy adoption.
Integration with Other ESG Frameworks
TCFD reporting UK is often aligned with:
- ISSB’s IFRS S2 (Global Climate Disclosure Standards)
- EU’s CSRD & ESRS (Mandatory sustainability reporting in Europe)
- SEC’s Climate Disclosure Rules (Planned US regulatory framework)
Who needs to comply with the UK TCFD reporting requirements?
The TCFD framework applies across all industries and sectors but is particularly relevant for:
- Publicly listed companies
- Financial institutions (banks, insurers, asset managers)
- Large private businesses with significant environmental impact
- Investors and asset owners
Additionally, many businesses worldwide voluntarily adopt TCFD to enhance sustainability leadership and investor trust.
Conclusion
As climate risks continue to reshape global markets, TCFD reporting is becoming a key driver of business sustainability strategies and financial resilience. With regulatory frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and the ISSB’s IFRS S2 standards reinforcing climate disclosure requirements, businesses must proactively integrate climate-related financial risks into their governance and strategic planning.
The future of TCFD reporting will see greater standardisation, enhanced investor scrutiny, and stronger links to financial decision-making. For businesses navigating the evolving landscape of sustainability reporting requirements, our CSRD training provides expert guidance on aligning corporate disclosures with global standards. Enrol in our online, accredited course to stay ahead of regulatory changes and ensure your organisation meets the highest climate reporting expectations.
