Task Force on Climate-Related Financial Disclosures
Since the Task Force on Climate-related Financial Disclosures (Task Force or TCFD) issued its f inal recommendations in June 2017, it has monitored climate-related financial disclosure practices and sought to identify and, when possible, address challenges in implementing the TCFD recommendations.1 As part of those efforts, the Task Force identified specific issues related to implementing its Risk Management recommendation (see Figure A1), including the following: • 75% of companies surveyed by the TCFD indicated the Risk Management recommendation is somewhat or very difficult to implement and • several of these companies indicated they do not have processes for identifying, assessing, or managing climate-related risks.
In addition, the Task Force’s latest status report shows companies’ disclosure of their risk management processes is lower than their disclosure of most other recommended disclosures.3 Given this and the issues noted above, the Task Force developed this guidance to help address some of the issues companies may face in implementing the Risk Management recommendation.4 In particular, this guidance is aimed at companies that are interested in integrating climate-related risks into their existing risk management processes and disclosing information on their risk management processes in alignment with the TCFD recommendations. Companies with established risk management processes for climate-related risks — regardless of whether those processes are integrated into broader or overall risk management processes — may find Section E. Disclosure of Risk Management Processes useful for disclosing information in alignment with the Risk Management recommendation.
The remainder of this guidance is organized as follows:
Section B. Scope and Approach. Describes the scope of this guidance to cover financial and non-financial companies with a focus on climaterelated risks and the Task Force’s use of defined risk management concepts and terms to ensure consistency of the terminology used.
Section C. Unique Characteristics of Climate-Related Risks. Describes the unique characteristics of climate-related risks that are important to consider when integrating such risks into existing processes.
Section D. Integration in Practice: Key Principles and Initial Steps. Explores the practicalities of integrating climate-related risks into existing risk management processes.
Section E. Disclosure of Risk Management Processes. Describes features of decision-useful risk management disclosures as well as examples of companies’ disclosures.
Appendices. Provide further information on topics covered in the guidance, including transition and physical risk definitions, additional information to support integration, and references.
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