Implementing the TCFD recommendations – practical issues, challenges and approaches for finance teams

The workshop was geared towards finance teams interested in implementing the TCFD Recommendations.

Agenda

1. Overview and objectives of the TCFD recommendations
2. Introduction to scenario analysis
3. Linking 2°C and 4°C scenarios to our business
4. Quantifying financial impacts
5. Implications for reporting

Background to the workshop 

As governments put policies in place to accelerate the low carbon transition, companies will find themselves at the heart of action to tackle climate change. Many companies are reviewing the implications of physical climate impacts as well as risks from policies intended to drive the transition.

To address this issue the Governor of the Bank of England and Chair of the Financial Stability Board (FSB), Mark Carney, launched the FSB's Task Force on Climate-related Financial Disclosures (TCFD). In December 2016, the Task Force presented their recommendations setting out how companies and investors should publicly disclose climate-related financial risk to the market. 

The recommendations go beyond current climate disclosures in two significant ways. Firstly, disclosures should be quantified in financial terms and in mainstream financial filings, increasing the role that will need to be played by the CFO and audit committee, and their responsibilities for climate risk analysis. Secondly, companies should use scenario analysis to assess the financial implications of climate risks. This is a concern for many companies who haven’t used scenario analysis in the past or applied it in the context of financial disclosures, in particular given the risks in relation to forward looking information.

The TCFD responds to a growing trend among the investor and regulatory communities to demand improved financial disclosures from companies in relation to climate risks. A number of large investors have already stated that they will ask the companies in which they invest to disclose in line with the recommendations, and a number of regulators are indicating that they plan to amend disclosure rules in response. Leading companies are also signalling their support for the recommendations, and a commitment to their adoption.