Taskforce on Climate-related Financial Disclosures

From 1 January 2021 all premium listed companies have been mandated by the Government to report on their climate risk exposure, in line with the Task Force on Climate related Financial Disclosures (TCFD) recommendations. This will roll out to all UK companies by 2025.

The Government has recognised that every business is exposed to varying degrees of both physical and transitional climate risk. That considered, there is huge opportunity for businesses that are able to turn these risks to their strategic advantage.

Our TCFD readiness review compares your current business status against the disclosure requirements and what your peers are doing. The benefits of our approach are that it:

• Aligns the key stakeholders on what you want to achieve from the TCFD project; and
• Ensures that any relevant work performed across the organisation to date is taken into account from the start. This ensures that there is clear direction from the Board from day one and the project is cost efficient.

Our KPMG process follows three steps:

1. Gather existing documentation on the key TCFD areas of governance, strategy, risk management, and metrics and targets, and 11 additional Disclosure Information Quality Index points to understand what processes are in place already
2. Conduct short interviews with key stakeholders across different functional areas to understand the requirements of the senior stakeholders and the thinking done to date
3. Benchmark you against the market and the regulatory requirements, presented in a report

KPMG's Climate Risk & Decarbonisation Strategy team are speaking to multiple FTSE listed companies each week as they grapple with the implications of meeting the requirements of the TCFD disclosures.

To tackle the requirement, companies need to take three key steps:

1. Understand their ‘as is’ state, via a TCFD gap analysis
2. Fill the gaps related to Governance, Risk, Strategy and Metrics and Targets
3. Disclose their progress to the market

Our recommendation is to start with a TCFD readiness review. This is a first step in considering Climate Risk as a component of your strategic planning