TCFD (Task Force on Climate-Related Financial Disclosures)

The Task Force on Climate-related Financial Disclosures (TCFD) was an international initiative that created the most influential framework for disclosing the financial risks and opportunities linked to climate change. Although the task force was disbanded in 2023, its recommendations live on: they are now fully embedded in the climate standard IFRS S2, issued by the International Sustainability Standards Board (ISSB).

What was the TCFD?

The TCFD was set up in 2015 by the Financial Stability Board (FSB). Its goal was to develop a set of recommendations to guide companies in disclosing decision-useful information about climate-related risks and opportunities, giving investors, lenders and other stakeholders consistent and comparable data on how companies manage those risks.

From the TCFD to IFRS S2

In July 2023 the FSB confirmed that the TCFD had fulfilled its remit, and the task force was disbanded in October 2023. From 2024, monitoring of companies' climate-related disclosures passed to the IFRS Foundation. The TCFD's four-pillar structure is now fully incorporated into IFRS S2: organisations that apply IFRS S1 and IFRS S2 also meet the TCFD recommendations, while IFRS S2 adds further requirements such as industry-based metrics and disclosures on the planned use of carbon credits. As a result, the TCFD recommendations remain the backbone of climate disclosure even though the task force itself no longer exists.

The four pillars of the framework

The recommendations are structured around four areas, which IFRS S2 retains: governance, strategy, risk management, and metrics and targets.

Governance

Disclosure of how the organisation governs climate-related risks and opportunities, including board oversight and the role of senior management.

Strategy

Identification of the climate-related risks and opportunities that could affect operations, revenue and business models, and how they may influence financial performance over the short, medium and long term. This often involves scenario analysis, for example how rising temperatures could affect supply chains or how decarbonisation policies could change operating costs.

Risk management

Description of the processes used to identify, assess and manage climate risks, covering both physical risks (such as extreme weather) and transition risks (regulatory, technological and market shifts).

Metrics and targets

Disclosure of the metrics and targets used to assess and manage climate risks and opportunities, including Scope 1, Scope 2 and Scope 3 greenhouse gas emissions.

The carbon footprint behind the disclosures

Measuring the carbon footprint is essential to the metrics-and-targets pillar. By quantifying GHG emissions, companies can identify where to improve, set reduction targets and report transparently. The methodology aligns with the GHG Protocol, which ensures consistency and comparability of the data.

Why it still matters

The TCFD template shaped climate disclosure rules around the world. Beyond IFRS S2, its logic underpins other frameworks: in the European Union the climate elements of corporate reporting (under the CSRD and the ESRS) reflect the same governance, strategy, risk and metrics structure, and Spain's Climate Change and Energy Transition Law 7/2021 pushes large companies and financial institutions towards climate-risk reporting in the same spirit. Adopting this approach helps companies:

• Strengthen their reputation with investors, customers and stakeholders.
• Improve access to sustainable finance.
• Identify efficiency opportunities and reduce costs.
• Stay ahead of fast-evolving disclosure regulation.

Common implementation challenges

• Data availability: collecting accurate emissions and climate-risk data is complex, especially across long supply chains.
• Technical expertise: analysing and reporting climate data requires specialist knowledge and tools.
• Up-front cost: setting up climate-risk measurement and management systems takes investment.

How Manglai helps you align with IFRS S2 and the TCFD recommendations

At Manglai we help companies measure their carbon footprint, manage decarbonisation projects and prepare auditable climate and sustainability reporting aligned with the TCFD recommendations now embedded in IFRS S2. Discover how Manglai can help you.