TCFD (Task Force on Climate-related Financial Disclosures)
TCFD is a framework developed by the Financial Stability Board for disclosing climate-related financial risks and opportunities. It organizes recommendations around four pillars: governance, strategy, risk management, and metrics and targets. Though the TCFD disbanded in 2023, its framework lives on through ISSB S2 and CSRD/ESRS.
The TCFD framework, published in 2017, established the structure that nearly all subsequent climate disclosure regulations follow. Its four pillars ask companies to disclose: how the board and management oversee climate issues (governance), how climate risks and opportunities affect strategy and financial planning (strategy), how the organization identifies, assesses, and manages climate risks (risk management), and what metrics and targets are used to measure performance (metrics and targets).
TCFD introduced scenario analysis as a key disclosure element — requiring companies to describe the resilience of their strategy under different climate scenarios (e.g., 1.5°C, 2°C, 4°C warming). This forward-looking approach was novel for financial reporting.
In 2023, the IFRS Foundation's International Sustainability Standards Board (ISSB) incorporated TCFD fully into IFRS S2, and the TCFD was formally disbanded. The CDP questionnaire is also aligned with TCFD. The EU's ESRS standards follow the same four-pillar structure.
For practical purposes, companies should now focus on the active standards (ISSB S2, CSRD/ESRS, CDP) rather than TCFD directly, but the TCFD framework remains the conceptual foundation underlying all of them.
Frequently asked questions
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Related terms
CSRD (Corporate Sustainability Reporting Directive)
The Corporate Sustainability Reporting Directive (CSRD) is the European Union's mandatory sustainability reporting law. It requires companies operating in the EU above certain thresholds to disclose environmental, social, and governance (ESG) information according to the European Sustainability Reporting Standards (ESRS), with third-party assurance.
CDP (formerly Carbon Disclosure Project)
CDP is a global non-profit organization that operates the world's largest environmental disclosure system. It collects self-reported climate, water, and forest data from thousands of companies, cities, and subnational governments on behalf of investors and purchasers, scoring disclosures from A (leadership) to D– (minimal).
ISSB (International Sustainability Standards Board)
The ISSB is a body under the IFRS Foundation that issues global sustainability disclosure standards. IFRS S1 (General Requirements) and IFRS S2 (Climate-related Disclosures) set the baseline for sustainability reporting worldwide, designed for investor-focused, financially material disclosures.
Carbon Accounting
Carbon accounting is the systematic process of measuring, recording, and reporting the greenhouse gas (GHG) emissions produced by an organization, product, or activity. It follows standardized methodologies — most commonly the GHG Protocol — to quantify emissions across Scope 1 (direct), Scope 2 (purchased energy), and Scope 3 (value chain) categories, producing an auditable inventory that underpins disclosure, reduction planning, and regulatory compliance.