Task Force on Climate-Related Financial Disclosures explained

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November 30, 2021
Sophie Wyatt

Why should you report climate-related financial disclosures?

In November 2020, UK Chancellor Rishi Sunak announced plans for the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations to become mandatory by 2025. This will apply to most sectors of the economy, and will cover listed companies, banks, and large private businesses.

Whilst it is strongly advised that businesses comply with TCFD, the reporting regime currently remains voluntary. The recommendations were put in place as guidance, to help businesses identify risks and opportunities as the climate crisis continues. Complying could also lead to an increase in sustainable investments. This could in turn build a resilient economy, during a time of turbulent weather patterns.

The initiative provides clear and comprehensive recommendations, supporting the shift to a green economy. It has never been more important for businesses to set ambitious emissions reduction targets and mitigate climate-related risks.

To support a transition to a low carbon economy, companies need to disclose accurate and reliable climate-related financial data. Businesses that do not report could be vulnerable to reputational and financial consequences.

What are the benefits?

But these climate-related risks can bring opportunities for businesses, that come from both safeguarding against them and accurately reporting them. These benefits include:

Resource efficiency – Using the Earth’s resources in a sustainable way can go beyond environmentalism and bring financial rewards for your business. Smart metering, monitoring and building controls, and intelligent energy management can help businesses to make significant long-term savings on their utility bills.
Clean energy – Harnessing clean energy sources, through green procurement or onsite generation, brings reputational benefits as well as financial advantages. As installations become less expensive, they will only become more sought after.
Sustainable products and services – Developing low-emission goods, services and/or innovative climate-related products can be beneficial for businesses in many ways. As the climate crisis worsens, demand for low-carbon goods and services will surge.
Credibility – Financial firms are turning their focus towards climate-related risks, and putting more faith in organisations that plan ahead. Implementing TCFD guidelines helps to maintain credibility and safeguard your organisation’s reputation, with both investors and the public.
Focused strategy – Implementing TCFD recommendations will help companies to identify and assess climate change risks. They can then address their structural weaknesses and implement mitigation and adaptation efforts to future-proof their business. Organisations that do this will have a competitive advantage over those that fall behind the times.
Resiliency – All of these benefits culminate in this last, most important one: resiliency. Every company is vulnerable during a time of economic recovery, and a genuinely sustainable strategy is key to survival. Boosting financial and reputational stability, and allowing access to new markets and assets through the implementation of TCFDs can help a business to thrive.

How can EIC help?

At EIC, our dedicated team of carbon consultants and analysts offer the highest standard of service to our clients. With our years of experience, and talent for spotting new and innovative solutions, we can identify effective and efficient carbon compliance solutions. Tailored specifically for each unique business.

Our expert team will:

Take complete care of your TCFD compliance, giving you the time to concentrate on running your business.
Provide you with essential guidance and support to make life simpler for you.
Interpret the legislation for you, to avoid confusion.
Keep you informed of any legislative changes that may affect your organisation.
Help you to become more energy efficient. Which can reduce your consumption, lower your carbon emissions, and save you money.
Provide you with peace of mind and reassurance that your compliance journey is in safe hands.

To learn more about how we can help you with the gathering and reporting on relevant climate-related data, download our TCFD guide today.