What are climate-related risks and opportunities and what is the TCFD?
Climate-related risks include risks related to the physical impacts of climate change like extreme weather events as well as risks related to the transition to a lower-carbon economy. Assessing such risks can unlock new opportunities including resource efficiency, business model innovation and access to new markets.
The TCFD or Task Force on Climate-Related Financial Disclosures was created in 2015 by the Financial Stability Board (FSB) to develop a framework to help public companies and other organisations disclose and report climate-related risks and opportunities.
What are the benefits of reporting climate risks and opportunities?
As of 2023, more than 3,900 organisations from 101 countries support TCFD disclosure. Europe is the leading region for disclosure with European companies disclosing at 60% on average across the 11 recommended disclosures for 2021 reporting (TCFD Status Report, 2022). Such percentage of disclosure is driven by increasing public sector attention and new legal requirements: Swiss companies will be required to provide mandatory disclosures in line with the TCFD requirements in 2025 and other European countries are set to introduce the TCFD mandate soon.
Understanding the impact of climate change on your business, and aligning with TCFD, brings a number of benefits, including the opportunity to:
- Test your business’s resilience across a range of hypothetical scenarios, providing the tools you need to make informed decisions in a rapidly changing world.
- Align your business strategy to emerging market trends and regulations, and drive competitive advantage.
- Identify potential blind spots, and uncover and leverage opportunities for growth in a fast-changing environment.
- Develop a feasible, sustainable and logical Net Zero transition plan.
- Embed sustainability in your corporate culture.
- Demonstrate to investors and lenders through TCFD alignment that your company’s climate-related risks have been appropriately assessed, potentially leading to easier or better access to capital.
- Understand portfolio risk in financial institutions, design an investment strategy that avoids climate risks, and improve due diligence processes to screen out, or accurately price, climate-risky investments.
How we can help
We have significant experience in providing TCFD support to a wide range of corporates, investors and policy makers including Diageo, Vodafone, Dr. Martens and the European Investment Bank, and are constantly refining our approach to give our clients the latest insights.
We provide strong leadership for encouraging the adoption of TCFD across markets, and for using it as a strategic tool beyond the disclosure requirements.
With our strategic approach and industry knowledge, we will uncover the most important and relevant risks and opportunities for your business. We can then support you to mitigate those risks, work out ways of making the most of the opportunities and go beyond fulfilling your disclosure requirements to drive sustainable growth.
Why the Carbon Trust?
We have two decades of experience in carbon business consulting, so we understand the dynamics of business model evolution in response to climate change. We know that the majority of risks are embedded in a company’s value chain and we have worked with suppliers and customers for years; we know their challenges and the potential for change.
As an organisation with a global reach working with policy makers, businesses, financiers and the technologies of the future, we can provide a truly systemic and holistic view on the low-carbon transition for your business.
