2023 Transition Plan Task Force_TCFD Recommendations and Guidance - TPT Disclosure Framework
Briefing Document: TCFD – TPT Technical Mapping
Introduction
In 2017, the Task Force on Climate-related Financial Disclosures (TCFD) presented its Recommendations, which were enhanced by an Annex titled "Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures" in 2021, alongside the “Guidance on Metrics, Targets and Transition Plans.” This document discusses the mapping of TCFD Recommendations to the TPT Disclosure Framework, designed to enrich climate-related disclosures and provide guidance on effective reporting of transition plans.
The TCFD Recommendations have been incorporated into the IFRS S2 standard on Climate-related Disclosures, with the IFRS Foundation now overseeing the monitoring of companies' climate-related disclosures previously managed by the TCFD. It is essential for entities to view TPT’s recommendations as complementary to TCFD’s framework, providing additional insights into the best practices for climate transition plans.
Governance
TCFD Recommendations
Organizations must disclose governance structures related to climate-related risks and opportunities. These disclosures should cover:
- Board Oversight: The processes and frequency of board discussions about climate-related issues.
- Management Role: The assignment of climate-related responsibilities to management-level positions and committees, and how they report to the board.
TPT Disclosure Recommendations
Entities should refer to TPT Sub-elements for guidance:
- Approval: The board must approve the transition plan and climate-related targets.
- Oversight: The board oversees the execution of the transition plan.
- Accountability: Senior management is responsible for executing the transition plan.
Further guidance includes ensuring that organizations periodically review and update their transition plans to maintain relevancy and effectiveness.
Strategy
TCFD Recommendations
Organizations should describe the impacts of climate-related risks and opportunities on their business strategies and financial planning. Key areas include:
- Products and Services: How climate-related issues affect offerings.
- Supply Chain: The influence on value chains and operations.
- Financial Performance: The impact on revenues and costs.
TPT Disclosure Recommendations
Relevant TPT Sub-elements to consider include:
- Alignment with Strategy: Transition plans must align with overall strategic goals.
- Action Plans: Short-term and medium-term plans should be outlined, detailing how the organization addresses climate risks and opportunities.
- Financial Plans: Transition plans must describe associated financial targets.
Organizations should also engage in scenario analysis to test the achievability of their transition plans.
Metrics & Targets
TCFD Recommendations
Organizations need to disclose the metrics and targets used for assessing and managing climate-related risks and opportunities. This includes:
- Metrics: Key metrics to measure climate-related risks.
- GHG Emissions: Disclosure of Scope 1, Scope 2, and, where appropriate, Scope 3 emissions.
- Targets: Clear description of climate-related targets, including time frames and key performance indicators.
TPT Disclosure Recommendations
Entities should consider the following:
- Monitoring Metrics: Transition plans should specify metrics for tracking progress against targets, including operational and financial performance metrics.
- Target Dates: Plans must include timelines for achieving targets and describe GHG emissions reductions and their contributions.
The presentation of climate-related metrics should aid understanding, combining both aggregated and disaggregated data where useful.
Conclusion
The TCFD-TPT Technical Mapping provides a structured approach for organizations to enhance their climate-related disclosures. By aligning TPT recommendations with TCFD’s framework, entities can report on their transition plans more effectively. This comprehensive mapping serves as a guide for organizations navigating the complexities of climate-related financial disclosures, ensuring that governance, strategy, and metrics are appropriately addressed.
Organizations are encouraged to leverage this mapping to strengthen their disclosures and align with evolving climate-related standards and expectations.