We have listed key information to help you increase your awareness and understanding of the requirements of the Task Force on Climate-Related Financial Disclosures ("TCFD"), International Sustainability Standards Board ("ISSB") and other key climate regulation.
Extreme weather events are here and not waiting for regulation to be enacted worldwide or a reduction of emissions, the economic impact continues to increase affecting business models and employees. These events are impacting risk assessment decisions and affecting significant assumptions and judgments applied in the preparation of financial statements.
The UK government's own climate change advisors have indicated the country is not prepared for the changes in extreme weather. The Association of British Insurers (ABI) recently revealed that the value of weather-related damage claims reached £573 million ($714 million) in 2023 — the highest on record and an increase of more than a third over 2022.
We at Simplify Climate believe all businesses need to start implementing a process to monitor as whether the changes in extreme weather are affecting your business model and employees, and accounting disclosures in the preparation of financial statements.
Regulatory information
The Financial Conduct Authority (FCA) requires filers to include a standard TCFD report each year, inclusive of Scope 3 emissions from supply chains (if material). While this rule was originally limited to premium listed firms, the program was extended to include standard listed firms for accounting periods beginning on or after January 1st, 2022.
Under the Climate-related Financial Disclosure Regulations that apply for financial years beginning on or after 6 April 2022, mandatory provision of climate-related information will now be required by publicly-quoted companies, large private companies and large LLPs.
Additional climate-regulations are being endorsed worldwide to deal with the climate emergency, creating additional reporting considerations and terminologies for practitioners to consider, which may cause confusion when disclosing climate information.
For example:
In November 2022 the EU approved the Corporate Sustainability Reporting Directive (CSRD) which requires "The undertaking shall disclose its transition plan for climate change mitigation" as required by ESRS E1 Climate Change. The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.
The UK government has been a strong supporter of the International Sustainability Standards Board since its launch. In its mobilising green investment: 2023 green finance strategy, the UK government laid plans to establish a framework to assess the suitability of IFRS S1 and IFRS S2 for endorsement in the UK.
The Transition Plan Task Force ("TPT") was launched in April 2022 with the goal of developing the gold standard for private sector climate transition plans. It aims to hep companies prepare robust and credible transition plans to achieve net zero emissions.
The UK government aims to make endorsement decisions on the first two ISSB standards by Q1 2025 and these standards will form part of a wider Sustainability Disclosure Reporting framework led by HM Treasury – for more information, see the SDR Implementation Update (May 2024).
What is the meaning of “climate disclosures”?
As of 2024 the TCFD has been taken over by the International Sustainability Standards Board (ISSB). As a result, those who have adopted TCFD, or were planning to, will need to adapt to this change.
The endorsement by the UK government of the ISSB standards has raised certain confusion among ESG practitioners as to whether companies need to integrate TCFD and/or ISSB to meet the “climate disclosure requirements” issued by the government.
The TPT has published its final disclosure framework to support organisations in meeting their climate goals and contributing to the UK governments commitment to achieve net zero by 2050. We consider the release of this framework to be a helpful guidance for ESG practitioners and accountants to understand the requirements of what a "good" climate transition plan is.
The EU CSRD directive identifies the importance of implementing a “climate transition plan”. The definition and objective of the climate transition plan is in line with the climate disclosure requirements identified by TPT, TCFD and ISSB.
Navigating the TCFD framework
The Task Force on Climate-related Financial Disclosures (TCFD) is a framework created by the Financial Stability Board (FSB) to develop standardised climate-related financial risk disclosures for companies, banks, and investors. The TCFD's objective is to help these organisations comprehend their climate-related risks and opportunities, thereby creating more informed decisions in investment, lending, and insurance underwriting.
We at Simplify Climate see the TCFD as a critical “risk framework” (we do not see this as a disclosure checklist) all accountants, practitioners and corporate boards need to consider to help understand and integrate physical risks due to the changing climate conditions. We have not identified another framework which deals with these physical risks.
TCFD climate related risks

TCFD strategic pillars and recommended disclosures

TCFD to ISSB? What do I need to consider?
As of 2024, the International Sustainability Standards Board (ISSB) has taken over from the TCFD on the monitoring of companies’ progress on climate-related disclosures. The new ISSB standards have kept the same framework and recommendations as TCFD, with small additions in the form of the IFRS Sustainability Disclosure Standards.
The IFRS Sustainability Disclosure Standards include 2 standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
As they use the TCFD framework as a starting point, any company that applies IFRS S1 and S2 will also meet the TCFD recommendations.
TCFD to ISSB reporting scenarios
Reporting Scenario | What do you need to do? |
I have already adopted TCFD and have not adopted IFRS Sustainability Disclosure Standards. | See IFRS guidance on the differences between TCFD and IFRS and adopt the new disclosures. |
I have not adopted TCFD and have not adopted IFRS Sustainability Disclosure Standards. | Look to adopt IFRS Sustainability Disclosure Standards. As shown by the guidance above, a company that applies IFRS Sustainability Disclosure Standards will meet the TCFD recommendations (and more). Therefore, a company does NOT need to adopt the TCFD recommendations in addition to ISSB. |
What are the additional disclosures to practitioners need to consider with IFRS S2?
As well as the TCFD recommendations, IFRS S2 adds additional disclosures requirements:
Ensure disclosed metrics are industry-based.
Include information about planned use of carbon credits to achieve its net emissions targets.
Include additional information about targets and financed emissions.
A requirement to report on Scope 3 greenhouse gas (GHG) emissions, including details on the measurement approach, inputs, and assumptions used (IFRS S2 includes a scope 3 measurement framework as guidance for companies to prepare scope 3 disclosures).
Future reporting of ISSB
More recently, the ISSB have started to shift their focus towards biodiversity, by adding this to the current climate related disclosure standards discussed in this article. The expansion into biodiversity aligns with initiatives such as the Task Force on Nature-related Financial Disclosures (TNFD), with the aim being to integrate these matters in the same fashion as ISSB with TCFD.
The overall goal of absorbing biodiversity and nature related disclosures is for the ISSB to create a unified approach to environmental reporting, which can cut down on the confusion practitioners face with the creation of multiple different regulations and frameworks.
Top tips for transitioning from TCFD to ISSB
Consult ISSB material to increase your technical understanding and knowledge of IFRS S1 and IFRS S2. Use the IFRS S2 - TCFD comparison table to identify differences between TCFD recommendations and IFRS.
Understanding climate change is becoming a necessity and no longer an option due to the changes in extreme weather events. Start your journey in getting familiar as doing so will empower you to make positive and informed decisions for you and your clients.
Grasp the significance of double materiality. Doing so can help practitioners to navigate the links between financial and non-financial impact of extreme weather events.
Join ESG communities and engage with regulators. Doing so will increase technical understanding of extreme weather but also requirements regarding ESG regulations.
Next insights series
We will be issuing a series of TCFD, TPT & ISSB insights to cover further aspects of these climate-related frameworks and reporting standards, with the next integration series focusing on what good looks like re: governance and risk management, climate transition plans, materiality considerations and a further series on key areas practitioners need to consider when integrating climate scenario analysis. Stay tuned!
How can we help?
Please reach out to help@simplifyclimate.co.uk to book an introductory consultation to explain how we can support you.
"The ESG Doctor" diagnostic phase assessment consists of:
(a) The deployment of our ESG software to identify improvements and determine your initial reporting baseline. A simple and practical approach to help you manage and budget your reporting costs in line with our suggested 3 -5 year reporting integration roadmap.
(b) What is affecting your business model now? are changes in extreme weather affecting you?
(c) Identification of cost savings (including areas of employee productivity improvements) and potential product development opportunities.
(d) What is the initial carbon reduction plan, accounting and reporting considerations you need to consider?
Let us help you stay ahead of the curve and drive positive change.
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