Implementing the TCFD recommendations: responding to the challenges (Part II)

In the past few months, CDSB held various workshops on the TCFD recommendations to provide guidance on the topic and gather feedback on the challenges and solutions that organizations are adopting on this journey.

As we celebrate the first anniversary of the launch of the TCFD recommendations, the action that we have witnessed in the past 12 months - from regulators, investors and companies - demonstrates that it is possible to achieve the goal of increasing transparency and create more sustainable and resilient economies.

When we started developing the TCFD Knowledge Hub, we set out to research and collate the existing guidance, legislation and tools that refer to the goals of the TCFD recommendations. Within a few months, we had already collected over 350 resources, with new submissions coming in every day. Working on the first platform dedicated to all the resources supporting the TCFD implementation, we have heard from hundreds of organizations developing tools, guidance and reports that are securing a space for climate disclosure in the financial area.

In the first part of this blog, we looked at the feedback we received during a series of workshops dedicated to the TCFD implementation, exploring the challenges faced by our attendees across Australia, France, the Netherlands and the UK.

In this second part, we present the advice provided by the many organizations attending our events, our expert speakers, as well as some selected examples from the myriad of resources available on the TCFD Hub, which provide the answers to many of the questions that have been asked in the past year.

1.  Internal engagement

  • One of the first tasks that a few organizations working on the TCFD reporting took on was creating an internal team with representatives from various departments - from sustainability and strategy to finance, operations, risk and legal. This involved establishing clear roles, responsibility and targets to ensure the knowledge and responsibility is shared across the company.
  • A few experts suggested that the final responsibility for sign-off should fall on the CFO, as the information reported is of financial nature.
  • When specific skills were missing from internal teams (such as natural hazard specialists in one specific case), external consultants were involved, either to set up specific training to create the missing skills, or to conduct specific analysis to collect the necessary data.
  • Organisations found that getting the board to give a mandate to implement the TCFD recommendations expedited the process and ensured a timely delivery of the project.

2.  Board buy-in

  • External pressure from investors, regulators and the media were cited as the most critical drivers for boards’ engagement on the topic.
  • The support of trustees was key for some organisations in getting the issue on the board’s agenda.
  • Using case studies from the same industry, demonstrating material benefits from disclosure of climate-related information, has been particularly useful to some organisations in creating an internal business case.

3. Risk management

  • Some organisations said that setting up risk training for various functions in the company helped them understand how to deal with climate-related financial risks and how to align them to their business objectives.
  • The TCFD Knowledge hub provides a whole section on risk management, which outlines some key resources to get you started and additional information taken from the TCFD report.

4. Existing tools

  • Reviewing current reporting practices and undertaking a gap analysis are useful first steps in understanding how much work has already been done on climate reporting and how it can be used for TCFD reporting.
  • The TCFD provides alignment tables with other mainstream reporting frameworks, standards and legislation, which help organisations understand how to build on their existing work to follow the TCFD. 

5. Investor engagement

  • The work of organisations such as the UNEP FI, PRI, IIGCC and CDP are helping to drive investors’ engagement with companies.
  • As the TFCD recommendations have been developed to allow the market to develop its own examples of “best practice”, early engagement with investors has been useful to help organisations understand which information investors would like to see in reports.
  • The A4S Essential Guide Series: Enhancing investor engagement is one of the resources presented on the TCFD Hub which helps investor relations team engage investors on their sustainability work.

6. Scenario analysis

  • Many of our speakers recommended organizations to consider a number of plausible future paths, testing their resilience and strategy responses to the extremes of the “wedge” of future risk and opportunity. A standard example is taking into account a business as usual scenario and an ambition 1.5 degree scenario.
  • Organizations that are just beginning on their journey should start with a high-level scenario approach, taking into account the complete organizational profile, as well as broad physical and transitional scenarios to identify risk exposure and opportunity.
  • We wrote about this topic in a previous blog as a summary of a webinar we ran with ERM. You can also watch the recording here
  • The TCFD Knowledge hub provides a section on scenario analysis, which outlines some key resources to get you started and additional information taken from the TCFD report.

If you want to see your resource featured here or on the TCFD Knowledge Hub, get in touch with us at .