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Mandatory TCFD Disclosure - where to start?

Words by Mariam Mohiuddin
Date 2022-02-23

Back in 2015, at the Paris COP21 conference, an important working group was created. A group tasked with the creation of a set of comparable and consistent disclosures – ones that Companies could use to demonstrate climate change resilience to their capital providers.

Headed up by former Bank of England governor Mark Carney, the launch of the Taskforce on Climate-Related Financial Disclosures (TCFD) came at a time where the world, (and the world’s largest corporations), were beginning to take climate change more seriously. There was an understanding of the need to build the climate risks into financial models.

Since then, we have seen the first of many predicted “climate change bankruptcies”. With Pacific Gas and Electric Company (PG&E) filing for bankruptcy in 2019 due to wildfires, and shareholders losing more than $20m as a result.

In 2021, at the Glasgow COP26, the UK identified the need for mandatory TCFD disclosure for all large companies. In the words of the TCFD Secretariat:

"As countries and companies around the world set net zero targets, the TCFD framework is increasingly becoming the foundation for standards and requirements needed to chart the transition to the low-carbon economy.”

— TCFD Secretariat, Glasgow COP26


Countries and companies are setting net zero targets and shifting the world’s perspective on climate change. The next 28 years are pivotal, and a shift in regulatory policy and consumer and company behaviour is threatening the traditional business models of many sectors and industries already.

Unlike some other aspects of sustainability reporting, TCFD isn’t about a company’s impact on the environment, it is about the environment’s impact on the company. These disclosures are targeted at mainstream investors, governments, and regulators, and are intended to help them assess whether climate risk is appropriately priced into the valuation of a company.


Mandatory climate-related financial disclosure has finally arrived and been enshrined in law at the beginning of this year (Jan 2022). From April 2022, 1,300 of the largest Companies in the UK must now report in line with the recommendations of the TCFD. This will be applicable for accounting periods starting on or after that date.

Any company with more than 500 employees and more than £500m in annual turnover in the UK will have to disclose potential risks of climate change with a focus on the financial impact on their business.


The government has legislated that the TCFD statement should be written as part of the "non-financial information statement" within a strategic report - which is being renamed to become the “non-financial and sustainability information statement” (NSFI). Some Companies with a greater exposure to - or ability to influence climate change have created standalone TCFD reports which go into further detail, given the significance of climate to their business and strategy.

The UK government has agreed to align the approach of the regulations with the TCFD framework and recommendations. Put simply, companies need to ensure disclosure in the following areas:

  • Governance – management and the Board’s role in assessing, managing, and overseeing climate-related risks and opportunities.
  • Strategy – approach to risks and opportunities, and how they impact the business model.
  • Risk Management – how risks are identified and managed.
  • Metrics and Targets – metrics and targets used to assess strategy and risk, and more recently - the actions being taken to reach Net Zero 2050.
  • Scenario analysis – qualitative analysis is sufficient.


Perhaps the biggest challenge of TCFD is providing meaningful disclosure without becoming too technical. This is not a piece of non-financial reporting destined purely for sustainability teams to put together – it specifically calls for a coming together of sustainability and financial skillsets in a way that hasn’t been required in the past. The broader, company-wide implications require discussion and input from Boards, management, finance teams and investor relations.


  • Clear and succinct disclosure – disclosure should be free from technical jargon; quantification of financial impact is the ultimate goal.
  • Graphs and visuals – utilising maps and other visual assets to showcase GHG emissions or even value chains highlighting both risks and opportunity. Maps can also be used to illustrate physical risks.
  • Transparency – Good reporting distinguishes transparent and authentic companies from their peers. The key to this is reporting on actions taken and how targets are going to be achieved as honestly as possible, whilst acknowledging that companies are on a journey.
  • Linking to Net Zero – We are now seeing the prevalence and importance of net zero transition plans, with the UK government implementing regulation for large firms to publish these plans by 2023.


As with all new reporting developments, this will be a journey for Private Companies disclosing for the first time. For now, we recommend starting with the following actions:

  1. Encourage discussion at the Board level, and make sure the right teams are involved.
  2. Conduct a gap analysis: what can you say right now, where are the gaps and what needs to be done to resolve them?
  3. Avoid boiler plate discussion – people reading the statement already know about climate change, focus on your strategy and on material information.

If you would like to discuss how we could help with your corporate reporting and sustainability communications, please do get in touch.

We are also setting up an ESG reporting working group, a safe space for like-minded peers to learn, ask questions and find solutions together as we learn together and work towards complying with the new ISSB standards to come this summer. It'll involve an email distribution list to share questions and best practice, but also a series of round tables and events over the summer aimed at breaking some of these obstacles down. If you'd like to join or have a further conversation, please email