The TCFD Recommendations can help companies secure jobs, investment & profitability.
Voluntary disclosures under the TCFD encourage companies to formulate strategies to ensure their resilience. By putting strategies in place, companies can maintain their profitability and safeguard people, assets, and reputation.
TCFD Recommendations encourage company resilience
The TCFD recommendations encourage companies to disclose how they will adapt to climate-related impacts that materially affect their businesses.
Companies should assess a range of scenarios to develop their strategies. The strategy that is implemented should ensure the company’s resilience as it reduces its greenhouse gas emissions in the transition towards a low-carbon economy.
Scenario-based strategies contribute to a Just Transition
Companies that have plans to adapt their business to a low-carbon economy are more resilient and can contribute to a just transition.
By creating and implementing mitigation, adaptation, resource efficiency, pollution reduction and transition plans, companies can ensure that they do not cause significant job losses, or negatively impact surrounding communities and the economy.
Analysing scenarios to inform strategies, and setting targets to reduce emissions, can reduce risks and secure the future of our planet
Targets to meet regulatory requirements and reduce emissions avoid risk
Continuing to emit high amounts of greenhouse gases poses physical and transitional risks to companies. To mitigate these risks, companies should set targets for reducing their exposure, which includes targets for reducing their greenhouse gas emissions.
The TCFD recommends that companies disclose the metrics and targets used to inform their strategies to address climate-related risks and opportunities. This includes disclosing their current direct and indirect emissions, and targets for reducing greenhouse gas emissions, water usage, and energy usage. The targets that companies set should be based on anticipated regulatory requirements, market constraints, or other goals.
Scenarios analysis uncovers the impacts of risk and informs strategies and targets
Facing potentially catastrophic risks as a result of unabated emissions should encourage companies to change course by implementing a strategy to avoid climate-related impacts.
The TCFD recommends that companies disclose the risks of various scenarios of global warming, including a 2°C scenario, to assess the extent of their risks if such a scenario would arise. While companies are not obliged to follow a strategy in line with a 2°C or lower scenario, they might face increasing regulatory risk. These risks may come in the form of government regulation to enforce lower emissions, reputational damage, and higher costs of doing business.
The TCFD provides the tools and framework to support companies in formulating their strategies based on scenario analysis.