The Financial Reporting Council's Financial Reporting Lab released Thursday guidance for companies preparing to report against the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
The Lab's Taskforce on Climate-related Financial Disclosures (TCFD): Ahead of Mandatory Reporting provides guidance for UK premium-listed companies, which are subject to more stringent governance requirements. They will need to report against the TCFD recommendations on a comply or explain basis in their annual reports from the end of this year. Other companies will need to report in this way in the next few years.
One of the biggest challenges for companies adopting the TCFD framework is carrying out scenario analysis, the FRC said.
The FRC has therefore also published research by the Alliance Manchester Business School that investigates climate-related scenario analysis in more detail. Climate Scenario Analysis: Current Practice and Disclosure Trends highlights the various approaches companies have adopted, instances of good practice, typical challenges faced, and the common steps taken to conduct the analysis.
The FRC's Lab also published a snapshot of the status of current reporting against the TCFD framework in the UK, which highlights the increased uptake in the last year. According to the snapshot, among UK companies that have published their annual reports in 2021, 204 have made extensive reference to the TCFD framework. This is up from 77 in 2020.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.