Three big takeaways from the event:
1. The TCFD is just the beginning
Most reporters have ably risen to the challenge of reporting against the Task Force on Climate-related Financial Disclosures (TCFD) framework. Some have gone further, faster than others, but the overall standard is high and improving. That said, the impending incorporation of stringent ‘Sustainability Standards’ into IFRS reporting will soon pose a fresh challenge for reporters. The climate transition plans many businesses are already working on at the behest of the UK government’s ‘Transition Plan Taskforce’ (TPT) will also impact TCFD reporting, while the EU’s forthcoming Corporate Sustainability Reporting Directive (CSRD) will replicate many of the TCFD’s requirements.
2. Reporting can make real change happen
Seminar contributor Alexander Laugier-Werth led the team that made TCFD reporting happen at Vesuvius plc – a global leader in metal flow engineering serving the steel industry – and explained to us that there have been several related benefits. One such benefit was the expansion of Vesuvius’ normal strategic horizon from three to five years to, on occasion, up to thirty years. Alexander notes that certain topics – for example the future of regulation and the use of technology by customers – which weren’t considered in detail before, were now covered during strategic discussions. Ultimately, the result was that leaders, post-TCFD, felt able to make better, more informed decisions.
3. There’s room for improvement
There are five key aspects of TCFD reporting which we believe most reporters should look to improve on in 2023. First, enhanced transparency is needed around the financial implications of the low-carbon transition. This isn’t easy to achieve, but investors are increasingly keen to access this information. Further insight into the impact of climate scenarios is highly beneficial for readers, as is greater clarity around net-zero transition plans. More detail around governance of sustainability/ESG would also add value. Finally, it would be great to see more in-depth discussion on the ways in which materiality was considered during the TCFD process.
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