The Task Force on Climate-related Financial Disclosures (TCFD) was established in December 2015 by the Financial Stability Board (FSB), an international body that monitors the global financial system. Chaired by Michael Bloomberg, the task force was created in response to a G20 request to develop voluntary, consistent disclosures companies could use to inform investors, lenders, insurers, and other stakeholders about climate-related financial risks.
In June 2017, the TCFD published its final recommendations, structured around four thematic pillars:
- Governance – the organisation's governance around climate-related risks and opportunities.
- Strategy – actual and potential impacts of climate-related risks on the organisation's businesses, strategy, and financial planning.
- Risk Management – how the organisation identifies, assesses, and manages climate-related risks.
- Metrics and Targets – the metrics and targets used to assess and manage relevant climate-related risks and opportunities, including Scope 1, 2, and (where appropriate) Scope 3 greenhouse gas emissions.
The TCFD distinguished between physical risks (acute events such as floods and chronic shifts such as sea-level rise) and transition risks (policy, legal, technology, and market changes associated with moving to a lower-carbon economy).
Adoption grew rapidly: jurisdictions including the United Kingdom, New Zealand, Switzerland, Japan, and the European Union incorporated TCFD-aligned reporting into mandatory disclosure regimes. The UK became the first G20 country to mandate TCFD-aligned disclosures across its economy, phased in from 2022.
In 2023, following the publication of IFRS S1 and S2 sustainability disclosure standards by the International Sustainability Standards Board (ISSB), which fully incorporated the TCFD recommendations, the FSB asked the ISSB to take over the monitoring of companies' climate-related disclosures. The TCFD was formally disbanded in 2023, but its four-pillar framework remains the architectural backbone of climate-related financial disclosure globally.
Example
In 2020, the UK Treasury announced that TCFD-aligned disclosures would become mandatory for large UK companies and financial institutions, with full economy-wide rollout phased in from 2022.