The Task Force on Climate-Related Disclosures (TCFD) has published its sixth and final status report, revealing both significant progress made in corporate climate reporting and continued, remaining data gaps.
According to the status report, companies disclosed in line with an average of 5.3 of the TCFD’s 11 recommendations, up from 3.2 in 2020. Among public companies, 58% met at least 5 of the 11 disclosures for fiscal year 2022, representing significant growth since 2020, when only 18% met at least 5 of the 11 disclosures.
The report also notes that 97 of the largest 100 companies in the world have expressed support for the TCFD, which is in line with its recommendations, or have done both. Further, 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 standards.
Despite the increases seen in TCFD reporting, however, only 4% of public companies reported on all 11 of the recommended disclosures.
Disclosure of climate-related financial filing was also reportedly limited. Instead, information aligned with the 11 recommended disclosures was four times more likely to be included in sustainability and annual reports.
The TCFD provides recommendations for filling the remaining gaps in climate finance reporting, including the need for corporations to disclose the resilience of their financial strategies under different climate-related scenarios and ensure consistent reporting across countries and sovereign entities. The report also suggests focusing on decision-useful disclosures on other sustainability topics, such as biodiversity, water, and social issues.
ISSB Standards Represent Culmination of TCFD Efforts
The TCFD, which first published recommendations in 2017, was first established to increase consistency and comparability of companies’ climate-related financial information. Since then, the Task Force has seen over 4,800 organizations indicate support for the TCFD recommendations, with nearly 60% of the global GDP having final or proposed TCFD-aligned disclosure requirements.
As climate-related reporting became more widespread and sustainability turned into a mainstream factor in investment decision-making, the International Sustainability Standards Board (ISSB) was formed in 2021. Earlier this year, the ISSB released its 2023 disclosure standards based on the TCFD recommendations, representing a culmination of the Task Force’s work.
“The TCFD has emerged as a beacon of clarity in an era of unprecedented environmental challenges,” said Graeme Pitkethly, TCFD vice chair and CFO of Unilever PLC. “Its importance lies not just in the numbers and reports, but in the transformative power it unleashes upon businesses and industries worldwide. By providing a common language for disclosing climate risks and opportunities, the TCFD has enabled companies to navigate the complexities of a rapidly changing world, fostering resilience, and unlocking sustainable growth.”