On May 1, 2019, the Sustainability Accounting Standards Board (SASB) and the Climate Disclosure Standards Board (CDSB) jointly released a how-to implementation guide for implementing the disclosure recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD).  TCFD released its final recommendations in June 2017, and as of this post’s writing, 643 organizations have publicly expressed support.  Despite this level of support, companies have lacked, according to the CEO of The SASB Foundation, Madelyn Antoncic, a clear understanding on how to put the recommendations into practice.  It is for this reason that CDSB and SASB teamed up to develop a series of practical TCFD-focused resources, of which the implementation guide is the first.

Why is the guide important?  Our blog has covered TCFD-related developments since the release of the draft recommendations in December 2016, with previous posts noting that although there are various climate change disclosure frameworks out there, TCFD’s recommendations are particularly relevant, largely due to TCFD’s relation to the Financial Stability Board.  The implementation guide brings practicality to TCFD’s principles-based disclosure recommendations, with the aim to, as stated in the guide, “enhance the robustness, consistency, comparability, and utility of TCFD implementation and reporting.” SASB and CDSB are both well-established organizations with TCFD-aligned reporting tools and their collaboration on this guide reinforces the work of the Corporate Reporting Dialogue’s Better Alignment Project, a two-year reporting alignment initiative launched by organizations including SASB and CDSB on March 20, 2019.

What are some key elements of the guide?  In addition to providing an overview of TCFD, SASB and CDSB, the guide offers a list of 11 action steps expanded and adapted from CDSB’s 2017 Practical Action TCFD Checklist to help companies initiate effective climate-related disclosure practices.  The guide notes that the action steps may also be applicable to a wider range of financially material environmental, social and governance (ESG) matters.  Key focus points for companies, as outlined in the steps, include:

  • Integrating climate risk into existing governance structures and processes;
  • Collaboration between sustainability, governance, finance and compliance roles;
  • Adapting currently employed tools and report structures to incorporate the recommendations; and
  • Analyzing the financial impact of climate risk.

Following a description of the steps, the guide offers several mock climate-related financial disclosures intended to serve as best-practice examples.  The mock disclosures apply to three fictional companies – OilCo, AgriCo and AutoCo – and are broken down by the four core elements of the TCFD recommendations: governance, strategy, risk management and metrics & targets.

What is next?  Both SASB and CDSB will continue to develop technical guidance on the TCFD recommendations, with CDSB providing implementation support to companies through programs such as Beyond Disclosure.  CDSB has also been conducting a series of capacity-building workshops and webinars on the TCFD recommendations since October 2017, with the next event, focusing on the implementation guide, occurring later this month.

Legal assistant Sarah Foster contributed to this post.