Only 4% of companies met all TCFD requirements, survey finds

It comes on the fifth anniversary of the influential climate reporting framework.

Only 4 percent of companies have disclosed in line with all 11 recommendations of the Taskforce on Climate-related Disclosures (TCFD), according to a survey conducted by the organisation.

It is the fifth stock-take to be issued by the TCFD since the launch of its 2017 framework, which has become the de facto reference for climate reporting rules in the EU, UK, Hong Kong, Singapore, Japan and multiple other global jurisdictions. The recommendations span four “pillars”: governance, strategy, risk management, and metrics and targets.

The survey was informed by a review of climate reports from more than 1,400 companies globally, filed in the 2021-22 fiscal year.

The largest increase in reporting over the last year – a rise of 10 percentage points – was on the degree to which climate-related risks are integrated into an organisation’s overall risk management.

However, the disclosure of organisational emissions has risen by only 4 percentage points from last year, despite the TCFD making a major push to include the key metric in all climate reporting in 2021. Companies were previously told to report on emissions only if they were assessed to be material.

Fewer companies disclosed the resilience of their strategies under different climate-related scenarios compared with other TCFD metrics, at 16 percent from 2021-22. More than 80 percent of 206 companies polled by the TCFD rated the topic as “somewhat difficult or very difficult to implement”.

In a statement to Responsible Investor, the TCFD said that it “recognises the challenges associated with making such disclosures” and noted that it had commissioned a series of reference climate scenarios, which was issued by the World Business Council on Sustainable Development earlier this year.

“While we are proud of the progress we’ve seen since 2017 in company disclosures, and in adoption of TCFD by governments, standard setters and regulators, these findings make it clear there is more work to be done to improve transparency as companies and investors assess their risks through the lens of climate change,” said TCFD secretariat and former SEC commissioner Mary Schapiro.

In 2021-22, companies reported against 4.2 TCFD recommendations on average, from 11 in total, compared with 3.6 in the previous year.

The TCFD saw the number of signatories increase to 3,900 organisations in 2022, a rise of 50 percent from last year’s 2,600.