The challenge of climate reporting: Using TCFD recommendations to identify climate-related opportunities and risks
Transparent climate change reporting is essential these days for businesses wanting to maintain their competitive edge. Investors are increasingly demanding the information needed to compare and evaluate climate-related risks and opportunities among companies. Implementing the TCFD recommendations helps companies demonstrate a sense of responsibility and vision – which can pay off in the long term. However, until now, many companies have not been required to publish this information and are therefore unprepared for these challenges.
Here you will find an overview of our services and solutions related to TCFD.
Why is this important?
The TCFD (Task Force on Climate-related Financial Disclosures) initiative was established by the International Financial Stability Board to promote international financial stability. In 2017, it issued recommendations for the disclosure of climate-related financial information in four areas:
 | Governance (alignment of corporate structures with recommended climate protection obligations for management and directors) |
 | Strategy (impact of climate-related risks and opportunities on corporate strategy, and implementation of scenario analyses) |
 | Risk management (identification, assessment, and management of climate-related risks) |
 | Key figures and targets for assessing climate-related risks and opportunities, including measurement of the greenhouse gas balance |
TCFD recommendations – currently still voluntary today, but soon to be obligatory for many
The TCFD recommendations are generally applicable to all companies, regardless of sector, and are aimed at companies in the real economy and financial sectors as well as publicly traded companies. These recommendations are currently supported and applied by over 50 companies in Germany. The EU draft of the Corporate Sustainability Reporting Directive (CSRD) for future sustainability reporting incorporates key areas of the TCFD recommendations, so that the requirements are expected to become relevant for all companies that fall within the scope of the CSRD from 2024 onwards.
What are the challenges for your business?
It is necessary to adapt internal structures and processes in order to assess the effects of climate-related risks and opportunities and to include climate reporting with the financial indicators. The TCFD recommendations can only be properly implemented if the responsible business units are identified and viewed as interdependent in the process. These usually come from the areas of strategic management, sustainability, risk management, financial controlling, and investor relations. This allows climate-related risks to be better managed. In addition, this makes it easier for investors to compare climate-related data and increases access to the capital market. The public perception of the company and its sense of social responsibility can also be enhanced in the long run.
How Forvis Mazars can assist you:
Our experts will be happy to help you analyse the data, processes, activities, and past governance practices, assess the drivers of climate risk, and finally, as the last step, implement the TCFD guidelines. This allows you to publicise the financial impact of climate risks and opportunities as part of your transparent financial reporting.
Contacts
Philipp Killius Partner - Hamburg
Elma Sefer Periskic Partner - Stuttgart
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