Task Force on

Climate-related
Financial Disclosures
2023 Status Report

October 2023

1
 September 13, 2023

Mr. Klaas Knot

Chair
Financial Stability Board
Bank for International Settlements
Centralbahnplatz 2
CH-4002 Basel
Switzerland

Dear Chair Knot,

On behalf of the Task Force on Climate-related Financial Disclosures, it is my pleasure to present our sixth status report.
As you know, this is our final report before the International Sustainability Standards Board assumes responsibility for
monitoring companies’ progress on climate-related disclosure as of next year. It reflects not only on progress made over
the last year, but also on experiences and insights gained over the eight years since the Task Force was formed.

The final TCFD recommendations published in June 2017 were designed to provide a framework for companies to
disclose critical climate-related financial information to help increase consistency and comparability around the world.
Six years later, the recommendations have become the foundation for national and international climate-related
disclosure requirements — including as the global baseline set by the International Sustainability Standards Board’s
general sustainability-related and climate-related disclosure standards — and have driven far greater consistency in
companies’ climate-related reporting. In short, the Task Force’s work has been an unequivocal success.

The success of the TCFD’s recommendations can be demonstrated by the 19 jurisdictions, accounting for close to 60% of
global 2022 GDP, with final or proposed TCFD-aligned disclosure requirements. Additionally, the Task Force has seen over
4,800 organizations indicate their support for the TCFD’s recommendations, ranging from companies and civil society to
governments.

However, more needs to be done. As this report describes, although companies continue to make progress in their
disclosures, significant gaps in data remain. In particular, reporting the impact of climate change on companies’
businesses, strategies, and financial planning is still lagging behind.

To help address those gaps, the Climate Data Steering Committee recommended the development of a global, open
repository for climate transition-related data: the Net-Zero Data Public Utility. It will provide free, public access to a
central source of emissions and targets information, in line with the TCFD recommended disclosures on metrics and
targets — a major step forward in the comparability and availability of data, building on work that the Task Force has led.

I’ve been honored to Chair the TCFD for these eight years and am grateful to the Task Force members who have
dedicated themselves to its success. On behalf of us all, I want to thank you and the Financial Stability Board, its Chairs,
and its Secretariat for recognizing the need for this work and for their steadfast support to make it possible.

Sincerely,

Michael R. Bloomberg
The Task Force on Climate-related Financial Disclosures

Executive Summary
In June 2017, the Financial Stability Board’s setters to use the TCFD recommendations
Task Force on Climate-related Financial in developing climate-related disclosure
Disclosures (Task Force or TCFD) released its requirements and concludes with the Task
final recommendations (2017 report), which Force’s view of insights gained over the past
provide a framework for companies and other eight years and areas that warrant continued
organizations to develop more effective climate- focus or further work by others.
related financial disclosures through their
existing reporting processes.1 In its 2017 report, Greater Alignment of Climate-Related
the Task Force emphasized the importance Financial Disclosure Regimes
of transparency in pricing risk — including In developing its recommendations, the Task
risk related to climate change — to support Force sought to balance the needs of the
informed, efficient capital-allocation decisions. users of disclosures with the challenges faced
by the preparers and was keenly aware of 1)
With the release of the Task Force’s
companies’ concerns that multiple climate-
recommendations and supporting
related disclosure frameworks increase
implementation guidance in 2017 and each
the administrative burden and cost of their
year thereafter, the FSB asked the Task Force
disclosure efforts and 2) investors and other
to continue its work — promoting adoption
users’ identification of non-comparable
of the TCFD framework; providing further
reporting by companies as a major obstacle to
guidance; supporting educational efforts;
incorporating climate-related issues into their
monitoring climate-related financial disclosure
financial decisions. In light of these concerns,
practices in terms of their alignment with the
the Task Force drew on existing climate-related
TCFD recommendations; and preparing annual
disclosure regimes to develop a singular,
status reports. During this time, the Task Force
accessible framework for climate-related financial
has issued five status reports — with this
disclosure that it believed would help existing
being its sixth and final report. In the months
disclosure regimes come into closer alignment
between this status report and the 2022 status
over time.
report, the Task Force has continued to see
significant momentum around adoption of and
support for its recommendations, including the The Task Force believes its recommendations,
International Sustainability Standards Board’s which provide a singular, accessible
(ISSB’s) release of its climate-related and general
framework for climate-related financial
sustainability-related disclosure standards —
disclosure, have helped existing disclosure
which are based on the TCFD recommendations.
regimes come into closer alignment over time.

Shortly after the release of the standards,

the FSB indicated that the ISSB standards The Task Force believes its recommendations
represent a culmination of the Task Force’s have been a key driver of greater consistency
work and that the TCFD would be disbanded among major climate-related disclosure regimes
upon release of its 2023 status report. that existed when the Task Force was created as
well as climate-related disclosure requirements
and standards that have been developed
more recently. For example, by 2019, several
This report describes companies’ progress in
major climate-related disclosure regimes had
making climate-related financial disclosures
incorporated the TCFD recommendations
and highlights some of the challenges they
into their requirements and guidance. 2 In
face in making such disclosures, including
addition, as described later in this report,
challenges with incorporating climate-related
several governments, regulators, and standard
risks into their financial statements. The report
setters have incorporated or drawn from the
also provides an update on significant actions
TCFD recommendations in developing climate-
by governments, regulators, and standard
related reporting requirements and standards,

1
In this report, the Task Force uses the term “companies” to refer to entities with public debt or equity as well as asset managers and asset
owners, including public- and private-sector pension plans, endowments, and foundations.
2
See Principles for Responsible Investment, “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework,” December 18, 2017;
Climate Disclosure Standards Board (now part of the IFRS Foundation), Framework for Reporting Environmental and Social Information, January
2022; CDP, “How CDP is aligned to the TCFD,” Accessed June 21, 2023; and Sustainability Accounting Standards Board (now part of the IFRS
Foundation), TCFD Implementation Guide, May 1, 2019.

ii
The Task Force on Climate-related Financial Disclosures

including the U.S. Securities and Exchange financial filings.6 Finally, the U.K. Financial
Commission (SEC), the U.K. Parliament, Reporting Council conducted a review of how
the European Commission, and the ISSB. 3 well companies explained the link between
Furthermore, the International Organization their net-zero targets and transition plans and
of Securities Commissions endorsed the their financial statements when there was a
ISSB standards and called on its 130 member reasonable expectation that there could be a
jurisdictions “to consider ways in which they material impact on the financial statements.7
might adopt, apply or otherwise be informed
by the ISSB standards within the context of The Task Force is encouraged by this focus as
their jurisdictional arrangements, in a way it aligns with its 2017 recommendation that
that promotes consistent and comparable companies provide climate-related financial
climate-related and other sustainability-related disclosures in their annual financial filings. With
disclosures for investors.”4 recent warnings from the Intergovernmental
Panel on Climate Change that many climate-
Increased Focus on Climate-Related Risks related risks are higher than previously
in Financial Filings assessed and losses and damages will increase
with each increment of warming (see Figure
Over the past several months, the Task Force
ES1), the Task Force believes an increasing
has noticed an increased focus on companies’
number of companies will need to incorporate
inclusion of climate-related financial
climate-related issues into their financial filings.8
information in their financial filings, including
in the financial statements. For example, A tangible example of the way in which rising
the U.S. SEC created a task force to identify global temperatures contribute to significant
potential violations including material gaps losses is through extreme weather events.
or misstatements in companies’ disclosure In 2022, natural disasters resulted in global
of climate-related risks under existing rules. 5 economic losses of $284 billion, of which less
In addition, the European Securities and than half — $125 billion — were covered by
Markets Authority included climate-related insurance.9 Since 2017, average annual insured
matters as one of its priorities for monitoring losses from natural disasters have been over
and assessing public companies’ compliance $110 billion, more than double the average
with relevant reporting requirements in 2022 of $52 billion over the previous five-year

Figure ES1
Intergovernmental Panel on Climate Change: Select Findings from Recent Report
Global warming will continue to increase in the near term.

Many changes in the climate system, including extreme

events, will become larger in the near term with increasing
global warming.

Multiple climatic and non-climatic risks will interact,

resulting in increased compounding and cascading
impacts becoming more difficult to manage.

Losses and damages will increase with increasing

global warming.
Source: Intergovernmental Panel on Climate Change, Synthesis Report of the IPCC Sixth Assessment Report, March 20, 2023.

3
U.S. Securities and Exchange Commission, “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures
for Investors,” March 21, 2022; U.K. Parliament, “Companies Act 2006 s414(CA),” (as amended), Accessed June 21, 2023; European Parliament
and European Council, Directive 2022/2464 as Regards Corporate Sustainability Reporting, December 14, 2022; IFRS Foundation, “ISSB Issues
Inaugural Global Sustainability Disclosure Standards,” June 26, 2023.
4
International Organization of Securities Commissions, “IOSCO Endorses the ISSB’s Sustainability-Related Financial Disclosures Standards,” July
25, 2023.
5
U.S. SEC, “Enforcement Task Force Focused on Climate and ESG Issues,” April 11, 2023.
6
European Securities and Markets Authority, European Common Enforcement Priorities for 2022 Annual Financial Reports, October 28, 2022.
7
Financial Reporting Council, CRR Thematic Review of Climate-Related Metrics and Targets, July 26, 2023.
8
Intergovernmental Panel on Climate Change, Synthesis Report of the IPCC Sixth Assessment Report, March 20, 2023.
9
Swiss Re Institute, “Natural Catastrophes and Inflation in 2022: A Perfect Storm,” March 29, 2023.

iii
The Task Force on Climate-related Financial Disclosures

period.10 With global temperatures continuing current disclosure practices and how they
to rise in the near term — leading to larger have evolved, the Task Force reviewed — using
extreme events, the Task Force emphasizes artificial intelligence (AI) technology — publicly
the importance of companies considering available reports for more than 1,350 large
the impact of climate change and associated companies in specific sectors around the world
mitigation and adaptation efforts on their over a three-year period. In addition, to gain
strategies and operations and disclosing related insight on asset managers and asset owners’
material information, including in their financial TCFD-aligned reporting practices, the Task
statements as appropriate. Such information Force reviewed publicly available reports of
is critical for investors, lenders, and insurance the top 50 asset managers and top 50 asset
underwriters to appropriately assess and price owners globally based on their assets under
climate-related risks and opportunities and management and conducted a survey. The
allocate capital. Task Force found the results of its reviews
and survey encouraging but believes 1) more
Climate-Related Financial Disclosure progress is needed to improve transparency
Practices 11 on the actual and potential impact of climate
Similar to previous status reports, this report change on companies and 2) more companies
provides an overview of current climate- need to consider the effects of climate-related
related financial disclosure practices in terms issues on their financial statements. Table
of their alignment with the Task Force’s ES1 summarizes the key themes and findings
recommendations. To better understand described in this year’s report.

Table ES1
Key Takeaways and Findings
The percentage of public companies disclosing TCFD-aligned information continues to grow,
but more progress is needed. For fiscal year 2022 reporting, 58% of companies disclosed in line
with at least five of the 11 recommended disclosures — up from 18% in 2020; however, only 4%
disclosed in line with all 11.

The percentage of companies reporting on climate-related risks or opportunities, board

oversight, and climate-related targets increased significantly — by 26, 25, and 24 percentage
points, respectively — between fiscal years 2020 and 2022.

Disclosure of climate-related financial information in financial filings is limited. On average for

fiscal year 2022, information aligned with the 11 recommended disclosures was four times more
likely to be disclosed in sustainability and annual reports than in financial filings.

The majority of jurisdictions with final or proposed climate-related disclosure requirements

specify that such disclosures be reported in financial filings or annual reports.

Over 80% of the largest asset managers and 50% of the largest asset owners reported in line
with at least one of the 11 recommended disclosures. Based on a review of publicly available
reports, nearly 70% of the top 50 asset managers and 36% of the top 50 asset owners disclosed
in line with at least five of the recommended disclosures.

Based on a 2022 TCFD survey, asset managers and asset owners indicated the top challenge to
climate-related reporting is insufficient information from investee companies. Asset managers
highlighted information from public companies as most challenging (62%), while asset owners
identified information on private investments (84%).11

10
Ibid.
11
Importantly, 93% of survey respondents indicated they had implemented the TCFD recommendations or planned to in the future. As a result, the
Task Force recognizes the survey results should not be extrapolated to a broader population of asset managers and asset owners.

iv
The Task Force on Climate-related Financial Disclosures

Conclusion and other capacity building efforts.12,13 As the

ISSB and other appropriate bodies continue to
Overall, the Task Force is encouraged by drive improvements in climate-related financial
companies’ progress in disclosing climate- disclosure and support companies’ efforts to
related financial information aligned with the make such disclosures, the Task Force believes it
TCFD recommendations and by the support of is especially important to recognize the dynamic
governments, regulators, and other authorities nature of climate-related (as well as broader
in using the recommendations as a basis to sustainability) issues and the need for ongoing
develop laws, rules, and standards on climate- assessment and adjustment, as appropriate, as
related financial disclosure. Nevertheless, practices continue to evolve.
the Task Force remains concerned that too
few companies are disclosing decision-useful Finally, the Task Force reflected on its
climate-related financial information — experiences and insights gained over the past
especially as it relates to the impact of climate eight years as well as areas that it believes
change on their businesses, strategies, and warrant continued focus or further work,
financial planning, which may hinder investors, which are described in the last section of
lenders, and insurance underwriters’ efforts the report and summarized in Box ES1 (p.
to appropriately assess and price climate- vi). It also considered the reasons why its
related risks. This is supported by the analysis voluntary climate-related financial disclosure
summarized in this report and previous status recommendations and overall framework were
reports as well as broader assessments on the well received by both the private sector and
state of climate change, including those in the the public sector, ultimately serving as the
Intergovernmental Panel on Climate Change’s foundation upon which several jurisdictional
March 2023 report. and international climate-related reporting
requirements and standards were built. The
With its work coming to a close with the release Task Force attributes the global spread of the
of this status report, the Task Force wishes TCFD recommendations to the support and
to commend the FSB on its leadership in willingness of thousands of companies to
establishing the TCFD as an industry-led task implement the recommendations on a voluntary
force to develop voluntary recommendations basis; the tremendous support from investors
on climate-related financial disclosure and for and others in asking companies to disclose
supporting its work to promote and monitor information in line with the recommendations;
adoption of the recommendations for the past and the FSB’s work to promote use of the TCFD
several years. In addition, the Task Force is recommendations by governments, regulators,
pleased that the ISSB has agreed to the FSB’s and standard setters as a basis for climate-
request to assume responsibility for monitoring related financial disclosure requirements.
progress on the state of climate-related Furthermore, the Task Force believes the
financial disclosures by companies as of next insights gained from its work could be useful for
year and support effective implementation of similar types of initiatives in the future.
its standards, including developing guidance

12
FSB, FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report, July 13, 2023.
13
IFRS Foundation, “IFRS Foundation Welcomes Culmination of TCFD Work and Transfer of TCFD Monitoring Responsibilities to ISSB from
2024,” July 10, 2023.

v
The Task Force on Climate-related Financial Disclosures

Box ES1
TCFD Major Milestones 2016–2023 and View on Future Work

TCFD Major Milestones 2016–2023

2016
March 2016: Consultation on Phase I Report
Task Force on Climate-Related Financial Disclosures—Phase I Report

Public Consultation Sought feedback on the scope and objectives of the Task Force’s work to
Phase 1 Report develop recommendations on climate-related financial disclosures.
1

Public Consultation December 2016: Consultation on TCFD Recommendations

TCFD Recommendations Sought feedback on the draft TCFD recommendations and engaged with users, preparers,
and other stakeholders in relevant industries and sectors around the world.
2017 100+ TCFD Supporters
2016–2017: Engagement with Over 2,700 Individuals in 43 Countries
Final TCFD Recommendations 128 Industry Interviews and 5 10 Webinars and 793
Focus Groups in 20 countries Attendees in 30 countries
TCFD Recommendations
Supported by 100+ CEOs 523 Responses on Public Outreach Events in
Consultations from 34 countries 13 countries
390 Investors Called on G20
Leaders to Support TCFD
June 2017: Final TCFD Recommendations
DRAFT – FOR DISCUSSION PURPOSES ONLY

Recommendations
Final Report

Recommendations of

Published final recommendations on climate-related financial disclosures along

the Task Force
on Climate-related
Financial Disclosures

with implementation guidance and a technical supplement on scenario analysis.

2018 ~500 TCFD Supporters Recommendations of the Task Force on Climate-related Financial Disclosures
June 2017

2017–2018: Conferences and Workshops Held to Drive Adoption

TCFD Knowledge Hub
Held two scenario analysis conferences Hosted three implementation workshops in
WBCSD TCFD Preparer in Europe and North America. Europe and Asia Pacific.
Forum Report
May 2018: TCFD Knowledge Hub
First TCFD Status Report
Launched the TCFD Knowledge Hub to help companies implement the
CDP, CDSB, and PRI Aligned TCFD recommendations.
with TCFD DRAFT – FOR DISCUSSION PURPOSES ONLY

September 2018: The Task Force’s First Status Report 2018 Status Report
DRAFT

Task Force on
Climate-related

2019 ~800 TCFD Supporters Included an overview of TCFD-aligned disclosure practices disclosure examples
Financial Disclosures:
Status Report

user case studies describing how TCFD-aligned information is used.

Japan TCFD Consortium
September 2018

The Task Force on Climate-related Financial Disclosures i

2018–2019: TCFD Implementation and Use Survey

Second TCFD Status Report
Surveyed preparers on implementing the TCFD recommendations and related challenges
and users on the usefulness, availability, and quality of TCFD-aligned disclosures.
European Commission
Guidelines in Line with TCFD
Recommendations June 2019: 2019 Status Report 2019 Status Report

Task Force on
Climate-related

Included an overview of TCFD-aligned disclosure practices disclosure examples

Financial Disclosures:
Status Report

WBCSD TCFD Preparer Forum Reports user case studies survey results insights on disclosing strategy resilience.
June 2019

The Task Force on Climate-related Financial Disclosures i

2020 1,500+ TCFD Supporters March 2020: User Survey on Decision-Useful Information
Surveyed expert users on most useful climate-related information for financial decision-
WBCSD TCFD Preparer Forum Report making. Expert users rated 60+ disclosure elements drawn from the TCFD framework.
Risk Management Guidance
October 2020: Guidance on Risk Management and Scenario Analysis Task Force on
Climate-related
Financial Disclosures

Scenario Analysis Guidance

Guidance on Risk Management
Integration and Disclosure

Issued guidance on 1) integrating climate-related issues into existing risk

Task Force on
Climate-related
Financial Disclosures
Guidance on Scenario Analysis
for Non-Financial Companies

management processes and disclosing relevant information and 2) conducting

Third TCFD Status Report
climate-related scenario analysis for non-financial companies. October 2020

Public Consultation: Forward-Looking

October 2020

Financial Sector Metrics October 2020: 2020 Status Report

Included an overview of TCFD-aligned disclosure practices disclosure examples
Task Force on
Climate-related
Financial Disclosures
2020 Status Report

2021 2,600+ TCFD Supporters insights from users on most useful TCFD-aligned information for financial
decision-making case studies by preparers regulatory developments.
WBCSD TCFD Preparer Forum Report
October 2020

2020–2021: Consultations on Metrics, Targets, and Transition Plans

Public Consultation: Metrics, Targets,
and Transition Plans Sought feedback on various forward-looking, Sought feedback on proposed
climate-related metrics for the financial sector guidance on metrics, targets, and
Metrics, Targets, and Transition in October 2020. transition plans in June 2021.
Plans Guidance
October 2021: 2021 Status Report
Updated Implementation Guidance
Task Force on
Climate-related
Financial Disclosures
2021 Status Report

Included an overview of TCFD-aligned disclosure practices disclosure

Fourth TCFD Status Report examples insights on disclosing financial impact of climate-related issues
regulatory developments. October 2021

FSB Report Encouraging Use of the

TCFD Framework October 2021: Guidance on Metrics, Targets, and Transition Plans Task Force on
Climate-related
Financial Disclosures
Guidance on Metrics, Targets,

and Updated Implementation Guidance

and Transition Plans

Task Force on
Climate-related

ISSB to Develop Standards Based

Financial Disclosures
Implementing the Recommendations
of the Task Force on Climate-related
Financial Disclosures

on TCFD Issued guidance on seven, core cross-industry metrics and transition plans
and updated implementation guidance to reflect industry developments. October 2021

Mexico TCFD Consortium October 2021

This document updates and supersedes the 2017 Annex "Implementing

the Recommendations of the Task Force on Climate-related Financial Disclosures"

Legend: TCFD Reports and Other Resources Support from Prepares, Users, and Official Bodies External Engagement

vi
The Task Force on Climate-related Financial Disclosures

Box ES1
TCFD Major Milestones 2016–2023 and View on Future Work (continued)

2022 3,900+ TCFD Supporters

February 2022: TCFD Workshop Presentation Series
Released a set of five presentations to support TCFD implementation.
U.S. SEC Proposed Rules
Leveraging TCFD
February and March 2022: Surveys on Reporting Trends and Challenges
ISSB Draft Standards Based on TCFD Sought input from asset managers and Sought input from preparers on TCFD
asset owners on reporting of climate- implementation over five-year period
EFRAG Draft Standards in Line
related information to clients and and from users on using TCFD-aligned
with TCFD
beneficiaries, respectively. information for decision-making.
Fifth TCFD Status Report
October 2022: 2022 Status Report
2023 4,850+ TCFD Supporters Included an overview of TCFD-aligned disclosure practices disclosure
Task Force on
Climate-related
Financial Disclosures
Overview

examples progress and challenges with TCFD implementation over past

five years users’ views of the usefulness of TCFD-aligned disclosures
ISSB Final Standards
regulatory developments. December 2022

First Set of Final EFRAG Standards

October 2023: The Task Force’s Last Status Report
Last TCFD Status Report Included an overview of TCFD-aligned disclosure practices disclosure Task Force on
Climate-related
Financial Disclosures
2023 Status Report

examples regulatory developments case studies by preparers

TCFD Disbanded
climate-related issues in financial statements insights gained over the
past eight years areas of continued focus and further work.
October 2023

Legend: TCFD Reports and Other Resources Support from Prepares, Users, and Official Bodies External Engagement

Areas of Continued Focus and Further Work

As part of reflecting on its work over the past eight years, the Task Force considered areas that it
believes warrant continued focus or further work by the ISSB or other appropriate bodies. These
areas are summarized below.

Ensuring interoperability of the ISSB standards with jurisdictional frameworks to support

consistent company reporting across jurisdictions and avoid the need for companies to report
through multiple venues.

Developing implementation guidance on topics such as climate-related physical risk assessment

and adaptation planning, climate-related scenario analysis at a sector or industry level, and Scope 3
GHG emissions measurement at a sector or industry level.

Continuing to focus on companies’ disclosure of the resilience of their strategies under

different climate-related scenarios, including a climate-related scenario aligned with the latest
international agreement on climate change.

Continuing to focus on decision-useful disclosure on other sustainability topics — such as

biodiversity, water, and social issues — and consider the linkages between climate-related and
other sustainability issues (for example, in the context of companies’ transition plans).

Developing a consistent climate-related financial disclosure framework for use by countries

and other sovereign entities. Consistent and comparable reporting by sovereigns would support
companies in preparing comprehensive TCFD-aligned disclosures and transition plans that
appropriately reflect their operating environment.

vii
 The Task Force on Climate-related Financial Disclosures

Contents
Letter from Michael R. Bloomberg i

Executive Summary ii

A. State of Climate-Related Financial Disclosures 1

1. TCFD-Aligned Reporting by Public Companies 2
2. TCFD-Aligned Reporting by Public Companies by Region 8
3. TCFD-Aligned Reporting by Asset Managers and Asset Owners 26

B. Financial Statement Considerations 50

1. General Factors Considered 52
2. Common Challenges Related to Climate Change and Financial Statements 56
3. Resources on Climate-Related Issues in Financial Statements 58
4. Examples of Climate-Related Disclosures in Financial Statements 59

C. Case Studies on Scope 3 GHG Emissions 63

1. Case Study by a Resources Company 65
2. Case Study by a Global Risk Assessment Firm 68
3. Case Study by a Global Automotive Group 71
4. Case Study by an Integrated Energy and Chemicals Company 73
5. Case Study by a Global Gaming, Hospitality, and Entertainment Company 77

D. TCFD-Aligned Requirements and Related Initiatives 80

1. Final and Proposed TCFD-Aligned Disclosure Requirements 83
2. Governmental, Regulatory, and Other Developments 86
3. Industry-Led Initiatives 87

E. Types of Financial Impact and Associated Drivers 89

1. Scope and Approach 91
2. Summary of Results 93
3. Case Studies on Financial Impact 97

F. Insights Gained and View on Future Work 108

1. Meeting the Remit from the FSB 109
2. Insights Gained from the Task Force’s Work 111
3. Areas of Continued Focus or Further Work 115

Appendix 1: Task Force Members 120

Appendix 2: Company Selection and AI Review Methodology 122

Appendix 3: AI Review Results by Industry 126

Appendix 4: Additional Information on Financial Impact 134

Appendix 5: Glossary 137

Appendix 6: References 139

A.
State of Climate-Related
Financial Disclosures
 The Task Force on Climate-related Financial Disclosures

A. State of Climate-Related Financial Disclosures

Consistent with previous status reports, the America, Middle East and Africa, and North
Task Force undertook a review of hundreds of America.15 These insights are described in
public companies’ reports for climate-related Section A.2. TCFD-Aligned Reporting by Public
financial information using artificial intelligence Companies by Region.
(AI) technology.14 The AI technology was used
to determine whether the reports include The Task Force also collected information on
information that appears to align with the Task reporting by asset managers and asset owners
Force’s recommendations. The Task Force has to their clients and beneficiaries, respectively,
received feedback that the baseline information as well as to a broader range of stakeholders.
on climate-related financial disclosures coming These organizations were excluded from the
out of its AI reviews is helpful for companies AI review because, in some cases, the types of
implementing the TCFD recommendations in reports needed for analysis are not publicly
understanding current practices. In addition, available. Instead, the Task Force conducted a
users, preparers, and others have expressed survey to gain insight into these organizations’
interest in understanding changes in climate- climate-related reporting practices to their
A.
State of Climate-Related related financial disclosures over time. clients and beneficiaries and reviewed the
Financial Disclosures largest asset managers and asset owners’
To assess the current state and evolution of publicly available reports to better understand
climate-related financial disclosures, the Task their climate-related reporting practices more
B.
Force used AI technology to review reports broadly. The results are described in Section
Financial Statement
Considerations
of more than 1,350 public companies over a A.3. TCFD-Aligned Reporting by Asset Managers
three-year period — fiscal years 2020, 2021, and Asset Owners.
and 2022 — as described in Section A.1.
C.
TCFD-Aligned Reporting by Public Companies.
Case Studies on Scope 3
In addition, given the growing number of
GHG Emissions
jurisdictions around the world using the TCFD
1. TCFD-ALIGNED REPORTING BY
recommendations in developing climate-related PUBLIC COMPANIES
D.
reporting requirements, the Task Force used the
TCFD-Aligned Requirements This subsection summarizes the scope and
AI technology to review fiscal year 2022 reports
and Related Initiatives approach used to review the alignment of
for a larger and more geographically diverse
public companies’ reporting for fiscal years
set of public companies (around 3,100). The
E. 2020, 2021, and 2022 with the Task Force’s
purpose of the review was to provide insights
Types of Financial Impact 11 recommended disclosures as well as the
on reporting practices at an industry level for
and Associated Drivers results and key findings from the review.16
each of five regions — Asia Pacific, Europe, Latin

F.
Insights Gained and View
on Future Work Key Takeaways
Appendices The percentage of companies disclosing TCFD-aligned information continues to grow, but more
progress is needed. For fiscal year 2022 reporting, 58% of companies disclosed information in line
with at least five of the 11 recommended disclosures — up from 18% in 2020; however, only 4%
disclosed in line with all 11.

The percentage of companies reporting on climate-related risks or opportunities, board oversight,

and climate-related targets increased significantly — by 26, 25, and 24 percentage points,
respectively — between fiscal years 2020 and 2022.

Disclosure of climate-related financial information in financial filings is limited. On average for fiscal
year 2022, information aligned with the 11 recommended disclosures was four times more likely to
be disclosed in sustainability and annual reports than in financial filings.

14
The Task Force gratefully acknowledges the work of Geoffrey Gunow, Weitingting Liu, Chuck-Hou Yee, Jennifer Shih, Shubham Chopra, Ryan
Berry, Shira Clement, Elizabeth Attah, Suzanne Szur, Nadia Humphreys, and Edo Schets from Bloomberg, L.P. on the AI technology review.
15
While Latin America generally includes Mexico, Mexico is included as part of North America for the purposes of this report.
16
In this report, references to reporting year(s) are to fiscal year(s) reporting, unless the context indicates otherwise.

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 The Task Force on Climate-related Financial Disclosures

Key Takeaways (continued)

In 2022, the most often disclosed recommended disclosure — at 71% of the companies reviewed —
was the metrics they use to assess their climate-related risks or opportunities.

The least disclosed recommended disclosure for all three years reviewed was the resilience
of companies’ strategies under different climate-related scenarios, with only 11% disclosing this
information in 2022.

Scope and Approach Figure A1

The Task Force reviewed financial filings, annual AI Review Population Size
reports, integrated reports, sustainability
A. reports, and other relevant reports of 1,365 Industry Number
State of Climate-Related
public companies from five regions in eight Banking 235
Financial Disclosures
industries (see Figure A1).17 Six of the eight Insurance 117
industries correspond to groups highlighted
B. Energy 205
in the Task Force’s 2017 report, as follows:
Financial Statement Banking, Insurance, Energy, Materials and Materials and Buildings 345
Considerations
Buildings, Transportation, and Agriculture, Transportation 126
Food, and Forest Products.18 The four non-
C. Agriculture, Food, and Forest Products 115
financial industries were identified as those
Case Studies on Scope 3 potentially most affected by climate change Technology and Media 91
GHG Emissions and the transition to a low-carbon economy. Consumer Goods 131
Beginning with the 2019 status report, the Task
D. Total 1,365
Force included two additional industries in its
TCFD-Aligned Requirements AI reviews to incorporate other large companies
and Related Initiatives that may be exposed to climate-related risks —
Technology and Media and Consumer Goods. recommended disclosures (see Table A1, p. 4). 22
E. It is important to note that the AI technology
Types of Financial Impact For this status report and the previous two, used for this year’s review is different from the
and Associated Drivers the Task Force sought to maintain as much AI technology used for the previous two status
consistency as possible with the final review reports. As such, direct comparisons between
F. population used in the 2020 status report.19 this year’s AI review results and previous years’
Insights Gained and View As such, the Task Force began with an initial results should not be made. More information
on Future Work review population of 1,434 companies that on the methodology is provided in Appendix 2:
were included in the AI review for the 2022 Company Selection and AI Review Methodology.
Appendices status report. 20 The final population used for
this year’s AI review was reduced to 1,365 after
accounting for companies that no longer existed Importantly, the AI review was not designed
or did not have reports available in English for to assess the quality of companies’ climate-
all three years. 21 The AI technology was used related financial disclosures, but rather to
to review more than 19,000 reports from the provide an indication of the alignment of
1,365 companies and determine whether the existing disclosures with the Task Force’s 11
reports included information that appeared to recommended disclosures.
align with one or more of the Task Force’s 11

17
Other relevant reports include those specifically focused on climate change or the TCFD recommendations.
18
TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017.
19
TCFD, 2020 Status Report, October 29, 2020.
20
TCFD, 2022 Status Report, October 13, 2022.
21
Because the AI technology cannot process reports in languages other than English, the AI review population has a higher representation of
international companies and those with large English-speaking populations than it would if non-English reports could be assessed. The regional
distribution of companies in the AI review population is provided in Figure A6 (p. 7). In addition, the AI technology reviewed the reports of all
companies included in the population for TCFD-aligned information regardless of the materiality of the information.
22
The Task Force used AI technology to perform an automated review of more than 1,350 companies’ public reports. Performing such a review
“manually” through human reviewers would take thousands of hours, which would not be feasible for the Task Force.

3
 The Task Force on Climate-related Financial Disclosures

Table A1
TCFD Recommendations and Supporting Recommended Disclosures

Governance Strategy Risk Management Metrics and Targets

Disclose the company’s Disclose the actual and Disclose how the Disclose the metrics and
governance around potential impacts of company identifies, targets used to assess
climate-related risks and climate-related risks assesses, and manages and manage relevant
opportunities. and opportunities on the climate-related risks. climate-related risks and
company’s businesses, opportunities where such
strategy, and financial information is material.
planning where such
information is material.

a) D
 escribe the board’s a) D
 escribe the climate- a) D
 escribe the company’s a) D
 isclose the metrics used
oversight of climate- related risks and processes for identifying by the company to assess
related risks and opportunities the and assessing climate- climate-related risks
opportunities. company has identified related risks. and opportunities in line
A. over the short, medium, with its strategy and risk
State of Climate-Related and long term. management process.
Financial Disclosures
b) D
 escribe management’s b) D
 escribe the impact of b) D
 escribe the company’s b) D
 isclose Scope 1, Scope
role in assessing and climate-related risks and processes for managing 2, and, if appropriate,
B. managing climate-related opportunities on the climate-related risks. Scope 3 greenhouse gas
Financial Statement risks and opportunities. company’s businesses, (GHG) emissions, and the
Considerations strategy, and financial related risks.
planning.

C. c) Describe the resilience of c) Describe how processes c) Describe the targets

Case Studies on Scope 3 the company’s strategy, for identifying, used by the company to
GHG Emissions taking into consideration assessing, and managing manage climate-related
different climate-related climate-related risks risks and opportunities
scenarios, including a 2°C are integrated into the and performance against
D.
or lower scenario. company’s overall risk targets.
TCFD-Aligned Requirements
management.
and Related Initiatives

E.
Summary of AI Review Results Disclosure of climate-related information
Types of Financial Impact
and Findings has increased since 2020, but more progress
and Associated Drivers
is needed. As shown on the left in Box A1, the
This subsection summarizes the results and
average number of recommended disclosures
F. findings from the AI review of public companies’
addressed per company in 2020 was 3.2, rising
Insights Gained and View reports for fiscal years 2020, 2021, and 2022
to 5.3 in 2022. In addition, 58% of companies
on Future Work in terms of alignment with the Task Force’s
disclosed in line with at least five of the 11
11 recommended disclosures. Overall, the
recommended disclosures in 2022 — up from
Appendices percentage of companies disclosing information
18% in 2020; however, only 4% disclosed in line
in line with the Task Force’s recommendations
with all 11.
steadily increased each year, as did the amount
of TCFD-aligned information companies disclosed.

Box A1
AI Review Results for Fiscal Years 2020–2022
Average Number of Disclosures per Company Percent of Companies Disclosing
At least 1
90% At least 5
58% At least 7
5.3 64% All 11
4.6 39%
3.2 4%
18%
8% 0%
FY 2020 FY 2021 FY 2022 1 3 5 7 9 11
Average Number of Recommended Disclosures Number of Recommended Disclosures

Base size: 1,365 Legend: FY 2020 FY 2022 Base size: 1,365

4
 The Task Force on Climate-related Financial Disclosures

Companies’ disclosure of their climate-related Reporting on climate-related metrics

risks and opportunities grew more than any was higher than any other recommended
other recommended disclosure between 2020 disclosure. Just over 70% of the companies
and 2022. While the percentage of disclosure reviewed disclosed the metrics they use
for each of the Task Force’s 11 recommended to assess their climate-related risks and
disclosures increased between 2020 and 2022, opportunities (Metrics and Targets a), followed by
as shown in Figure A2, the largest increase in reporting on greenhouse gas (GHG) emissions
reporting — at 26 percentage points — was and climate-related targets — both at 66%.
on companies’ descriptions of their climate- Notably, the percent of companies reporting
related risks or opportunities (climate-related on their climate-related targets increased by 24
issues). This was followed closely by companies’ percentage points between 2020 and 2022.
reporting on their boards’ oversight of climate-
related issues at 25 percentage points.

Figure A2
TCFD-Aligned Disclosures by Fiscal Year for 2020–2022
A. Pt. Change
State of Climate-Related Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
Financial Disclosures Governance a) Board Oversight 25 39%
56%
B. 64%
Financial Statement b) Management’s Role 21 23%
Considerations 37%
44%
Strategy a) R
 isks and Opportunities 26 36%
C.
55%
Case Studies on Scope 3
62%
GHG Emissions
b) Impact on Organization 17 26%
37%
D. 43%
TCFD-Aligned Requirements 4%
c) Resilience of Strategy 7
and Related Initiatives 9%
11%
E. Risk Management a) R
 isk ID and Assessment 22 14%
Types of Financial Impact Processes 26%
and Associated Drivers 36%
b) R
 isk Management Processes 20 19%
F. 33%
39%
Insights Gained and View
on Future Work c) Integration into Overall Risk 14 11%
Management 21%
25%
Appendices
Metrics and Targets a) C
 limate-Related Metrics 13 58%
66%
71%
b) S
 cope 1,2,3 GHG Emissions 16 50%
60%
66%
c) C
 limate-Related Targets 24 42%
59%
66%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 1,365

Companies disclosed TCFD-aligned information in sustainability and annual reports

information primarily in sustainability and based on fiscal year 2022 reporting. Notably,
annual reports. While companies disclosed however, there was a significant increase in
information in multiple types of reports (e.g., companies including TCFD-aligned information
financial filings, annual reports, integrated in their financial filings over the three years
reports, and sustainability reports), they were reviewed. Specifically, companies on average
four times more likely to disclose TCFD-aligned were eight times more likely to disclose TCFD-

5
 The Task Force on Climate-related Financial Disclosures

aligned information in their sustainability and at 5.8 (see Figure A3). In addition, companies
annual reports than in their financial filings for in the energy industry had the highest levels
fiscal year 2020 reporting. In addition, across of disclosure on seven of the 11 recommended
the 11 recommended disclosures, companies disclosures (see Figure A4). 24 The insurance
were more likely to include the metrics companies and banks reviewed had the highest
they use to assess climate-related risks and levels of reporting on the Risk Management
opportunities in line with their strategy and recommendation, which may be attributable to
risk management process (Metrics and Targets financial regulators’ general emphasis on risk
a) in sustainability and annual reports than in management processes.
financial filings.

The resilience of companies’ strategies under

Figure A3
different climate-related scenarios had the
lowest level of disclosure in all three years
Average Number of Disclosures
reviewed. Only 11% of the companies reviewed per Company
reported in line with this recommended Industry Number
disclosure (Strategy c) for fiscal year 2022.
Energy 6.3
Based on a survey conducted last year of over
A.
200 companies, nearly 90% of them rated this Materials and Buildings 5.8
State of Climate-Related
Financial Disclosures recommended disclosure as somewhat difficult Insurance 5.2
or very difficult to implement, which may help
Agriculture, Food, and Forest Products 5.1
explain why its disclosure is low. 23
B. Transportation 5.1
Financial Statement Energy companies disclosed more information Banking 5.0
Considerations
than companies in the other seven industries.
Consumer Goods 4.1
Energy companies, on average, reported on 6.3
C. of the 11 recommended disclosures in 2022, Technology and Media 3.7
Case Studies on Scope 3 followed by materials and buildings companies
GHG Emissions

D.
Figure A4
TCFD-Aligned Requirements
and Related Initiatives Disclosure by Industry: 2022 Fiscal Year Reporting
Percent of Companies1

d lo 15) ,
d
s t oo
E.

n
7)

5)
Tr ing and

Te ore e, F

)
io

Go sum (91
5)

(11

(1
34

t
)
Types of Financial Impact
23

M gy
05

ta

1)
ia
s(

s( r
ce

il d l s

d tu
g(

od e
13
(2

6 ) or

ed
a
and Associated Drivers
n

l
in

an o
gy

B u e ri

an i cu
(12 sp
ra

n
F
nk

er

ch
su

an
at

n
Recommendation Recommended Disclosure

Ag
Ba

En

Co
In

F. M
Governance a) B
 oard Oversight 57% 65% 76% 71% 70% 57% 43% 58%
Insights Gained and View
on Future Work b) M
 anagement’s Role 40% 44% 57% 46% 44% 39% 32% 32%

Strategy a) R
 isk and Opportunities 69% 68% 70% 66% 55% 57% 38% 46%
Appendices
b) Impact on Organization 35% 45% 58% 46% 40% 49% 27% 28%

c) R
 esilience of Strategy 9% 13% 16% 12% 6% 17% 5% 8%

Risk Management a) R
 isk ID and Assessment Proc. 40% 44% 42% 40% 30% 36% 14% 22%

b) R
 isk Management Processes 46% 51% 45% 38% 37% 35% 20% 29%

c) Integration into Risk Mgmt. 38% 36% 32% 22% 21% 18% 7% 11%

Metrics and Targets a) Climate-Related Metrics 61% 56% 81% 81% 70% 71% 67% 62%

b) S
 cope 1,2,3 GHG Emissions 58% 53% 77% 75% 64% 64% 65% 54%

c) C
 limate-Related Targets 47% 50% 80% 77% 73% 69% 56% 63%

1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting

23
See TCFD, 2022 Status Report, October 13, 2022 (pp. 57–64).
24
The AI review results for each industry for the past three fiscal years are provided in Appendix 3: AI Review Results by Industry.

6
 The Task Force on Climate-related Financial Disclosures

Companies in the consumer goods and and Targets c) — which is 35 percentage points
technology and media industries disclosed higher than companies in Asia Pacific and 32
less than companies in other industries. percentage points higher than companies
As noted previously, these two industries in North America (see Figure A6). Please see
were added to the AI review to incorporate Section A.2. TCFD-Aligned Reporting by Public
other large companies that may be exposed to Companies by Region for results at an industry
climate-related risks whereas the other four level for each region.
non-financial industries were included because
they are most likely to be affected by climate
change. This may explain why companies in
Figure A5
these two industries, on average, have the
lowest levels of disclosure.
Average Number of Disclosures
per Company
Companies in Europe had the highest level
Region Number
of reporting for each of the 11 recommended
disclosures. The European companies Europe 7.2
reviewed, on average, reported on 7.2 of the Asia Pacific 5.0
11 recommended disclosures (see Figure North America 4.6
A.
A5). Notably, 92% of European companies
State of Climate-Related Latin America 4.2
Financial Disclosures
disclosed their climate-related targets (Metrics
Middle East and Africa 3.8

B.
Financial Statement
Considerations Figure A6
Disclosure by Region: 2022 Fiscal Year Reporting
C. Percent of Companies1
Case Studies on Scope 3 Latin Middle East North
Asia Pacific Europe America and Africa America
GHG Emissions Recommendation Recommended Disclosure (279) (324) (38) (65) (659)

Governance a) B
 oard Oversight 62% 71% 53% 45% 65%
D.
TCFD-Aligned Requirements b) M
 anagement’s Role 33% 60% 34% 22% 42%
and Related Initiatives
Strategy a) R
 isk and Opportunities 53% 76% 61% 38% 61%

E. b) Impact on Organization 41% 59% 39% 29% 37%

Types of Financial Impact
and Associated Drivers c) R
 esilience of Strategy 11% 24% 3% 6% 6%

Risk Management a) R
 isk ID and Assessment Proc. 31% 65% 24% 22% 26%
F.
Insights Gained and View b) R
 isk Management Processes 41% 56% 34% 28% 32%
on Future Work
c) Integration into Risk Mgmt. 20% 35% 26% 20% 22%

Appendices Metrics and Targets a) Climate-Related Metrics 80% 92% 55% 63% 58%

b) S
 cope 1,2,3 GHG Emissions 73% 88% 50% 58% 54%

c) C
 limate-Related Targets 57% 92% 42% 48% 60%

1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting

Larger companies are more likely to disclose The highest level of reporting by larger
TCFD-aligned information than smaller companies was on climate-related targets
ones. On average, companies with a market — at 85%, followed closely by climate-related
capitalization of at least $12.3 billion reported metrics at 83% (see Figure A8, p. 8). Notably,
on 6.7 of the 11 recommended disclosures medium-sized companies (market capitalization
in fiscal year 2022 (see Figure A7, p. 8), while between $3.2 billion and $12.3 billion) and
smaller companies on average — those with smaller companies (market capitalization less
less than $3.2 billion in market capitalization — than $3.2 billion) reported most frequently
reported on 3.9 recommended disclosures. on climate-related metrics — at 72% and 59%,
The Task Force notes that this finding has been respectively. Their reporting on climate-related
consistent in all six of its status reports. targets was at least seven percentage points

7
 The Task Force on Climate-related Financial Disclosures

lower than the levels of reporting on their

Figure A7
climate-related metrics. A possible reason
why larger companies reported on climate- Average Number of Disclosures
related targets as much as they reported on per Company
climate-related metrics could be that a greater
Market Capitalization Number
proportion of larger companies have made
net-zero or other GHG emissions reduction >$12.3B 6.7
commitments. $3.2–12.3B 5.3
<$3.2B 3.9

Figure A8
Disclosure by Company Size: 2022 Fiscal Year Reporting
Percent of Companies1
<$3.2B Market $3.2B–12.3B Market >$12.3B Market
Capitalization Capitalization Capitalization
Recommendation Recommended Disclosure (462) (448) (455)
A. Governance a) B
 oard Oversight 49% 65% 80%
State of Climate-Related
Financial Disclosures b) M
 anagement’s Role 27% 44% 60%

Strategy a) R
 isk and Opportunities 50% 63% 74%
B.
Financial Statement b) Impact on Organization 30% 41% 58%
Considerations c) R
 esilience of Strategy 5% 12% 16%

Risk Management a) R
 isk ID and Assessment Proc. 21% 36% 50%
C.
Case Studies on Scope 3 b) R
 isk Management Processes 29% 38% 51%
GHG Emissions
c) Integration into Risk Mgmt. 16% 24% 35%

D. Metrics and Targets a) Climate-Related Metrics 59% 72% 83%

TCFD-Aligned Requirements
and Related Initiatives b) S
 cope 1,2,3 GHG Emissions 52% 67% 79%

c) C
 limate-Related Targets 48% 65% 85%
E.
Types of Financial Impact 1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting
and Associated Drivers

F.
Insights Gained and View 2. TCFD-ALIGNED REPORTING BY PUBLIC The purpose of the review was to provide
on Future Work COMPANIES BY REGION insight on TCFD-aligned reporting practices at
an industry level for each region — Asia Pacific,
Appendices As noted previously, given the growing number Europe, Latin America, Middle East and Africa,
of jurisdictions around the world using the TCFD and North America. The scope and approach
recommendations in developing climate-related used for the review is described below, followed
reporting requirements, the Task Force also by a summary of the AI review results and key
used the AI technology to review fiscal year 2022 findings for the expanded population overall
reports for a larger and more geographically and for each region. At the end of the section,
diverse set of public companies (around 3,100), several examples of TCFD-aligned disclosure are
referred to as the expanded population. included.

Key Takeaways
Companies in Asia Pacific and Europe had higher levels of reporting on climate-related metrics
than those in North America. For example, 78% of companies in Europe and 49% in Asia Pacific
reported their climate-related metrics, while only 35% did so in North America.

Insurance companies had some of the highest levels of disclosures in Latin America and Europe but
some of the lowest levels in Asia Pacific and the Middle East and Africa.

8
 The Task Force on Climate-related Financial Disclosures

Key Takeaways (continued)

Across all five regions, technology and media companies had significantly lower levels of disclosure
compared to companies in other industries.

Across all five regions and industries, the resilience of companies’ strategies under different
climate-related scenarios had the lowest level of disclosure. In all regions except Europe, there was
at least one industry in which none of the companies reviewed reported this information.

Scope and Approach

Figure A9
To review reports of the expanded population
Average Number of Disclosures
of companies, the Task Force used the same
AI technology and followed the same general
per Company
approach described in the previous section. Industry Number
A. The one difference relates to the scope of
State of Climate-Related Energy 4.9
public companies included in the review. The
Financial Disclosures Materials and Buildings 4.7
Task Force began with the 1,365 companies
used in the review of the past three fiscal years Insurance 3.7
B. of reporting, which was originally identified
Financial Statement Banking 3.7
using specific size thresholds so that only the
Considerations Transportation 3.3
largest companies were included. 25 To achieve
statistically significant AI review results at an Agriculture, Food, and Forest Products 3.0
C. industry level for each region, the Task Force Consumer Goods 2.8
Case Studies on Scope 3 had to supplement the AI review population
GHG Emissions with an additional 1,748 companies, which
Technology and Media 1.7

required including companies of all sizes. In

D. addition, because the AI technology cannot
TCFD-Aligned Requirements
reports. Importantly and as noted in this status
process reports in languages other than report and previous ones, larger companies
and Related Initiatives English, the number of companies that could be are more likely to disclose climate-related
included in the reviews for Asia Pacific, Europe, information than smaller ones. 27 Consequently,
E. Latin America, and the Middle East and Africa the overall AI review results for the expanded
Types of Financial Impact was smaller than it otherwise would be. In fact,
and Associated Drivers
population are lower than the analogous results
there were not enough companies with reports described in the previous section, with the
in English to provide statistically significant exception of Strategy c) for companies in Latin
F. AI review results for two industries in Latin America where the AI review results are the
Insights Gained and View America. 26 same in the two populations.
on Future Work
Summary of Overall AI Review Results In general, the overall AI review results for the
Appendices for Expanded Population expanded population follow patterns similar
For companies in the expanded AI review to the overall AI review results described in
population, Figure A9, Figure A10 (p. 10), and the previous section. For example, companies
Figure A11 (p. 10) provide an overview of the in the energy and materials and buildings
overall AI review results and serve as a basis of industries, on average, disclosed on more of the
comparison for the AI review results for each 11 recommended disclosures than companies
region. Figure A9 provides the average number in the other industries; and companies in the
of recommended disclosures per company for consumer goods and technology and media
each industry for fiscal year 2022 reporting, industries, on average, disclosed on the fewest.
while Figure A10 (p. 10) and Figure A11 (p. 10) In addition, companies in Europe had the
provide the overall AI review results for each of highest level of reporting for each of the 11
11 recommended disclosures by industry and recommended disclosures.
region, respectively, based on fiscal year 2022

25
See Appendix 2: Company Selection and AI Review Methodology for more information on the approach for selecting the review population.
26
In Latin America, there were not enough companies with reports in English for the consumer goods and technology and media industries to
achieve statistically significant results at an 80% confidence level. This resulted in excluding three companies from Latin America that were part
of the 1,365 companies used in the review of the past three fiscal years of reporting and an expanded population of 3,110 companies.
27
See Figure A7 (p. 8) in this report; TCFD, 2022 Status Report, October 13, 2022 (p. 18); TCFD, 2021 Status Report, October 14, 2021 (p. 37); and
TCFD, 2020 Status Report, October 29, 2020 (p. 13).

9
 The Task Force on Climate-related Financial Disclosures

Figure A10
Disclosure by Industry for Expanded Population: 2022 Fiscal Year Reporting
Percent of Companies1

M hn o t ( 3 7 o d ,

nd
n

0)
o
)
37

tio
s d
3)

re , F

Co ia ( 3 g y a
6)

Tr ing an
( 3 nsp (5 4
0)
(2

Fo re
ta
46

Go sum 2)

)
3

s r
59
ce

s
il d al s

d l tu

8
e d lo

od e
g(

(4

o r

(3
n
in

gy

B u te ri

an i cu
ra
nk

er
su

n
r
23

c
a
a
Recommendation Recommended Disclosure

Ag
Ba

En

Te
M
In
Governance a) B
 oard Oversight 41% 43% 58% 61% 40% 31% 19% 35%

b) M
 anagement’s Role 28% 28% 38% 35% 24% 19% 13% 19%

Strategy a) R
 isk and Opportunities 52% 45% 54% 55% 33% 32% 17% 28%

b) Impact on Organization 23% 27% 38% 35% 24% 25% 12% 16%

c) R
 esilience of Strategy 5% 6% 10% 9% 4% 6% 2% 4%
A.
State of Climate-Related Risk Management a) R
 isk ID and Assessment Proc. 26% 29% 27% 29% 18% 15% 6% 13%
Financial Disclosures
b) R
 isk Management Processes 32% 32% 32% 29% 23% 19% 9% 21%
B.
c) Integration into Risk Mgmt. 25% 21% 20% 16% 13% 9% 4% 8%
Financial Statement
Considerations Metrics and Targets a) Climate-Related Metrics 43% 40% 58% 63% 43% 42% 30% 43%

b) S
 cope 1,2,3 GHG Emissions 40% 37% 54% 57% 39% 36% 28% 38%
C.
Case Studies on Scope 3 c) C
 limate-Related Targets 33% 33% 57% 61% 44% 39% 25% 38%
GHG Emissions
1. The numbers in parentheses represent the size of the review population. Legend:
D. Low to high percentage of reporting

TCFD-Aligned Requirements
and Related Initiatives

E. Figure A11
Types of Financial Impact
Disclosure by Region for Expanded Population: 2022 Fiscal Year Reporting
and Associated Drivers
Percent of Companies1

F. Latin Middle East North

Insights Gained and View Asia Pacific Europe America and Africa America
on Future Work Recommendation Recommended Disclosure (724) (616) (111) (271) (1,388)

Governance a) B
 oard Oversight 37% 55% 34% 22% 44%
Appendices
b) M
 anagement’s Role 18% 47% 20% 10% 25%

Strategy a) R
 isk and Opportunities 29% 56% 37% 17% 45%

b) Impact on Organization 24% 44% 18% 12% 22%

c) R
 esilience of Strategy 5% 16% 3% 2% 3%

Risk Management a) R
 isk ID and Assessment Proc. 15% 47% 12% 10% 14%

b) R
 isk Management Processes 24% 43% 25% 15% 20%

c) Integration into Risk Mgmt. 13% 27% 13% 8% 12%

Metrics and Targets a) Climate-Related Metrics 49% 78% 34% 31% 35%

b) S
 cope 1,2,3 GHG Emissions 45% 73% 31% 27% 31%

c) C
 limate-Related Targets 34% 73% 38% 22% 38%

1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting

10
 The Task Force on Climate-related Financial Disclosures

Asia Pacific companies included in each of eight industry

groups along with an indication of the size of the
The AI review of companies headquartered in companies included based on their total assets
the Asia Pacific region included 724 companies for financial institutions and total revenue for
across 18 jurisdictions. The two jurisdictions non-financial companies. Financial institutions
with the largest number of companies included ranged in size from about $600 million to
in the review were China with 161 companies around $5.7 trillion in assets, and non-financial
and Japan with 141 companies as shown in Box companies ranged in size from about $100
A2. This figure also describes the number of million to nearly $500 billion in revenue.

Box A2
Demographics of Companies Reviewed in Asia Pacific
Number and Size Range by Industry Number by Jurisdiction1

Total Assets ($US billion) China 161

A. Financial Institutions Number Min Median Max Japan 141
State of Climate-Related Taiwan 75
Banking 92 $5.0 $166 $5,742
Financial Disclosures
Insurance 66 $0.6 $9 $2,230 Hong Kong 70
Australia 57
B.
India 55
Financial Statement Revenue ($US billion)
Considerations Thailand 32
Non-Financial Companies Number Min Median Max
Indonesia 30
Ag., Food, and Forest Products 94 $0.3 $4 $73
C. Malaysia 25
Consumer Goods 96 $1.2 $3 $156
Case Studies on Scope 3 South Korea 20
Energy 88 $0.1 $9 $493
GHG Emissions Singapore 20
Materials and Buildings 99 $0.3 $7 $172
Philippines 13
D. Technology and Media 96 $0.7 $5 $235
Pakistan 11
TCFD-Aligned Requirements Transportation 93 $0.8 $8 $275
New Zealand 7
and Related Initiatives
Vietnam 3

E. 1. In addition, there were two companies from Bangladesh and one company each from Kazakhstan and Sri Lanka.
Types of Financial Impact
and Associated Drivers

F. Figure A12 shows jurisdictions where the

government or another authority has issued Figure A12
Insights Gained and View
on Future Work climate-related disclosure requirements TCFD-Aligned Disclosure
that incorporate or draw from the TCFD Requirements
recommendations. The governments or other For Jurisdictions in Asia Pacific
Appendices
authorities in jurisdictions shaded in light blue Legend
or dark blue have issued final climate-related
In Effect
disclosure requirements, while those shaded
Not in Effect
in dark gray have issued proposed disclosure
Proposed
requirements. The types of climate-related
disclosure requirements range from legislation None
that applies to public companies to guidelines
issued by a financial regulator that apply to only
select financial institutions. It is important to
note that the Task Force’s review of documents
is limited to those available in English. As a
result, Figure A12 may understate the number
of jurisdictions that have issued TCFD-aligned
disclosure requirements.
aligned information than companies in the
The AI review results for companies in Asia other industries, followed by banks and energy
Pacific are shown in Figure A13 (p. 12) and Figure companies. In addition, the highest level of
A14 (p. 12). Overall, companies in the materials reporting was on climate-related metrics (Metrics
and buildings industry disclosed more TCFD- and Targets a) for seven of the eight industries.

11
 The Task Force on Climate-related Financial Disclosures

Figure A13
TCFD-Aligned Disclosures by Industry for Fiscal Year 2022
Percent of Companies in Asia Pacific1

d l o 4) ,
a n h n o t (9 o d
n

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od e 6)
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99

G o s u m a (9
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an s (

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(9
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gy

B u te ri

an i cu
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nk

er
su

c
a

3)
Recommendation Recommended Disclosure

Ag
Ba

En

Co
Te
M
In
Governance a) B
 oard Oversight 53% 32% 45% 64% 30% 31% 15% 28%
b) M
 anagement’s Role 26% 11% 24% 30% 14% 14% 7% 14%
Strategy a) R
 isk and Opportunities 35% 26% 42% 52% 20% 18% 15% 23%
b) Impact on Organization 26% 12% 36% 39% 19% 27% 15% 17%
c) R
 esilience of Strategy 3% 3% 7% 12% 3% 4% 0% 5%
Risk Management a) R
 isk ID and Assessment Proc. 30% 14% 17% 30% 8% 11% 4% 8%
b) R
 isk Management Processes 39% 17% 27% 34% 20% 21% 13% 22%
A.
State of Climate-Related c) Integration into Risk Mgmt. 26% 11% 18% 16% 12% 9% 3% 7%
Financial Disclosures Metrics and Targets a) Climate-Related Metrics 68% 30% 61% 81% 31% 45% 30% 43%
b) S
 cope 1,2,3 GHG Emissions 63% 29% 58% 73% 26% 36% 29% 41%
B. c) C
 limate-Related Targets 35% 21% 41% 57% 28% 38% 21% 29%
Financial Statement
Considerations 1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting

C.
Case Studies on Scope 3
GHG Emissions Materials and buildings companies, on average,
reported in line with 5.1 of the 11 recommended Figure A14
D. disclosures. They also had the highest levels Average Number of Disclosures
TCFD-Aligned Requirements of reporting on eight of the 11 recommended per Company
and Related Initiatives disclosures, with the highest on climate-related Industry Number
metrics (Metrics and Targets a) at 81%, which was
Materials and Buildings 5.1
E. 31 percentage points higher than the average
Types of Financial Impact for the region as shown in Figure A11 (p. 10). Banking 4.2
and Associated Drivers Energy 4.1
On average, the banks reviewed reported in line
with 4.2 of the 11 recommended disclosures Agriculture, Food, and Forest Products 2.8
F.
Insights Gained and View — the second highest of the eight industries Consumer Goods 2.4
on Future Work but closely followed by energy companies at
Transportation 2.3
4.1. In addition, banks had the highest levels
of reporting on the three recommended Insurance 2.2
Appendices
disclosures under the Risk Management Technology and Media 1.5
recommendation — identifying and assessing
climate-related risks; processes for managing
climate-related risks; and how these processes when compared with the banks reviewed. For
are integrated into overall risk management. example, 68% of the banks reported on their
climate-related metrics while only 30% of the
Technology and media companies, on
insurance companies did so.
average, reported on the fewest number of
recommended disclosures — at only 1.5. This
is consistent with the AI review results for Europe
the industry overall as shown in Figure A9 (p.
The AI review of companies headquartered
9). Insurance companies also had relatively
in Europe included 616 companies across 37
low levels of reporting — at 2.2 of the 11
jurisdictions. The three jurisdictions with the
recommended disclosures on average. Notably,
largest number of companies were the U.K.
insurance companies overall — those reviewed
with 91 companies, Germany with 65, and
across all five regions — had relatively high
Switzerland with 53, as shown in Box A3 (p.
levels of reporting, as shown in Figure A9 (p. 9).
13). This figure also describes the number of
In addition, the insurance companies reviewed
companies included based on their total assets
had significantly lower levels of reporting

12
 The Task Force on Climate-related Financial Disclosures

Box A3
Demographics of Companies Reviewed in Europe
Number and Size Range by Industry Number by Jurisdiction1

Total Assets ($US billion) United Kingdom 91

Financial Institutions Number Min Median Max Germany 65

Banking 87 $12 $88 $2,949 Switzerland 53

Insurance 46 $2 $68 $1,002 France 49

Italy 45
Revenue ($US billion) Sweden 41
Non-Financial Companies Number Min Median Max Norway 29
Ag., Food, and Forest Products 80 $0.7 $3.0 $99 Finland 26
Consumer Goods 78 $0.9 $5.0 $92 Spain 23
Energy 78 $1.4 $12.0 $381 Netherlands 21
Materials and Buildings 95 $0.4 $9.0 $256 Denmark 21
A. Technology and Media 79 $0.1 $0.5 $27 Russia 18
State of Climate-Related Poland 18
Transportation 73 $0.8 $4.0 $294
Financial Disclosures
Austria 16
Turkey 15
B.
Financial Statement 1. In addition, there were 14 companies in both Belgium and Ireland; ten companies in Greece; seven in Portugal; six in Romania;
Considerations five in Luxembourg; four in Croatia; three companies each in the Czech Republic, Cyprus, and Slovenia; two companies in each of
the following jurisdictions: Estonia, Hungary, Lichtenstein, and Lithuania; and one company in each of the following jurisdictions:
Bulgaria, Faroe Islands, Isle of Man, Jersey, Malta, Monaco, Serbia, and Ukraine.
C.
Case Studies on Scope 3
GHG Emissions for financial institutions and total revenue for
non-financial companies. Financial institutions Figure A15

D. ranged in size from about $2 billion to nearly $3 TCFD-Aligned Disclosure

TCFD-Aligned Requirements trillion in assets, and non-financial companies Requirements
and Related Initiatives ranged in size from about $100 million to nearly For Jurisdictions in Europe
$400 billion in revenue.
Legend
E.
As described in this status report and previous In Effect
Types of Financial Impact
and Associated Drivers ones, European companies on average have Not in Effect
higher levels of TCFD-aligned reporting Proposed

F.
than companies in the other four regions. 28 None
Insights Gained and View European companies, governments, and
on Future Work regulators have focused on climate-related
reporting issues for several years, well before
the Task Force published its recommendations,
Appendices of jurisdictions that have issued TCFD-aligned
which may explain the higher levels of
reporting. Figure A15 shows jurisdictions where disclosure requirements.
the government or another authority has
Most jurisdictions in Europe have final
issued climate-related disclosure requirements
requirements that are already in effect. The
that incorporate or draw from the TCFD
European Union (EU) issued requirements
recommendations. The governments or other
in late 2014 for large companies to disclose
authorities in jurisdictions shaded in light blue
information on environmental (including
have issued final climate-related disclosure
climate-related) and other matters beginning
requirements, while those shaded in light
in their 2017 financial year reports. 29 More
gray have not issued either proposed or final
recently, the EU issued a directive on corporate
disclosure requirements. It is important to
sustainability reporting that builds on the
note that the Task Force’s review of documents
requirements issued in 2014. The U.K. and
is limited to those available in English. As a
Switzerland have also issued climate-related
result, Figure A15 may understate the number
disclosure requirements.

28
See Figure A11 (p. 10) in this report; TCFD, 2022 Status Report, October 13, 2022 (p. 16); TCFD, 2021 Status Report, October 14, 2021 (pp. 34–35);
and, TCFD 2020 Status Report, October 29, 2020 (p. 14).
29
See European Parliament and European Council, Non-Financial Reporting Directive, October 22, 2014. On June 17, 2019, the European
Commission published additional Guidelines on Reporting Climate-Related Information, which referenced the TCFD recommendations.

13
 The Task Force on Climate-related Financial Disclosures

The AI review results for Europe are shown in

Figure A16
Figure A16 and Figure A17. Overall, companies
in seven of the eight industries reviewed Average Number of Disclosures
disclosed, on average, in line with at least five of per Company
the 11 recommended disclosures. Companies Industry Number
in the technology and media industry, on Materials and Buildings 7.8
average, disclosed less than three of the 11
recommended disclosures. Insurance 7.7
Energy 7.7
The highest levels of reporting for each
Banking 6.9
of the eight industries were on the three
recommended disclosures related to metrics Agriculture, Food, and Forest Products 5.8
and targets — namely climate-related metrics; Transportation 5.8
Scope 1, Scope 2, and Scope 3 GHG emissions;
Consumer Goods 5.1
and climate-related targets. More than 75%
of the companies in six of the eight industries Technology and Media 2.7
reviewed reported their climate-related metrics
(Metrics and Targets a). The lowest level of climate-related scenarios (Strategy c), which
A.
reporting in each industry was on the resilience is consistent with the AI review results for the
State of Climate-Related
of companies’ strategies under different other regions.
Financial Disclosures

B.
Financial Statement Figure A17
Considerations TCFD-Aligned Disclosures by Industry for Fiscal Year 2022
Percent of Companies in Europe1
C.

an hno t (80 od,

n
Case Studies on Scope 3

o
)
tio

)
Tr ings and

re , F
)

G o s um ( 7 9
6

( 7 sp 95)
(4
)

Fo re

Co e d y
GHG Emissions

ta
87

8)

ia
M g
(

s r
ce

8)
il d al s

d l tu

od e
g(

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(7

(7
n
in

gy

B u te ri

an i cu
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nk

an
er
su

n
r

c
3)
D.

a
Recommendation Recommended Disclosure

Ag
Ba

En

Te
In

M
TCFD-Aligned Requirements Governance a) B
 oard Oversight 68% 65% 72% 72% 53% 45% 19% 46%
and Related Initiatives
b) M
 anagement’s Role 55% 61% 60% 61% 41% 40% 20% 40%
Strategy a) R
 isk and Opportunities 64% 76% 64% 79% 51% 59% 15% 40%
E.
b) Impact on Organization 47% 54% 64% 58% 37% 50% 15% 24%
Types of Financial Impact
and Associated Drivers c) R
 esilience of Strategy 16% 20% 24% 24% 10% 19% 3% 13%
Risk Management a) R
 isk ID and Assessment Proc. 63% 72% 56% 67% 45% 35% 14% 31%
F. b) R
 isk Management Processes 53% 63% 65% 42% 38% 40% 11% 40%
Insights Gained and View c) Integration into Risk Mgmt. 46% 46% 41% 27% 15% 20% 9% 14%
on Future Work Metrics and Targets a) Climate-Related Metrics 80% 87% 86% 94% 77% 79% 49% 72%
b) S
 cope 1,2,3 GHG Emissions 77% 83% 81% 88% 71% 70% 46% 68%
Appendices
c) C
 limate-Related Targets 77% 78% 82% 97% 78% 73% 38% 62%

1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting

Notably, nearly all the companies in the for technology and media companies overall
materials and buildings industry reviewed — those reviewed across all five regions — as
(97%) reported on their climate-related targets, shown in Figure A10 (p. 10).
followed closely by reporting on their climate-
related metrics (94%). In addition, materials Latin America
and buildings companies on average reported
in line with 7.8 of the 11 recommended The AI review of companies headquartered in
disclosures — closely followed by insurance Latin America included 111 companies across
and energy companies, both of which reported 11 jurisdictions. The three jurisdictions with
on 7.7 of the 11 recommended disclosures the largest number of companies were Brazil
on average. Companies in the technology with 52 companies, Chile with 18, and Bermuda
and media industry had the lowest levels of with 12, as shown in Box A4 (p. 15). As noted
reporting for all 11 recommended disclosures, previously, there were not enough companies
which is consistent with the AI review results with reports in English in Latin America for the

14
 The Task Force on Climate-related Financial Disclosures

consumer goods and technology and media Financial institutions ranged in size from about
industries to achieve statistically significant $2 billion to more than $400 billion in assets,
results. As a result, the analysis covers six and non-financial companies ranged in size from
industry groups, listed in Box A4 along with an about $10 million to over $100 billion in revenue.
indication of the size of the companies included.

Box A4
Demographics of Companies Reviewed in Latin America
Number and Size Range by Industry Number by Jurisdiction

Total Assets ($US billion) Brazil 52

Financial Institutions Number Min Median Max Chile 18
Banking 20 $19 $65 $439 Bermuda 12
Insurance 14 $2 $12 $48 Argentina 9
Colombia 7
Revenue ($US billion)
A. Peru 5
Non-Financial Companies Number Min Median Max
State of Climate-Related Trinidad and Tobago 2
Ag., Food, and Forest Products 21 $0.3 $2 $25
Financial Disclosures Puerto Rico 2
Consumer Goods1 — — — —
Jamaica 2
Energy 19 $1.2 $5 $124
B. Panama 1
Financial Statement Materials and Buildings 23 $1.0 $4 $44
Cayman Islands 1
Considerations Technology and Media1 — — — —
Transportation 14 $0.01 $1 $9
C.
Case Studies on Scope 3 1. There were not enough companies to obtain statistically significant results.
GHG Emissions

D. Figure A18 shows jurisdictions where the

TCFD-Aligned Requirements government or another authority has issued Figure A18
and Related Initiatives climate-related disclosure requirements TCFD-Aligned Disclosure
that incorporate or draw from the TCFD Requirements
E. recommendations. The governments or other For Jurisdictions in Latin America
Types of Financial Impact authorities in jurisdictions shaded in light blue Legend
and Associated Drivers have issued final climate-related disclosure In Effect
requirements. It is important to note that the Not in Effect
F. Task Force’s review of documents is limited to
Proposed
Insights Gained and View those available in English. As a result, Figure
None
on Future Work A18 may understate the number of jurisdictions
that have issued TCFD-aligned disclosure
Appendices requirements, as it reflects requirements in
Brazil and Columbia only.

The AI review results for Latin America are Figure A19

shown in Figure A19 and Figure A20 (p. 16). Average Number of Disclosures
Insurance companies on average reported per Company
on more recommended disclosures than
Industry Number
companies in the other industries. Insurance
companies also had the highest level of Insurance 6.1
reporting on all the recommended disclosures Banking 4.2
except two — climate-related targets (Metrics Energy 3.0
and Targets c) and the resilience of companies’
strategies under different climate-related Materials and Buildings 2.8
scenarios (Strategy c). Notably, insurance Transportation 2.0
companies had the lowest level of reporting on Agriculture, Food, and Forest Products 1.0
Metrics and Targets c) across the six industries
reviewed at 21%.
c) across the six industries reviewed at 55%. In
The Latin American banks reviewed had the contrast, the AI review results for banks overall
highest level of reporting on Metrics and Targets — those reviewed across all five regions — had

15
 The Task Force on Climate-related Financial Disclosures

the second lowest level of reporting on Metrics only one of the 11 recommended disclosures
and Targets c), as shown in Figure A10 (p. 10). On — the lowest of the eight industries. These
average, companies in the agriculture, food, and companies also had the lowest level of reporting
forest products industry reported in line with on nine of the 11 recommended disclosures.

Figure A20
TCFD-Aligned Disclosures by Industry for Fiscal Year 2022
Percent of Companies in Latin America1

,
(2 od
n

st o
tio
gs d

1)
re , F
)
(14

3)
in an
)

Fo re
(2
20

ta
)
ce

(19

il d ial s

d l tu
g(

or
n
in

gy

(1 sp

an u
ra

B u te r

ric
nk

er

an
su

a
Recommendation Recommended Disclosure

4)

Ag
Ba

En

Tr
In

M
Governance a) B
 oard Oversight 45% 64% 32% 30% 29% 10%
b) M
 anagement’s Role 30% 50% 16% 17% 7% 5%
Strategy a) R
 isk and Opportunities 55% 64% 26% 30% 29% 19%
b) Impact on Organization 20% 43% 16% 13% 14% 5%
A.
State of Climate-Related c) R
 esilience of Strategy 0% 0% 11% 4% 0% 0%
Financial Disclosures Risk Management a) R
 isk ID and Assessment Proc. 10% 36% 11% 9% 7% 5%
b) R
 isk Management Processes 30% 57% 16% 30% 7% 10%
B. c) Integration into Risk Mgmt. 10% 50% 5% 17% 0% 0%
Financial Statement Metrics and Targets a) Climate-Related Metrics 45% 50% 32% 30% 36% 14%
Considerations b) S
 cope 1,2,3 GHG Emissions 35% 43% 32% 30% 36% 14%
c) C
 limate-Related Targets 55% 21% 32% 48% 36% 24%
C.
Case Studies on Scope 3 1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting
GHG Emissions

D.
TCFD-Aligned Requirements Middle East and Africa number of companies included in each of eight
and Related Initiatives industry groups along with an indication of the
The AI review of companies headquartered size of the companies included based on their
in the Middle East and Africa included 271 total assets for financial institutions and total
E. companies across 21 jurisdictions. The three revenue for non-financial companies. Financial
Types of Financial Impact
jurisdictions with the largest number of institutions ranged in size from about $1 billion
and Associated Drivers
companies were South Africa with 53 companies, to more than $300 billion in assets, and non-
Saudi Arabia with 50, and Israel with 40, as financial companies ranged in size from $3
F. shown in Box A5. This figure also describes the million to over $50 billion in revenue.
Insights Gained and View
on Future Work

Box A5
Appendices
Demographics of Companies Reviewed in the Middle East and Africa
Number and Size Range by Industry Number by Jurisdiction1
Total Assets ($US billion) South Africa 53
Saudi Arabia 50
Financial Institutions Number Min Median Max
Israel 40
Banking 40 $25 $63 $324
United Arab Emirates 32
Insurance 36 $0.7 $1 $63 Qatar 16
Nigeria 12
Revenue ($US billion)
Kuwait 12
Non-Financial Companies Number Min Median Max
Egypt 9
Ag., Food, and Forest Products 37 $0.3 $0.6 $41
Kenya 7
Consumer Goods 33 $0.1 $0.6 $12 Jordan 7
Energy 32 $0.4 $1.4 $19 Oman 6
Materials and Buildings 42 $1.0 $4.4 $53 Bahrain 5
Technology and Media 25 $0.003 $0.1 $5 Zimbabwe 4
Zambia 4
Transportation 26 $0.01 $0.5 $13
Morocco 4

1. In addition, there were three companies from Mauritius; two companies each from Botswana and Ghana; and one company from
each of the following jurisdictions Sudan, Togo, and Uganda.

16
 The Task Force on Climate-related Financial Disclosures

Figure A21 shows jurisdictions where the

government or another authority has issued Figure A21
climate-related disclosure requirements TCFD-Aligned Disclosure
that incorporate or draw from the TCFD Requirements
recommendations. It is important to note that For Jurisdictions in the Middle East and Africa
the Task Force’s review of documents is limited Legend
to those available in English. As a result, Figure
In Effect
A21 may understate the number of jurisdictions
Not in Effect
that have issued TCFD-aligned disclosure
Proposed
requirements, as it reflects requirements in
Egypt, Kenya, and Mauritius only. None

The AI review results for the Middle East and

Africa are shown in Figure A22 and Figure A23.
Materials and buildings companies, on average,
reported on more recommended disclosures
than companies in the other industries. These
companies also had the highest level of reporting
A.
on eight of the 11 recommended disclosures Figure A22
State of Climate-Related
Financial Disclosures
and relatively high reporting on climate-related Average Number of Disclosures
metrics, GHG emissions, and climate-related per Company
targets at 60%, 57%, and 50%, respectively.
B.
Industry Number
Financial Statement Companies in the technology and media and
Considerations Materials and Buildings 3.9
insurance industries, on average, reported in
line with less than one of the 11 recommended Banking 2.9
C. disclosures. The lowest level of reporting in Energy 2.1
Case Studies on Scope 3 each of the industries was on resilience of
GHG Emissions Agriculture, Food, and Forest Products 1.3
companies’ strategies under different climate-
related scenarios (Strategy c). In fact, none of Consumer Goods 1.1
D. the energy, transportation, technology and Transportation 1.0
TCFD-Aligned Requirements media, or consumer goods companies reviewed Insurance 0.9
and Related Initiatives reported in line with Strategy c).
Technology and Media 0.5
E.
Types of Financial Impact
and Associated Drivers
Figure A23
F. TCFD-Aligned Disclosures by Industry for Fiscal Year 2022
Insights Gained and View Percent of Companies in the Middle East and Africa1
on Future Work

d lo 7 ) ,
d
s t oo
n
Appendices
6)

)
Tr ing and

tio

Te ore e, F

G o s um a ( 2 5
(3
(2 nsp (42)
(3
)

M gy
40

ta
2)

s r
ce

il d al s

3)
d l tu
s
g(

od e
n di
(3

or

(3
n

e
an n o
in

gy

B u te ri

an u
ra

F
ric
nk

ch
er
su

a
a

6)

Recommendation Recommended Disclosure

Ag
Ba

En

Co
In

Governance a) B
 oard Oversight 28% 14% 25% 45% 12% 16% 4% 18%
b) M
 anagement’s Role 20% 6% 13% 21% 8% 3% 4% 3%
Strategy a) R
 isk and Opportunities 33% 14% 13% 31% 8% 8% 16% 6%
b) Impact on Organization 15% 6% 9% 26% 4% 14% 4% 12%
c) Resilience of Strategy 3% 3% 0% 5% 0% 3% 0% 0%
Risk Management a) R
 isk ID and Assessment Processes 23% 6% 9% 21% 8% 3% 0% 0%
b) R
 isk Management Processes 23% 8% 9% 31% 8% 8% 4% 18%
c) Integration into Overall Risk Mgmt. 20% 3% 6% 12% 12% 3% 0% 3%
Metrics and Targets a) Climate-Related Metrics 45% 14% 34% 60% 15% 30% 8% 21%
b) S
 cope 1,2,3 GHG Emissions 40% 11% 31% 57% 12% 24% 8% 12%
c) Climate-Related Targets 28% 6% 28% 50% 12% 19% 0% 18%

1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting

17
 The Task Force on Climate-related Financial Disclosures

North America along with an indication of the size of the

companies included based on their total assets
The AI review of companies headquartered for financial institutions and total revenue for
in North America included 1,388 companies, non-financial companies. Financial institutions
with the majority headquartered in the United ranged in size from about $800 million to
States (1,185), as shown in Box A6. This figure over $3.5 trillion in assets, and non-financial
also describes the number of companies companies ranged in size from $5 million to
included in each of eight industry groups more than $600 billion in revenue.

Box A6
Demographics of Companies Reviewed in North America
Number and Size Range by Industry Number by Jurisdiction
Total Assets ($US billion)
United States 1,185
Financial Institutions Number Min Median Max Canada 183
Banking 227 $4.1 $13 $3,666 Mexico 20
A.
State of Climate-Related Insurance 75 $0.8 $13 $690
Financial Disclosures Revenue ($US billion)
Non-Financial Companies Number Min Median Max
B.
Ag., Food, and Forest Products 138 $0.005 $0.9 $102
Financial Statement
Considerations Consumer Goods 152 $0.03 $3.0 $611
Energy 213 $0.3 $3.0 $399
C. Materials and Buildings 284 $0.9 $4.0 $77
Case Studies on Scope 3 Technology and Media 182 $0.03 $0.7 $394
GHG Emissions Transportation 117 $0.01 $3.0 $158

D.
TCFD-Aligned Requirements
and Related Initiatives Figure A24 shows jurisdictions where the
government or another authority has issued Figure A24

E. climate-related disclosure requirements TCFD-Aligned Disclosure

Types of Financial Impact that incorporate or draw from the TCFD Requirements
and Associated Drivers recommendations. In Canada — shaded in For Jurisdictions in North America
dark blue, the Office of the Superintendent
Legend
F. of Financial Institutions issued guidelines
on climate-related risk management for In Effect
Insights Gained and View
on Future Work financial institutions that includes minimum Not in Effect
mandatory climate-related financial disclosure Proposed

Appendices expectations, which incorporate the Task None

Force’s 11 recommended disclosures. 30 In
addition, the Canadian Securities Administration
has proposed mandatory climate-related
disclosures for public companies; and in the
U.S. — shaded in dark gray, the Securities
and Exchange Commission has proposed
rules to enhance and standardize climate-
related disclosures that drew on the TCFD by materials and buildings companies,
recommendations. which disclosed 3.9 of the 11 recommended
disclosures on average. Energy companies also
The AI review results for North America are had the highest levels of reporting — across
shown in Figure A25 (p. 19) and Figure A26 (p. the industries reviewed — on eight of the 11
19). Overall, the energy companies reviewed recommended disclosures. The exceptions were
reported, on average, in line with 4.8 of the on the three recommended disclosures related
11 recommended disclosures — the highest to risk management — processes for identifying
of all industries reviewed. They were followed and assessing climate-related risks; processes

30
Under the guidelines, “Domestic Systemically Important Banks” and “Internationally Active Insurance Groups” have to report at the end of fiscal
year 2024 and other federally regulated financial institutions have to report at the end of fiscal year 2025.

18
 The Task Force on Climate-related Financial Disclosures

for managing climate-related risks; and how

these processes are integrated into overall Figure A25
risk management. For these recommended Average Number of Disclosures
disclosures, the insurance companies reviewed per Company
had the highest levels of reporting.
Industry Number
Technology and media companies reported less
Energy 4.8
climate-related information than companies
in the other industries reviewed. On average, Materials and Buildings 3.9
these companies reported on 1.6 of the 11 Insurance 3.4
recommended disclosures. Technology and
Transportation 3.1
media companies also had the lowest levels
of reporting on seven of the 11 recommended Banking 2.3
disclosures; and banks had the lowest levels Consumer Goods 2.1
of reporting on the three recommended Agriculture, Food, and Forest Products 2.1
disclosures under the Metrics and Targets
recommendation. Only 15% of the North Technology and Media 1.6
American banks reviewed reported their targets
A.
as compared with 77% of the European banks
State of Climate-Related
Financial Disclosures
reviewed (see Figure A17, p. 14).

B.
Financial Statement Figure A26
Considerations TCFD-Aligned Disclosures by Industry for Fiscal Year 2022
Percent of Companies in North America1
C.

M hno t (13 od,

Case Studies on Scope 3

ns 82) nd
n

8)
o
tio
Tr ings and
)

re , F
5)

(11 nsp 28 4

Co a (1 y a
7)
GHG Emissions

(7

Fo re
)

ta
22

13

2)
g
(

s r
ce

s
il d l s

d l tu

od e
g(

7 ) or

e d lo
(2

(15
G o um
a
n
in

gy

B u te ri

an i cu
ra
nk

i
er
su
D.

c
a
a
Recommendation Recommended Disclosure

Ag
Ba

En

Te
In

M
TCFD-Aligned Requirements
Governance a) B
 oard Oversight 28% 49% 65% 61% 48% 30% 23% 36%
and Related Initiatives
b) M
 anagement’s Role 19% 31% 41% 31% 28% 17% 14% 16%
E.
Strategy a) R
 isk and Opportunities 56% 53% 64% 54% 38% 33% 20% 30%
Types of Financial Impact
and Associated Drivers b) Impact on Organization 15% 31% 36% 30% 24% 16% 11% 13%

c) R
 esilience of Strategy 2% 4% 8% 4% 3% 3% 2% 0%
F.
Insights Gained and View Risk Management a) R
 isk ID and Assessment Proc. 11% 25% 24% 19% 14% 10% 4% 9%
on Future Work b) R
 isk Management Processes 23% 35% 27% 23% 21% 11% 8% 11%

c) Integration into Risk Mgmt. 18% 19% 17% 13% 15% 7% 4% 5%

Appendices
Metrics and Targets a) Climate-Related Metrics 17% 29% 52% 49% 39% 25% 24% 32%

b) S
 cope 1,2,3 GHG Emissions 16% 27% 47% 43% 37% 22% 23% 27%

c) C
 limate-Related Targets 15% 31% 62% 53% 43% 28% 26% 35%

1. The numbers in parentheses represent the size of the review population. Legend:
Low to high percentage of reporting

The highest level of reporting for companies in 50% of the companies reviewed reported on
energy, materials and buildings, transportation, Strategy a). For companies in each of the eight
and consumer goods was on their boards’ industries, the lowest level of reporting was on
oversight of climate-related issues (Governance the resilience of their strategies under different
a), while the highest level of reporting for banks, climate-related scenarios (Strategy c). Notably,
insurance companies, and agriculture, food, and none of the consumer goods companies
forest products companies was on their climate- reviewed and only 2% of the banks reviewed
related risks or opportunities (Strategy a). In reported on Strategy c).
addition, in four of the eight industries, over

19
 The Task Force on Climate-related Financial Disclosures

Examples of Climate-Related Financial they may help companies generate ideas for
Disclosure their own disclosures.
This subsection includes examples of public Governance Recommendation
companies' reporting on information aligned
with one or more of the 11 recommended Governance a) asks companies to describe the
disclosures. The Task Force sought to include board’s oversight of climate-related risks and
examples from a geographically diverse set of opportunities, and Governance b) asks them
companies, covering all five regions and the to describe management’s role in assessing
11 recommended disclosures. The examples and managing those risks and opportunities.
included are not intended to represent “best Figure A27 shows a U.S. materials company’s
practice” nor demonstrate disclosures that fully description of its board oversight and
meet the associated recommended disclosure. 31 management’s role in assessing and managing
Instead, the examples are provided because climate-related issues.

Figure A27
A.
State of Climate-Related Board Oversight and Management’s Role
Financial Disclosures
The Board of Climate change governance
B.
Financial Statement
Directors is Climate change is a material governance and strategic issue, and the Board of
Considerations responsible for Directors is responsible for ensuring there are adequate policies and strategies
in place to understand and manage climate risk while also seizing the strategic
ensuring there are opportunities presented by the transition to a low-carbon economy.
C. adequate policies The Safety, Health, Environment, Community and Sustainability (SHECS)
Case Studies on Scope 3
GHG Emissions
and strategies in Committee assists the Board in overseeing its climate-related performance and
governance responsibilities. The Risk Committee reviews climate-related risk
place to understand and is ultimately responsible for overseeing the embedding of climate risk into
the Enterprise Risk Management (ERM) approach and setting the risk appetite
D. and manage climate for the company. The charters for these committees are available in the FY22
TCFD-Aligned Requirements risk while also Corporate Governance Statement and Director’s Report and at www.simsltd.
com/governance. In practice, all members of the Board participate in each
and Related Initiatives
seizing the strategic committee meeting, which supports holistic consideration of climate-related
topics.
E. opportunities
Types of Financial Impact presented by the MANAGING RISK AND OPPORTUNITY
and Associated Drivers transition to a low- With support and input of the executive leadership team, our chief risk and
compliance officer (CRCO) is responsible for providing and maintaining the
carbon economy. ERM framework, in which climate change risk is considered. Reporting to
F. the CEO and Board, the CRCO has accountability for oversight of climate
Insights Gained and View targets and climate-related matters across the company, including monitoring
on Future Work performance across the business, maintaining the ERM system and
performance disclosure.

Appendices Executives are ultimately the risk owners and are accountable for identifying,
managing and monitoring climate-related risks and opportunities within the
ERM framework and risk appetite. Key risks are reported to the Board’s Risk
Committee at least quarterly. The CEO, CRCO and the rest of the executive
leadership team are accountable for the company’s actions and commitments
to embed climate change into our risk management and business strategy.

In relation to opportunities, our executive and management teams, under the

leadership of the CEO, are responsible for delivering the strategic direction
and goals approved by the Board. These include implementation of climate-
related targets and policy positions, identification and management of risks and
opportunities, and reporting on these topics to the Board directly and/or through
the relevant Board committees.

Sims Limited, 2022 Climate Report, p. 13

31
The mention of specific companies does not imply they are endorsed by the TCFD or its members in preference over other companies of a similar
nature that are not mentioned.

20
 The Task Force on Climate-related Financial Disclosures

Strategy Recommendation and long term. Figure A28 shows the climate-
related risks, associated time horizons, and
Strategy a) asks companies to describe the
potential impacts of an Italian energy company’s
material climate-related risks and opportunities
Latin American subsidiary.
they have identified over the short, medium,

Figure A28
Climate-Related Risks and Opportunities
Scenario Time Category of risks Description of the Impact Model of management
phenomena horizon opportunities impact
The Company adopts the best practices
to manage the return to activity in the
shortest possible time. Furthermore. it
works to implement investment plans
for resilience. With regard to the Risk
Extreme events can Assessment activity in the insurance
From a Risk: cause impacts in area. it manages a Loss prevention
Acute short Particularly extreme terms of damage program for Property risks. to value
Extreme events
Physical period and intense weather to property and the main exposures linked to natural
(1 to 3 years) events. lack of continuity of events. together with prevention
A. operations. activities and internal risk management
policies. In the future. the potential
State of Climate-Related impacts of trends due to the most
Financial Disclosures relevant climate variations that will
manifest themselves in the term will be
integrated into the valuations.
B. The geographical and technological
Financial Statement Electricity demand
diversification of the Enel Group
permits it to mitigate the impact of
Considerations is also affected
changes (positive and negative) on a
Risk/opportunity: by temperature.
single variable at a general level. To
From a long Increased or fluctuating in which
Chronic guarantee that operations always
decreased demand may affect our
C. Physical
period Market
for electricity, business. Renewable
consider weather and climate events.
(2030-2050) a number of practices such as weather
Case Studies on Scope 3 increase or decrease energy generation can
forecasting. real-time monitoring of
in production. also be affected by
GHG Emissions structural changes in
plants and long-term climate scenarios
are adopted to identify any chronic
resource availability.
changes in the availability of renewable
sources.
D.
The Company is minimizing its
TCFD-Aligned Requirements Risk/opportunity: exposure to risks through strategic
CO., pricing and The effects of energy
and Related Initiatives emissions policies, transition and
actions focused on investing in
From a renewables. grids and customers that
Policy and incentives for energy resilience policies
Transition short period permit us to mitigate potential threats
regulation transition, greater can influence the
(1 to 3 years) and seize opportunities related to the
E. margin for investment volume and return on
energy transition. These activities are
in renewables and investments.
Types of Financial Impact resilience.
carried out within the framework of
stakeholder dialogue platforms.
and Associated Drivers
Considering
Risk/opportunity: alternative transition
F. Changes in the scenarios. the
price of commodity: Company assesses The Company maximizes opportunities
Insights Gained and View From an raw materials and the impacts of the thanks to a strategy aimed at the
average different trends with energy transition. the electrification
on Future Work Transition
period
Market energy, evolution
the increase in the of consumption and the great
of the energy
(2025-2029) package, changes in weight of renewable development of renewable energy
retail consumption, sources in the energy production.
Appendices modification of the package and the
competitive structure. electrification of final
consumption.

Opportunity: Greater
margins and more Considering two
space to invest alternative transition
From an as a result of the scenarios. Enel Enel Américas maximizes opportunities
average transition, in terms of Américas assesses thanks to a strong strategic positioning
Transition Product & Services
period electric transport and the impact of the on new businesses and services
(2025-2029) new electrification different trends in “beyond commodities”.
technologies and the electrification of
efficiency of final consumption.
consumption.

Faced with the

Opportunity: Greater trend of penetration
margins and more of electrification
space to invest and efficiency
From an as a result of the
average technologies. Enel Américas maximizes opportunities
Transition Technology transition, in terms of considering two thanks to a strong strategic positioning
period electric transport and
(2025-2029) alternative transition on its networks.
new electrification scenarios. the
technologies and Company values the
efficiency of final opportunities to scale
consumption. in current businesses.

Enel Américas, Integrated Annual Report Enel Américas 2022, pp. 132–133
Note: Some content was reformatted in order to fit the page.

21
 The Task Force on Climate-related Financial Disclosures

Strategy b) asks companies to describe the In Figure A29, a Spanish bank describes the
impact of material climate-related risks and potential impact of certain climate-related
opportunities that they have identified on their risk factors on its operations, reputation, and
businesses, strategies, and financial planning. strategy.

Figure A29
Impact of Climate-Related Risks
Risk type Potential impact on climate What we’re doing to manage climate risk Next steps
risk factors
Operational → Serious climate events can → Climate risk was a mandatory addition → Embed climate risk in
affect business continuity, to our scenario analyses. the annual operational
infrastructure, processes and control risk self-
and headcount at branches → We updated our operational risk assessment.
and offices. database with a new climate and
environmental risk metric. → Enhance the operational
→ If energy, water and risk that considers
A. insurance prices soar, so will → We’re updating our continuity plan with climate risk data.
operational costs. more details on the threats of climate
State of Climate-Related
risk. → Study external data
Financial Disclosures sources.

B. Reputational → Customers, investors → Updated climate and environmental risk → Methodology to

Financial Statement and other stakeholders policies and procedures. quantify the and
Considerations who believe banks aren’t procedures. reputational
doing enough to meet low- → Corporate credit committees address impact of climate and
carbon targets or their own reputational risk when assessing environmental risk.
C. public commitments can sensitive transactions that involve
Case Studies on Scope 3 pose reputational risk. climate and environmental risk.
GHG Emissions
→ The Group’s climate → Strengthen climate and environmental
information is risk governance, which the Reputational
D. considered insufficient risk forum addresses. Formal meetings
TCFD-Aligned Requirements or misleading, or product scheduled to review reputational issues
announcements appear to (including climate matters), involving
and Related Initiatives be “greenwashing”. the legal, responsible banking, investor
relations, risk and other teams.
E.
→ Proactive measures that show
Types of Financial Impact
Santander supports companies’ green
and Associated Drivers transition and decarbonization.

F. Strategic → The Group’s net-zero → Regular monitoring of the strategic → Increase granularity of
Insights Gained and View financing and operations ‘Climate change’ project, including stressed event impacts
strategy fails to bring KPIs that relate to the Group’s net zero as part of the top risk
on Future Work
about enough change and objectives. identification.
undermines our strategy.
Appendices → Our top risk identification includes a → Update key ESG metrics
climate change risk event. We analyse according to the Group’s
the potential impact of low-probability strategy.
stress scenarios on the Group’s
strategic plans and draw up action → Include more ESG factors
plans accordingly, o budget tracking for in our business model
inclusion in the strategic risk profile. performance review.

→ Monitoring of ESG initiatives presented → Continue to include ESG

at the CPGF and investors’ forum. factors in comparisons
with peers.

Banco Santander, 2022 Annual Report, p. 496

Note: Some content was reformatted in order to fit the page.

22
 The Task Force on Climate-related Financial Disclosures

Strategy c) asks companies to describe the describes its business resilience under three
resilience of their strategies under different different scenarios, including two scenarios
climate-related scenarios. In Figure A30, a under 2°C.
Mexican materials and buildings company

Figure A30
Resilience of Strategy
SCENARIO NAME STATED POLICIES SUSTAINABLE DEVELOPMENT NET ZERO EMISSIONS BY 2050
Short name - external reference scenario STEPS SDS NZE
STRATEGY EFFECTIVENESS: RISKS AND OPPORTUNITIES
PROBABILITY IMPACT PROBABILITY IMPACT PROBABILITY IMPACT
RISKS
LOW MED HIGH LOW MED HIGH LOW MED HIGH LOW MED HIGH LOW MED HIGH LOW MED HIGH

Reduced market demand for higher-carbon products/

commodities

Physical: Increased business interruption and damage across

operations and supply chains with consequences for input
costs, revenues, asset values, and insurance claims
Increased input/operating costs for high carbon activities
under regulated markets (even threats to securing license to
operate)

Risk of stranded assets: plants that cannot be easily

upgraded and close to end of their lifetime
A.
OPPORTUNITIES
State of Climate-Related Increased demand for energy-efficient, lower-carbon
Financial Disclosures products and services

New technologies available at competitive cost that

disrupt markets

B.
Financial Statement
Access to competitive energy sources (AF cost)

Considerations Opportunity to enhance reputation and brand value

The
The results of the of
results analysis
theconfirm that Cemex’s
analysis confirm carbon strategy
that is in general
Cemex’s carbonrobust.strategy
Cemex is aware
is inthat • InA
 2022, Cemex validated
lso, Cemex expectsits 2050
tonet-zero
continueCO2 roadmap and itsin
investing 2030 decarbonization
research and goals under the
develop-
C. climate action is the biggest challenge of our times. With the Future in Action program, we remain commit-
general robust. Cemex is aware that
Science-Based Targets initiative’s (SBTi) recently announced 1.5ºC Scenario.
ment to deliver innovative building materials and solutions to build
ted to becoming a net-zero CO2 company by 2050. We will provide greener products and services for a more
Case Studies on Scope 3 sustainable
climate and circularisworld.
action the biggest challenge of our times. With the Future
 Also, Cemex expects to continue investing in research and development to deliver innovative building
climate-smart
materials and solutionsurban projects, sustainable
to build climate-smart buildings,
urban projects, sustainable andand
buildings, climate-re-
climate-resilient

GHG Emissions in Action

 We program,
will continue we
working to remain
achieve committed
2030 target of reducingtoourbecoming
net specific COa2 emissions
net-zero COcom-
by 47% 2
silient infrastructures,
infrastructures, while capitalizing onwhile capitalizing
CX Ventures, on
Urbanization CX Ventures,
Solutions, and strategicUrbanization
partnerships.

company
pared to ourby 2050.
1990 We
baseline; will provide
mid-term performancegreener products
validation to and services for a
guarantee achievement.  WeSolutions, and strategic
remain committed to identifying partnerships.
and investing in new technologies needed to achieve our 2050 tar-
get, and we expect it will be strengthened in the most carbon-constrained scenarios.
more sustainable and circular world. • We remain committed to identifying and investing in new technologies
• W e will continue working to achieve 2030 target of reducing our net needed to achieve our 2050 target, and we expect it will be strength-
D.
specific CO2 emissions by 47% compared to our 1990 baseline; mid- ened in the most carbon-constrained scenarios.
TCFD-Aligned Requirements term performance validation to guarantee achievement.
and Related Initiatives • In 2022, Cemex validated its 2050 net-zero CO2 roadmap and its 2030
decarbonization goals under the Science-Based Targets initiative’s
(SBTi) recently announced 1.5ºC Scenario.
E. CEMEX, 2022 Integrated Report, p. 258
Types of Financial Impact Note: Some content was reformatted in order to fit the page.
and Associated Drivers

Risk Management Recommendation In Figure A31, a Mexican multinational beverage

F.
company describes its process for identifying
Insights Gained and View Risk Management a) asks companies to describe
and assessing climate-related physical and
on Future Work their processes for identifying and assessing
transition risks.
climate-related risks.
Appendices

Figure A31
Risk Identification and Assessment Processes
[...] [...]
TASK FORCE ON Risk Management: Processes used by the organization to identify, assess, and manage
climate-related risks
CLIMATE-RELATED We assess physical and transitional risks and opportunities in line with TCFD recommendations using
FINANCIAL a five-step method:
1. Identification of climate risks and opportunities (qualitative analysis)
DISCLOSURES 2. Definition of climate scenarios and time horizons
3. Identification of variables associated with climate scenarios
(TCFD) REPORT 4. Estimation of risk and opportunity parameters
5. Calculation of value at risk from climate change (includes a quantitative estimate of the expected
and stressed impact of risks and opportunities).
Multidisciplinary groups in our operations (consisting of areas such as sustainability, strategic planning,
operations, marketing, finance, corporate affairs, etc.) work together to identify, prioritize, and quantify
the main climate-related risks and opportunities. […]

Coca-Cola FEMSA, 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report, p. 1
Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

23
 The Task Force on Climate-related Financial Disclosures

Risk Management b) asks companies to describe describes its climate-related risk management
their processes for managing climate-related processes.
risks. In Figure A32, a Chilean company

Figure A32
Risk Management Processes

Risk Our model

management We developed various measures to identify,
manage and mitigate the risks facing each
business. We integrated our environmental,
Falabella and its subsidiaries operate their businesses in changing social and governance (ESG) risks into
environments. Therefore, they are exposed to various risks that could our traditional risk management model, to
adversely impact their business objectives and sustainability. Accordingly, produce an overall vision that connects the
A. risk management is required to adequately and continually protect the market, the local community and the company.
State of Climate-Related value created.
Financial Disclosures Risk management at Falabella and its
Our risk management model is based on an Integrated Risk Management subsidiaries is based on the Institute of
Policy and Internal Audit Policy, which describe our risk prevention and Internal Auditors’ (IIA) “Three Lines Model”,
B. mitigation procedures and guidelines. Both policies apply to all our which identifies the structures and processes
Financial Statement subsidiaries, who can issue additional policies and guidelines, provided required to achieve their objectives and robust
they do not contradict these policies.
Considerations risk governance. This model is based on a
“Tone at the Top” culture that originates with
The Integrated Risk Management Policy was updated in October the Board and senior management, followed
C. 2022 and approved by the Board. It was developed from national and by the rest of the organization. The model is
international risk standards, such as ISO 31000 and COSO ERM 1. It
Case Studies on Scope 3 based on: Governance structure, Leadership
describes the general guidelines within the risk management model, the and Internal Audit
GHG Emissions responsibilities of the main positions involved in risk management, how it
operates, communication channels and reporting lines.
D.
1 Committee of Sponsoring Organizations of the Tradeway Commission – Enterprise Risk Management
TCFD-Aligned Requirements
and Related Initiatives Falabella, Annual Report 2022, p. 50
Note: Some content was reformatted in order to fit the page.

E.
Types of Financial Impact Risk Management c) asks companies to describe Figure A33 shows an Indian metals and
and Associated Drivers how their processes for identifying, assessing, mining company’s description of how climate-
and managing climate-related risks are related risks are a part of its enterprise risk
F. integrated into their overall risk management. management processes.
Insights Gained and View
on Future Work
Figure A33
Appendices Integration into Overall Risk Management

Climate Risk Management

Tata Steel uses the company-wide integrated Enterprise Risk Management (ERM) process for managing climate
change risks. The process identifies and assesses business risks through bottom up, top down and outside in
perspectives so as to ensure comprehensive risk identification and minimize blind spots. Likelihood, impact, and
velocity scores are assigned for each of the risks post a due-diligence process including scenario. Appropriate early
warning indicators and mitigation strategies are identified for review, including by the Apex Risk Committee and
Risk Management Committee (RMC) of the Board.

Tata Steel, Integrated Report and Annual Accounts 2021–22, p. 105

Note: Some content was reformatted in order to fit the page.

Metrics and Targets Recommendation Figure A34 (p. 25) shows a South African metals
and mining company’s description of a selection
Metrics and Targets a) asks companies to
of its climate-related metrics, including its Scope
disclose the metrics they use to assess climate-
1, Scope 2, and Scope 3 GHG emissions.
related risks and opportunities in line with
their strategy and risk management processes.

24
 The Task Force on Climate-related Financial Disclosures

Figure A34
Climate-Related Metrics
Climate adaptation, resilience and transition refer to our capacity We mitigate climate change and its impacts through:
to adjust to current and anticipated climate change-related risks, • Reducing our carbon footprint, guided by our Climate Change
and capitalise on strategic opportunities presented by a low-carbon Response strategy and decarbonisation plan. In the short
and resource-constrained economy. term, our operational energy efficiency projects, renewable
energy self-generation and potential divestment, will result
Two of Exxaro’s strategic objectives — to transition at speed and
in emissions reduction of 40% by 2026 for scope 1 and 2.
scale and to be carbon neutral by 2050 — outline our goals and
We are developing the medium and long-term elements of
commitment to fundamentally change our business to positively
our decarbonisation plan, including the capital alignment
respond to the climate change agenda.
implications
Our Climate Change Response strategy, TCFD recommendations, • Measuring, monitoring and reporting data and performance
decarbonisation plan (under development for the medium and • Incentivising performance through the STI scheme
long-term targets) and linked STI scheme across the business support • Prioritising adaptation and resilience of our operations and
the achievement of these objectives. The principles and mechanisms host communities
to respond to climate change are integrated throughout our business • Creating awareness during regular stakeholder engagements
and are central to our thinking and actions. • Supporting research and development
[...]
Snapshot of our performance
A.
State of Climate-Related
Carbon intensity increased by 0.5% to Scope 3 emissions increased by 5% to
Financial Disclosures
5.54tCO2e/kTTM 74 488ktCO2e
(2021: 5.51tCO2e/kTTM) (2021: 70 931ktCO2e)
B.
Financial Statement
Considerations CDP score: B
(higher than the coal mining
sector C average)
C. Scope 1 and scope 2
Case Studies on Scope 3 emissions decreased
GHG Emissions by 2.5% to 971ktCO2e R8.9 million invested in
(2021: 995ktCO2e) research and development
(2021: R9.5 million)
D.
TCFD-Aligned Requirements Exxaro Resources Limited, Exxaro Resources Limited Integrated Report 2022, pp. 105–106
and Related Initiatives Notes: STI stands for short-term incentive and TTM for trailing twelve-month.
Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

E.
Types of Financial Impact
and Associated Drivers Metrics and Targets b) asks companies to disclose of its Scope 1 and Scope 2 GHG emissions over
their Scope 1, Scope 2, and, if appropriate, a three-year period as well as its Scope 3 GHG
F. Scope 3 GHG emissions. Figure A35 shows a emissions broken down by categories.
Insights Gained and View British consumer goods company’s description
on Future Work

Appendices Figure A35

Scope 1, Scope 2, and Scope 3 GHG Emissions
2022 – 2021
GHG emissions (million tonnes CO2e) 2022 2021 2020 % change
(a)
Scope 1 and 2 GHG emissions: Unilever operations (Note 2) 0.62 0.71 0.82 -13%
Scope 3 GHG emissions(b) 33.69 33.03 34.85 2%
Raw materials and ingredients 20.16 19.35 19.32 4%
Packaging materials 4.54 4.60 4.53 -1%
(c)
Downstream logistics and distribution 1.00 1.02 2.78 -2%
Retail ice cream freezers 3.55 3.75 4.01 -5%
Direct consumer use (HFC propellants) 0.82 0.71 0.77 15%
Product end of life 3.62 3.60 3.44 1%
Scope 1, 2 and 3 GHG emissions in scope of net zero target 34.31 33.74 35.67 2%
Scope 3 GHG emissions – indirect consumer use(b) 57.54 64.87 65.76 -11%
Total Scope 1, 2 and 3 GHG emissions 91.85 98.61 101.43 -7%

(a) Measured for the 12 month period ended 30 September.

(b) Measured for the 12 month period ended 30 June.
(c) The change in our logistics and distribution emissions between 2020 and 2021 is a result of a move from using industry-standard global GHG emission conversion
factors to industry-standard regional GHG conversion factors in our calculations.

Unilever, Unilever Annual Report and Accounts 2022, p. 39

Note: Some content was reformatted in order to fit the page.

25
 The Task Force on Climate-related Financial Disclosures

Metrics and Targets c) asks companies to description of its GHG emissions reduction
describe the targets they use to manage targets for both the medium term and longer
climate-related issues as well as the term as well as its performance against them.
performance against those targets. Consistent Of note, the company also disclosed avoided
with this recommended disclosure, Figure emissions — expressed as “contribution to CO2
A36 shows a Japanese technology company’s reduction.”

Figure A36
Climate-Related Targets

Metrics and Targets Used to Assess and Manage Climate-related Risks and Opportunities

Konica Minolta seeks to achieve Carbon Minus status by actively helping to reduce global CO2 emissions in cooperation with its
stakeholders, especially suppliers and customers. The Group defines “Carbon Minus status" as "contributing more to CO2
emissions in areas outside of our responsibility than to CO2 emissions reductions in areas we are responsible for.” Konica
Minolta’s goal is to ensure that the Group contributes to emission reductions for customers and the broader society greater than
the emissions directly related to its own products and operations (including Scope 1, 2, and 3 emissions). Konica Minolta hopes
A. to accelerate the effects of decarbonization, broaden its ties with stakeholders, and grow its business together, by not only
State of Climate-Related fulfilling its social responsibilities but also helping stakeholders fulfill theirs.
Financial Disclosures Progress toward achieving Carbon Minus
2023 Target
2,067 Medium-Term "Carbon Minus" Eco Vision
B. thousand tons Plan 2022 Status 2050
Parts and materials
Financial Statement procured at
Considerations Konica Minolta 57% 60% 80%
Production reduction reduction reduction
CO2 emissions in Distribution 992
C. Konica Minolta thousand 880
product lifecycle tons 821 790 800
Sales and thousand thousand thousand
Case Studies on Scope 3 service tons tons
tons thousand
Scope 1,2 and 3 tons
GHG Emissions CO2 emissions Use of 400
Konica Minolta thousand
products tons
D.
TCFD-Aligned Requirements
and Related Initiatives 2005 2019 2020 2021 2022 2030 2050

E. Contribution to CO2 reduction

outside Konica Minolta
Types of Financial Impact product lifecycle
and Associated Drivers Contribution
to CO2 Contribution Contribution
Contribution to to CO2
reductions to CO2
CO2 reductions (579 thousand
reductions reductions Contribution
other than (599 thousand to CO2
F. tons)
tons)
(650 thousand
reductions Increase
Scope 1, 2 and 3 tons) Contribution
Insights Gained and View (800 thousand
tons)
to CO2
reductions
on Future Work
Konica Minolta, Konica Minolta, Inc. Sustainability Report 2022, p. 68
Note: Some content was reformatted in order to fit the page.
Appendices

3. TCFD-ALIGNED REPORTING BY ASSET reporting to their clients and beneficiaries and

MANAGERS AND ASSET OWNERS recommended they use their existing channels of
financial reporting, where relevant and feasible.
When the Task Force published its
recommendations in 2017, it recognized that While the Task Force focused on reporting to
reporting by asset managers and asset owners clients and beneficiaries, it also recognized
is intended to satisfy the needs of clients, that many asset managers and asset owners
beneficiaries, regulators, and oversight bodies have a broader range of stakeholders to
and often follows a format that is generally which they report climate-related financial
different from corporate financial reporting.32 information. 33 In particular, asset managers
For the purposes of asset managers and asset that are public companies have two distinct
owners’ adoption of the recommendations, audiences for their climate-related financial
the Task Force focused on these organizations’ disclosures. The first audience is shareholders,

32
See the Task Force’s 2022 Status Report, October 13, 2022, (p. 30) for more information on asset managers and asset owners, including the types
of reporting channels they may use.
33
TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, October 14, 2021 (pp. 37 and 41–42).

26
 The Task Force on Climate-related Financial Disclosures

who need to understand enterprise-level because the types of reports needed for analysis
risks and opportunities and how they are may not be publicly available. To gain insight
managed; and the second is clients, for which on these organizations’ current reporting
product-, investment strategy-, or client- of climate-related financial information to
specific disclosures are more relevant. For their clients and beneficiaries, the Task Force
asset owners, the Task Force recognized that conducted a survey in early 2023. The Task Force
they sit at the top of the investment chain and also reviewed the largest asset managers and
their disclosure of climate-related issues — to asset owners’ publicly available reports to better
the extent possible given existing data and understand their climate-related reporting
methodology constraints — allows beneficiaries practices to a broader group of stakeholders.
and other audiences to assess the asset owners’ This subsection describes the scope and
investment considerations and approaches to approach used to collect information on asset
climate change. managers and asset owners’ reporting practices,
summarizes the results from the survey
As noted previously, asset managers and asset and review of publicly available reports, and
owners were excluded from the AI review highlights key findings related to the results.

A.
State of Climate-Related Key Takeaways
Financial Disclosures
TCFD Survey
Seventy percent (70%) of asset managers and 84% of asset owners indicated they currently report
B. climate-related information to their clients and beneficiaries, respectively.
Financial Statement
Considerations Asset managers and asset owners indicated the top challenge to climate-related reporting is
TCFD Survey
insufficient information from investee companies. Asset managers highlighted information from
public companies as most challenging (62%), while asset owners identified information on private
C.
investments (84%).
Case Studies on Scope 3
GHG Emissions Over 80% of the largest asset managers and 50% of the largest asset owners reported in line with
at least one of the 11 recommended disclosures. Based on a review of publicly available reports,
D. nearly 70% of the asset managers and 36% of the asset owners disclosed in line with at least five of
TCFD-Aligned Requirements the recommended disclosures.
and Related Initiatives
Over 40% of the largest asset managers and 30% of the largest asset owners described their
targets on GHG emissions associated with their assets under management in public reports.
E.
Types of Financial Impact Just over 20% of the largest asset managers and 14% of the largest asset owners described the
and Associated Drivers weighted average carbon intensity of their funds, products, or investment strategies in public reports.

F.
Insights Gained and View
Scope and Approach: Survey of Asset composition of survey respondents, the Task
on Future Work
Managers and Asset Owners Force recognizes the survey results should not
be extrapolated to a broader population of
Appendices In late February 2023, the Task Force issued a asset managers and asset owners.
survey to better understand asset managers
and asset owners’ TCFD-aligned reporting The Task Force distributed the survey to around
practices to their clients and beneficiaries, 1,300 financial institutions, resulting in 150
respectively. 34 The Task Force believes it is responses from asset managers and asset
important to highlight that the survey was owners. 35,36 The survey asked asset managers
distributed primarily to financial institutions and asset owners about their reporting to
that signed up for updates on the Task Force’s clients and beneficiaries, respectively, on
website, which means most survey respondents information aligned with the Task Force’s
were familiar with the Task Force’s work. In fact, 11 recommended disclosures along with
93% of the survey respondents indicated they associated challenges. In addition, as part of the
had implemented the TCFD recommendations questions aligned with the three recommended
or planned to in the future. Given the disclosures related to metrics and targets,

34
The Task Force recognizes that asset owners represent a wide range of organizations with different types of stakeholders. For ease of reference,
we refer to these stakeholders as beneficiaries.
35
In addition to distributing the survey to financial institutions that signed up for updates on the Task Force’s website, the TCFD Secretariat also
sent the survey to the Principles for Responsible Investment and requested the survey be shared with its signatories.
36
In addition to asset managers and asset owners, 40 organizations began the survey and indicated that they were neither asset managers nor
asset owners and, as a result, were not asked to complete the survey.

27
 The Task Force on Climate-related Financial Disclosures

the survey incorporated specific metrics that responded to the survey. Asset managers
are included in the Task Force’s supplemental represented 71% (106) of the responses,
guidance for asset managers and asset and asset owners represented 29% (44). The
owners. 37 Other topics covered include the plurality (39%) was headquartered in Europe,
types of reports in which asset managers and 30% in North America, 23% in Asia Pacific, 5%
asset owners report climate-related financial in Latin America, and the remaining 3% in the
information, the amount of their assets under Middle East and Africa.
management (AUM) or assets in investment
portfolios, and whether they are implementing In terms of the size of survey respondents
the TCFD recommendations. overall, 77% held $99 billion or less in
AUM. When viewed by organization type, a
Box A7 provides an overview of the composition different picture emerges, wherein 81% of
of the asset managers and asset owners that asset manager respondents held $99 billion

Box A7
Composition of Asset Manager and Asset Owner Survey Respondents
A. Percent of Respondents1
State of Climate-Related
Financial Disclosures Implementing TCFD Organization Type
93% 7% 71% 29%
B.
Yes (139) No (11) Base size: 150 Asset Managers (106) Asset Owners (44) Base size: 150
Financial Statement
Considerations
Geographic Distribution of Respondents
Percent of Respondents by Region Top 5 Countries by Number of Respondents
C.
Case Studies on Scope 3 Europe 39% United States of America 31
GHG Emissions North America 30% United Kingdom 24

Asia Pacific 23% Canada 11

D.
TCFD-Aligned Requirements Latin America 5% Japan 9
and Related Initiatives Middle East and Africa 3% Australia 9

E. Distribution by Assets Under Management 2 100%

92%
Types of Financial Impact 77%
and Associated Drivers 52%

23% 100% 100%

6% 81% 92% 91%
F. 58% 66%
5% 9% 25% 39%
22%
Insights Gained and View
on Future Work <$100M <$999M <$9B <$99B <$499B All
Asset Managers (106) Asset Owners (44) All Respondents (150)
Appendices
Services Offered by Asset Managers Types of Asset Owners
Offering Multiple Services (92) 3
87% Insurance Company 48%
Fiduciary Management 4
65% Non-Corporate Pension5 21%
Corporate Pension5 11%
Fund of Funds 42%
Endowment or Foundation 9%
Wealth Management 32%
Real Estate Investment Trust 7%
Other 7% Sovereign Wealth Fund 2%
Execution and Advisory Only (14) 13% Family Office 2%

1. The numbers in parentheses represent the number of respondents.

2. The percentages in this chart are cumulative percentages.
3. Respondents could select multiple types of services.
4. Fiduciary management or other outsourced discretionary fund allocation.
5. Pension fund, superannuation, retirement, or provident fund or plan.

37
In addition to climate-related metrics, GHG emissions, and climate-related targets—which are part of the 11 recommended disclosures—the
survey asked about four other specific metrics as follows: weighted average carbon intensity; the extent to which assets under management or
in the investment portfolio are aligned with a well-below 2°C scenario; the extent to which products, funds, or investment strategies are aligned
with a well-below 2°C scenario; and targets related to GHG emissions.

28
 The Task Force on Climate-related Financial Disclosures

or less in AUM compared with 66% of asset determine whether the organizations reported
owner respondents. Of the asset owner information aligned with each of the Task Force’s
respondents, the vast majority were insurance 11 recommended disclosures.38
companies (48%) and corporate or non-
corporate pension funds (32%). For asset As shown in the top two charts in Box A8, the
managers, the survey asked about the types of top 50 asset managers represented 63% or $70
services they offer and more than one type of trillion of the total AUM held by asset managers
service could be selected, with the exception ($112 trillion); and the top 50 asset owners
of “execution and advisory services only.” Of held 35% or $26 trillion of the total AUM held
the 87% that offered multiple services, 65% by corporate and non-corporate pensions,
indicated they offered fiduciary management insurance companies, endowments, and
or other outsourced discretionary fund reserve/sovereign wealth funds ($75 trillion). 39
allocation, 42% indicated fund of funds, The bottom two charts show the geographic
manager of managers, or sub-advised products, distribution of the survey respondents. The
32% indicated wealth management, and the majority of the top 50 asset managers were
remaining 7% identified other types of services. headquartered in North America (82%),
followed by Europe (12%), and then Asia Pacific
Scope and Approach: Review of Largest (6%). There was no representation from Latin
A.
State of Climate-Related
Asset Managers and Asset Owners America or the Middle East and Africa. Among
Financial Disclosures In addition to the survey — which focused on asset owners, a plurality were headquartered
reporting to clients and beneficiaries, the Task in North America (40%), followed by Asia Pacific
Force also reviewed large asset managers and (26%), Europe (18%), and the Middle East and
B.
asset owners’ publicly available reports to better Africa (16%). Similar to asset managers, there
Financial Statement
understand their reporting practices to a broader was no representation from Latin America.
Considerations
group of stakeholders. The review included Summary of TCFD-Aligned Reporting
C. the top 50 asset managers and top 50 asset
Case Studies on Scope 3 owners globally based on their assets under The Task Force’s survey asked asset managers
GHG Emissions management. The reports reviewed included and asset owners whether they currently
the most recent financial filings, annual or report, plan to report, or do not plan to report
integrated reports, and climate or sustainability climate-related information to their clients
D.
TCFD-Aligned Requirements reports published between March 2021 and and beneficiaries, respectively. As shown in
and Related Initiatives March 2023. The purpose of the review was to the top charts in Box A9 (p. 30), the majority of

E.
Box A8
Types of Financial Impact
and Associated Drivers Composition of Top 50 Asset Managers and Top 50 Asset Owners

F. Percent of Total Global Assets Under Management of Top 50

Insights Gained and View Asset Managers Asset Owners
on Future Work

37% Top 50 35% Top 50

Appendices ($42T) ($26T)
63% 65%
($70T) All Other ($49T) All Other

Distribution of Top 50 by Region

Asset Managers Asset Owners
North America 82% North America 40%
Europe 12% Asia Pacific 26%
Asia Pacific 6% Europe 18%
Middle East and Africa 16%

38
This approach was not designed to assess the quality or comprehensiveness of the organizations’ climate-related reporting, but rather to provide
an indication of the alignment of information in their publicly available reports with the Task Force’s recommendations.
39
All figures are for 2021. The top 50 asset managers’ AUM was sourced from Pensions & Investments, “The Largest Money Managers,” December
31, 2021. The top 50 asset owners’ AUM was sourced from the Thinking Ahead Institute, The Asset Owner 100, November 30, 2022. Asset
managers’ total AUM was sourced from Boston Consulting Group, “Global Asset Management 2022: From Tailwinds to Turbulence,” May 25,
2022. Asset managers’ AUM includes professionally managed assets, which can include asset owners’ captive AUM when it is delegated to asset
managers. Asset owners’ total AUM was sourced from the Preqin database.

29
 The Task Force on Climate-related Financial Disclosures

respondents indicated they currently report asset managers for reporting was that climate-
to their clients or beneficiaries — 70% of asset related risks are material, followed by requests
managers and 84% of asset owners, and most from clients. For asset owners, the most often
of the remainder indicated they plan to report. cited reason was tied — at 57% — between
Respondents that indicated they do not plan climate-related risks are material and regulators
to report climate-related financial information are or will be requiring such reporting. When
to their clients or beneficiaries — 6% of asset reviewing both asset manager and asset
managers (6) and 5% of asset owners (2) — were owner respondents that indicated one of the
not asked to complete questions about their reasons for reporting is because of regulatory
reporting practices on information aligned with requirements, the Task Force found 50% were
the Task Force’s 11 recommended disclosures. located in Europe, 31% in North America, 18% in
The charts in the middle of Box A9 show Asia Pacific, and the remaining 1% in the Middle
the reasons why asset managers and asset East and Africa.
owners report or plan to report climate-related
information to their clients and beneficiaries, The charts at the bottom of Box A9 show two
respectively. The most often cited reason by common reporting channels asset managers

A.
Box A9
State of Climate-Related
Financial Disclosures Reporting of Climate-Related Information to Clients and Beneficiaries
Percent of Respondents1

B.
Status of Reporting
Financial Statement
Considerations All Respondents (150) 74% 21% 5%

Asset Managers (106) 70% 24% 6%

C. Asset Owners (44) 84% 11% 5%
Case Studies on Scope 3
Currently Report Plan to Report Do Not Plan to Report
GHG Emissions

Reasons for Reporting or Planning to Report2

D.
TCFD-Aligned Requirements Reasons Asset Managers (100) Asset Owners (42)

and Related Initiatives Climate-Related Risks are Material 68% 16% 57% 5%
Requests from Clients or Beneficiaries 55% 8% 40% 5%
E. Senior Management Priority 45% 11% 52% 5%
Types of Financial Impact Required by Regulators (or Will Be) 41% 10% 57% 5%
and Associated Drivers
Peers Report Information 35% 7% 48% 5%

Currently Report Plan to Report

F.
Insights Gained and View
Channels for Reporting to Clients and Beneficiaries3
on Future Work
81%
Asset Managers (74)
Appendices 46%
95%
Asset Owners (37)
11%

Publicly Available Reports Reports Available to Clients or Beneficiaries Only

1. The numbers in parentheses represent the number of respondents.

2. Respondents could select multiple reasons.
3. Only respondents that indicated they currently report to their clients or beneficiaries received this question.

and asset owners use to report climate-related to communicate climate-related financial

information to their clients and beneficiaries, information to their stakeholders. The majority
respectively — reports that are publicly of both asset managers (81%) and asset
available and those that are made available to owners (95%) use publicly available reports
clients or beneficiaries only. Only respondents to communicate this information. In addition,
indicating they currently report climate-related nearly half of the asset managers (46%)
information to their stakeholders were asked indicated they communicate to their clients
about the reporting channels they use. The through reports that are available only to the
Task Force was interested in understanding clients — the vast majority of which are tailored
the extent to which asset managers and to the clients’ holdings.
asset owners use publicly available reports

30
 The Task Force on Climate-related Financial Disclosures

TCFD-Aligned Reporting by Asset Managers The survey also asked respondents about seven
specific climate-related metrics and targets, as
Overall, nearly two thirds of asset manager
shown in Figure A38 (p. 32). The Task Force was
respondents indicated they currently report
interested in the level of reporting on certain
information in line with at least five of the
metrics included in its supplemental guidance,
Task Force’s 11 recommended disclosures,
including GHG emissions associated with assets
and 15% indicated they report on all 11. Figure
under management and the weighted average
A37 provides the percent of asset manager
carbon intensity for each product or investment
respondents indicating they currently report,
strategy.42 Figure A38 (p. 32) shows the percent
plan to report, do not plan to report, or are
of asset managers that indicated they currently
undecided about reporting to their clients for
report on each of the seven metrics to their
each of the 11 recommended disclosures.40 Of
clients. Just over half of the asset managers
those currently reporting, the highest level of
(52%) indicated they report on the GHG
reporting was a tie between descriptions of
emissions associated with their AUM. This
the material climate-related issues identified
was the most often reported metric, followed
(Strategy a) and climate-related metrics (Metrics
by the weighted average carbon intensity for
and Targets a) — both at 65%. These were
each product or investment strategy at 45%.
followed by reporting on Governance b) and Risk
A. The least reported metric — at 21% — was the
Management a), both at 61%, and Governance
State of Climate-Related extent to which assets under management align
a) at 60%. The lowest level of reporting — at
Financial Disclosures with a well below 2°C scenario.
26% — was on the resilience of strategies under
different climate-related scenarios (Strategy c); In addition to asking respondents about the
B. however, 32% of asset managers indicated they types of climate-related information they
Financial Statement were planning to report on this in the future.41 report to their clients, the survey asked
Considerations

C. Figure A37
Case Studies on Scope 3 Asset Managers: Status of TCFD-Aligned Reporting
GHG Emissions
Recommendation Recommended Disclosure Percent for Each Reporting Option
D. Governance a) Board Oversight 60%
24%
TCFD-Aligned Requirements 6%
10%
and Related Initiatives 61%
b) Management’s Role 27%
4%
E. 8%
Strategy a) R
 isks and Opportunities 65%
Types of Financial Impact 26%
4%
and Associated Drivers 5%
b) Impact on Organization 54%
35%
F. 4%
7%
Insights Gained and View c) Resilience of Strategy 26%
32%
on Future Work 14%
28%
Risk Management a) R
 isk ID and Assessment Processes 61%
Appendices 30%
2%
7%
b) R
 isk Management Processes 57%
33%
2%
8%
c) Integration into Overall Risk Management 52%
30%
5%
13%
Metrics and Targets a) C
 limate-Related Metrics 65%
25%
4%
6%
59%
b) S
 cope 1,2,3 GHG Emissions 30%
5%
6%
c) C
 limate-Related Targets 44%
29%
10%
17%
0% 20% 40% 60% 80% 100%
Legend: Currently Report Plan to Report Do Not Plan to Report Undecided Base size: 100

40
See Table A1 (p. 4) for descriptions of each of the Task Force’s 11 recommended disclosures.
41
Nearly 70% of those that indicated they plan to report on Strategy c) currently report on at least one of the other recommended disclosures.
42
TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, October 14, 2021 (pp. 48–49).

31
 The Task Force on Climate-related Financial Disclosures

Figure A38
Asset Managers: Currently Report on Select Metrics and Targets
Metrics and Targets Percent Responding1
a) Alignment with <2°C Scenario: AUM 21%
Alignment with <2°C Scenario: Products and Strategies2 22%
Other Metrics 44%
b) GHG Emissions of AUM 52%
WACI: Products and Investment Strategies3 45%
c) Targets Related to GHG Emissions 36%
Other Targets 25%
0% 20% 40% 60% 80% 100%
Base size: 100

1. The percentages for Metrics and Targets a), b), and c) in Figure A37 (p. 31) are higher than the percentages
for specific metrics associated with Metrics and Targets a), b), and c) in this figure because respondents were
identified as currently reporting if they indicated reporting at least one of the metrics listed.
2. Alignment with <2°C Scenario: Products and Investment Strategies.
A. 3. Weighted Average Carbon Intensity (WACI).
State of Climate-Related
Financial Disclosures
about challenges in reporting information In anticipation that insufficient information
B. aligned with each of the Task Force’s four would be identified as a significant challenge
Financial Statement recommendations — Governance, Strategy, Risk again this year, the survey asked respondents
Considerations Management, and Metrics and Targets. Figure to indicate whether the issue of insufficient
A39 list the challenges identified along with the information related to public companies, private
C. overall results as well as by recommendation. investments, sources other than these two,
Case Studies on Scope 3 Consistent with a similar survey conducted by or some combination of the three options. Of
GHG Emissions the Task Force last year, insufficient information those identifying this challenge, 62% indicated
from investee companies and a lack of public companies, 49% indicated private
D. methodologies were the two most frequently investments, and 45% indicated sources other
TCFD-Aligned Requirements cited challenges.43 Over 70% of asset manager than these two.
and Related Initiatives respondents indicated insufficient information
is a challenge for their reporting in general and The Task Force also reviewed asset managers’
E. especially for reporting on metrics and targets, reporting on information aligned with its 11
Types of Financial Impact and 53% identified a lack of methodologies. recommended disclosures based on their
and Associated Drivers size using AUM. Figure A40 (p. 33) shows the
percent of asset managers in each size category
F.
Insights Gained and View
on Future Work
Figure A39
Appendices Asset Managers: Challenges Reporting Climate-Related Information
Percent of Respondents

Metrics and
Challenge Governance Strategy Risk Mgmt. Targets Overall

Insufficient Information from Companies 22% 31% 42% 63% 71%

Lack of Methodologies 14% 27% 32% 40% 53%

Lack of Resources 21% 23% 26% 25% 35%

Lack of Expertise and/or Capabilities 13% 13% 15% 16% 25%

Concern about Negative Scrutiny 12% 8% 6% 14% 23%

Lack of Board / Senior Management Support 3% 3% 4% 3% 6%

Base size: 100 Legend:

Low to high percentage of respondents

43
TCFD, 2022 Status Report, October 13, 2022 (p. 38).

32
 The Task Force on Climate-related Financial Disclosures

indicating they currently report on each than larger ones. For example, asset managers
recommended disclosure. The largest asset with between $1 billion and $9 billion in AUM
managers — those with more than $100 billion have higher levels of reporting for eight of 11
in AUM — have the highest percent of reporting recommended disclosures than asset managers
on each of the 11 recommended disclosures. with between $10 billion and $99 billion in
This is generally consistent with the AI review AUM. Notably, only 8% of asset managers with
results for public companies in which a higher between $10 billion and $99 billion in AUM
percentage of large companies disclosed TCFD- report on Strategy c) compared with 27% of
aligned information than smaller companies. asset managers with between $1 billion and $9
An interesting difference between the AI review billion in AUM and 24% for those with less than
results and these survey results is that smaller $1 billion in AUM.
asset managers do not necessarily report less

Figure A40
Asset Managers: Currently Report TCFD-Aligned Information by Size (AUM)
Percent of Respondents1

A. >$100B $10–99B $1–9B <$1B

Recommendation Recommended Disclosure (18) (24) (37) (21)
State of Climate-Related
Financial Disclosures Governance a) B
 oard Oversight 72% 58% 57% 57%
b) M
 anagement’s Role 78% 58% 57% 57%
B. Strategy a) R
 isk and Opportunities 83% 54% 65% 62%
Financial Statement b) Impact on Organization 78% 46% 51% 48%
Considerations c) R
 esilience of Strategy 50% 8% 27% 24%
Risk Management a) R
 isk ID and Assessment Proc. 72% 54% 68% 48%
C.
b) R
 isk Management Processes 72% 50% 57% 52%
Case Studies on Scope 3
c) Integration into Risk Mgmt. 72% 42% 51% 48%
GHG Emissions
Metrics and Targets a) Climate-Related Metrics 78% 63% 62% 62%
b) S
 cope 1,2,3 GHG Emissions 78% 58% 59% 43%
D.
TCFD-Aligned Requirements c) C
 limate-Related Targets 50% 38% 46% 43%
and Related Initiatives 1. The numbers in parentheses represent the number of respondents. Legend:
Low to high percentage of respondents
E.
Types of Financial Impact
Figure A41 provides a breakdown of the types specific reports, while another 26% indicated
and Associated Drivers
of reports in which asset managers indicated they are planning to report to clients this way
they currently report, plan to report, do in the future. Very few — 8% — indicated they
F.
not plan to report, or are undecided about report to clients through their financial filings,
Insights Gained and View
reporting climate-related information to their and only 5% indicated they plan to report this
on Future Work
clients. Most asset managers currently report in way in the future. Asset manager respondents,
sustainability reports or reports available only on average, indicated reporting to their clients
Appendices
to their clients — at 60% and 56%, respectively. through two types of reports.
Over 35% indicated they report through climate-

Figure A41
Asset Managers: Location of Reporting
Percent of Respondents
Reporting Status

Reporting Type 1
Currently Report Plan to Report Do Not Plan to Report Undecided
Financial Filling 8% 5% 8% 10%
Annual Report or Integrated Report 32% 14% 13% 11%
Sustainability Report 60% 21% 2% 9%
Climate-Specific Report 37% 26% 12% 15%
Client Report 56% 20% 3% 12%
Other 8% 0% 0% 0%
Base size: 100 Legend:
1. Respondents could select multiple report types. Low to high percentage of respondents by reporting status

33
 The Task Force on Climate-related Financial Disclosures

As mentioned previously, the Task Force also asset managers by AUM are described in Box
reviewed the largest asset managers and A10. Notably, 68% of the top 50 asset managers
asset owners’ publicly available reports to reported climate-related information in line with
better understand their reporting practices at least five of the 11 recommended disclosures
to a broader group of stakeholders. The Task — which is generally consistent with the survey
Force’s findings from the review of the top 50 findings, but only 2% reported in line with all 11.

Box A10
Top 50 Asset Managers: TCFD-Aligned Reporting1
Reporting Aligned with the 11 Recommended Disclosures
The highest level of reporting for the top 50 asset managers was for Metrics and Targets a) at 70%, followed by a tie
between Governance a) and Governance b) at 64%, as shown in the figure below. The lowest level of reporting was on
the resilience of asset managers’ strategies under different climate-related scenarios — Strategy c) — at 24%, which is
consistent with results from the survey respondents and previous years’ analyses.

A. Recommendation Recommended Disclosure Percent for Each Reporting Option

State of Climate-Related Governance a) Board Oversight 64%
Financial Disclosures b) Management’s Role 64%
Strategy a) R
 isks and Opportunities 60%
B. b) Impact on Organization 40%
Financial Statement
c) Resilience of Strategy 24%
Considerations
Risk Management a) R
 isk ID and Assessment Processes 56%

C. b) R
 isk Management Processes 60%

Case Studies on Scope 3 c) Integration into Overall Risk Management 52%

GHG Emissions Metrics and Targets a) C
 limate-Related Metrics 70%
b) S
 cope 1,2,3 GHG Emissions 46%
D. c) Climate-Related Targets 46%
TCFD-Aligned Requirements
0% 20% 40% 60% 80% 100%
and Related Initiatives
Reporting on Specific Metrics and Targets Metrics and Targets Percent
E. For climate-related metrics and targets, the Task Force <2°C Alignment: AUM 8%
Types of Financial Impact was most interested in those associated with asset
<2°C Alignment: Products and Investment Strategies 16%
and Associated Drivers managers’ AUM versus other types (referred to as
operational). 2 As shown on the right, the highest level of GHG Emissions of AUM 20%
reporting on climate-related metrics was on WACI of AUM WACI: AUM 30%
F.
at 30%, followed by WACI on products and investment
Insights Gained and View WACI: Products and Investment Strategies 22%
strategies at 22%. For climate-related targets, 56% of
on Future Work asset managers reported on their operational targets vs. Targets: GHG Emissions of AUM 44%
44% on their GHG emission targets for AUM. Targets: Operational 56%
Appendices
Directional Comparison with Survey Results
Recognizing these results are not directly comparable to the survey results discussed above since survey respondents
varied in size and were subject to self-selection bias, the Task Force instead compared the most and least disclosed
recommended disclosures from the two groups. The groups were aligned on the least reported recommended
disclosure — Strategy c). They were also aligned on the most reported recommended disclosure — Metrics and Targets
a); however, the survey results showed a tie between Metrics and Targets a) and Strategy a) for the most reported
recommended disclosure.

1. The base size for the chart and table in this figure is 50.
2. Operational targets include those related to the organization’s own carbon footprint, including but not limited to carbon neutrality,
energy efficiency, etc.

34
 The Task Force on Climate-related Financial Disclosures

TCFD-Aligned Reporting by Asset Owners a) at 79%. A similarly high level of reporting —

The Task Force applied the same approach at 76% — was on Strategy a). The lowest level
to asset owners’ survey responses as it did of reporting was on Strategy c) — the resilience
to asset managers’ responses. As such, the of strategies under different climate-related
figures included below generally follow the scenarios, but 60% of respondents indicated
same structure and order as those on previous they currently report this information and
pages.44 Overall, nearly three quarters of asset another 24% indicated they plan to. In addition,
owner respondents indicated they currently very few asset owners indicated they were
report information in line with at least five of not planning to report on the recommended
the Task Force’s 11 recommended disclosures, disclosures, with the exception of Metrics
and 40% indicated they report on all 11. Notably, and Targets b) — 12% indicated they were not
the percent of asset owners currently reporting planning to report this information in the future.
on ten of the 11 recommended disclosures was
The survey asked respondents about seven
67% or higher. Figure A42 provides the percent
specific climate-related metrics and targets,
of asset owners indicating they currently report,
as shown in Figure A43 (p. 36). The Task Force
plan to report, do not plan to report, or are
wanted to understand the level of reporting
undecided about reporting to their beneficiaries
A. on certain metrics included in its supplemental
for each of the 11 recommended disclosures.
State of Climate-Related guidance, including GHG emissions associated
Of those currently reporting, the highest level
Financial Disclosures with assets under management and the
of reporting — at 83% — was on Governance b),
weighted average carbon intensity for each fund
which was followed by reporting on Governance
B. or investment strategy.45 Figure A43 (p. 36) shows
Financial Statement
Considerations
Figure A42
C. Asset Owners: Status of TCFD-Aligned Reporting
Case Studies on Scope 3
GHG Emissions
Recommendation Recommended Disclosure Percent for Each Reporting Option
Governance a) Board Oversight 79%
D. 10%
2%
TCFD-Aligned Requirements 9%
and Related Initiatives b) Management’s Role 83%
10%
0%
7%
E. Strategy a) R
 isks and Opportunities 76%
14%
Types of Financial Impact 0%
10%
and Associated Drivers 74%
b) Impact on Organization 14%
0%
12%
F.
c) Resilience of Strategy 59%
Insights Gained and View 24%
5%
on Future Work 12%
Risk Management a) R
 isk ID and Assessment Processes 74%
14%
Appendices 2%
10%
b) R
 isk Management Processes 69%
19%
2%
10%
c) Integration into Overall Risk Management 67%
19%
2%
12%
Metrics and Targets a) C
 limate-Related Metrics 74%
16%
5%
5%
b) S
 cope 1,2,3 GHG Emissions 69%
10%
12%
9%
c) Climate-Related Targets 67%
19%
5%
9%
0% 20% 40% 60% 80% 100%
Legend: Currently Report Plan to Report Do Not Plan to Report Undecided Base size: 42

44
The one exception is that there is no figure on asset owners’ reporting on information aligned with the 11 recommended disclosures based on
their size as there is for asset managers (see Figure A40, p. 33) given the lower number of respondents.
45
TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, October 14, 2021 (pp. 41–42).

35
 The Task Force on Climate-related Financial Disclosures

the percent of asset owners that indicated they Consistent with a similar survey conducted by
currently report on each of the seven metrics to the Task Force last year, a lack of methodologies
their beneficiaries. Over 60% of the asset owners and insufficient information were the two
indicated they report on the GHG emissions most frequently cited challenges by asset
associated with their assets under management owners. Over 75% of asset owner respondents
(under Metrics and Targets b). This was the most indicated insufficient information from investee
often reported metric, followed by climate- companies as a challenge for their reporting in
related targets related to GHG emissions. general and especially for reporting on metrics
and targets.
In addition to asking respondents about the
types of climate-related information they report In anticipation that insufficient information
to their beneficiaries, the survey asked about would be identified as a significant challenge
challenges they face in reporting information again this year, the survey asked respondents
aligned with each of the Task Force’s four to indicate whether the issue of insufficient
recommendations — Governance, Strategy, Risk information related to public companies, private
Management, and Metrics and Targets. Figure investments, sources other than these two,
A44 lists the challenges identified along with the or some combination of the three options. Of
overall results as well as by recommendation. those identifying this challenge, 78% indicated
A.
State of Climate-Related
Financial Disclosures
Figure A43
B. Asset Owners: Currently Report on Select Metrics and Targets
Financial Statement
Considerations Metrics and Targets Percent Responding1
a) Alignment with <2°C Scenario: AUM 43%
C. Alignment with <2°C Scenario: Products and Strategies2 38%
Case Studies on Scope 3 Other Metrics 50%
GHG Emissions b) GHG Emissions of AUM 64%
WACI: Funds and Investment Strategies 48%
D. c) Targets Related to GHG Emissions 60%
TCFD-Aligned Requirements Other Targets 38%
and Related Initiatives 0% 20% 40% 60% 80% 100%
Base size: 42
E.
1. The percentages for Metrics and Targets a), b), and c) in Figure A42 (p. 35), are higher than the percentages for specific metrics
Types of Financial Impact associated with Metrics and Targets a), b), and c) in this figure because respondents were identified as currently reporting if they
and Associated Drivers indicated reporting at least one of the metrics listed.
2. Alignment with <2°C Scenario: Funds and Investment Strategies.
F.
Insights Gained and View
on Future Work

Appendices Figure A44

Asset Owners: Challenges Reporting Climate-Related Information
Percent of Respondents

Metrics and
Challenge Governance Strategy Risk Mgmt. Targets Overall

Insufficient Information from Companies 21% 33% 36% 71% 76%

Lack of Methodologies 12% 36% 33% 45% 57%

Lack of Resources 19% 19% 29% 31% 45%

Lack of Expertise and/or Capabilities 21% 21% 24% 26% 38%

Concern about Negative Scrutiny 14% 19% 19% 31% 38%

Lack of Board / Senior Management Support 14% 14% 7% 12% 19%

Base size: 42 Legend:

Low to high percentage of respondents

36
 The Task Force on Climate-related Financial Disclosures

public companies, 84% indicated private not plan to report, or are undecided about
investments, and 59% indicated sources other reporting climate-related information to their
than these two. A lack of methodologies was beneficiaries. Most asset owners indicated
also identified as a significant challenge by asset they currently report to their beneficiaries in
owner respondents, especially for metrics and sustainability reports (64%), climate-specific
targets (45%). The least identified challenge reports (62%), or annual or integrated reports
for reporting in general was a lack of board (60%). In addition, 19% indicated they currently
or senior management support, which was report climate-related information in their
identified by 19% of respondents. financial filings. Asset owner respondents,
on average, indicated reporting to their
Figure A45 provides a breakdown of the types beneficiaries through at least two different
of reports in which respondents indicated types of reports.
they currently report, plan to report, do

Figure A45
Asset Owners: Location of Reporting
A. Percent of Respondents
State of Climate-Related Reporting Status
Financial Disclosures Currently Report Plan to Report Do Not Plan to Report Undecided
Reporting Type1
Financial Filling 19% 7% 14% 2%
B.
Financial Statement Annual Report or Integrated Report 60% 7% 12% 5%
Considerations Sustainability Report 64% 14% 10% 2%
Climate-Specific Report 62% 12% 5% 5%
C.
Beneficiaries Report 38% 7% 17% 10%
Case Studies on Scope 3
GHG Emissions Other 10% 0% 0% 0%

Base size: 42 Legend:

D. 1. Respondents could select multiple report types. Low to high percentage of respondents by reporting status
TCFD-Aligned Requirements
and Related Initiatives

E.
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View
on Future Work

Appendices

37
 The Task Force on Climate-related Financial Disclosures

As mentioned previously, the Task Force also described in Box A11. Overall, 36% of the top
reviewed the largest asset managers and asset 50 asset managers reported climate-related
owners’ publicly available reports to better information in line with at least five of the 11
understand their reporting practices to a recommended disclosures, and 8% reported in
broader group of stakeholders. The Task Force’s line with all 11. Notably, the Task Force found
findings from the review of the top 50 asset sovereign wealth funds had the lowest levels of
owners by AUM — which consisted primarily reporting when compared with non-corporate
of non-corporate pension funds, insurance pension funds and insurance companies.
companies, and sovereign wealth funds — are

Box A11
Top 50 Asset Owners: TCFD-Aligned Reporting1
Reporting Aligned with the 11 Recommended Disclosures
The highest level of reporting for the top 50 asset owners was on Metrics and Targets a) at 44%, followed by Governance a),
Governance b), and Strategy a) at 36%, as shown below. The lowest levels of reporting were for Strategy c) and Strategy b) at 18%
and 20%, respectively.
A.
Recommendation Recommended Disclosure Percent of Companies Reporting
State of Climate-Related
Financial Disclosures Governance a) Board Oversight 36%
b) Management’s Role 36%
B. Strategy a) R
 isks and Opportunities 36%
Financial Statement b) Impact on Organization 20%
Considerations
c) Resilience of Strategy 18%
Risk Management a) R
 isk ID and Assessment Processes 24%
C.
Case Studies on Scope 3 b) R
 isk Management Processes 34%
GHG Emissions c) Integration into Overall Risk Management 28%
Metrics and Targets a) C
 limate-Related Metrics 44%
D. b) S
 cope 1,2,3 GHG Emissions 30%
TCFD-Aligned Requirements c) Climate-Related Targets 30%
and Related Initiatives 0% 20% 40% 60% 80% 100%

E. Reporting on Specific Metrics and Targets Metrics and Targets Percent

Types of Financial Impact For climate-related metrics and targets, the Task Force was <2°C Alignment: AUM 12%
and Associated Drivers most interested in those associated with asset owners’
<2°C Alignment: Funds and Investment Strategies 14%
AUM versus other types (referred to as operational). 2 As
shown on the right, the highest level of reporting was on GHG Emissions of AUM 14%
F. WACI: AUM 4%
targets for GHG emissions of AUM. Notably, this was more
Insights Gained and View commonly reported than operational targets. Reporting WACI: Funds and Investment Strategies 14%
on Future Work on WACI for AUM was the lowest with only 4% of the top 50
Targets: GHG Emissions of AUM 30%
reporting on this.
Targets: Operational 22%
Appendices
Directional Comparison with Survey Results
Recognizing these results are not directly comparable to the survey results discussed above since survey respondents varied
in size and were subject to self-selection bias, the Task Force instead compared the most and least disclosed recommended
disclosures from the two groups. The groups were aligned on the least reported recommended disclosure — Strategy c). The
groups were not aligned on the most reported recommended disclosure, which survey respondents identified as Governance
b) whereas the most reported item for the top 50 was Metrics and Targets a).

1. The base size for the chart and table in this figure is 50.
2. Operational targets include those related to the organization’s own carbon footprint, including but not limited to carbon neutrality,
energy efficiency, etc.

Case Studies their respective experiences in implementing

the Task Force’s recommendations, which
This subsection includes two case studies
are intended to provide practical insights
— one from a diversified financial services
on and considerations for other asset
company that is both an asset owner and asset
managers and asset owners implementing the
manager and the other from an asset manager.
recommendations.
In the case studies, the organizations describe

38
 The Task Force on Climate-related Financial Disclosures

Case Study by a South African Asset advancing our TCFD-aligned reporting in our
Owner and Asset Manager integrated annual reporting. Our decision to
pursue TCFD-aligned disclosures is based on
Sanlam is a South African diversified financial a joint effort by the sustainability and risks
services company that is both an asset owner teams combined with a need to quantify the
and an asset manager. We have a significant financial impacts of climate-related risks and
commercial presence across the African opportunities, including those in our investment
continent and global operations in India and portfolios.
Malaysia. We offer a wide range of services to
both retail and institutional clients, including We began implementing the TCFD
insurance, asset and wealth management, recommendations by analyzing our global
financial planning, retirement, credit, and financial services peers’ reporting practices.
healthcare solutions. We develop and deliver This allowed us to gain insights into the
these services through five business clusters, best practices of integrating the TCFD
namely Sanlam Investment Group, Sanlam Life recommendations in our industry and the
and Savings, Sanlam Emerging Markets, Sanlam notable gaps in our processes. We also used
Fintech, and Santam. We have been a signatory our group-wide enterprise risk management
A. to CDP since 2007 and were the first South framework — Own Risk and Solvency
State of Climate-Related African private-sector asset owner to become a Assessment (ORSA) — to quantify the risks our
Financial Disclosures signatory to the UN Principles for Responsible industry faces.
Investing (UN PRI).
We then commissioned a diagnostic analysis
B.
We recognize that climate change amplifies of our readiness for TCFD-aligned reporting,
Financial Statement
Considerations existing challenges related to health, safety, primarily consisting of interviews with internal
food security, and socioeconomic development. stakeholders on current practices. The
This is particularly the case in Africa, where we diagnostic report helped guide our efforts
C.
conduct a significant portion of our business. and set attainable integration and disclosure
Case Studies on Scope 3
Our clients are already experiencing the impacts goals. The analysis emphasized the importance
GHG Emissions
of climate change, and we are committed to of raising awareness among board members
becoming an African champion supporting and executives about climate-related risks
D.
climate action. and opportunities and highlighted the need to
TCFD-Aligned Requirements
integrate climate-related risk considerations
and Related Initiatives
Implementing the recommendations of the into our business strategy. The analysis further
TCFD is, in our view, not only about disclosing confirmed the importance of incorporating
E.
the potential financial impacts for Sanlam climate-related risk and opportunity
Types of Financial Impact
but also a key component of furthering our assessments into our ORSA processes.
and Associated Drivers
actions on climate change. This case study
shows our journey and the challenges we We developed a coordinated plan of action
F. in the form of a five-year roadmap to align
faced as we first disclosed in line with the TCFD
Insights Gained and View with the TCFD recommendations and to drive
recommendations for our group-wide business,
on Future Work climate action, prioritizing areas where we
including for our investment portfolios.
estimated high levels of potential financial
Appendices Our TCFD Journey impacts. The first phase of our roadmap was
to initiate dialogue on climate change with
Sanlam Group began implementing the TCFD
both our internal business clusters and our
recommendations in 2021. This was followed by
external stakeholders. The subsequent phase
the publication of our Climate Change Resilience
— which we are currently in — consists of
Report in 2022, which disclosed climate-related
setting up policies and procedures to monitor,
risks and opportunities in line with the TCFD
quantify, and manage risks. The final stage of
recommendations.46 In this inaugural report,
our roadmap — which starts in 2024 — will
we provided a comprehensive view of our
include the ongoing monitoring, reporting,
progress in aligning our internal processes to
and management of climate-related risks and
enable TCFD-aligned disclosures. The report
opportunities.
also provided a view of our key priorities for

46
Sanlam, Climate Change Resilience Report 2021, August 2022.

39
 The Task Force on Climate-related Financial Disclosures

Disclosures discussing the importance of climate-related

risks and opportunities. This informed
For our inaugural report, we prioritized
dialogue helped us understand stakeholders’
disclosures on climate-related information that
expectations, which we incorporated into our
was readily available. For example, we disclosed
reporting process. This collective engagement
the board’s role in the governance of climate-
has been instrumental in generating the buy-in
related risks and opportunities (see Figure A46),
necessary to maintain momentum with our
detailing how two committees advise the board
TCFD-aligned reporting.
on identifying and managing climate-related
risks and opportunities. Another challenge was our stakeholders’
varying levels of maturity in understanding
We also disclosed our practices on risk
climate-related information. To ensure that
management in the same report — as we had
our employees, board, and executives alike
already integrated our processes for identifying,
are well-equipped to address climate-related
assessing, and managing climate-related
risks relevant to our business clusters, we have
risks and opportunities across the business
developed resources and provided training on
through our ORSA process (see Figure A47, p.
climate-related risk management. For example,
41). We also detailed how climate-related risks
we conducted a webinar on climate-related risk
A. impacting our strategy were considered in a
for the board, strengthening board members’
State of Climate-Related top-down manner while those impacting our
Financial Disclosures
abilities to effectively respond to climate-related
day-to-day operations were considered in a
challenges and opportunities.
bottom-up manner.
B. We also face a challenge regarding the lack of
Financial Statement Overcoming Challenges
available climate-related data and information,
Considerations We have encountered and overcome various specifically from our investee companies. For
challenges in our reporting of climate-related example, we are actively working through our
C. information. This includes complex stakeholder Sanlam Investments business to understand the
Case Studies on Scope 3 management given our multiple business underlying carbon footprint of our portfolios.
GHG Emissions clusters and large number of stakeholders. To While obtaining comprehensive self-reported
meet the need to bring everyone to the table, emissions data from our investee companies
D. we established open lines of dialogue and is challenging, we are leveraging third-party
TCFD-Aligned Requirements actively engaged with investors, regulators, climate data providers that enable the
and Related Initiatives and our internal teams. We structured the measurement and analysis of our portfolios’
conversations based on the TCFD framework, carbon footprints.
E. which provided a common language for
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View Figure A46
on Future Work Our Board’s Role in Governance of Climate-Related Risks and Opportunities

Appendices The following two Board committees provide oversight The Chairs of both committees are independent non-
and support to the Board and advise the Board regarding executive directors and have oversight roles in terms of
environmental (and climate-related) aspects. climate change. Depending on the nature of the climate-
• The Risk and Compliance committee advises and assists related matter submitted to either committee, it will note,
the Board in overseeing risk governance by setting provide approval, monitor or advise on the matter and
the direction for how risk management should be relevant related issues that might impact the Group and its
approached and addressed at Sanlam. This includes material stakeholders. When necessary, these committees
(among others) the identification, mitigation and elevate climate-related matters to the Board for its
management of climate-related risks that the Group consideration and/or approval.
might be exposed to. The committee meets quarterly Sustainability matters (non-financial and ESG) are considered
and provides feedback at every Board meeting. from a risk, governance, compliance and opportunity
perspective and are channelled into Sanlam’s enterprise
• The Social, Ethics and Sustainability (SES) committee risk management process. Read more about this process,
monitors and advises the Board on all ESG matters, including management’s role in governing climate-related
including climate-related risks and opportunities. risk, from page 15.

Sanlam, Climate Change Resilience Report 2021, p. 8

Note: Some content was reformatted in order to fit the page.

40
 The Task Force on Climate-related Financial Disclosures

Figure A47
Our Risk Management Process

SANLAM’S ORSA PROCESS Each cluster’s finance and risk committee/forum

The Own Risk and Solvency Assessment (ORSA) is an maintain risk registers and reports. Quarterly Business
overarching process that brings together the results Review (QBR) cluster forums provide financial, strategic,
from various processes embedded at the Sanlam Group risk and operational feedback to the Sanlam Life and
and cluster level as part of the Group Enterprise Risk Limited Boards and feedback on sustainability-related
Management (ERM) framework. The risk in the ORSA take matters, including climate issues. Significant and
account of Sanlam’s risk profile, approved risk appetite emerging climate change risks are thus escalated to
and business strategy. Group level via both structures.

The Group risk function manages the ORSA process and The Group has a specific focus on emerging risks that
drafts a quarterly Group ORSA Update report, covering form part of the top-down strategic risk assessment
assessments and analysis of the Group’s top-down process. Internal and external scanning of emerging risks
strategic risks, bottom-up operational risks, risk profile, is performed quarterly as part of this process. Internal
approved risk appetite, stress and scenario testing, scanning includes input from key subject matter experts
and projections over the business planning horizon. within the Group regarding emerging risks, whereas the
After management review, the report is tabled at the external scanning process focuses on external industry
A. and media risk reports.
quarterly Sanlam Risk and Compliance committee and
State of Climate-Related Board meetings. As an insurance provider, Sanlam has a specific focus on
Financial Disclosures
The Group ORSA process is well established and emerging risks such as the ones posed by climate change.
supported by parallel ORSA processes at cluster level. All These risks are typically outside of the usual frame of
B. clusters report on assessments of cluster’s strategic risks, reference and are often unknown.
Financial Statement top bottom-up risks, risk profile, risk appetite, emerging The Group ERM Forum initiated the process for assessing
Considerations risks, issues, solvency, stress, and scenario testing with the potential size and scope of identified climate-related
forward-looking projections. risks and opportunities. Risks are categorised into
C. Sanlam’s Group-wide enterprise risk management (ERM) either general, financial or business-specific risks. A
Case Studies on Scope 3 process includes the identification and management of sub-category of risks is then determined, with feedback
GHG Emissions climate change risks at different organisational levels: from key business owners, stakeholders and regulation
into primary risk categories such as strategic, market,
• Strategic climate change risks are considered using a operational, reputational or credit risk.
D. top-down approach.
Sustainability risks are filtered into this process and
TCFD-Aligned Requirements • Operational climate change risks (related to Sanlam’s prioritised based on materiality and impact on the
and Related Initiatives day-to-day operations) are considered using a bottom- business. Sanlam’s risk appetite statement defines the
up approach. substantive financial or strategic impact. The board sets
E. the risk appetite statement and is the key mechanism for
Types of Financial Impact setting limits for the identified risk categories.
and Associated Drivers
Sanlam, Climate Change Resilience Report 2021, p. 15
F. Note: Some content was reformatted in order to fit the page.
Insights Gained and View
on Future Work

Appendices
Lessons Learned Another important lesson we learned through
implementing the TCFD recommendations is
We have learned that assessing the current
that estimating the potential financial impacts
capabilities on climate-related information is
of climate-related risks and opportunities for
an important step toward reporting in line with
different business clusters and stakeholders
the TCFD recommendations. By thoroughly
is incredibly important. This exercise helps
reviewing our existing processes and identifying
us prioritize our efforts, allocate resources
gaps, we developed a targeted and effective
effectively, and develop targeted strategies
strategy for TCFD-aligned reporting that has also
to mitigate climate-related risks. Additionally,
helped inform our plan for climate action. The
it enhances our ability to communicate the
assessment further serves as the foundation for
financial implications of climate change on
ensuring that our internal processes generate
our business to our stakeholders, thereby
relevant information and that our reporting
facilitating informed decision-making and
efforts are meaningful and accurate.
fostering transparency.

41
 The Task Force on Climate-related Financial Disclosures

In addition, we have learned the importance disclose climate-related information in line

of committing to multi-year roadmaps for with the TCFD recommendations. For fiscal
continuous improvement. Climate-related year 2022 reporting, the climate report —
disclosures and risk management are ongoing which is referenced several times in Bradesco’s
processes that require regular monitoring, 2022 annual integrated report — addresses
evaluation, and enhancement. By developing the Task Force’s recommended disclosures.
our roadmap, we ensure that reporting in line We have been seeking to incorporate the
with the TCFD recommendations remains a TCFD recommendations into our different
priority and that our efforts are sustained departments through in-house activities,
over time with clear goals, milestones, and action plans, and participation in international
allocated resources. It also demonstrates our and national initiatives. We expanded our
commitment to transparency, accountability, dedicated climate team in 2022, employing even
and resilience in the face of climate change. more efforts to advance the internalization of
recommendations.47
Case Study by a Brazilian Asset Manager
Conducting Carbon Pricing Sensitivity Analysis
Bradesco Asset Management (BRAM) is a on Our Investment Portfolios
A. Brazilian asset manager and a wholly owned One of the more significant improvements
State of Climate-Related subsidiary of Banco Bradesco. Given the we have made recently to our climate-related
Financial Disclosures importance of the financial sector to the wider disclosures is the analysis of potential impacts
economy, it is important for us to actively from carbon pricing on our investee companies,
B. address climate-related risks and mobilize which is in line with the TCFD strategy
Financial Statement financial resources to enable the transition to a recommendation. We have conducted scenario
Considerations low-carbon economy. We believe that disclosure analysis in order to test the resilience of our
of climate-related information is essential portfolio to potential climate-related issues. For
C.
in ensuring market participants have the example, we believe that Brazil might introduce
Case Studies on Scope 3 information they need for decision making. carbon pricing regulations in the future and
GHG Emissions have therefore conducted scenario analysis to
The content below describes our TCFD journey
prepare our business for the associated risks
as well as two recent developments related to
D. and opportunities. The goal of our scenario
our disclosure of climate-related information in
TCFD-Aligned Requirements analysis was to assess whether the introduction
line with the TCFD recommendations. The first
and Related Initiatives of a regulated carbon market would affect the
development is our assessment of potential
net income of our portfolios.
impacts of carbon pricing on our investee
E. companies, and the second is our calculation of To assess the potential impact of a regulated
Types of Financial Impact the GHG emissions associated with our assets
and Associated Drivers
carbon market, we developed four GHG
under management. emissions pricing scenarios based on existing
GHG emissions trading systems in other
F. Journey on TCFD-Aligned Climate-Related
countries and external studies on carbon
Insights Gained and View Disclosures
price estimates for the Brazilian economy.
on Future Work
Banco Bradesco started its climate journey These scenarios covered both the effects
over 15 years ago (see Figure A48, p. 43) and of taxing GHG emissions and introducing a
Appendices
has been making progress in managing risks trading system for GHG emissions. We applied
and opportunities, initially focusing on its these carbon pricing scenarios to our investee
operations and more recently on transforming companies to estimate potential financial losses.
its businesses to support the development of a Initially, our scope was to evaluate all companies
low-carbon economy. In line with this journey, in our equity and credit portfolios. However,
BRAM became a signatory to the UN PRI in due to the lack of GHG emissions disclosures
2010. In early 2016, an executive director from from certain companies, we had to reduce
Banco Bradesco joined the TCFD as a vice chair; our sample size. Ultimately, we considered
and we became a TCFD supporter in 2017. only companies that had published their GHG
Since then, we have endeavored — through emissions for at least one year in the period
Banco Bradesco’s group-wide reports — to between 2016 and 2021.

47
This refers to BRAM’s exclusive team that conducts all the commitments of the climate agenda, such as TCFD, PCAF, etc.

42
 The Task Force on Climate-related Financial Disclosures

Figure A48
Banco Bradesco Journey on the Climate Agenda
100% of our
We have facilities are
adopted the now powered by
recommendations renewable energy.
We started the of the Task Force We have joined
calculation of the GHG on Climate- the Partnership for We have drafted
We joined the inventory in line with -Related Financial Carbon Accounting our first Net-Zero
CDP the GHG Protocol Disclosures (TCFD) Financials (PCAF) sectoral targets

2006 2008 2017 2020 2022

2007 2011 2019 2021 2023

We prepared We have become a We have started We have joined the We have released
A. our first GHG member of UNEP FI offsetting 100% of Net-Zero Banking our first Exercise of
operational carbon Alliance Net-Zero targets
State of Climate-Related emissions
inventory (based emissions (Scopes 1,
Financial Disclosures on ISO 14064) 2 and 3).
and offset 100% We have structured
of Scope 1 and 2 the Eco-efficiency We conducted the 1st
emissions for 2006 Master Plan study of financed
B. and 2007 - focused on emissions of our
Financial Statement operational
emissions
loan portfolio

Considerations
Banco Bradesco, Integrated Report 2022, p. 185
C. Note: Some content was reformatted in order to fit the page.
Case Studies on Scope 3
GHG Emissions

D.
Our results indicated that if Brazil were to Estimating Invested Emissions
TCFD-Aligned Requirements introduce a GHG emissions trading system,
We began calculating GHG emissions
and Related Initiatives 78% of the sample portfolio would not be
associated with our assets under management
significantly impacted, 19% would be negatively
— which we refer to as our invested emissions
impacted, and 3% would have the opportunity
E. — in 2020 and provided our first disclosure on
to sell carbon credits. We also found that 35%
Types of Financial Impact this topic in Banco Bradesco 2021 Integrated
and Associated Drivers of the companies in the sample portfolio would
Report. 49 In that report, we covered our
be directly or indirectly affected by fossil fuel
fixed income and variable income corporate
taxation. Finally, our analysis identified that
F. investment portfolios, as shown in the top
certain industries — such as oil refining, steel,
Insights Gained and View part of Figure A49 (p. 44). The bottom part
chemicals, electricity, transport, and food — are
on Future Work of Figure A49 (p. 44) shows our invested
at higher risk than others. In 2022, we disclosed
emissions calculations per sector. As part of
these results in Banco Bradesco’s Integrated
Appendices Banco Bradesco’s commitment to the Net-
Report and, in 2023, within the Climate Report.48
Zero Banking Alliance, we have adopted the
We are currently in the process of updating the Partnerships for Carbon Accounting Financials
results of our carbon pricing study, including by (PCAF) methodology for calculating the GHG
using public data and estimations to address emissions associated with our assets under
the lack of company-reported data. We are also management. 50 Following PCAF guidance, we
actively working with our investee companies prioritized investee companies’ reported GHG
to improve their disclosures. Conducting emissions, which are considered the highest-
scenario analyses has helped us gain a deeper quality data among potential sources of GHG
understanding of the climate-related risks and emissions data. Wherever this information was
opportunities in our portfolio. This has informed not available, we relied on estimates based
our investment decision-making and has helped on the economic activity of each client. We
us develop targeted climate engagement estimated Scope 1 and Scope 2 GHG emissions
strategies with our investee companies. with internal calculations.

48
See Banco Bradesco, Integrated Report 2021, June 2022 (p. 174) and Banco Bradesco, Climate Report, June 2023 (p. 53).
49
See Banco Bradesco, Integrated Report 2021, June 2022 (p. 195).
50
Partnership for Carbon Accounting Finance. The Global GHG Accounting and Reporting Standard Part A: Financed Emissions. Second Edition,
December 19, 2022.

43
 The Task Force on Climate-related Financial Disclosures

Figure A49
Disclosure of Our Invested Emissions
Disclosure of Our Invested Emissions
Disclosure of Our Invested Emissions
Invested emissions
For investments
Invested ofmanaged
emissions
Disclosure by Bradesco
Our Invested Asset Management, we also calculated invested emissions related to
Emissions
fixed income and variable income portfolios for the years 2021 and 2022.
For investments
Invested managed by Bradesco Asset Management, we also calculated invested emissions related to
emissions
For the
fixed calculations
income of the income
and variable investedportfolios
portfolio,for
wethe
used the2021
years Unlisted
and Equity
2022. asset class of the PCAF methodology.
For investments
For the managed
the calculations
oil and gas and by
mining Bradesco
sectors, Asset Management,
we calculated we also calculated invested emissions related to
For of the invested portfolio, we usedscope 3 using Equity
the Unlisted client data,
assetwhen available,
class of the PCAFand the PCAF
methodology.
fixed income
database andremainder,
for the variable income portfolios
resulting for the
in 3.2 MtCO 2
years
and 2021
130K and
tCO 2 e 2022.
(2021) and 2.4 MtCO 2 and 90K tCO 2 e (2022),
For the oil and gas and mining sectors, we calculated scope 3 using client data, when available, and the PCAF
respectively.
For the calculations of the invested portfolio, we used the Unlisted Equity asset class of the PCAF methodology.
database for the remainder, resulting in 3.2 MtCO2 and 130K tCO2e (2021) and 2.4 MtCO2 and 90K tCO2e (2022),
EMISSIONS
For – BRADESCO
the oil and
respectively. ASSETsectors,
gas and mining INVESTMENTS – TOTAL
we calculated scope 3 using client data, when available, and the PCAF
database for the remainder, resulting in 3.2 MtCO2 andDec/2021 130K tCO2Dec/2022
e (2021) and 2.4 MtCO2 and 90K tCO2e (2022),
EMISSIONS – BRADESCO ASSET INVESTMENTS – TOTAL
respectively.
Value of the portfolio evaluated (R$ billion) 92.8 126.5
Dec/2021 Dec/2022
Financed
EMISSIONS Emissions – ScopesASSET
– BRADESCO 1 and 2 (millions of tCO–2e)TOTAL 1.2 1.1
A. Value of the portfolio evaluated (R$INVESTMENTS
billion) 92.8 126.5
Coverage of fixed and variable income portfolios (%) Dec/2021
100 Dec/2022 100
State of Climate-Related Financed Emissions – Scopes 1 and 2 (millions of tCO2e) 1.2 1.1
Value of the portfolio evaluated (R$ billion) 92.8 126.5
Financial Disclosures Coverage of fixed and variable income portfolios (%) 100 100
EMISSIONS – BRADESCO
Financed Emissions – ScopesASSET
1 and 2INVESTMENTS
(millions of tCO–2e)SECTORAL 1.2 1.1
Total balance
Coverage of fixed and variable income portfolios (%) covered Scopes 1 and
100 2
100 Emission Intensity Average Analysis
B. EMISSIONS – BRADESCO ASSET INVESTMENTS – SECTORALEmissions (MtCO2e)
(R$ billions) (MtCO2e/R$) Quality Score
Financial Statement Sector/Year Total balance covered
2021 2022 Scopes
2021 1 and 2
2022 Emission
2021 Intensity
2022 Average
2021 Analysis
2022
Considerations EMISSIONS
Agriculture
– BRADESCO ASSET INVESTMENTS 0.16
– SECTORAL
(R$ billions)0.16 Emissions
0.02 (MtCO 2e)
0.02 (MtCO2e/R$)
0.10 0.10 Quality
1.5 Score1.5
Sector/Year
Aluminum Total balance covered
2021
0.15 2022
0.11 Scopes
0.02 1 and
2021 2
2022
0.02 Emission
0.16 Intensity
2021 0.16 Average
2022 1.0 Analysis
2021 2022
1.0
Agriculture (R$ billions)0.16
0.16 Emissions
0.02 (MtCO 2e)
0.02 (MtCO e/R$)
0.10 Quality Score
C. Iron and Steel 0.60 0.35 0.12 0.07 0.20 2 0.100.20 1.5
2.9 1.5
2.9
Sector/Year
Aluminum 2021
0.15 2022
0.11 2021
0.02 2022
0.02 2021
0.16 2022
0.16 2021
1.0 2022
1.0
Case Studies on Scope 3 Power Generation 10.43 14.11 0.45 0.56 0.04 0.04 2.2 2.7
Agriculture
Iron 0.16 0.16 0.02 0.02 0.10 0.10 1.5 1.5
GHG Emissions Real and Steel
Estate (commercial/residential) 0.60
1.24 0.35
1.11 0.12
0.00 0.07
0.00 0.20
0.00 0.20
0.00 2.9
3.3 2.9
3.2
Aluminum
Power 0.15 0.11 0.02 0.02 0.16 0.16 1.0 1.0
Oil andGeneration
Gas 10.43
5.44 14.11
3.41 0.45
0.33 0.56
0.21 0.04
0.06 0.04
0.06 2.2
2.2 2.7
2.4
Iron
Real and Steel
Estate (commercial/residential) 0.60
1.24 0.35
1.11 0.12
0.00 0.07
0.00 0.20
0.00 0.20
0.00 2.9
3.3 2.9
3.2
Transport 2.38 4.31 0.03 0.06 0.01 0.01 1.9 2.3
D. Power
Oil and
Mining
Generation
Gas 10.43
5.44
2.63
14.11
3.41
1.82
0.45
0.33
0.05
0.56
0.21
0.04
0.04
0.06
0.02
0.04
0.06
0.02
2.2
2.7
2.7
2.4
2.4
TCFD-Aligned Requirements Real Estate (commercial/residential)
Transport 1.24
2.38 1.11
4.31 0.00
0.03 0.00
0.06 0.00
0.01- 0.00
0.01- 3.3
1.9- 3.2
2.3-
Others 69.84 101.2 0.13 0.15
and Related Initiatives Oil and Gas
Mining 5.44
2.63 3.41
1.82 0.33
0.05 0.21
0.04 0.06
0.02 0.06
0.02 2.2
2.7 2.4
Note: Bradesco Asset was not exposed to the 2.38
Transport coal and cement
4.31 sectors0.03
in 2021 and 2022. 0.01
0.06 0.01- 1.9- 2.3-
Others 69.84 101.2 0.13 0.15 -
Mining 2.63 1.82 0.05 0.04 0.02 0.02 2.7 2.4
E. Note: Bradesco Asset was not exposed to the coal and cement sectors in 2021 and 2022.
Others 69.84 101.2 0.13 0.15 - - - -
Types of Financial Impact
Note: Bradesco Asset was not exposed to the coal and cement sectors in 2021 and 2022.
and Associated Drivers

F.
Insights Gained and View Banco Bradesco, Integrated Report 2022, p. 196
Notes: The PCAF methodology requires the inclusion of Scope 3 GHG emissions for the oil, gas, and mining sectors for reports published in 2021
on Future Work onwards, with additional sectors being added from 2023.
Some content was reformatted in order to fit the page.

Appendices

The key challenge we have faced is the limited particularly significant source. Estimating GHG
availability of climate-related disclosures, emissions associated with land use requires
specifically data on GHG emissions from additional data and more-complex calculations
our investee companies. We have also faced and estimations. The lack of company
obstacles in adapting the PCAF methodology to disclosures has made it challenging for us to
Brazilian companies given the country’s unique make further advancements in how we calculate
GHG emissions context. While many countries our invested emissions. To overcome these
may have a majority of GHG emissions emitted challenges, we rely on the support of a technical
by the energy sector, in Brazil, land use is a climate consultancy to assist in estimations.

44
 The Task Force on Climate-related Financial Disclosures

We also engage with our investee companies We also recognize that it is essential to be
as part of our climate strategy to reduce actively involved in global initiatives such as
GHG emissions and improve climate-related the TCFD and the United Nations Environment
disclosures. To prepare for engagement, we Programme Finance Initiative in order to
actively train our employees. For example, we keep abreast of the rapidly evolving reporting
educated BRAM employees about our invested frameworks and regulatory developments.
emissions and the climate-related risks in our At a regional level, we are involved in working
investments. BRAM analysts and portfolio groups led by industry associations such
managers were also trained on how to engage as Investidores pelo Clima, Principles for
with investee companies on climate-related risk Responsible Investment, and Associação de
management, including transition planning. Investidores no Mercado de Capitais, which
This supports our role in enabling the transition regularly meet to discuss climate-related risks
to a lower-carbon economy and enables us and governance. Our involvement in these
to continue to advocate for the reporting of global and regional initiatives has supported the
climate-related information. disclosure process for the industry as well as
helped us gain important insights that we have
Lessons Learned used for our own disclosures.
A. Our role as an asset manager places us in a
State of Climate-Related unique position to facilitate positive change
Examples of Climate-Related Financial
Financial Disclosures on climate action globally. Often, our investee
Disclosure
companies do not disclose climate-related data, This subsection includes examples of asset
B. as they are neither familiar with climate-related managers and asset owners’ reporting on
Financial Statement reporting nor have the resources to do so. We information aligned with one or more of the
Considerations have learned that through engagement with 11 recommended disclosures. The examples
our investee companies, we can influence them included are not intended to represent “best
C. to calculate and report their GHG emissions practice” nor demonstrate disclosures that
Case Studies on Scope 3 data, establish climate targets, and join net-zero fully meet the associated recommended
GHG Emissions initiatives. Engagement has thus driven better disclosure(s).51 Instead, the examples are
reporting on climate-related information and provided because they may help asset
D. improved our own management and disclosures managers and asset owners generate ideas for
TCFD-Aligned Requirements of climate-related risks and opportunities. their own reporting.
and Related Initiatives
Furthermore, our implementation of the The examples are divided into two categories —
TCFD recommendations has helped drive general and U.K. pension schemes. Beginning
E.
internal alignment with senior leadership on October 1, 2021, U.K. pension schemes with
Types of Financial Impact
and Associated Drivers
on climate-related issues, which has led to £5 billion or more in assets were required to
key strategic business decisions. We have report in line with the TCFD recommendations,
openly communicated with senior leadership followed by those with £1 billion or more in
F.
and the board on climate-related risks and assets on October 1, 2022.52 The last three
Insights Gained and View
opportunities. For example, we presented examples come from U.K. pension schemes that
on Future Work
the results of our carbon pricing study. are subject to these reporting requirements.
Leadership’s understanding of and alignment
Appendices General
with our findings led to several important
decisions in terms of managing climate-related Figure A50 (p. 46) shows an asset manager’s
risks, including changes to our responsible interim climate-related targets (Metrics and
investments policy and processes. Targets c) on the proportion of its assets under
management initially committed to be managed
in line with net zero.

51
The mention of specific companies does not imply that they are endorsed by the TCFD or its members in preference over other companies of a
similar nature that are not mentioned.
52
See U.K. Parliament, The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021, July 13, 2021.

45
 The Task Force on Climate-related Financial Disclosures

Figure A50
Climate-Related Targets

Asset Level 1 Asset Level 2

Portfolio Coverage Targets Engagement Threshold Targets
• Every five years, meaningfully increase the percentage of • Companies making up 70% of financed emissions in material
AUM in material sectors which are considered net zero, sectors will either be assessed as Net Zero, assessed as aligned
aligned or aligning and annually report on progress. or subject to direct engagement / active management by 2025

• 100% of AUM in material sectors is considered net zero or • Companies making up 90% of financed emissions in material
aligned by 2040. sectors will either be assessed as Net Zero, assessed as aligned
or subject to direct engagement / active management by 2030
• In support of our clients and investments teams we will
continue to progress collective understanding of Net Zero • 100% of assets in material sectors are aligned or achieving
solutions as data and methodologies evolve. Net Zero by 2040, as stipulated in the IIGCC PAII Framework.

Portfolio Level 1 Coverage of scope 1, 2, and the extent of scope 3 emissions

Portfolio Decarbonisation Reference Targets Our measurements include Scope 1 and 2 top-down portfolio
reduction targets. Given the estimated nature of current scope 3
• 50% lower carbon footprint as measured by tCO2e per USD mn assessment methodologies available, this measurement is too
invested by 2030 versus 2019 baseline of 73 tCO2e per USD mn immature at this stage to include in portfolio construction against a
A. meaningful net zero target.
• Net zero by 2050 against 2019 baseline
State of Climate-Related
Whilst scope 3 emissions are not considered in the top-down
Financial Disclosures portfolio emissions target (i.e., 50% reduction by 2030), they still are
crucial in assessing the alignment of companies at the issuer-level.
B.
Financial Statement
Considerations
Invesco Ltd., 2022 Taskforce on Climate-related Financial Disclosures Report, p. 45
Note: Some content was reformatted in order to fit the page.
C.
Case Studies on Scope 3
GHG Emissions Figure A51 provides a description of an asset processes and indicates that climate-
owner’s reporting on Risk Management a) and related issues are part of its enterprise risk
D. c). This example provides an overview of the management framework.
TCFD-Aligned Requirements asset owner’s risk identification and assessment
and Related Initiatives

E. Figure A51
Types of Financial Impact Risk Identification and Assessment and Integration into Overall Risk Management
and Associated Drivers
Our Enterprise Risk Management Framework incorporates climate change risk, allowing for the different time
F. horizons over which climate change could impact our business.

Insights Gained and View Business and risk strategy alignment RIS
KM
ANAGEMENT PRO
CE
SS We use impact and vulnerability assessments to understand our
climate change risks and opportunities and to inform our climate
on Future Work
RISK
for climate change risk IDE
NTIFICATION
strategy and target-setting processes. We categorised the risks and
opportunities within each segment using the TCFD framework and
We integrate the outcomes of our climate change risk scored them according to the existing Group risk-scoring process.
assessment into our business and risk strategy. These inform
RI AN

GROWTH
NM K
T

We expanded on our initial impact and vulnerability assessments

SK D R
EN
STRATEGY ALIG RIS

our response to ensure we remain within our risk appetite and TARGETS

Appendices
through climate scenario planning workshops. The goal of these
ME ESPO

capitalise on climate-related opportunities.

D
BUSINESS AN

workshops was to identify strategic responses to the risks and

AS
URE E

opportunities that would generate value across a range of plausible

Climate Change Risk Appetite and
MA
L
CIA

future scenarios.
NA

NS
MENT
AN

Preference Statement
GE

STRATEGY
FIN

ME

AND
When necessary, we partner with climate specialists to ensure best
LES CE

We acknowledge the science of climate change and the economic BUSINESS

NT

practices are applied to the various dimensions of climate change

RD AN

PLANNING
and social implications of the transition from fossil fuels. We
risk. These dimensions include:
AP

U RM
RI TIT

strive to address climate change risks timeously. Our targets and FRAMEWORK
» Evaluating the carbon intensity and implied temperature rise of
PE
SK

FO

commitment to reducing carbon emissions aim to measure and E R

PE H our investment portfolios
manage financial and non-financial climate change risks and
» Improving our operational carbon footprint
reduce our carbon-based and fossil fuel footprint. We work towards
SC

» Deepening our understanding of our natural catastrophe

IN G
G

R
RI T
ST

managing our exposure to the domestic fossil fuel industry in line A ES

EN

RI S TO R modelling and quantitative and scenario modelling capabilities

with our national policy and international good practice. We seek O AN NI PO
TE D
ST M O RE
to grow our renewable energy and green bonds exposure. Our ING D
AN We believe we have made tangible progress in furthering our
commitment to working with our customers ensures their right to
understanding of climate change risk and our mitigation plans
across these dimensions.
is appropriately managed.

We will refine this Climate Change Risk Preference Statement as the Climate monitoring and reporting
Group progresses in setting measurable targets.
Physical risk (level 3) – Increased damage and loses due to physical We continually monitor our external and internal environment
phenomena associated with climate trends (such as changing
Climate change risk identification weather patterns and sea-level rises) and/or climate events (such as
to understand how it impacts our identified climate change
risks. We identify and monitor appropriate indicators and take
natural disasters and extreme weather). Physical risks may have a action as needed. Climate change risks are reported regularly
We conducted an extensive risk identification exercise across
direct or indirect financial impact, such as property damage leading
our business to understand the climate change risks we face.
to impaired asset value and sovereign risk.
Due to the uncertainty and evolving nature of climate change
Transition risk (level 3) – Transition to low-carbon economy and
risks, we consider climate change in our standard and emerging
risk methodologies.
the resulting technology, regulatory and social effects that may
impact the value of assets or the cost of doing business. Transition
Climate change risk stress and scenario
The Old Mutual Risk Classification Model comprises 12 level 1 risk
risks arise when markets adjust towards a low-carbon economy testing
due to regulatory and policy changes, disruptive technologies, new
categories, which are broken down into level 2 categories and, where
business models, shifting sentiment and societal preferences, or We base our internal analysis on the following three NGFS
appropriate, level 3 categories. Climate change is a separate risk
evolving evidence frameworks and legal interpretations. reference scenarios: orderly transition, disorderly transition, and
category (level 2 external risk) but may also be a cause for other risk
types, such as non-life insurance risk and operational risk. We have hot house world. We use the scenarios and their underlying
data sources to better understand our business’ vulnerabilities
further categorised climate change into physical risk and transition risk. Climate change risk measurement and to various climate-related risks and opportunities and take
Climate change risk (level 2) – The risk that global warming, response measures to improve our resilience. Over time, we will introduce
extreme weather events and the transition to a low carbon economy higher granularity to this analysis to accommodate desired
will adversely impact economic growth, asset valuations and We determine our risk exposure to physical and transition risks outcomes like the Just Transition.
insurance profitability. These, in combination with increased costs of in our areas of operation after considering both the financial
doing business could threaten the resilience and sustainability of our and non-financial impacts on our business. We identity and
business. track suitable actions to best mitigate our climate change risks.

Old Mutual, Old Mutual Climate Report 2022, p. 19

46
 The Task Force on Climate-related Financial Disclosures

U.K. Pension Schemes

Figure A52 shows a U.K. pension fund’s different climate-related scenarios on the fund’s
reporting on the potential impact of three portfolios (Strategy c).

Figure A52
Resilience of Strategy

A.
State of Climate-Related
Financial Disclosures

B.
Financial Statement
Considerations

C.
Case Studies on Scope 3
GHG Emissions

D.
TCFD-Aligned Requirements
and Related Initiatives

E.
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View
on Future Work

Appendices

Universities Superannuation Scheme, Universities Superannuation Scheme TCFD Report 2022, pp. 16–17
Note: Some content was reformatted in order to fit the page.

47
 The Task Force on Climate-related Financial Disclosures

Figure A53 shows a U.K. pension scheme’s intensity as well as benchmarks for each (Metrics
reporting on its financed emissions, financed and Targets b).
carbon intensity, and weighted average carbon

Figure A53
Portfolio Carbon Footprint Metrics
Equities portfolio: carbon intensity metrics
The December 2021 carbon footprint analysis for our listed Equities aggregate shows substantial
progress from our 2020 footprint analysis, with our weighted average carbon intensity (WACI)
declining by 37 per cent year-on-year. The WACI of the Equity benchmark reduced by over 70 per
cent as a result of the transition to our new climate-aware equity benchmark. This had the direct

PPF Equities carbon metrics

350
A.
Tonnes CO2e per $million metric

State of Climate-Related 300

299
Financial Disclosures
250 257
243
226
B. 200
Financial Statement 150
151 154
Considerations
100 122 125

83
C. 50 65 70
Case Studies on Scope 3 30
0
GHG Emissions Benchmark Benchmark PPF weighted Benchmark
carbon emissions carbon intensity average carbon weighted average
(tCO2e/$m emissions (tCO2e/$m intensity (tCO2e/$m intensity carbon intensity
D.
invested) (tCO2e/$m invested) revenues) revenues)
TCFD-Aligned Requirements
and Related Initiatives
December 2020 December 2021

E.
Types of Financial Impact Credit portfolio: carbon intensity metrics
and Associated Drivers This is the second year we have included the corporate bonds in our Strategic Cash, IG Credit, EM
Debt and Absolute Return portfolios as an aggregate. The WACI of our global Credit portfolio
F. declined by 58 per cent over the year, driven largely by our strategic cash portfolio. The financed
Insights Gained and View carbon emissions and financed carbon intensity remained largely unchanged.
on Future Work
PPF Credit carbon metrics*
Appendices
350
Tonnes CO2e per $million metric

300 318
279
250 255
200
204 203
192 193
150
133
100
85
50 70
53 50
0
Benchmark Benchmark PPF weighted Benchmark
carbon emissions carbon intensity average carbon weighted average
(tCO2e/$m emissions (tCO2e/$m intensity (tCO2e/$m intensity carbon intensity
invested) (tCO2e/$m invested) revenues) revenues)

December 2020 December 2021

Pension Protection Fund, Pension Protection Fund Climate Change Report 2021/2022, p. 20

48
 The Task Force on Climate-related Financial Disclosures

Figure A54 shows a U.K. pension scheme’s investment, asset management, and divestment
reporting on its risk management activities or exit (Risk Management b).
related to its funds at different phases — pre-

Figure A54
Climate Risk Management in the Investment Process

Avoid

Mitigate

A.
State of Climate-Related
Financial Disclosures Exploit

B.
Financial Statement
Considerations

C.
Case Studies on Scope 3
GHG Emissions

D. Pooled Fund Portfolios Pre-Investment Asset Management Divestment/Exit

TCFD-Aligned Requirements
and Related Initiatives

E.
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View
on Future Work

Appendices

Avoid Mitigate Exploit

Railways Pension Scheme, Combined TCFD Report 2022, pp. 57–58

Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

49
B.
Financial Statement
Considerations
 The Task Force on Climate-related Financial Disclosures

B. Financial Statement Considerations

When the Task Force published its final
recommendations in June 2017, it recommended Figure B1
companies include climate-related financial Reporting in Financial Filings
information in their public annual financial
In most G20 jurisdictions, companies with public
filings (see Figure B1).53 As part of its efforts debt or equity have a legal obligation to disclose
to monitor companies’ progress in disclosing material information in their financial filings —
information aligned with its recommendations including material climate-related information.
over the past several years, the Task Force In its 2017 report, the Task Force indicated its
has found that companies are more likely to recommendations should be useful to companies
disclose such information in their sustainability in complying more effectively with existing
reports than in their annual financial filings.54 disclosure obligations.
While the Task Force recognizes the amount of
climate-related financial information included in It also noted that disclosure in financial filings
financial filings has increased over the years, it should foster shareholder engagement and
believes more progress is needed — especially broader use of climate-related financial
A.
on reporting the impact of climate-related disclosures, thus promoting a more informed
State of Climate-Related
issues on companies’ businesses, strategies, understanding of climate-related risks and
Financial Disclosures
opportunities by investors and other users.
and financial planning, including the impact
Furthermore, publication of climate-related
B. on financial statements (e.g., balance sheets,
financial information in annual financial filings
Financial Statement income statements), as appropriate.55 Notably,
should help ensure that appropriate controls
Considerations the ISSB’s reporting standards published earlier
govern the production and disclosure of the
this year require material climate-related
required information.
information to be disclosed in “general purpose
C.
Case Studies on Scope 3 financial reports” (e.g., financial filings) and
GHG Emissions were built on the concepts underpinning the
In addition, the educational material published
International Financial Reporting Standards
by the IFRS Foundation describes specific
(IFRS).56
D. accounting requirements as well as overarching
TCFD-Aligned Requirements
In November 2019, a member of the requirements that could be relevant for
and Related Initiatives companies when considering climate-related
International Accounting Standards Board (IASB)
published an article — which was inspired by matters. As to the latter, companies are
E. a joint bulletin issued by Australian standard required to disclose information not specifically
Types of Financial Impact setters — providing guidance on the application required by IFRS accounting standards and not
and Associated Drivers
of materiality as the term is defined under IFRS presented elsewhere in the financial statements
accounting standards and how it relates to but is relevant for understanding the financial
F. climate-related and other emerging risks.57 The statements. In other words, companies need
Insights Gained and View article, which was later followed by educational to consider whether to provide additional
on Future Work material from the IFRS Foundation, highlighted disclosures when compliance with the specific
that climate-related risks and other emerging requirements in the accounting standards is
Appendices risks are predominantly discussed outside the insufficient to enable investors
financial statements; however, “qualitative to understand the impact of climate-related
external factors, such as the industry in issues on their financial positions and
which [a] company operates, and investor financial performance.59
expectations may make some risks ‘material’
Moreover, regulatory authorities are
and may warrant disclosures in financial
increasingly focusing on companies’ inclusion
statements, regardless of their numerical
of climate-related financial information in
impact.” 58
their financial filings, including in the financial

53
F
 inancial filings refer to the annual reporting packages in which companies are required to deliver their audited financial results under the
corporate, compliance, or securities laws of the jurisdictions in which they operate. While reporting requirements differ internationally, financial
filings generally contain financial statements and other information such as governance statements and management commentary.
54
 CFD, 2018 Status Report, September 26, 2018 (p. 14); TCFD, 2019 Status Report, June 5, 2019 (p. 9); TCFD, 2020 Status Report, October 29, 2020 (p.
T
12); and Section A.1. TCFD-Aligned Reporting by Public Companies (p. 2).
55
TCFD, 2022 Status Report, October 13, 2022 (p. 63).
56
IFRS, “Ten Things to Know about the First ISSB Standards,” June 27, 2023.
57
 he Australian Accounting Standards Board and Auditing and Assurance Standards Board, Climate-Related and Other Emerging Risks Disclosures:
T
Assessing Financial Statement Materiality Using AASB Practice Statement 2, December 2018 (republished April 2019).
58
Nick Anderson, IFRS Standards and Climate-Related Disclosures, November 2019.
59
IFRS, Educational Material: Effects of Climate-Related Matters on Financial Statements, November 2020 (republished July 2023) (p. 2).

51
 The Task Force on Climate-related Financial Disclosures

statements. For example, the U.S. Securities In addition, several excerpts from companies’
and Exchange Commission created a task financial filings that show how they described
force in its Division of Enforcement to identify the impact of climate-related issues on their
potential violations including material gaps financial statements are included at the end of
or misstatements in companies’ disclosure of this section.
climate-related risks under existing rules.60
In addition, the European Securities and
Markets Authority included climate-related
matters as one of its priorities for monitoring
1. GENERAL FACTORS CONSIDERED
and assessing compliance with relevant Climate change affects nearly all economic
reporting requirements in companies’ 2022 sectors; and, based on the Intergovernmental
financial filings.61 Finally, the U.K. Financial Panel on Climate Change’s (IPCC’s) recent
Reporting Council conducted a review of how report, many climate-related risks are higher
well companies explained the link between than previously assessed and projected long-
their net-zero targets and transition plans and term impacts are up to multiple times higher
their financial statements when there was a than currently observed.63 In addition, the
reasonable expectation that there could be a report indicated projected adverse impacts
A. material impact on the financial statements.62 and related losses and damages from climate
State of Climate-Related change escalate with every increment of global
Financial Disclosures
In light of the above, the Task Force worked
warming. While many companies recognize
with professionals in accounting and auditing to
their exposure to climate-related transition
describe the following:
B. and physical risks and opportunities and make
Financial Statement • s ome of the general factors considered when strategic and operational decisions in light of
Considerations incorporating climate-related issues into these, many others may not. Given findings
financial statements, in the recent IPCC report, it is becoming
C. increasingly important for companies to assess
Case Studies on Scope 3 • c ommon challenges faced in considering the and address their climate-related issues —
GHG Emissions impact of climate-related issues on financial which could affect their financial statements.
statements, and
D. When it issued its recommendations in
TCFD-Aligned Requirements • b
 rief descriptions of guidance and other June 2017, the Task Force acknowledged the
and Related Initiatives resources companies may find useful when interconnectivity of its recommendations with
incorporating climate-related issues into their existing financial statement and disclosure
E. financial statements. requirements. In particular, the Task Force
Types of Financial Impact highlighted specific standards from two
and Associated Drivers accounting frameworks — the IFRS and U.S.

F. Key Takeaways
Insights Gained and View
on Future Work
Investors and other users are interested in companies’ disclosure of their assessments and
evaluations of assets for potential impairment, contingencies, and useful lives to understand the
Appendices impact of climate-related issues on companies’ financial position and financial performance.

Under overarching IFRS accounting requirements, a company must consider whether to provide
additional disclosures when compliance with the specific requirements in IFRS standards is
insufficient to enable investors to understand the impact of climate-related issues on its financial
statements.

Developing estimates — including dealing with measurement uncertainty — is a core component

of companies’ financial reporting, but it also presents certain challenges, especially as the level of
uncertainty increases.

It is important that those responsible for preparing, approving, and auditing a company’s financial
statements have sufficient experience with and knowledge of climate-related risks and the
company’s exposure to such risks when making judgments about their impact on the financial
statements.

60
Securities and Exchange Commission, “Enforcement Task Force Focused on Climate and ESG Issues,” Accessed July 24, 2023.
61
European Securities and Markets Authority, European Common Enforcement Priorities for 2022 Annual Financial Reports, October 28, 2022.
62
Financial Reporting Council, CRR Thematic Review of Climate-Related Metrics and Targets, July 26, 2023.
63
Intergovernmental Panel on Climate Change, Summary for Policymakers in Climate Change 2023: Synthesis Report, March 20, 2023.

52
 The Task Force on Climate-related Financial Disclosures

Generally Accepted Accounting Principles (US

GAAP).64 The standards that were highlighted Figure B2
in 2017 related to assessing the impairment Measurement Uncertainty
of assets and accounting for provisions and in Financial Reporting
disclosing contingencies.65,66 Since the 2017
report was published, several organizations In general, “uncertainty” means a state of limited
knowledge where it is impossible or impracticable
have provided guidance on incorporating
to describe exactly an existing state or a
climate-related issues into the financial
future outcome. Uncertainty exists in financial
statements, as described in Section B.3.
statements where measurements “to a large
Resources on Climate-Related Issues in Financial
extent…are based on estimates, judgments, and
Statements. The Task Force drew from these
models rather than exact depictions.” As the level
in identifying key considerations that may of uncertainty increases, challenges may exist for:
be useful to companies as they assess and
incorporate the impact of climate-related issues • fi
 nancial statement preparers to estimate the
future outcome of the uncertainties inherent in
on their financial statements. One example
many business transactions,
of such guidance is educational material
published by the IFRS Foundation that was • a
 uditors to verify the subjective judgments
A. developed to help companies determine how to about those uncertainties, and
State of Climate-Related consider climate-related issues when preparing • investors to understand those uncertainties and
Financial Disclosures their financial statements according to IFRS assess their potential impact on future earnings
accounting standards.67 Some of the standards or cash flows.
B. included were International Accounting
Financial Statement Standard (IAS) 36 Impairment of Assets, IAS
Considerations 16 Property, Plant and Equipment, and IAS 37 statements can be complex and challenging and
Provisions, Contingent Liabilities and Contingent often requires companies to exercise judgment
C. Assets, all of which are described below.68 on factors that they may not have considered or
Case Studies on Scope 3 had to consider in the past.
Prior to the discussion of the accounting
GHG Emissions
standards noted above, it is important to Impairment of Non-Financial Assets
highlight that a core component of financial
D. One of the issues companies may face is how to
reporting is developing estimates, including
TCFD-Aligned Requirements take climate-related issues into account in their
dealing with measurement uncertainty.
and Related Initiatives impairment considerations for non-financial
Developing estimates presents certain
assets. For instance, jurisdictions’ actions (such
challenges, especially as the level of uncertainty
E. as imposing a carbon tax) as well as companies’
increases (see Figure B2 for more information).69
Types of Financial Impact own actions to address climate-related risks
Recent examples of events that introduced
and Associated Drivers (such as reducing their GHG emissions) could
significant uncertainty — and associated
have a significant effect on their future expected
challenges — for companies in preparing their
F. cash flows and result in the impairment of
financial filings relate to the COVID-19 pandemic
Insights Gained and View certain assets. Some of the potential climate-
and the Russia-Ukraine conflict. Climate-related
on Future Work related issues companies consider when
issues present similar challenges in terms
developing their financial statements in
of measurement uncertainty and may have
Appendices accordance with IAS 36 Impairment of Assets
implications for both 1) disclosing narrative
are described below.
information, such as that found in governance
statements and management commentary, and Identifying Climate-Related Impairment
2) measuring and valuing assets and liabilities Indicators. Under IAS 36, companies are
reflected in financial statements and notes required to assess, at the end of each reporting
to the financial statements. Reporting on the period, whether there is any indication that
impact of climate-related issues on the financial an asset or cash-generating unit may be

64
The Task Force recognizes that there are other accounting frameworks such as those applied in India, China, and other jurisdictions.
65
 he Task Force referred to IFRS, IAS 36 Impairment of Assets, May 2013, and Accounting Standards Codification (ASC) 360 “Long-lived Asset
T
Impairment” as well as ASC 450 “Contingencies” and IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020.
66
F
 or the sake of simplicity in this report, the Task Force refers only to standards under the IFRS since the majority of jurisdictions use these
standards. Based on the IFRS Foundation’s analysis of 168 jurisdictions, which represents 98% of the world’s gross domestic product, 160 of the
168 jurisdictions have a commitment to IFRS Accounting Standards. See IFRS Foundation, “Analysis of the IFRS Accounting Jurisdiction Profiles,”
Accessed July 24, 2023.
67
IFRS, Effects of Climate-Related Matters on Financial Statements, November 2020 (republished July 2023).
68
The International Accounting Standards Board (IASB) is the independent accounting standard-setting body of the IFRS Foundation.
69
 ources for Figure B2 are Hubbard, Douglas, How to Measure Anything: Finding the Value of Intangibles in Business, John Wiley & Sons, July 2007 and
S
FASB, Statement of Financial Accounting Concepts No. 8, August 2018.

53
 The Task Force on Climate-related Financial Disclosures

impaired.70,71 An impairment arises when More specifically, the IASB has tentatively
the carrying amount of an asset or a cash- decided to retain the requirement that future
generating unit exceeds its recoverable cash flows shall be estimated for an asset in
amount.72 Climate-related issues may give rise its current condition. Therefore, companies
to indications that an asset is impaired. For would not be prohibited from including cash
example, a decline in the demand for diesel- flows arising from improving or enhancing an
based products of a manufacturing company asset’s performance as long as the asset has
could indicate that its production equipment the current potential to generate those future
may be impaired. Significant changes in the cash flows. A public consultation on IAS 36 is
environment in which the company operates — currently expected in the first half of 2024;
such as new regulations that limit the amount and, if the aforementioned proposed changes
of GHG emissions that can be produced — may were made, they would allow companies to
also be an indication that a GHG emissions reflect future capital expenditure in response
producing asset could be impaired. to climate-related issues in determining the
recoverable amount of an asset (or a cash-
Determining Cash Flows Included. Where the generating unit) if the potential for generating
“value in use” method, which is the present value cash flows exists for the asset (or a cash-
of future cash flows expected to be derived generating unit) in its current condition.76
A.
from an asset or cash-generating unit, is used in
State of Climate-Related
Financial Disclosures
determining the recoverable amount, a company Evaluating Terminal Value Assumptions.
is required to make an estimate of future cash The terminal value reflects the value of an
flows. IAS 36 places certain constraints on the asset after the explicit forecast period. For
B.
future cash flows that can be incorporated when many companies, climate-related issues are
Financial Statement
calculating the value in use and requires 1) the expected to affect their businesses in the
Considerations
cash flows to be estimated for the asset (i.e., longer term; and, as a result, the terminal value
single asset or group of assets) in its current is the value in use component that is likely to
C.
condition and 2) future capital expenditure that be most affected. A small change in the long-
Case Studies on Scope 3
would improve the asset’s performance and the term growth rate — which is a key input in the
GHG Emissions
related benefits to be excluded.73 terminal value calculation — could significantly
change the terminal value amount. Given this,
D. This has raised practical questions on the extent it is important for companies to consider and
TCFD-Aligned Requirements to which future capital investments related reflect the impact of climate-related issues,
and Related Initiatives to climate-related commitments or targets including carbon price and physical climate-
can be included in the value in use cash flow related risks, in the long-term growth rate.
E. projections (that is, whether the expenditure The Task Force recognizes there are challenges
Types of Financial Impact incurred to reduce the GHG emissions in determining an appropriate long-term
and Associated Drivers associated with an asset represents future cash growth rate given the uncertainties around the
outflow to enhance the asset or to maintain impact of climate-related risks on a company,
F. the asset to continue operating). As part of its coupled with limited external data.77 Further
Insights Gained and View Business Combinations: Goodwill and Impairment challenges may exist when a company needs
on Future Work project, the IASB indicated in March 2023 that to use a forecast period longer than five years
it tentatively decided to propose removing to reach a sustainable level of cash flows that
Appendices the existing constraint on cash flows used to reflect climate-related issues, considering the
estimate value in use in IAS 36.74,75

70
C
 ash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of cash inflows from
other assets or groups of assets. IFRS, IAS 36 Impairment of Assets, May 2013 (paragraph 36.6).
71
Irrespective of any indicator of impairment, IAS 36 requires goodwill and intangible assets with indefinite useful lives and intangible assets that
are not yet available for use to be tested for impairment annually.
72
T
 he carrying amount is the amount at which an asset is recognized after deducting any accumulated depreciation (amortization) and accumulated
impairment losses thereon, and the recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of disposal
and its value in use. IFRS, IAS 36 Impairment of Assets, May 2013 (paragraph 36.6).
73
T
 he effects of upcoming climate-related regulation or legislation may be included in the measurement of the value in use if management’s best
estimate is that there will be an effect on the entity’s future cash flows. See Deloitte, A Closer Look—IAS 36 Impairment of Non-Financial Assets—
Reminders and Hot Topics, May 3, 2023.
74
IFRS, “Business Combinations—Disclosures, Goodwill and Impairment,” Accessed July 12, 2023.
75
IFRS, “IASB Update March 2023,” March 20, 2023.
76
IFRS, “IFRS Foundation Work Plan,” Accessed July 12, 2023.
77
IAS 36.33 requires that when measuring value in use, a company must base cash flow projections on reasonable and supportable assumptions
that represent management’s best estimate of the range of economic conditions that will exist over the remaining useful life of the asset and
greater weight should be given to external evidence. IAS 36.33 also requires a company to use a steady or declining growth rate to estimate cash
flow projections beyond the period covered by the most recent budget unless an increasing rate can be justified. IFRS, IAS 36 Impairment of
Assets, May 2013.

54
 The Task Force on Climate-related Financial Disclosures

requirements in IAS 36.35.78 If extending the liabilities.80 As jurisdictions take actions to

forecast period is not possible, adjusting the address climate change, they may pass new laws
cash flows and the long-term growth rate in the that could result in new or changed provisions
terminal value formula to reflect the impact of or require disclosure of a contingent liability by
climate-related matters can be challenging when affected companies. For example, a law passed
different growth rates and/or profit margins are to accelerate the timing for the decommissioning
expected in future periods. of long-lived assets such as those related to coal
or oil and gas could lead to companies needing
Asset Useful Lives to revise existing decommissioning provisions
As various jurisdictions work towards based on the impact of discounting future cash
transitioning to low-carbon economies, flows.81 Where the details of a proposed new
companies’ use of certain assets may be law have yet to be finalized, the cost that will be
affected. The development or emergence of required to meet the legislation is not required
new, lower-carbon technologies may lead to to be recognized until the proposed legislation
companies replacing their production-related is virtually certain to be enacted as drafted.82 In
assets earlier than originally expected. In addition, companies may need to assess whether
addition, the introduction of laws and regulations constructive obligations have been created by
A. to limit companies’ GHG emissions — such as their actions or specific public statements related
State of Climate-Related a carbon tax — may lead companies to retire to climate change.
Financial Disclosures GHG emissions producing assets sooner than
planned to avoid higher costs. These and other
IAS 37 indicates a constructive obligation may
B. events related to climate change could affect
the useful lives of companies’ assets, which they
arise from a company’s actions or sufficiently
Financial Statement
Considerations may need to consider when reviewing the useful specific public statements through which it has
lives of their assets at each annual reporting indicated to others that it will accept certain
C. date (or more frequently). Companies in carbon responsibilities and, as a result, has created a
Case Studies on Scope 3 intensive industries such as oil and gas, utilities, valid expectation that it will discharge
GHG Emissions coal, and metals and mining likely face a higher those responsibilities.83
risk of the useful lives assigned to some of their
D. assets being significantly shortened, resulting in
TCFD-Aligned Requirements an acceleration of the depreciation/amortization
Notably, in March 2023, the IASB announced a
and Related Initiatives charged to the income statement.
project to explore whether and how companies’
financial statements can provide better
E. information about climate-related risks (see
An asset’s useful life is defined as the period of
Types of Financial Impact Section B.3. Resources on Climate-Related Issues
and Associated Drivers time over which a company expects to use the
in Financial Statements).84 The IASB indicated
asset or the number of production or similar
stakeholders have asked several questions
F. units that it expects to obtain from the asset.79 including why companies that have made net-
Insights Gained and View zero commitments do not recognize liabilities
on Future Work or impair the value of their assets as a result
Provisions and Contingent Liabilities of those commitments. Regardless of whether
Appendices such commitments lead to provisions, investors
Another section in the financial statements that
involves developing estimates with measurement and other users have expressed interest in
uncertainty and could be affected by climate- information on the potential costs to deliver
related issues is provisions and contingent against climate-related commitments as this

78
IAS 36.35 states that detailed, explicit, and reliable financial budgets/forecasts of future cash flows for periods longer than five years are generally
not available. For this reason, management’s estimates of future cash flows are based on the most recent budgets/forecasts for a maximum of
five years. Management may use cash flow projections based on financial budgets/forecasts over a period longer than five years if it is confident
that these projections are reliable and it can demonstrate its ability, based on past experience, to forecast cash flows accurately over that longer
period. IFRS, IAS 36 Impairment of Assets, May 2013.
79
IFRS, IAS 16 Property, Plant and Equipment, May 2020 (paragraph 16.6) and IFRS, IAS 38 Intangible Assets, May 2014 (paragraph 38.8).
80
 provision is a liability of uncertain timing or amount. IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020
A
(paragraph 37.10).
81
A
 decommissioning or asset retirement obligation may need to be recognized for an obligation associated with the decommissioning or
retirement of a tangible long-lived asset (such as coal, oil and gas, and chemicals and cement plants) to the extent that the company is obliged to
rectify damage already caused, as per IAS 37.19. IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020.
82
IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020 (paragraph 37.50).
83
IFRS, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, May 2020 (paragraph 37.10).
84
IFRS, “Connectivity in Practice: The IASB’s New Project On Climate-Related Risks in the Financial Statements,” March 23, 2023.

55
 The Task Force on Climate-related Financial Disclosures

would be useful for their financial decision material climate-related information

making.85 Companies could describe these costs in financial filings for use by investors
in the notes to their financial statements — in and other users.
accordance with IAS 1 — if they believe these
costs would be material to investors.86,87 Companies that overcome challenges associated
with considering and disclosing the impact
Summary of material climate-related issues on their
financial statements may be better positioned
As described previously, the effects of
to provide investors and other users with more
material climate-related issues disclosed in the
decision-useful information in their financial
management commentary of companies’ public
filings, which is being increasingly demanded by
financial filings may affect the recognition and
investors and other users (see Box B1, p. 57).
measurement of financial statement amounts
that require some form of estimation. In some Experience with and Knowledge of
cases, these material climate-related issues may
Climate-Related Issues
not be factored in when measuring the amounts
in the financial statements due to the recognition For companies with limited to no experience
and measurement requirements under IFRS. with or knowledge of climate-related issues,
A. In these situations, disclosing the potential incorporating such issues into their financial
State of Climate-Related impact of material climate-related issues on the statements can be a challenge. In fact, several
Financial Disclosures assumptions used or amounts in the financial studies and surveys support the notion
statements could provide investors and other that many companies do not have sufficient
B. users with useful information for their financial expertise (i.e., experience and knowledge) to
Financial Statement decision making. appropriately assess and address issues related
Considerations to climate change.88 Based on a 2022 survey
of senior executives, 82% said they are not
C. “completely confident” that their companies
2. COMMON CHALLENGES RELATED are properly staffed to meet the demands
Case Studies on Scope 3
GHG Emissions
TO CLIMATE CHANGE AND of increased environmental, social, and
FINANCIAL STATEMENTS governance (ESG) disclosures — including those
D. related to climate change.89 Notably, staffing
As mentioned previously, the Task Force concerns related to meeting the demands for
TCFD-Aligned Requirements drew from various sources to identify key
and Related Initiatives increased disclosure were higher among finance
considerations that may be useful to companies and accounting executives than executives in
as they assess and incorporate the impact of other areas of the companies. In addition, the
E. material climate-related issues into their financial
Types of Financial Impact Association of Chartered Certified Accountants
statements. The Task Force also drew from (ACCA) surveyed more than 3,000 accountancy
and Associated Drivers these sources as well as others to identify some and finance professionals from around the
common challenges that companies may face, as world and across corporate, public, financial,
F. noted below.
Insights Gained and View
and nonprofit sectors and asked how their
on Future Work organizations are addressing climate-related
• C
 ompanies that do not have sufficient risk.90 Nearly 25% of the respondents indicated
expertise on climate-related issues one of the barriers preventing finance teams
Appendices across the organization may be at risk of from supporting organizations in addressing
underestimating the impact of climate-related climate-related issues was their own lack of
issues on their businesses, strategies, and professional skills in this area.
financial planning, including the impact on
their financial statements. Sufficient expertise among boards of directors
and audit committees has also been highlighted
• D
 ata and systems-related issues faced by as a challenge. A survey of global companies’
preparers may hinder their ability to disclose boards of directors found that around 70% of

85
Investor alliances, including groups representing over $100 trillion in assets under management, have called on companies to disclose how a
net-zero pathway will affect the companies’ financial positions. See “Investor Groups Call on Companies to Reflect Climate-Related Risks in
Financial Reporting,” September 16, 2020. Another investor group sent letters to 17 of Europe’s largest companies asking why expectations over
climate-related accounting disclosures have failed to be met. See “Investors Put Audit Committee Chairs on Notice over Continued Omission of
Climate Risks in Financial Reporting Ahead of 2022 AGM Season,” April 5, 2022.
86
Climate Disclosure Standard Board, Accounting for Climate: Integrating Climate-Related Matters into Financial Reporting, December 2020.
87
IFRS, IAS 1 Presentation of Financial Statements, February 2021 (paragraph 1.29).
88
 oston Consulting Group, Directors Can Up Their Games on Environmental, Social and Governance Issues, March 30, 2022; Whelan, T., U.S.
B
Corporate Boards Suffer From Inadequate Expertise in Financially Material ESG Matters, January 2021; and Eversheds Sutherland and KPMG,
Climate Change and Corporate Value: What Companies Really Think, November 11, 2020.
89
Deloitte, ESG Executive Survey Preparing for High-Quality Disclosures, March 31, 2022.
90
 ssociation of Chartered Certified Accountants, Climate Action and the Accounting Profession: Building a Sustainable Future, October 2021.
A

56
 The Task Force on Climate-related Financial Disclosures

Box B1
User Demand for Climate-Related Information in Financial Filings
In November 2019, a member of the IASB published an article emphasizing that companies have an obligation under
current IFRS rules to disclose material climate-related information and illustrating how companies can use IFRS
guidance when they make materiality judgements related to disclosures about climate-related risks.1
In September 2020, a large group of investors — representing over US $103 trillion in assets under management
globally — published an open letter welcoming the IFRS article and calling upon companies to ensure that their financial
statements accurately report their performance by incorporating material information about climate-related risks.2
The investors also asked for companies to “apply the IASB opinion” in letter and spirit, including showing the key
assumptions that have been made with regard to climate-related risks and auditors to “only sign off on financial
statements [that] are consistent with the IASB opinion” in letter and spirit, including showing the key assumptions that
have been made with regard to climate-related risks.
In addition, based on a recent survey of investors and analysts, nearly 90% indicated they use financial statements and
related notes to understand how companies manage their risks and opportunities (including those related to climate
change), with around 60% indicating that they use sustainability reports. 3 The survey respondents also described some
of the information they want companies to disclose, as shown below.4
A.
State of Climate-Related 73% 70% 69%
Financial Disclosures the cost to meet their the effect of sustainability risks and opportunities the relevance of sustainability
sustainability commitments on financial statement assumptions factors to the business model

B. 1. IFRS, IFRS Practice Statement 2: Making Materiality Judgements, September 2, 2017.

Financial Statement 2. The letter was signed by the PRI, the UN Environment Program Finance Initiative, the UN-convened Net-Zero Asset Owner Alliance, the Institutional
Considerations Investors Group on Climate Change, Investor Group on Climate Change, the Asia Investor Group on Climate Change, and the Pensions and Lifetime
Savings Association.
3. PwC, PwC’s Global Investor Survey 2022, February 2023.
C. 4. Sustainability commitments, risks, and factors include those related to climate change.
Case Studies on Scope 3
GHG Emissions
the directors indicated they are only moderately and consideration. For companies with material
D. or not at all effective at integrating climate- climate-related risks, this could result in not
TCFD-Aligned Requirements related issues into company strategy and accounting for impairment or provisions related
and Related Initiatives governance.91 In addition, based on a global to climate factors, potentially affecting the
survey of over 350 audit committee members quality, accuracy, and completeness of such
E. and chairs, nearly half of the respondents said companies’ financial statements.
Types of Financial Impact they do not consider their audit committees
and Associated Drivers to have the resources or background needed External auditors also play an important role in
to address climate-related issues effectively. the context of companies’ financial statements
F. Thirty-four percent (34%) of respondents stated as they may be required to conduct independent
Insights Gained and View that their biggest challenge in overseeing climate assessments of those financial statements and
on Future Work change is a shortage of people with the requisite related disclosures and consider whether there is
experience and knowledge.92 any key information missing — including related
to climate-related issues — that could bear on
Appendices
Companies that do not have sufficient expertise whether the disclosures are fairly presented and
on climate-related issues across the organization free of material misstatement. As a result, it is
— at the staff level; in business lines, finance, equally important that the external auditors
and internal audit; among senior management; have sufficient expertise on issues related to
and on the board of directors — may be at climate change.
risk of underestimating the impact of climate-
related issues on their businesses, strategies, Data and System-Related Issues
and financial planning, including the impact Complete, accurate, and reliable data are critical
on their financial statements. For example, inputs for companies when preparing their
companies with senior management and boards financial statements and, ultimately, disclosing
of directors that lack sufficient expertise on decision-useful information investors and
climate change issues and their implications others rely on when making financial decisions.
could result in relevant climate-related issues not In the ACCA global survey of accountancy
receiving the appropriate level of assessment and financial professionals mentioned

91
 oston Consulting Group, Directors Can Up Their Games on Environmental, Social and Governance Issues, March 30, 2022. Another study based on
B
U.S. companies found that 47% of executives said their boards of directors have poor climate expertise (PwC, Board Effectiveness: A Survey of the
C-Suite, May 2023).
92
Deloitte, The Audit Committee Frontier – Addressing Climate Change, November 2021.

57
 The Task Force on Climate-related Financial Disclosures

previously, 28% of respondents indicated one different purpose than those used for financial
of the barriers preventing finance teams from data and, therefore, are not necessarily subject
supporting organizations in addressing climate- to internal controls intended to ensure the
related issues was “poor data to work with.” In integrity of the information.98 For example,
addition, a study by the U.K. Financial Reporting collecting and maintaining climate-related and
Council Lab found that the production of ESG other ESG data may be siloed within business
data (including climate-related data) used for units or functions with little governance or
financial reporting as well as other purposes is formal processes supporting them. In addition,
associated with several challenges.93 The study the data collected may not be defined clearly
noted challenges related to obtaining data from or consistently across a company, leading to
third-party suppliers, the manual input of data differences in the types of information collected
and associated risk of human error, and the and inability to aggregate the information.
inconsistency of data resulting from differences These types of issues can pose challenges to
in jurisdictional requirements. As an example, using climate-related data in the same way
collecting data on Scope 3 GHG emissions financial data are used.
and ensuring its quality poses a significant
challenge for some companies, as most of these
A. GHG emissions are from activities not under
the companies’ ownership or direct control.94
3. R ESOURCES ON CLIMATE-RELATED
State of Climate-Related
ISSUES IN FINANCIAL STATEMENTS
Financial Disclosures
Another data issue relates to market prices that
may not fully reflect climate-related physical This subsection summarizes an IASB project
B. on climate-related risks in financial statements
and transition risks. Under IFRS standards,
Financial Statement as well as guidance published by standard
companies are required to report certain assets
Considerations setters, regulators, and other organizations
and liabilities in their financial statements
at fair value. In measuring the fair value of a that may be helpful for companies in
C. considering the impact of climate-related issues
company — or its assets or liabilities, IFRS 13
Case Studies on Scope 3 in their financial statements based on current
requires that companies prioritize the use of
GHG Emissions accounting standards.
unadjusted market prices (e.g., prices quoted
on a stock exchange) over unobservable
D. IASB Project
ones (e.g., prices that cannot be verified
TCFD-Aligned Requirements In March 2023, the IASB announced a project to
with external sources but were developed
and Related Initiatives explore whether and how companies’ financial
internally by companies to reflect their own
assumptions).95 However, as highlighted in statements can provide better information
E. a 2022 study, while climate-related risks are about climate-related risks. As part of the
Types of Financial Impact announcement, the IASB indicated stakeholders
starting to be reflected in market prices,
and Associated Drivers have asked the following questions:
concerns are growing that current market
prices do not fully reflect the risks.96 In
F. • W
 hy do companies that are expected to be
addition, a survey of investment professionals
Insights Gained and View affected by climate-related risks not provide
in 20 jurisdictions managing $34.5 trillion
on Future Work information about these effects in their
of investments found that the majority of
financial statements?
participants believed climate-related issues
Appendices are not adequately incorporated into market • W
 hy do companies that have made net-zero
prices.97 Requirements to use market prices commitments not recognize liabilities or impair
for assets and liabilities — despite such prices the value of their assets as a result of those
not fully reflecting the impact of climate- commitments?
related issues — may lead to valuations in
financial statements that do not fully reflect • H
 ow should companies factor long-term
such issues. uncertainties into the measurement of amounts
in the financial statements? 99
Moreover, the systems for climate-related and
other ESG data have likely been used for a

93
Financial Reporting Council Lab, Improving ESG Data Production, August 2022.
94
 orld Resources Institute and World Business Council for Sustainable Development, The Corporate Value Chain (Scope 3) Accounting and
W
Reporting Standard, April 16, 2013.
95
IFRS, IFRS 13 Fair Value Measurement, May 2011.
96
 ank for International Settlements, BIS Papers No 130 Pricing of Climate Risks in Financial Markets: A Summary of the Literature,
B
December 9, 2022.
97
KPMG, “Can Capital Markets Save the Planet,” October 28, 2021.
98
Financial Reporting Council, FRC Statement of Intent on Environmental, Social and Governance Challenges, July 2021.
99
IFRS, “Connectivity in Practice: The IASB’s New Project on Climate-Related Risks in the Financial Statements,” March 23, 2023.
58
 The Task Force on Climate-related Financial Disclosures

As part of the project, the IASB indicated it would Standards Board educational material that
explore the nature and causes of stakeholder provides investors and other interested parties
concerns about the reporting of climate-related with an overview of the intersection of ESG
risks in the financial statements, which would matters with financial standards. It also provides
help inform appropriate actions to take. It further examples of how an entity may consider the
noted that one of the causes of those concerns effects of material ESG matters when applying
could be that investors’ information needs go current accounting standards.
beyond the objective of financial statements
and that such information needs are outside the CRR Thematic Review of TCFD Disclosures and
scope of the project. It indicated the ISSB’s climate Climate in the Financial Statements (July 2022):
-related standard addresses these information U.K. Financial Reporting Council report
needs. describing results of a thematic review of
1) TCFD disclosures and 2) climate-related
In September 2023, the IASB provided an update reporting in the financial statements of 25 listed
on the project, indicating that the project objective companies. The report includes examples of
was expanded to cover reporting on the effects disclosure that show good practices and areas
of uncertainties more broadly (rather than just that need further improvement.
climate-related uncertainties).100 The IASB also
A.
indicated it would explore 1) whether to create Accounting for Climate (December 2020): Climate
State of Climate-Related
examples to illustrate how to apply requirements Disclosure Standards Board guidance on
Financial Disclosures
in IFRS accounting standards to reporting the integrating climate-related matters into the
effects of climate-related and other uncertainties financial statements.
B.
and 2) clarifying or enhancing requirements in
Financial Statement
Considerations IFRS accounting standards in relation to disclosing
information about estimates. 4. E
 XAMPLES OF CLIMATE-RELATED
C. Guidance on Climate-Related Issues in DISCLOSURES IN FINANCIAL
Case Studies on Scope 3 Financial Statements STATEMENTS
GHG Emissions
Effects of Climate-Related Matters on Financial This subsection includes examples of disclosure
D. Statements (Republished July 2023): IFRS contained in financial statements. The Task
TCFD-Aligned Requirements educational material that reminds stakeholders Force sought to include examples that cover
and Related Initiatives of the long-standing requirements in IFRS some of the standards described above, such as
accounting standards to report on the effects IAS 36 Impairment of Assets and IAS 16 Property,
of climate-related matters in the financial Plant and Equipment. The examples included
E.
Types of Financial Impact statements when those effects are material. contain primarily qualitative information and
and Associated Drivers are not intended to represent “best practice”
IFRS for SMEs® Accounting Standard (May 2023): or demonstrate disclosures that meet the
IFRS educational material similar to the Effects of associated accounting standards. Instead,
F. Climate-Related Matters on Financial Statements
Insights Gained and View the examples are provided because they may
but tailored to entities that do not have public be useful to other companies to assess and
on Future Work
accountability and publish general purpose incorporate the impact of climate-related issues
financial statements for external users. into their financial statements.
Appendices
Intersection of Environmental, Social and
Governance Matters with Financial Accounting
Standards (March 2021): Financial Accounting

100
IFRS, "Climate-Related and Other Uncertainties in the Financial Statements,” Accessed September 27, 2023.

59
 The Task Force on Climate-related Financial Disclosures

Figure B3 shows an extract from the financial impairment of certain assets under a scenario
statements of a British mining and mineral they consider to be Paris-aligned (namely, the
resources company describing the sensitivity “Aspirational Leadership” scenario).
testing of cash-flows performed to assess the

Figure B3
Use of Sensitivities to Paris Aligned Accounting
Under the Aspirational Leadership scenario, which is not used in the preparation of these financial statements, nor for
budgeting purposes, the economic performance of copper and aluminium is expected to be stronger under supply and
demand forward pricing curves which we believe will be consistent with the Paris Agreement. It is possible therefore, under
the right conditions, that historical impairments associated with these assets could reverse. We recognised an impairment of
US$202 million during the year for the Boyne smelter cash-generating unit, triggered by economic and operating performance
of the smelter (note 4). When measuring the recoverable amount for this cash-generating unit we utilised net present value
of cash flows to the end of the existing joint venture agreements in 2029, which also coincides with the Group’s targeted
carbon emission reductions by 2030. The Group continues to evaluate lower emission power solutions for the smelter that
could extend its life to at least 2040. In such circumstances, the net present value of forecast future cash flows could support
the reversal of past impairments. Both the recorded outcome and the sensitivity represent a reduction in emissions that we
A. considered to be Paris-aligned.
State of Climate-Related
In the Aspirational Leadership scenario the prices for lower-grade iron ore are supported in the medium term by an assumed
Financial Disclosures
underlying increase in GDP-driven demand. However, in the longer term we assume the pricing for lower grade iron ore to be
weaker than in our core scenarios. This will depend on the development of low-emissions steel technology, the pace of which
B. is uncertain, but is expected to be offset by higher prices for higher-grade iron ore. This is unlikely to give rise to impairment
Financial Statement triggers for 2022 or in the foreseeable future due to the high returns on capital employed in the Pilbara.
Considerations Rio Tinto, Annual Report, p. 154
Note: Some content was reformatted in order to fit the page.

C.
Case Studies on Scope 3
GHG Emissions
Figure B4 shows an extract from note 8 to the intangible assets (including goodwill) for their
financial statements of a British industrials relevant cash-generating units (CGUs) in a
D. company describing the impairment testing of 1.5°C scenario.
TCFD-Aligned Requirements
and Related Initiatives
Figure B4
E.
Impairment Testing of Intangible Assets
Types of Financial Impact
and Associated Drivers The Group believe there are significant business growth opportunities to come from Rolls-Royce playing a leading role in the
transition to net zero, whilst at the same time climate change poses potentially significant risks. The assumptions used by the
Directors are based on past experience and external sources of information. The main climate-related areas that have been
F.
considered are the risk that regulatory changes could materially impact demand for its products (and hence the utilisation
Insights Gained and View of the products whilst in service and their useful lives) and shifting investment focus towards more sustainable products and
on Future Work solutions. Based on the climate scenarios prepared, the forecasts do not assume a significant deterioration of demand for Civil
Aerospace (including Rolls-Royce Deutschland) programmes given that all commercial aero-engines will be compatible with
Appendices sustainable fuels by the end of 2023. Similarly, the most popular reciprocating engines in Power Systems will be compatible
with sustainable fuels by the end of 2023. The investment required to ensure our new products will be compatible with net zero
operation by 2030, and to achieve net zero scope 1 and 2 GHG emissions is reflected in the forecasts used.

A 1.5°C scenario has been prepared using key data points from external sources including Oxford Economics, Global Climate
Service and Databank and the International Energy Agency. This scenario has been used as the basis of a sensitivity. It is
assumed that governments adopt stricter product and behavioural standards and measures that result in higher carbon pricing.
Under these conditions it is assumed that markets are willing to pay for low carbon solutions and that there is an economic
return form strategic investments in low carbon alternatives. The sensitivity has considered the likelihood of demand changes
for our products based on their relative fuel efficiency in the marketplace and the probability of alternatives being introduced
earlier than currently expected. The sensitivity also reflects the impact of a broad range of potential costs imposed by policy or
regulatory interventions (through carbon pricing). This sensitivity does not indicate the need for an impairment charge.

Rolls Royce plc, Annual Report and Audited Financial Statements, p. 82

Note: Some content was reformatted in order to fit the page.

60
 The Task Force on Climate-related Financial Disclosures

Figure B5 shows an extract from the note 13 reversal of non-current assets including impacts
to the financial statements of an Australian from risks related to climate change and the
resources company describing the assessment transition to a low carbon economy.
of indicators of impairment or impairment

Figure B5
Estimation of Useful Lives of Property, Plant, and Equipment

Key judgements and estimates

Judgements: Assessment of indicators of impairment or impairment reversal and the determination of CGUs for impairment
purposes require significant management judgement.

Indicators of impairment may include changes in the Group’s operating and economic assumptions, including those arising from
changes in reserves or mine planning, updates to the Group’s commodity supply, demand and price forecasts, or the possible
additional impacts from emerging risks including those related to climate change and the transition to a low carbon economy.

Climate change
A. Impacts related to climate change and the transition to a low carbon economy may include:
State of Climate-Related - demand for the Group’s commodities decreasing, due to policy, regulatory (including carbon pricing mechanisms), legal,
technological, market or societal responses to climate change, resulting in a proportion of a CGU’s reserves becoming
Financial Disclosures
incapable of extraction in an economically viable fashion

- physical impacts related to acute risks resulting from increased frequency or severity of extreme weather events, and those
B. related to chronic risks resulting from longer-term changes in climate patterns
Financial Statement
The Group’s assessment of the potential impacts of climate change and the transition to a low carbon economy continues to
Considerations
mature. As outlined in the Basis of Preparation, where sufficiently developed, the potential financial impacts on the Group of
climate change and the transition to a low carbon economy have been considered in the assessment of
C. Indicators of impairment, including:
Case Studies on Scope 3 - the Group’s current assumptions relating to demand for commodities and carbon pricing, including their impact on the
GHG Emissions Group’s long-term price forecasts

- the Group’s operational emissions reduction strategy

D.
Estimates: The Group performs a recoverable amount determination for an asset or CGU when there is an indication of
TCFD-Aligned Requirements impairment or impairment reversal.
and Related Initiatives
When the recoverable amount is measured by reference to FVLCD, in the absence of quoted market prices or binding sale
agreement, estimates are made regarding the present value of future post-tax cash flows. These estimates are made from the
E.
perspective of a market participant and include prices, future production volumes, operating costs, capital expenditure, closure
Types of Financial Impact and rehabilitation costs, taxes, risking factors applied to cash flows and discount rates. The cash flow forecasts may include
and Associated Drivers net cash flows expected from the extraction, processing and sale of material that does not currently qualify for inclusion in ore
reserves. Reserves and resources are included in the assessment of FVLCD to the extent that it is considered probable that a
F. market participant would attribute value to them.
Insights Gained and View
When recoverable amount is measured using VIU, estimates are made regarding the present value of future cash flows based
on Future Work on internal budgets and forecasts and life of asset plans. Key estimates are similar to those identified for FVLCD, although some
assumptions and values may differ as they reflect the perspective of management rather than a market participant.
Appendices
All estimates require management judgements and assumptions and are subject to risk and uncertainty that may be beyond the
control of the Group; hence, there is a possibility that changes in circumstances will materially alter projections, which may impact
the recoverable amount of assets/CGUs at each reporting date. While no indicators of impairment, or impairment reversal, were
identified across the Group’s CGUs at 30 June 2022, with the exception of the Cerro Colorado CGU, the carrying value of the Spence
CGU is the most susceptible to changes in the significant estimates outlined below in the next reporting period.

BHP, Annual Report, p. 155

Notes: Abbreviations used include CGU for cash generating units, FVLCD for fair value less cost of disposal, and VIU for value in use.
Some content was reformatted in order to fit the page.

61
 The Task Force on Climate-related Financial Disclosures

Figure B6 shows an extract from note 1.5 to of the useful lives of assets considering factors
the financial statements of a British power arising from climate transition.
generation company describing the estimation

Figure B6
Estimation of Useful Lives of Property, Plant and Equipment
Property, plant and equipment represents a significant proportion of the asset base of the Group, primarily due to power plants
owned, being 59.6% (2021: 63.2%) of the Group’s total assets. Estimates and assumptions made to determine their carrying
value and related depreciation are significant to the Group’s financial position and performance. The annual depreciation
charge is determined after estimating an asset’s expected useful life and its residual value at the end of its life. The useful
lives and residual values of the Group’s assets are determined by management at the time the asset is acquired and reviewed
annually for appropriateness. The Group derives useful economic lives based on experience of similar assets, including use
of third party experts at the time of acquisition of assets, and these lives may exceed the period covered by contracted power
purchase agreements.

Emerging governmental policies are also considered when reviewing the appropriateness of useful economic lives, including
whether asset life assessments could be impacted by factors arising from climate transition or other regulatory and market
A. factors. This includes consideration of government energy transition policies, and how our thermal assets are expected to be
State of Climate-Related used, in particular to provide a secure supply during a medium to long-term transition to renewables. In particular, during
Financial Disclosures 2022 the expiration of the Maritsa PPA in February 2024 was considered together with the emerging geopolitical issues and the
continued high dependency on the asset in the region which outweigh the climate transition factors in the short to medium
term. As a result, during the year, the useful life of the asset was increased. The impact on depreciation was not material.
B.
Financial Statement A decrease in the average useful life by one year in power plant assets would result in a decrease in the net book value of
Considerations $16.0 million (2021: $21.1 million).

ContourGlobal Limited, Annual Report and Financial Statements, p. 69

C. Note: Some content was reformatted in order to fit the page.
Case Studies on Scope 3
GHG Emissions

D.
TCFD-Aligned Requirements
and Related Initiatives

E.
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View
on Future Work

Appendices

62
C.
Case Studies on Scope 3
GHG Emissions
 The Task Force on Climate-related Financial Disclosures

C. Case Studies on Scope 3 GHG Emissions

In October 2021, the Task Force published Scope 3 GHG emissions by investors and other
guidance on metrics, targets, and transition users for financial decision-making but also
plans in which it encouraged all companies to recognized there are challenges associated with
report their Scope 3 GHG emissions (see Box disclosing this information — including data and
C1).101 The Task Force noted growing demand for methodological challenges.102 103
1.

Box C1
Scope 3 GHG Emissions Categories
Based on the GHG Protocol Corporate Accounting and Reporting Standard, Scope 3 GHG emissions are those
that occur in the value chain of a company. Under this standard, Scope 3 GHG emissions can be broken down
into 15 categories, as shown below. purchased electricity, steam,
CO2 CH4 CO2 CO2N2O CH4 CHHFCs N2O N2O PFCsHFCselectricity, SF6 PFCs PFCs SF6
heatingpurchased forHFCs
own usesteam, SF6
N2O& coolingcooling
4
CO2 CH4 HFCs PFCs SF 6
CO2 Scope
CH 4 2 N2O heating &ScopeHFCs 1
for own use
PFCs transportation
SFand
6 distribution
processing of
sold products
CO2 CH4 CO2 N2O CH4 HFCs N2O PFCs HFCs SF6 PFCs SF6
A. INDIRECT
CO2 CHpurchased
4
DIRECT
N2O steam, company
electricity, HFCs PFCs SF6 processing of company
transportation facilities
State of Climate-Related purchased electricity, steam,
heating & cooling for own use
heating & cooling for own use facilities purchased transportation
capital
and distribution soldfuelprocessing
and
products of
purchased capital fuel and goods and and distribution
goods energysold products
related
CO2 CH4 Ngoods
2O and HFCs PFCs SF6
Financial Disclosures goods energy related services
company
activities
purchased services
electricity, steam, HFCs activities facilitiescompany
CO2 CH4 electricity,
purchased N2Osteam, PFCs SF6 transportation processing of
heating
heating &&cooling
cooling forown
own
purchased use capital fuel and facilities
purchased electricity, goods
for use
steam,and Scope 3
purchased goods capitalenergy related transportation
fuel and processing of Scope 3
use of sold sold products
end-of-life and distribution
products
B. and distribution sold products treatment of
purchased electricity, steam, purchased & electricity, services
steam, goods and goods activities energy related transportation waste business
heatingpurchased
cooling for own use
electricity, steam, INDIRECT sold products INDIRECT

1
heating & cooling for ownheating & cooling services business activities and distribution generated in travel
use purchased
heating & for own for
transportation useown
electricity,
cooling waste
steam,
use company
Financial Statement purchased and distribution
heating electricity,
& cooling for generated
steam,
own use companyin travel facilities
transportation
transportation processing
end-of-life
processing
operations
of end-of-life
of treatment of
use of sold
use of sold
products
company

9
purchased electricity, steam, purchased electricity, heating & coolingsteam, for own use facilities capital
purchased
operations fuel and

15
company vehicles
Considerations Purchased
heating & cooling for own use heating capital & coolingfuel forandowntransportation
use goods and waste goods
purchased electricity, steam, business
energy related vehicles
transportation
and distribution
and distribution
processing of
sold products
sold products treatment of
sold products
sold products
products

8
Goods and goods energy related services generated
transportation waste travel activities
business
and distribution
heating & cooling for own use in
transportation processing Transportation
of
and distribution
transportation processing
sold products of
processing of
Services activities and distribution generated company
incompany travel
operations
and distribution and Distribution
sold products andtransportationsold products
distribution
company processing
sold productsof
Purchased Electricity, Steam, end-of-life use of sold

2
facilities
operations facilities transportation processing
employee of leasedtreatment
assets
purchased electricity, Heatingsteam,
& Cooling for Own Use
company end-of-life and distribution
of soldcompany
usevehicles sold products ofInvestments
products
C. &purchased
heating purchasedcooling for own use capital
capital
employee fuel
fuelandand
Leased Assets company
transportation processing of transportation
investments and products processing
distribution ofsold products
commuting

14
company facilitiesCompanytreatment of vehicles leased assets sold franchises
products
goods
goods and and goods
goods
commuting energy related
transportation
energy related
and distribution wastesold products business
and distribution sold products

10
purchased capital business facilities
fuel and facilities company sold products transportation processing of
Case Studies on Scope 3 transportation services
waste activities
and distribution generated Facilities
in travel
purchased Capital purchased
goods and services
fuel and capitalgoods capital activities
fuel and fuel and company
travel energy related facilities and distribution sold products
transportation processing of

12
and distribution purchased
generated in operations
Goods goods and and goodscompany energy related and distribution sold products

5
goods and energy
services related
purchased
goods capital
goods employee
activities
energy fuel andleased
related company
assets investments
facilities end-of-life company use of sold leased assets Franchises
GHG Emissions services
operations
servicespurchased
activities
goods and
services goodsactivities
capital
facilities commuting Employee
fuel
energy and company
related
activities leased assets
facilities transportation investments Processing
treatment of end-of-life
of vehiclesproducts
use of sold leased assets franchises

3
company

13
purchased capital purchased
Fuel andgoods capital
and
services goods fuel and energy Commuting
related
activities
company
vehicles and distribution end-of-life
Sold Products treatment
sold products use of ofsold products

7
transportation business facilities facilities
end-of-lifeend-of-life use of sold
goods and goods goods
Energy and
Related servicesgoodscapital waste
purchased energyfuelrelated
and activities end-of-life use of soldtreatment ofsold products
products use of sold
transportation
and distribution waste
generatedpurchased
in business
travel capital fuel and
treatment of products treatment
sold products of products
end-of-life use of sold
services services
Activitiesgoods and goods activities
energy related treatment of products
transportationdistribution waste
andservices generatedgoods
operations in Business company
and goods
travel energy related sold products

11
activities sold products end-of-life use products
of sold
D. transportation wastetransportation
and distribution wasteoperations
business generated in services business employee
facilities
Travel business leased assets
Company investments
activities
sold treatment
productsof Leased Assets franchises

4
employee transportation
leased assets waste end-of-life use of soldleasedend-of-life soldUse
use of sold treatment of Sold products
of
products
and distribution generated
purchased andindistribution
capital travel generated
fuel andinvestments
in wastein travel commuting business company
Vehicles
end-of-life assets franchises
andTransportation
distributionoperationsgenerated travel treatment ofcompany treatment of treatment
products products ofsold products Products
TCFD-Aligned Requirements transportation
commuting
operations goods
goods and
services transportation
waste
transportation
transportation
businessand
operations
energy
and Distribution
waste
distribution
related
waste
activities
Waste company
generated
operations
Generated
in
business
business
business
invehicles travel
travel company
sold productsvehiclescompany
vehicles
sold products sold products End-of-life
Treatment of
use of sold
products
and distribution generated in operations
travel vehicles vehicles
company
and Related Initiatives and distribution generated in and distribution
operations
travel
employee
generated in Operations
operations travel
transportation investments
operations leased assets
wastecompany
vehicles
company
business vehicles
end-of-life use ofleased
sold assets
Sold Products
franchises
company
and distribution generated in company vehicles
travel
commuting treatment of products
employee leased leasedvehicles
assets assets investments
operations vehicles assetsleased assets franchises
employeetransportation
leased assets
employee
Upstream
employeecommuting
waste
commuting
activities
investments leasedbusiness
assets
investments
investments Reporting leased assets
company
sold products
franchises
leased
leased
company
assets
Downstream
franchises
franchises
activities
employee leased assets investments vehicles
leased assets franchises
E. commuting and distribution commuting
generatedemployeein
employee
commuting
commuting
operationsemployee
travelleased assets
leased assets

leased assets
investments
investments
investments
leased assets franchises
leased assets franchises
Note: Theemployee items numberedcommuting from 1investments
to 15 refer to Scope 3 GHG emissions
company categories.franchises
leased assets franchises
Types of Financial Impact employee
commuting
leased assets investments
commuting
leased assets
commuting leased assets
vehicles franchises leased assets
employee leased assets investments leased assets franchises
and Associated Drivers commuting
Adapted from World Resources Institute and World Business Council for Sustainable Development, The Corporate Value Chain (Scope 3) Accounting
and Reporting Standard,
employee April
leased 16, 2013
assets investments leased assets franchises
commuting
Note: Some content was reformatted in order to fit the page.
F.
Insights Gained and View
on Future Work As part of its efforts to support companies in specific GHG emissions data, costs associated
implementing its recommendations, the Task with making GHG emissions estimates, double
Appendices Force worked with five companies to develop counting of GHG emissions, and accuracy of
case studies describing their respective assumptions related to downstream processing
approaches to estimating and disclosing Scope and end-of-life of products. The Task Force
3 GHG emissions, including the challenges believes the case studies offer insights that
they face.103 In the case studies that follow, the may be useful to other companies as they face
companies highlight challenges related to the similar challenges in estimating and disclosing
limited availability of supplier- or customer- Scope 3 GHG emissions.

Key Takeaways
Scope 3 GHG emissions are often a significant portion of companies’ GHG emissions inventories
and represent an important driver of climate-related issues.

101
TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021.
102
In a 2022 TCFD survey, 71% of companies indicated disclosing Scope 3 GHG emissions was difficult, with data collection in the value chain noted
as a challenge (TCFD, 2022 Status Report, October 13, 2022). Similarly, in a survey conducted by the SBTi, 85% of respondents that estimated
Scope 3 GHG emissions highlighted data access as a challenge (SBTi, Catalyzing Value Chain Decarbonization, February 2023).
103
There is also a case study in Section A.3. TCFD-Aligned Reporting by Asset Managers and Asset Owners that covers Scope 3 GHG emissions.

64
 The Task Force on Climate-related Financial Disclosures

Key Takeaways (continued)

For companies beginning to measure and report on Scope 3 GHG emissions, it may be helpful to
develop initial estimates that can be improved over time.

Companies indicated continuous improvements to their systems and processes; coordination with
various internal teams; engagement with companies in the value chain; and active participation
in industry initiatives on GHG emissions measurement are important to overcome the various
challenges related to Scope 3 GHG emissions measurement and to achieve reliable and
comprehensive reporting.

Case Study by a Resources Company our GHG emissions inventory and achievement
of our goal is uncertain, particularly given
BHP is a resources company headquartered the challenges of a net-zero pathway for our
in Melbourne, Australia. We operate globally customers in steelmaking. It is, therefore, of
across a range of commodities, including iron particular importance for us to report on Scope
A. ore, copper, nickel, and metallurgical and 3 GHG emissions. Engaging with our value
State of Climate-Related thermal coal, and are working toward our first chain is also important as we cannot ensure
Financial Disclosures potash production. the outcome of our long-term goal alone. In the
sections that follow, we describe key aspects
B. We have long been focused on the business of — and lessons learned from — our efforts to
Financial Statement implications of climate change and on improve our disclosures with respect to Scope 3
Considerations communicating those implications and GHG emissions.
our response to our investors and other
C. stakeholders. For example, we released our Our Approach to Scope 3 GHG Emissions
Case Studies on Scope 3 Climate Change: Portfolio Analysis in September Disclosures and Challenges Faced
GHG Emissions 2015 to provide investors with more information We disclose both upstream and downstream
regarding how climate-related risk might affect Scope 3 GHG emissions in our Annual Report.
D. our portfolio and our response to climate Downstream GHG emissions disclosures include
TCFD-Aligned Requirements change.104,105 In addition, we were one of the Processing of Sold Products (category 10) and
and Related Initiatives first companies to align our climate-related Use of Sold Products (category 11).108 Scope 3
disclosures with the recommendations of the GHG emissions from third-party processing
E. Task Force, of which our Group Climate Change of our products (predominantly iron ore and
Types of Financial Impact and Sustainability Officer, Dr. Fiona Wild, has metallurgical coal for steelmaking) are the most
and Associated Drivers been a member since its inception in late 2015. material, constituting approximately 76% of our
In fact, we have been reporting in line with the total reported Scope 3 GHG emissions inventory
F. Task Force’s 11 recommended disclosures since in financial year (FY) 2022 (see Figure C1, p.
Insights Gained and View they were released in 2017. More recently, we 66). Use of Sold Products comprises mainly
on Future Work published our Climate Transition Action Plan combustion of sold energy coal, post the merger
(CTAP) in 2021, which outlines our approach to of our petroleum business. The remaining GHG
Appendices the reduction of GHG emissions and managing emissions in this category are anticipated to
climate-related risks for our operations and in decrease significantly following the anticipated
our global value chain.106 The latest updates on closure of our energy coal mine in New South
our CTAP progress are available in our Annual Wales, Australia, by the end of FY 2030. To
Report 2022.107 highlight our commitment to transparency —
one of the key principles of the GHG Protocol
Our broader corporate strategy defines our
— we publish a detailed methodology that
approach to decarbonization, which includes
provides information on Scope 3 GHG emission
pursuit of our long-term goal of net-zero Scope
calculations and assumptions.109
3 GHG emissions by 2050. Downstream Scope
3 GHG emissions are the largest contributor to

104
BHP, Climate Change: Portfolio Analysis, September 29, 2015.
105
We have also provided periodic updates on this information since then. For example, see BHP, Climate Change: Portfolio Analysis – Views after
Paris, October 11, 2016 and BHP, Climate Change Report 2020, February 2020.
106
BHP, Climate Transition Action Plan 2021, September 14, 2021.
107
BHP, Annual Report 2022, September 6, 2022.
108
World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD), Technical Guidance for Calculating Scope 3
Emissions, April 23, 2013.
109
BHP, Scope 1, 2 and 3 GHG Emissions Calculation Methodology 2022, September 6, 2022.

65
 The Task Force on Climate-related Financial Disclosures

Figure C1
Breakdown of Our Scope 3 GHG Emissions by Category in FY 2022 Disclosures
Scope 3 GHG emissions by category (MtCO2-e)1
Year ended 30 June 2022 2021 2020
Upstream
Purchased goods and services
(including capital goods)2 9.9 10.1 9.8
Fuel and energy related activities 1.0 1.1 1.2
Upstream transportation and distribution3 4.6 4.8 4.6
Business travel4 0.1 0.1 0.1
Employee commuting4 0.3 0.4 0.2
Downstream
Downstream transportation and distribution5 3.2 3.1 2.9
Investments (i.e. our non-operated assets)6 2.7 2.7 2.7
A. Processing of sold products7
State of Climate-Related GHG emissions from steelmaking8 305.3 300.5 292.9
Financial Disclosures – Iron ore processing to crude steel 270.8 260.7 252.8
– Metallurgical coal processing to crude steel9 34.5 39.8 40.1
B. Copper processing10 1.0 1.0 1.0
Financial Statement
Nickel processing11 0.3
Considerations
Total processing of sold products 306.7 301.5 294.0
Use of sold products
C.
Energy coal12,13 37.6 38.3 56.4
Case Studies on Scope 3
GHG Emissions Natural gas13 17.4 19.5 20.6
Crude oil and condensates13 15.9 16.8 17.9
D. Natural gas liquids13 1.7 1.8 1.9
TCFD-Aligned Requirements Total use of sold products 72.6 76.4 96.8
and Related Initiatives Total Scope 3 GHG emissions 401.2 400.1 412.3
Total Scope 3 GHG emissions
E. (adjusted for divested operations)14 364.3 359.7 369.5
Types of Financial Impact
and Associated Drivers BHP, Annual Report 2022, pp. 50–51
Note: Footnotes 1–14 can be found in BHP’s 2022 Annual Report.

F.
Insights Gained and View
on Future Work
Our approach to calculating Scope 3 GHG The following paragraphs describe an example
emissions is aligned with the GHG Protocol. of how we calculate GHG emissions from the
Appendices
We calculate GHG emissions from Processing processing of iron ore to steel. For calculation
of Sold Products by each of our significant of Processing of Sold Products, we use the
commodities. We also make assumptions on “average-data” method outlined in the Technical
the most common process type the significant Guidance for Calculating Scope 3 Emissions,
commodities can go through and the associated which involves applying industry average
industry-average GHG emission factor per input emission factors to production volumes for
volume of our commodity.110 The commodities each commodity to determine a GHG emissions
not covered have comparably lower volumes estimate.111 As part of our annual reporting,
— and associated GHG emissions — and the we obtain independent limited assurance over
variety of end uses associated with these certain sustainability data and disclosures in
commodities means applying a meaningful our Annual Report, which includes Scope 3 GHG
average GHG emission factor is challenging. emissions and the calculation approach.112

110
For example, we use data from the International Energy Agency’s Iron and Steel CCS Study, April 2013 and Iron and Steel Technology Roadmap,
October 2020. For details, refer to pages 18 and 19 and Appendix 1 in BHP Scope 1,2 and 3 GHG Emissions Calculation Methodology 2022,
September 6, 2022.
111
WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.
112
Refer to Independent Assurance Report in section 7.19 of our Annual Report 2022 for further details.

66
 The Task Force on Climate-related Financial Disclosures

Example Calculation: GHG Emissions GHG Protocol Scope 3 guidance specific to the
from Steelmaking mining industry, and the general guidance
has sometimes been difficult to apply to our
Most steelmaking by our customers occurs particular circumstances. For example, some
through a process that follows the blast of our products have a number of potential
furnace-basic oxygen furnace (BF-BOF) downstream applications, each of which will
route.113 We estimate the volume of crude steel have a different GHG emissions profile — and
that can be produced from our iron ore and the eventual end uses of our products may be
apply the International Energy Agency’s (IEA’s) unknown. In these cases, we must make various
industry average GHG emission factor per ton assumptions about the most likely processing
of crude steel for the BF-BOF route. This GHG route or end use and, in doing so, unavoidably
emission factor may not accurately represent introducing an additional source of uncertainty
(geographically, technologically, or temporally) into our reported Scope 3 GHG emissions
the actual GHG emissions intensities of our inventory. To improve consistency of reporting
customers’ facilities, but it is considered across the industry on these issues, we are now
sufficiently representative of average industry working with the International Council of Mining
conditions to provide a meaningful estimation. and Metals to develop supplementary guidance.
A. We have entered several collaborative
State of Climate-Related
Lessons Learned
partnerships with customers and research
Financial Disclosures institutions to support the trial and piloting We have learned that improving the accuracy
of solutions designed to reduce the GHG of disclosures — in addition to efforts by our
B. emissions intensity of existing steelmaking customers and suppliers to reduce Scope 3
Financial Statement routes — and to help support the establishment GHG emissions — has, and will continue to,
Considerations of low-emission production routes. We are require time. A large share of our reported
also currently working with our customers Scope 3 GHG emissions inventory comes
C. in the steel sector to understand their ability from processes that are considered hard-to-
Case Studies on Scope 3 to provide GHG emission factors to allow us abate (particularly steelmaking and shipping)
GHG Emissions to improve the accuracy of our calculations and will require investment in research, early
over time. Some of the challenges associated pilots, and commercial trials intended to
D. with a more accurate calculation include GHG bring low-emission solutions to maturity. In
TCFD-Aligned Requirements emissions measurement capability and maturity these industries, investment now is crucial.
and Related Initiatives in our customer locations, commercial and Steelmaking assets are capital-intensive
confidentiality concerns regarding data sharing, and have a long life, so opportunities for
E. and the potential for inconsistent measurement substantial decarbonization exist primarily in
Types of Financial Impact approaches to be applied across our two timeframes — when a new asset is built or
and Associated Drivers customer base. when an asset undergoes major refurbishment,
which typically occurs 15 to 20 years into
F. Another challenge in the calculation of Scope its operational life. For these reasons, early
Insights Gained and View 3 GHG emissions from steelmaking is the investment in pilots and trials to decarbonize
on Future Work overlap of reporting boundaries. In addition the steelmaking industry may not achieve
to iron ore, steel production from the BF-BOF material GHG emissions reductions for decades
Appendices process route consumes metallurgical coal as to follow. We also know that measurement
an input, a portion of which is also produced improvements are vital to accurately account
by BHP. Therefore, some form of allocation for Scope 3 GHG emissions reductions in the
of GHG emissions is needed to avoid double value chain. It is challenging both to influence
counting within the Scope 3 GHG emissions Scope 3 GHG emissions reductions in the value
inventory for these two commodities. Currently, chain and to see improvement in the accuracy
no guidance exists on how to manage this of Scope 3 GHG emissions measurement. To
allocation, however we have approached this manage these challenges, we have learned to
by an apportionment of the steelmaking Scope prioritize wherever our efforts can have the
3 emissions based on the mass ratio of iron ore highest potential impact.
and metallurgical coal needed to produce a ton
of crude steel. To support both improved data accuracy and
progress towards GHG emissions reduction,
Developing Industry-Specific Guidance engagement across the value chain is required
The lack of industry-specific guidance on Scope to align incentives. We have learned that the
3 GHG emissions calculation is a key challenge most impactful partnerships can be created
for us. At the time of this report, there is no where the source of Scope 3 GHG emissions

113
See the following to learn more about different steelmaking processes: World Steel Association, The Steelmaking Process, January 23, 2022.

67
 The Task Force on Climate-related Financial Disclosures

in our inventory is material and where we knowledge and closely monitor climate-related
have influence — which depends both on our developments in order to understand where
leverage in the value chain and the maturity they can have the most influence in their role.
of the value chain. The maturity of the value
chain in relation to climate-related issues
differs between industries. Both materiality Case Study by a Global Risk
and influence must be considered in order Assessment Firm
to evaluate the potential impact that can
be achieved. For example, we are a major Moody’s is an integrated risk assessment
charterer of ships and — although this is a firm that provides credit ratings, risk analysis,
less-material Scope 3 GHG emissions source research, and other services. We have set and
for us than steelmaking — we can have a validated near- and long-term net-zero targets
significant influence on the industry through with the goal of achieving decarbonization
our procurement decisions and vessel selection. across our value chain. As such, our targets are
We have implemented a decision support and centered on reducing all three scopes of our
reporting system that allows us to take into GHG emissions and increasing the proportion of
account GHG emissions in our vessel selection suppliers that have set science-based targets.114
criteria. We also look for opportunities to For example, we set a target that 60% of the
A.
influence progress towards the decarbonization suppliers of our purchased goods and services
State of Climate-Related
of the shipping industry by tendering for new — by spend — have science-based targets by
Financial Disclosures
and emerging low-emissions vessels and 2025.115,116 See Figure C2 (p. 69) for more detail
fuels. This helps to provide a demand signal on our targets.
B.
Financial Statement and supports the industry in overcoming
Our response to the TCFD recommendations
Considerations commercial barriers.
followed the initial confirmation of support
signed by our Chief Executive Officer and
Finally, we have learned that — in addition
C. Chief Financial Officer in June 2017; and
Case Studies on Scope 3
to alignment of value chain incentives —
Richard Cantor, Vice Chairman of Moody’s
GHG Emissions alignment with both internal and external
Investors Service, serves as a member of the
stakeholders such as investors is important.
Task Force. We have been disclosing in line
D. Management of our approach to Scope 3 GHG
with the TCFD recommendations — including
TCFD-Aligned Requirements emissions occurs across lines of business, our GHG emissions inventory — since then.
and Related Initiatives markets, and functions. We have therefore Our annual disclosures of the GHG emissions
made a targeted effort to build capacity around inventory are important to support the
E. climate-related issues in the organization achievement of our targets. We disclose
Types of Financial Impact and with our external stakeholders. It has our GHG emissions inventory through our
and Associated Drivers proven important to engage with senior Stakeholder Sustainability Report, TCFD Report,
management across relevant functions as and response to the CDP Climate Change
F. well as our external stakeholders as early as questionnaire.117 Scope 3 GHG emissions
Insights Gained and View possible to ensure everyone is aligned in their comprise 99% of our total Scope 1, 2, and 3
on Future Work understanding of the risks and challenges GHG emissions inventory (see Figure C3, p. 69,
associated with Scope 3 GHG emissions, in for disclosure of our GHG emissions). Our most
Appendices terms of both reporting and achieving our material category of Scope 3 GHG emissions is
reduction goals. It is becoming increasingly category 1, Purchased Goods and Services. As
important that people throughout our a result, supplier data are a key area of focus in
organization continue to build their our disclosures.

114
We also have carbon offset projects that were chosen based on funding certified projects, the geographies where we operate, and alignment
with the Sustainable Development Goals. Although carbon offsets neither reduce our own carbon footprint nor are considered in our net-zero
target, they do support voluntary carbon market development and reduction of GHG emissions elsewhere in the global economy.
115
We are also targeting 15% Scope 3 GHG emissions reductions in the categories of fuel and energy-related activities, business travel, and
employee commuting. Actions to achieve this include the following: 1) lower business travel by imposing an internal carbon price on air travel, 2)
lower employee commuting by implementing a hybrid work model and supporting work-from-home capabilities, and 3) reduce fuel and energy-
related activities that cause GHG emissions by implementing initiatives that promote energy efficiency across our global real estate portfolio and
to procure 100% renewable electricity for global operations.
116
GHG emissions and targets are calculated in accordance with the GHG Protocol Reporting Standard and the SBTi guidance — and are externally
validated in accordance with the latest SBTi Target Validation Protocol.
117
See Moody’s, 2022 Stakeholder Sustainability Report, May 3, 2022; Moody's, 2022 TCFD Report, April 19, 2023; and Moody’s, Moody’s Corporation
2022 CDP Response, July 28, 2022.

68
 The Task Force on Climate-related Financial Disclosures

Figure C2
Our Science-Based Targets

50% 15% 60%

Reduction in absolute Scope 1 and Reduction in Scope 3 GHG emissions Of our suppliers by spend covering
Scope 2 GHG emissions by 20231 from fuel and energy-related activities, purchased goods and services and
business travel and employee capital goods to have science-based
commuting by 20251,2 targets by 2025

Target in progress

95%
92% 92% 49%
Exceeding target 81%
76%
68%
Exceeding target
25% 28%
24%

2020 2021 2022 2020 2021 2022 2019 2020 2021 2022

A. Moody’s, 2022 Stakeholder Sustainability Report, p. 25

State of Climate-Related Note: Some content was reformatted in order to fit the page.
Financial Disclosures

B.
Figure C3
Financial Statement
Considerations Our Total Absolute GHG Emissions
GHG emissions (mtCO e)
C.
2019 2020 2021 2022
Case Studies on Scope 3
GHG Emissions Scope 1 1,744 919 851 810
0.20%4
Scope 2 market-based2 13,591 2,745 432 440
D. 0.94%
TCFD-Aligned Requirements Scope 3 171,260 112,158 121,290 137,981 7.32%
and Related Initiatives
Purchased goods and services 122,500 86,000 102,900 106,100
7.46%

E. Capital goods 5,600 12,200 7,900 9,900 7.17%

Types of Financial Impact 2022 Scope 3
and Associated Drivers Business travel 23,100 3,300 1,480 10,300 emissions
breakdown
Employee commuting 10,400 3,100 208 1,300
F.
Insights Gained and View Investments 6,100 6,900 8,500 10,100 76.89%
on Future Work
Other 3 3,560 658 302 281

Appendices Total Scope 1, Scope 2

186,595 115,822 122,573 139,231
market-based, Scope 3

[...]
1
2019, 2020 and 2021 purchased goods and services (Scope 3, Category 1), capital goods (Scope 3, Category 2) and fuel and energy-related activities (Scope 3, Category 3) GHG emissions were restated as a result of
change in methodology and access to improved data.
2
Scope 2 location-based emissions were as follows: 2022 – 7,696 mtCO2e, 2021 – 6,878 mtCO2e, 2020 – 8,767 mtCO2e and 2019 – 14,035 mtCO2e.
3
Other includes fuel and energy-related activities (2022 – 200 mtCO2e, 2021 – 230 mtCO2e, 2020 – 590 mtCO2e and 2019 – 3,100 mtCO2e) and waste generated in operations (2022 – 81 mtCO2e, 2021 – 72 mtCO2e
2020 – 68 mtCO2e and 2019 – 460 mtCO2e).
Moody’s,
4 2022fuel
Other includes TCFDandReport, p. 36activities (0.14%) and waste generated in operations (0.06%).
energy-related
Note:
5
Someinclude
Emissions content wasunder
all offices reformatted in order
financial control. tofootage
Square fit theincludes
page; Moody’s
and some content
managed officeswas removed,
and excludes denoted
shared-space by […].
offices due to data limitations. The impact is expected to be not material, with em
in shared-space offices accounting for approximately 0.7% of total GHG inventory in 2022.

Our Approach to Scope 3 GHG Emissions industry-based emissions factors to augment

Disclosures and Challenges Faced gaps in supplier-specific data. Doing so allows
us to have more precise and complete data
We calculate Scope 3 GHG emissions from our
and aligns us with the GHG Protocol guidance
supply chain according to the GHG Protocol
on supply chain Scope 3 GHG emissions. It also
and use a methodology based on supplier-
enables us to effectively track progress on our
specific data, when available.118 We leverage
decarbonization targets.

118
WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.

69
 The Task Force on Climate-related Financial Disclosures

We measure supply chain Scope 3 GHG a time-consuming effort, and it can be difficult
emissions for nearly 500 of our top suppliers — to evaluate what the most appropriate NAICS
by spend — which jointly cover approximately code for our suppliers’ activities are and match
90% of our total spend. Our top 500 suppliers’ that with emissions factors.
Scope 1, Scope 2, and upstream Scope 3 GHG
emissions are calculated based on their CDP Increased Use of Supplier-Specific Data
responses which are accessible in standardized We are further making efforts to move from
data types. We attribute the company-level industry-based GHG emission factors to
GHG emissions to our Scope 3 supply chain GHG supplier-specific data in order to better track
emissions based on our spend. For suppliers the progress of our suppliers’ GHG emissions.
that do not report to CDP, we use a spend- Increasing the use of supplier-specific data is
based methodology that estimates Scope 3 challenging, as many suppliers do not report
GHG emissions inventories by multiplying our climate-related information. In particular, many
spend with a particular supplier by inflation- smaller companies do not respond to CDP, as
adjusted industry-based GHG emissions factors it can be a challenge to fill out the extensive
that are sourced from the GHG Protocol Scope questionnaire. It should also be noted that
3 Evaluator tool.119 Results from our top 500 CDP’s data are at the company level; and
A. suppliers are then extrapolated to our product-level climate-related data are
State of Climate-Related total spend. very scarce.
Financial Disclosures
Expansion of the Coverage of Suppliers We actively engage with our suppliers to
B. Since first reporting our supply chain Scope encourage them to respond to the CDP
Financial Statement 3 GHG emissions in 2019, we have worked to questionnaire so that we can leverage their
Considerations improve our disclosures, the cornerstone of specific emissions data. The engagement further
which has been expanding the coverage of aims to encourage suppliers to set science-
supplier-specific GHG emission data across our based targets in line with our targets. In 2022,
C.
Case Studies on Scope 3 supply chain. When we first began reporting we engaged nearly 500 suppliers in partnership
GHG Emissions supply chain Scope 3 GHG emissions, we with CDP’s supply chain membership and
collected supplier-specific data for our top 100 conducted targeted engagement with suppliers
suppliers, which we increased to 500 in 2021. that have the highest impact on our targets.
D.
In the same year, we restated our Scope 3 In certain cases, this included incorporating
TCFD-Aligned Requirements
and Related Initiatives GHG emissions for 2019 and 2020 to include language that addresses how to meet climate
our top 500 suppliers and merger and requirements in our contracts. Additionally, we
acquisition activity. arranged one-on-one discussions between key
E.
suppliers and leaders from our executive team.
Types of Financial Impact
As we expanded our coverage of suppliers,
and Associated Drivers We have also put in place internal policies and
mapping company names between our internal
systems and the CDP database required manual incentives that further advance our supply
F. chain Scope 3 GHG emissions disclosures. For
effort. Given that many company names are
Insights Gained and View example, Moody’s Supplier Code of Conduct
coded in CDP differently from our internal
on Future Work encourages suppliers to disclose their carbon
systems, mapping our suppliers to the CDP
database became a key challenge. Certain footprint and set science-based targets of their
Appendices own. Starting in 2022, sourcing managers —
suppliers disclose through a parent company
or by using identifying details — such as trade managers in our procurement function who are
names — that may be entered differently in involved with sourcing vendors — are required
the CDP database. Our mapping allows us to to complete a responsible sourcing training
partially automate the process, reducing the module that focuses on how to incorporate
effort required in the future. responsible sourcing metrics, such as science-
based targets, into contract decisions.
Identifying the most appropriate GHG Additionally, we provide incentives for certain
emissions factor for the suppliers that do not employees to proactively manage and address
report climate-related information requires climate-related issues.120
manually identifying the most relevant
industry GHG emissions factors. This involves Lessons Learned
categorizing each company with a North In developing calculations for supply chain
American Industry Classification System Scope 3 GHG emissions, we have come to
(NAICS) code, which classifies business activities realize how important it is for us to prioritize
across more than a thousand industries. This is our efforts. In our first year in this endeavor,

119
Quantis, “Scope 3 Evaluation Tool,” Accessed July 1, 2023.
120
See Moody’s, Moody’s Corporation 2022 CDP Response, July 28, 2022 (pp. 7–8) for additional information about these incentives.

70
 The Task Force on Climate-related Financial Disclosures

we prioritized collecting supplier-specific data company, we play a key role in facing up to this
and industry-based emission factors from our challenge. We can have a positive impact on the
top 100 suppliers by spend. Since then, we have planet through, for example, reducing our GHG
significantly increased the number of suppliers emissions and offering solutions for sustainable
to cover 90% of our spend; however, we are not mobility. We have committed to the Science
collecting GHG emissions data for all of them. Based Targets initiative's (SBTi's) most ambitious
That remaining share of suppliers comprises standard and are aiming to — by 2045 — reduce
thousands of companies, and because collecting our absolute Scope 1, 2, and 3 GHG emissions
data for each of them would add only limited by 90% from 2019. To support decisions in line
accuracy at a substantial effort. We instead with this commitment, we developed an internal
cover these suppliers by extrapolating GHG carbon dioxide (CO2) price in 2021.121
emissions data from the other suppliers for
which we have that information. Scope 3 GHG emissions constitute the majority
of our emissions and category 1, Purchased
We have also learned that there can be Goods and Services, is one of the more
a material difference between industry- significant contributors to those emissions.
based emission factors and reported GHG Faurecia has been working with Ecovadis since
emissions from our suppliers. Effective supplier 2017 for in-depth assessment of our suppliers'
A.
engagement to encourage transparency of GHG ethical, social, and environmental practices. This
State of Climate-Related
Financial Disclosures
emissions is critical to improve our disclosures year, HELLA will be included in the scope of this
of supply chain Scope 3 GHG emissions and assessment as well.
decarbonization actions such as science-based
B. Faurecia has applied the TCFD framework in our
target setting — as decarbonization of our
Financial Statement climate-related disclosures since 2019. Accurate
upstream Scope 3 GHG emissions depends on
Considerations disclosures of GHG emissions are important
the actions of our suppliers.
for us to support the achievement of our
C. This requires close collaboration between the decarbonization targets and inform business
Case Studies on Scope 3 procurement and sustainability teams, as the strategy. We further need to frequently
GHG Emissions procurement team is best suited to engage update our GHG emissions — at least twice
with suppliers, while the sustainability team annually — in order to monitor performance.
D. has specific expertise. It is important that the Manually calculating Scope 3 GHG emissions
TCFD-Aligned Requirements sustainability team provide the procurement would be a time-consuming endeavor, as
and Related Initiatives team with a technical review and detailed we have thousands of suppliers. We have
documentation to guide the engagement. therefore developed tools that automate certain
E. calculations and parts of the data collection
Types of Financial Impact Finally, it has become clear that the restating process for upstream Scope 3 GHG emissions.
and Associated Drivers of Scope 3 GHG emissions due to changes In the following pages, we describe how we
in the organization or improvement of the developed these tools as well as the insights we
F. methodology is a natural part of the process. have gained.
Insights Gained and View We are continuously working on improving
on Future Work our disclosures, which in some years has Our Approach to Scope 3 GHG Emissions
required us to restate our disclosed Scope Disclosures and Challenges Faced
Appendices 3 GHG emissions. With clear explanations
FORVIA follows the GHG Protocol to quantify
of the updates, our experience is that such
and categorize Scope 3 GHG emissions. We
restatements have been well-received by
disclose our Scope 3 GHG emissions across
the stakeholders.
all 15 categories of the GHG Protocol in our
annual universal registration document, along
Case Study by a Global with a qualitative estimate of uncertainty and
Automotive Group a description of the methodologies used (see
Figure C4, p. 72). Within our upstream Scope 3
FORVIA is a French-domiciled automotive
GHG emissions, category 1, Purchased Goods
group recently formed through the acquisition
and Services, and category 4, Upstream Transport
of HELLA by Faurecia. We produce vehicle
and Distribution, are most significant.122
interiors, seating systems, mobility systems,
lighting, and electronics for automated vehicles FORVIA uses dedicated tools to collect data
that are produced and sold globally. Climate and calculate upstream Scope 3 GHG emission
change is one of the more urgent disruptions categories. To reduce the uncertainty of these
the world is facing, and we believe that, as a calculations, it is necessary to collect primary

121
FORVIA, Sustainability Report 2021–22, November 1, 2022.
122
WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.

71
 The Task Force on Climate-related Financial Disclosures

Figure C4
Breakdown of Our Scope 3 GHG Emissions by Category
2019 baseline 2021 2022 Level of
uncer-
Faurecia FORVIA Faurecia FORVIA Faurecia FORVIA tainly
Scope 1 direct
Scope 1 156,000 213,000 173,000 231,000 121,000 170,000 low
emissions
Scope 2 indirect
707,000 992,000 526,000 804,000 478,000 660,000 low
emissions
Scope 2
SCOPES 1 AND 2
863,000 1,205,000 699,000 1,035,000 599,000 830,000 LOW
(INTERNAL EMISSIONS)
Purchased goods and 6,218,000 8,102,000 5,227,000 7,103,000 medium
6,502,000 8,177,000
services

Capital goods 389,000 614,000 253,000 530,000 304,000 573,000 high

Fuel & energy related 245,000 359,000 208,000 319,000 low

203,000 302,000
emissions

Upstream
Upstream transport 783,000 944,000 909,000 1,094,000 1,079,000 1,262,000 medium
and distribution

Wastes generated 186,000 202,000 121,000 134,000 119,000 141,000 medium

A. Business travel 68,000 76,000 18,000 20,000 42,000 50,000 medium

State of Climate-Related 176,000 230,000 137,000 179,000 175,000 209,000 medium
Employee commuting
Financial Disclosures
Upstream leased
Controlled

50,000 58,000 54,000 62,000 58,000 65,000 medium

assets

B. Downstream transport 118,000 167,000 112,000 168,000 medium

127,000 183,000
and distribution
Financial Statement
Scope 3

Processing of sold 85,000 278,000 73,000 239,000 81,000 275,000 high

Considerations products

Products end of life 228,000 681,000 219,000 668,000 331,000 682,000 medium
Downstream

C. Downstream leased N/A

assets
Case Studies on Scope 3
N/A
GHG Emissions Franchises

Investments 23,000 96,000 23,000 80,000 26,000 65,000 medium

D. SCOPES 1, 2 AND
CONTROLLED SCOPE 3
TCFD-Aligned Requirements (EXCLUDING THE USE
9,432,000 13,012,000 8,053,000 11,631,000 9,646,000 12,814,000 MEDIUM

and Related Initiatives OF PRODUCTS)

Use of products sold in
19,240,000 23,776,000 14,029,000 18,148,000 18,627,000 22,817,000 medium
Uncontrolled

the car
E. SCOPE 3 TOTAL 27,809,000 35,583,000 21,383,000 28,744,000 27,674,000 34,801,000 MEDIUM
Types of Financial Impact SCOPES 1, 2 AND 3
28,672,000 36,788,000 22,082,000 29,779,000 28,273,000 35,631,000 MEDIUM
and Associated Drivers TOTAL

F. Forvia, 2022 Universal Registration Document, p. 330

Insights Gained and View Note: Some content was reformatted in order to fit the page.

on Future Work

Appendices
data at the most granular level possible. by order of availability — quantity-based, then
To do so, we use automated tools to collect spend-based emission factors.
primary and secondary data and perform GHG
emissions calculations, applying proprietary We currently cover around 55% of Faurecia’s
methodologies we have designed in-house. The total purchased goods emissions with supplier-
tools increase accuracy while saving time for specific or quantity-based GHG emission
our teams to focus on analyzing the results and factors. We aim to refine our estimates by
decarbonization plans. collecting more supplier-specific factors moving
forward; however, the automotive industry
Calculation of Emissions from Purchased Goods is not yet mature in terms of calculating and
and Services sharing products’ GHG emission data. The
For the calculation of GHG emissions from complexities surrounding the products and
Purchased Goods and Services, our tool collects value chains are significant, largely due to
data from our Enterprise Resource Planning the multiple materials, process stages, and
system — such as item type and supplier details suppliers involved with each. Hence, we have
— and then finds and applies the most accurate started to collect supplier data for commodities
cradle-to-gate GHG emission factor available. within less-complex value chains and large
We give priority to supplier-specific emission players used to calculating and reporting GHG
factors, and if they are not available, we use — emissions (e.g., steel, chemicals).

72
 The Task Force on Climate-related Financial Disclosures

In the case of calculations using quantity- Calculations of Scope 3 GHG emissions twice
based emission factors, we have an internal a year would not have been realistic without a
database of cradle-to-gate GHG emission dedicated tool that supports the calculation and
factors for materials and components by data collection processes.
weight. The weight by material of the purchased
items is first collected from the International Building a proprietary tool for GHG emission
Material Database System through which calculations requires having the right IT
automotive companies provide details of the infrastructure in place. When we began, our
material and component composition of their IT systems did not support GHG emissions
sold products.123 The tool then proceeds to calculations as these calculations require
match the item with the most appropriate connecting systems and databases from
GHG emission factors — using the material different parts of the organization. For example,
segmentation — to estimate the Scope 3 GHG we had to connect our Enterprise Resource
emissions. The spend-based emission factors, Planning system to databases containing
used as a last resort, are calculated using emission factors. To enable this, we had to
the Scope 3 GHG emissions of similar “proxy consolidate GHG emission factors in a single
purchases” for which quantity-based emission database, which had not been systematized
factors can be used. prior to the project. Today, we have around
A.
6,000 GHG emission factors in our database and
State of Climate-Related
Financial Disclosures
For purchased services, Faurecia has partnered are adding more to further improve granularity
with a digital solution to offer the suppliers and accuracy. The database is maintained
a high-level GHG emission estimation at a centrally with a strict governance policy to
B.
lower cost. We also use this tool to send a ensure accuracy and traceability.
Financial Statement
questionnaire to our service providers to collect
Considerations Further, when building a tool for GHG emissions
their total GHG emissions data, which we use to
estimate a spend-based GHG emission factor calculation, it can be useful to leverage external
C. databases and off-the-shelf tools. Building
that we apply to our spend with them. We also
Case Studies on Scope 3 everything in-house becomes very time-
collect other climate-related information from
GHG Emissions consuming and there are often products that
our suppliers via this tool to better understand
their transition plans. can be tailored and integrated as part of a
D. solution. An example is the external solution for
TCFD-Aligned Requirements Calculation of Emissions from Upstream transport management we recently purchased
and Related Initiatives Transportation and Distribution and integrated into our calculation tool.
For Upstream Transportation and Distribution,
E. Case Study by an Integrated Energy
we have implemented a Transport Management
Types of Financial Impact and Chemicals Company
Solution that allows us to collect — for each
and Associated Drivers
trip — the actual load weight and distance
traveled, the name of the carrier, and the means Sasol is a South African integrated energy and
F. chemicals company, and our products are sold
of transport. We have also partnered with a
Insights Gained and View across 118 countries. We are committed to
service provider to collect GHG emission factors
on Future Work addressing the challenges of climate change and
by carrier. Coupling these data points allows us
to calculate GHG emissions. We plan to improve taking steps to reduce our carbon footprint in
Appendices our calculations by increasing the coverage line with our 2050 net-zero ambition. To achieve
of the Transport Management Solution and this goal, we are applying a three-pillar action
collecting more GHG emission factors framework that involves reducing emissions,
from carriers. transforming our business, and shifting our
portfolio to low carbon product solutions (see
Lessons Learned Figure C5, p. 74). The implementation of the
TCFD recommendations is a key part of our
Calculating the GHG emissions of our major
target-setting and evaluation processes, and
Scope 3 categories for Faurecia twice instead of
we have embraced the TCFD framework in
only once per year has significantly improved
our reporting since 2018 as one of the earliest
our monitoring of progress towards our
adopters in the region.
decarbonization targets. This frequency helps
us evaluate our initiatives to ensure efficiency Our Approach to Scope 3 GHG
and supports strategic and operational Emission Disclosures
decisions. Further, it supports a continuous
dialogue with internal and external stakeholders Scope 3 GHG emissions are an important part
regarding our Scope 3 GHG emissions. of our target-setting and TCFD-aligned

123
See “International Material Database System,” Accessed July 1, 2023.

73
 The Task Force on Climate-related Financial Disclosures

Figure C5
Our Target Setting Approach

Our target-setting approach centered on the three-pillar emission-reduction framework

Sasol’s target setting and roadmap development approach

What is expected? What can we achieve? Holistically assess and phase options

Top-down Bottom-up People, Planet and Profit lens

Evaluate technical mitigation

ENVIRONMENT SOCIAL
options for scope 1, 2 and 3

REDUCE TRANSFORM SHIFT

• F
 air share and other science-based1 FINANCIAL AND
target setting methodologies OTHER
A. • Nationally Determined
• Risk • Required enablers
State of Climate-Related Contribution (NDC) implications
• Emission abatement • Business case
• Benchmarking
Financial Disclosures • Understanding carbon budgets potential • Schedule and Just
Transition
• Ease of integration timing

B.
Financial Statement
Considerations Develop pathways to 2025

Integrate, package and

Assurance Test robustness
C. approve final targets
and ambition
Case Studies on Scope 3
GHG Emissions
Qualitative
robustness testing
D.
• Combine top-down and bottom-up • Second and third-party audits Current Pathway
TCFD-Aligned Requirements approaches • C
 omparative assessment against
Cooperative World
and Related Initiatives • Apply CDR offset approach external studies
• GEC and Board decision-making
Accelerating to
1,5oC
E.
Types of Financial Impact
1. Science-based target initiative (SBTi) is still in the process of finalising an oil and gas and chemicals module, which was not available for use.
and Associated Drivers Other science-based approaches were used. We continue to monitor the landscape and will assess the applicability of these methodologies
once released.

F. Sasol, Climate Change Report 2021, p. 8

Note: Some content was reformatted in order to fit the page.
Insights Gained and View
on Future Work

Appendices disclosures.124 Today, Scope 3 GHG emissions upstream operations with the care and nuance
total 37,557 CO2e (kilotons), and are necessary to ensure that our actions have a
approximately 37%, of the company’s total positive impact on society at large.
emissions (see Figure C6, p. 75). The largest
portion of these emissions originates from We began reporting our Scope 3 GHG
the use of our sold products in South Africa. emissions in 2010 and have made significant
improvements to our calculation methodologies
We acknowledge the need to also reduce our over this period. Today, our approach to
Scope 3 GHG emissions. Accordingly, we set calculating these emissions is tailored to each
an interim target to reduce absolute Scope emission category. We strive to use the most
3 emissions for GHG Protocol category 11 appropriate methodologies for each category
(Use of Sold Products) by 20% by 2030, with while aligning with the principles of the
the ambition of achieving net zero for these GHG Protocol.
emissions by 2050. We are cognizant of our
role in the economy and the global energy and It can be difficult to determine how to best apply
chemicals ecosystem, and as such we approach existing standards and guidance documents
climate management of our downstream and to our complex operations given the rapidly
evolving Scope 3 GHG emissions reporting

124
WRI and WBCSD, Technical Guidance for Calculating Scope 3 Emissions, April 23, 2013.
74
 The Task Force on Climate-related Financial Disclosures

Figure C6
GHG Emissions per Category
Accounting
Category ) ) ) ) accuracy

N/A

Not measured

N/A

Baseline under development

A. N/A
State of Climate-Related
Financial Disclosures
Total
Highly Certain Moderate Certainty Low Certainty Unknown Not applicable
B.
Subjected to external assurance.
Financial Statement
Considerations
Sasol, Climate Change Report 2022, p. 32

C.
Case Studies on Scope 3
GHG Emissions landscape. As such, we augment existing Improving the Reliability of Scope 3 GHG
guidance with internal research and expertise, Emission Estimates
D. as well as a wide range of external sources
TCFD-Aligned Requirements most applicable to each category. However, Over the past few years, we have taken several
and Related Initiatives it is important to recognize that Scope 3 measures to strengthen the robustness of our
GHG emission calculations rely on a variety Scope 3 GHG emission calculations. Although
E. of assumptions and, therefore, attaining our Scope 3 GHG emissions program focuses on
Types of Financial Impact complete accuracy is not always feasible. all 15 categories of emissions (some of which are
and Associated Drivers not relevant to our operations), we have paid
Examples of Category-Level Methodologies particular attention to improving the calculation
F. approach of our largest Scope 3 GHG emissions
In the case of category 1, Purchased Goods
Insights Gained and View source, category 11.
and Services, we use data on the volume of
on Future Work purchased goods and services obtained from For example, we conducted extensive internal
our internal data management systems with studies to identify emission sources and refine
Appendices cradle-to-gate emission factors from a variety our internal emission factors. Given our position
of data sources, including Sphera’s Life Cycle in the supply chain, we developed detailed
Assessment (referred to as GaBi), the U.K. factors for combustion emissions, which we use
Department for Environment Food and Rural to increase the reliability of our calculations.
Affairs (DEFRA) as well as our internal lifecycle Although the amount of work needed to arrive
inventory database. For our most significant at detailed estimates for this category was
category, Use of Sold Products (category 11), significant, we have found the results helpful
we assume complete combustion of applicable beyond Scope 3 GHG emission calculations.
sold products and use emission factors from One way our detailed knowledge of category 11
our internal analysis, augmented by additional factors is particularly useful is in our internal
details from DEFRA and GaBi as necessary emission reduction planning. For instance,
(see Figure C7, p. 76). Having access to these knowing how feedstock substitutions impact
third-party data sources has been helpful in our emissions is extremely useful in targeting
both validating our initial assumptions as well our reduction efforts given that our emissions
as improving on them. We also leverage external profile is by and large the result of feedstock
auditing, which has been helpful in confirming choice.
that the requisite checks and balances are in
place, while working internally to strive towards
improved data accuracy.

75
 The Task Force on Climate-related Financial Disclosures

Figure C7
Our Methodologies for Categories 1 and 11
1 Purchased Volume of purchased goods and services obtained from internal business data
Activity data
goods and management systems.
services Cradle-to-gate emission factors obtained from data sources, such as GaBi, DEFRA and
Emission factors
Sasol’s Lifecycle Inventory Database, based mainly on primary data.
Upstream Cradle-to-gate emissions, including transport and indirect emissions were used
emissions from Methodology and assumptions1 together with appropriate emission factors. A weighted product carbon footprint was
the products calculated where country specific emission factors were available.
purchased or
acquired Value-chain engagement Continued supplier engagement programme to improve accuracy of emission factors.
Emissions reduced overall, primarily due to the use of more accurate emission factors
Changes to data 2022
for crude oil sourcing.
1. GWP values refer to the time horizon of 100 years, sourced from IPCC, AR5, 2013.
[...]

11 Use of sold Complete combustion of all products sold to our customers to generate energy in
Activity data
Products their operations.
Emission factors Derived from internal analysis and also sourced from DEFRA and GaBi database.
Emissions
The direct use phase emissions of sold products over their expected lifetime was
from the use Methodology and assumptions
considered from combustion of natural gas, diesel, petrol and exported coal.
of good and
A. services sold Value-chain engagement Not applicable
State of Climate-Related Changes to data 2022 Decrease in emissions primarily due to lower coal sales.
Financial Disclosures
Sasol, Climate Change Report 2022, pp. 61–63
B. Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].
Financial Statement
Considerations
While category 11 has been a priority for us, clients and suppliers and are actively engaging in
C. we have also taken steps to address other this area to support them in their own climate-
Case Studies on Scope 3 categories. For example, we have reviewed related disclosure processes on which our Scope
GHG Emissions opportunities to improve reporting of category 3 GHG emissions calculations depend.
1 emissions associated with crude oil sourcing,
D. which provides a more accurate baseline for A particularly challenging area is in the
TCFD-Aligned Requirements reporting. This deep dive has also created quantification of GHG emissions from End-
and Related Initiatives opportunities to engage crude oil suppliers of-life Treatment of Sold Products (category
and transporters to investigate potential 12). The complexity of accurately determining
E. emission reduction interventions. We also the fate of thousands of products sold into
Types of Financial Impact implemented measures to increase efficiency in an even greater number of applications and
and Associated Drivers our vehicles and driver techniques and initiated countries is particularly difficult. Through
an engagement project with our clients and peer benchmarking, we identified the World
F. customers to improve emission factors. In Business Council for Sustainable Development
Insights Gained and View addition, we have also fully offset our business methodology as being the most appropriate
on Future Work travel emissions for fiscal year 2021. for undertaking these calculations. These
calculations use the product’s carbon
Challenges in Scope 3 GHG Emissions content and region-specific disposal data to
Appendices
Reporting estimate emissions. However, even within this
We have faced several challenges on our path methodology certain assumptions need to
to implement the TCFD recommendations. At be made that can yield a range of calculated
the onset, our sustainability team worked hard outcomes for this category. We are working to
to generate the necessary internal support and develop a deeper understanding of this category
recognition of the importance of TCFD-aligned of emissions.
disclosures. With support from our senior
Lessons Learned
leadership, we made steady progress in our
reporting through methodological improvements Our TCFD-aligned disclosure approach has
each year. allowed us to make significant strides in refining
our baseline for Scope 3 GHG emissions, as
We also acknowledge that our work to improve well as gain a better understanding of these
the robustness of our Scope 3 GHG emissions emissions to be able to pinpoint opportunities
calculations will need to continue. As of today, we to reduce them. We acknowledge that
have several categories for which the certainty achieving significant reductions will necessitate
of our emission estimates is lower or unknown, fundamental changes to our business model,
such as Upstream Transportation and End-of- which we are currently evaluating in line with
life Treatment of Sold Products. We recognized our net-zero ambition by 2050.
early on the need to work more closely with our

76
 The Task Force on Climate-related Financial Disclosures

We have learned that reliable Scope 3 1 and Scope 2 GHG emissions by 50% by 2030
GHG emission calculations and continuous over 2019 figures and to reduce absolute Scope
improvements therein cannot be achieved 3 GHG emissions from Purchased Goods and
by one team alone. Instead, it requires Services, Fuel- and Energy-Related Activities,
integration of various teams from multiple Waste Generated in Operations, and Employee
disciplines within the company (e.g., supply Commuting by 30% within the same timeframe.
chain, operations, finance, human resources,
infrastructure management, etc.), managed Our Approach to Scope 3 GHG
through an overall centralized effort. We have Emission Disclosures
found that a certain degree of centralization As of today, Scope 3 GHG emissions account
is helpful in both establishing clear roles for a significant portion of our total GHG
and procedures as well as ensuring that emissions (see Figure C8, p. 78). Of these,
institutional memory is maintained. 51% are attributable to Purchased Goods and
Services. Our path to our current Scope 3 GHG
For companies starting out on their Scope
emissions inventory and related calculation
3 GHG emissions reporting journey, it is
processes began with the GHG Protocol’s
valuable to ensure that the reporting systems
spend-based method using data acquired
being developed have the flexibility to adapt
A. from our procurement department. The initial
to the evolving and nuanced reporting
State of Climate-Related iterations of our process involved a significant
Financial Disclosures
requirements. In addition, it is important that
amount of manual work, including reviewing
the reporting system can accommodate data
and categorizing purchase data to identify the
and adjustments from a variety of sources,
B. applicable Scope 3 GHG emission categories
including internal data systems.
Financial Statement and emission factors. Although our initial
Considerations Openly discussing the evolution of our spend-based assessment was labor intensive,
methodologies builds confidence in our it was an important effort to undertake, as it
C. reporting and supports the growth of TCFD- allowed us to quickly identify Purchased Goods
Case Studies on Scope 3 reporting in our industry and across our peers. and Services as the category accounting for the
GHG Emissions Our hope is that our own disclosures will help largest share of our Scope 3 GHG emissions.
others in our value chain to start disclosing More specifically, we identified the Food
D. in alignment with the requirements of TCFD, and Beverage category (F&B) as the greatest
TCFD-Aligned Requirements which in turn will help us improve our scope contributor to our Scope 3 GHG emissions.
and Related Initiatives calculation approaches through greater
As we continuously seek new and different ways
collaboration with our value chain partners.
E.
to improve our methods for calculating GHG
Types of Financial Impact emissions, today, we calculate Scope 3 GHG
Case Study by a Global Gaming, emissions inventory based on a combination
and Associated Drivers
Hospitality, and Entertainment Company of methods. For example, we use both weight
and industry emission factors to estimate the
F. MGM Resorts International is a global gaming
Insights Gained and View
footprint associated with our beef consumption.
and entertainment company with both domestic
on Future Work Our procurement department has recently
and international locations. In 2019, we
begun implementing changes to our internal
conducted a formal ESG materiality assessment
systems in order to improve data availability
Appendices through which we identified climate change as
and quality, which are essential for reliably
the highest priority issue for our company. As
assessing our Scope 3 GHG emissions.
a result, we have developed a comprehensive
approach to address the challenges of climate Increasing the Specificity of
change, including a long-term climate strategy Our Disclosures
and climate governance framework. We
have been committed to voluntary climate We are working to increase the specificity of
disclosures for a decade and aligned our our Scope 3 GHG emissions across our entire
reporting with the TCFD recommendations in spend, specifically focusing on the F&B category,
2022 when we issued our first TCFD report. which is the single largest emissions segment
of our Purchased Goods and Services. Our aim
Our climate strategy focuses on reducing is to disclose at a sufficient level of detail in the
GHG emissions, increasing energy efficiency, main categories — including beef and dairy — to
sourcing renewable energy, and advocating for allow for more effective supplier engagement
the transition to a lower carbon economy. We and spend management.
have established targets for all major areas of We have partnered with the World Resources
our strategy, including 50% reductions in our Institute’s “Coolfood” initiative to help calculate
Scope 1 and Scope 2 GHG emissions by 2030. the carbon footprint of our served meals at the
As of April 2023, we had registered a near-term
commitment with SBTi to reduce absolute Scope

77
 The Task Force on Climate-related Financial Disclosures

Figure C8
GHG Emissions Metrics

A.
State of Climate-Related
Financial Disclosures (i) Any data point that is blue has received external assurance. We submitted our 2022 data for independent third-party verification in April 2023. See
here for an archive of GHG emission verification statements. Metrics that are externally verified may differ slightly from other reported metrics given
the time of external assurance.
B. (ii) Absolute Scope 1 and 2 carbon emissions data in this table are unadjusted for the Circus Circus Las Vegas divestiture completed in December 2019.
Financial Statement (iii) Beginning in 2022, Scope 2 emissions have been calculated using both location-based and market-based approaches. Our location-based
emissions reflect the average emissions intensity of grids where our electricity is consumed, whereas our market-based calculation reflects the
Considerations electricity that we have chosen through our energy procurement strategies.
(iv) Emissions from purchased goods and services in 2021 differ from our 2021 CDP Climate Change filing, reflecting an update to our activity data
exclusions. The change is an increase in emissions in this category by 42,829 MTCO2e. Additionally, 2019 purchased goods and services differ from
C. CDP reported metrics based on guidance from SBTi, as part of our climate target baseline validation.
(v) Emissions from capital goods are susceptible to high annual variability due to changes in annual capital expenditures. Examples include purchases
Case Studies on Scope 3 related to major renovation projects.
GHG Emissions
MGM, TCFD Report, p. 23
Note: Some content was reformatted in order to fit the page.
D.
TCFD-Aligned Requirements
and Related Initiatives ingredient level (see Figure C9, p. 79).125 Emission GHG emissions disclosures. Another challenge
factors sourced from Coolfood help us combine we face concerns spend data and today’s
E. spend and weight data with publicly-facing and historically high levels of inflation, which in
Types of Financial Impact third-party validated emission factors at the turn can inflate our emissions estimates if
and Associated Drivers product level, which increases our confidence in not addressed correctly. Finally, the cost of
the resulting estimations. Additionally, Coolfood transporting goods to our resorts (a distinct
F. goes beyond the supply chain GHG emissions category of Scope 3 GHG emissions per the
Insights Gained and View that are typically reported to also include the GHG Protocol) is often embedded in the costs
on Future Work carbon opportunity costs associated with each we use for our spend-based analysis. This may
food type. Carbon opportunity costs estimate lead to overestimated Purchased Goods and
Appendices the missed potential carbon capture if the land Services GHG emissions and underestimated
used for food production — such as cleared Upstream Transportation GHG emissions.
land for cattle feedlots — were instead able to
return to native vegetation, including forests. Managing Our Clients and Suppliers
For some of our operations, we also use the In addition to seeking more specific data from
GHG Protocol Scope 3 Evaluator tool from our suppliers, we are also beginning to place a
Quantis to inform our calculations.126 greater emphasis on conducting assessments
on how suppliers manage GHG emissions
One key challenge we face is the inability to
themselves. As a first step, we have identified
consistently obtain specific GHG emissions data
the largest contributors to our Scope 3 GHG
from our suppliers. For example, many of our
emissions inventory and are exploring ways
suppliers are bulk distributors that may not
to actively engage them to reduce the GHG
have data on the origins of ingredients beyond
emissions in our own supply chain. For example,
a country level. We also source ingredients
we are working with our largest F&B suppliers
from smaller companies, many of which are
to source new products and enhance menu
in an early stage of maturity with regard to
options, with a target of having 10% of our

125
World Resources Institute, “Coolfood,” Accessed July 1, 2023.
126
Quantis, “Scope 3 Evaluation Tool,” Accessed July 1, 2023.

78
 The Task Force on Climate-related Financial Disclosures

Figure C9
Food and Beverage Emissions
Metrics and Goals
Change Change Progress
2019 2022 2030 Needed from Achieved to
Metric Goal Baseline Performance Target Baseline by 2022 Target
Agriculture Supply Chain
Emissions, MTCO2e 240,401 200,284 180,301 (60,100) (40,118) 66.8%

Carbon Opportunity Cost,

MTCO2e 953,007 714,755 240,401 (238,252) (156,898) 65.9%

Total Food-Related 25%

reduction 1,193,408 895,056 240,401 (298,352) (197,016) 66.0%
Emissions, MTCO2e

Proportion of Food-Related Emissions

Ruminant
Category Meats Dairy Pork Poultry Seafood Eggs Grains

A. Percent 66% 12% 7% 6% 4% 3% 2%

State of Climate-Related
Financial Disclosures MGM, Internal Data.

B.
Financial Statement F&B offerings being low-carbon. We are also reducing our GHG emissions in the category
Considerations encouraging our clients — including event Waste Generated in Operations. For example,
organizers — to embrace low carbon menus we aim to reduce the amount of materials
C. and reduce waste through smaller portion sizes. disposed in landfills or by incineration by 75%
Case Studies on Scope 3 While important, these efforts are still in their by 2030. We are accomplishing this in part
GHG Emissions nascent phases. We are also seeking ways to through significant manual intervention to
overcome such challenges as navigating lengthy divert materials from landfills. At Mandalay Bay,
D. contract terms during which changes are not for example, materials from throughout the
TCFD-Aligned Requirements easy to implement. resort are brought to one of eleven recycling
and Related Initiatives docks where they are hand-sorted for recycling,
Supplier engagement is critical to driving reuse, composting, or disposal. Reducing food
E. progress on emissions reduction, and we waste — and its associated GHG emissions
Types of Financial Impact intend to leverage the significant work MGM — is particularly important for us as a U.S.
and Associated Drivers Resorts has already done in the arena of Environmental Protection Agency (EPA) Food
supplier diversity to inform our engagement Loss and Waste 2030 Champion, so we conduct
F.
strategy regarding embedded carbon. Our targeted waste-stream audits to identify food
Insights Gained and View suppliers report their diversity qualifications waste and strategies for diversion.
on Future Work in order to enable our reporting, just as their
environmental characteristics (e.g., emission Lessons Learned
factors) enable greater carbon accounting.
Appendices The key lesson we have learned is the importance
Our Supplier Diversity program has a large
of starting with the available data, even if it is not
education component and we mentor small,
perfect or complete. Using the spend data as a
diverse-owned business leaders to give them
starting point has helped us to identify our most
the tools they need to do business with
significant Scope 3 GHG emissions categories
MGM Resorts. Incorporating environmental
and to prioritize our efforts accordingly.
sustainability and carbon reduction measures
into this education and mentorship program We have realized that refining our Scope 3
will help us continue to prepare small GHG emission calculation across the board as
business enterprises to meet the reporting we move from manual reviews to using data
requirements of MGM Resorts and other from our improved procurement systems is
like-minded companies. an ongoing process that requires dedicated
time and effort to improve. As we continue this
Taking Action to Reduce Scope 3 GHG journey, we anticipate that our methodology
Emissions Across Our Own Operations will mature, and the usefulness of our data will
We recognize that meeting our GHG emission expand. Moving forward, we aim to incorporate
targets requires dedicated action from MGM more specific data into our procurement
Resorts across the most material Scope 3 GHG systems, which will help us better understand
emission categories. In addition to our actions and manage our GHG emissions across our
in Purchased Goods and Services, we are also value chain.

79
D.
TCFD-Aligned Requirements
and Related Initiatives
 The Task Force on Climate-related Financial Disclosures

D. T
 CFD-Aligned Requirements and
Related Initiatives
Over the past year, the Task Force has seen a combined market capitalization of $29.5
continued momentum around and support trillion, including more than 1,800 financial
for its recommendations. For example, since institutions responsible for assets of $222.2
the Task Force released its 2022 status report, trillion. These supporters come from all
over 800 additional companies and other around the world — as shown in Box D1 —
organizations have indicated support for the with the Asia Pacific region having the highest
TCFD, bringing the total number of supporters percent of supporters at 51%, largely driven by
to just over 4,850.127,128 Of these supporters, supporters in Japan. In addition, 97 of the 100
4,486 are companies and 369 are other largest companies in the world have declared
organizations (e.g., industry associations, support for the TCFD, report in line with the
governments). The companies supporting the TCFD recommendations, or both.129
TCFD represent a broad range of sectors, with
A.
State of Climate-Related
Box D1
Financial Disclosures
Number and Geographic Distribution of TCFD Supporters
B. 4,855
4,141
Financial Statement 369
297 1,831
Considerations 1,681

2,983
C. 206
29%
Case Studies on Scope 3 1,360 Europe 51%
GHG Emissions 1,681 2,163
2,655 15%
115
952 North Asia Pacific
92
841
1,372 America 2%
D. 3% Middle East
485
TCFD-Aligned Requirements 725
Latin
and Africa
375
and Related Initiatives America
2019 2020 2021 2022 2023 YTD

E. Legend: Non-Financial Financial Other Legend: 1–9 10–49 50–99 100–199 200-499 500-999 >1000
Types of Financial Impact Number of supporters by country

and Associated Drivers

F. Another example of the momentum around the

Insights Gained and View As indicated in its 2017 report, “[t]he Task
Task Force’s recommendations relates to the
on Future Work Force’s recommendations provide a common
continued efforts of governments, regulators,
stock exchanges, and standard setters to set of principles that should help existing
Appendices incorporate the TCFD recommendations — in disclosure regimes come into closer alignment
full or in part — into laws, rules, and guidance over time. […] The Task Force also encourages
on climate-related disclosure or reference the
standard setting bodies to support adoption
recommendations as a basis for their disclosure
of the recommendations and alignment with
requirements. The Task Force believes its
recommendations have been a key driver of the recommended disclosures."130
greater consistency among major climate-
related disclosure regimes that existed when
the Task Force was created as well as climate- By 2019, several major climate-related
related disclosure requirements and standards disclosure regimes had incorporated the TCFD
that have been developed more recently. recommendations into their requirements
and guidance, including the Principles for

127
Importantly, not all organizations that support the TCFD recommendations implement them. Some organizations express support by convening
their members and facilitating consistency in implementation, while others—such as governments and regulators—express support by
encouraging or requiring companies and other organizations to implement the recommendations.
128
There were nearly 4,000 supporters at the time the Task Force released its 2022 status report.
129
Forbes, “The World’s Largest Public Companies,” Accessed June 8, 2023. In reviewing the 100 largest public companies, the Task Force identified
whether a company indicated that it reported in line with the TCFD recommendations or planned to.
130
TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017 (p. 33).

81
 The Task Force on Climate-related Financial Disclosures

Responsible Investment, the Climate Disclosure requirements or directly incorporated them into
Standards Board, and CDP.131 More recently, their climate-related disclosure requirements
the U.S. Securities and Exchange Commission, and standards.132 Figure D1 provides a summary
the European Parliament, and the ISSB have of these final and proposed requirements and
drawn on the TCFD recommendations in standards and how they compare to the
developing proposed climate-related disclosure TCFD recommendations.

Figure D1
TCFD Recommendations Support Alignment across Disclosure Regimes
International European Union United States
Framework Standards Laws/Regulations

Organization

Short Title Recommendations IFRS S1 and S2 ESRS CSRD SEC Proposal

Focus Climate Change Sustainability Sustainability Sustainability Climate Change
A.
State of Climate-Related Required1 Voluntary Voluntary Required Required Required
Financial Disclosures Materiality2 Financial Financial Financial/Impact Financial/Impact Financial
Finalized 2017 2023 20223 2022 Proposed
B. Incorporate or draw from the Task Force’s 11 recommended disclosures
Financial Statement
Considerations 1. IFRS S1 and S2 are not required until jurisdictional authorities mandate their use.
2. See Figure D2 (p. 85) for descriptions of materiality.
3. EFRAG delivered final draft standards to the European Commission in late 2022. In July 2023, the European Commission adopted the
C. first set of standards.
Case Studies on Scope 3
GHG Emissions
The rest of this section is organized into three the publication of the last status report
D. subsections, as described below. in October 2022 — by governments,
TCFD-Aligned Requirements regulators, stock exchanges, and international
and Related Initiatives • T
 he first subsection provides information and regional standard setters that
on jurisdictions that have issued final support the implementation of the TCFD
E. or proposed climate-related disclosure recommendations.
Types of Financial Impact requirements that incorporate or draw from
and Associated Drivers the TCFD recommendations (referred to as • T
 he third subsection provides brief
TCFD-aligned disclosure requirements). descriptions of efforts — since October
F. 2022 — by private-sector groups that
Insights Gained and View • T
 he second subsection provides brief support the implementation of the
on Future Work descriptions of efforts — occurring since TCFD recommendations.

Appendices
Key Takeaways
The number of TCFD supporters has grown this year to just over 4,850, largely driven by support in
the Asia Pacific region.

In June 2023, the ISSB finalized its general sustainability-related and climate-related standards,
which incorporate and build on the TCFD recommendations.

The majority of jurisdictions with final or proposed climate-related disclosure requirements specify
that such disclosures be reported in financial filings or annual reports.

131
See Principles for Responsible Investment, “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework,” December 18, 2017;
the Climate Disclosure Standards Board (now part of the IFRS Foundation), Framework for Reporting Environmental and Social Information,
January 2022; CDP, “How CDP is aligned to the TCFD,” Accessed June 21, 2023; and the Sustainability Accounting Standards Board (now part of
the IFRS Foundation), TCFD Implementation Guide, May 1, 2019.
132
U.S. Securities and Exchange Commission, “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for
Investors,” March 21, 2022; European Parliament and Council of the European Union, Directive 2022/2464 as Regards Corporate Sustainability
Reporting, December 14, 2022; International Sustainability Standards Board, “ISSB Issues Inaugural Global Sustainability Disclosure
Standards,” June 26, 2023.

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 The Task Force on Climate-related Financial Disclosures

1. FINAL AND PROPOSED TCFD-ALIGNED In addition, three jurisdictions have proposed

DISCLOSURE REQUIREMENTS disclosure requirements that incorporate or
draw from the TCFD recommendations. These
This subsection summarizes final and proposed 19 jurisdictions account for close to 60% of
climate-related disclosure requirements global 2022 gross domestic product.134 In
that incorporate or draw from the TCFD addition, the requirements cover a range of
recommendations and were issued by company types, with some applying to certain
governments, regulatory authorities, or stock listed issuers, others applying to specific
exchanges, as shown in Table D1. Currently, financial institutions, and still others applying
companies in 14 jurisdictions are subject to to some combination of financial institutions
TCFD-aligned disclosure requirements, and and large companies. The time frames included
companies in another two jurisdictions will in the table refer to the first fiscal year to which
be subject to such requirements by 2025.133 the requirements apply. 135 136 137 138 139 140 141 142 143 144

Table D1
A. TCFD-Aligned Disclosure Requirements in Select Jurisdictions
State of Climate-Related
Financial Disclosures Final Requirements
Time Report
Jurisdiction: Authority Scope Threshold Frame Type
B.
Financial Statement Brazil: Central Bank of Brazil Regulated institutions except Segment 5135 FY 2022
Considerations
Brazil: Securities and Exchange Commission Regulated issuers FY 2022

C. Canada: Office of the Superintendent of

Federally regulated financial institutions136 FY 2024
Financial Institutions
Case Studies on Scope 3
GHG Emissions Colombia:
Large issuers137 FY 2023
Financial Superintendent of Colombia

D. Egypt: Financial Regulatory Authority138 Issued capital or net ownership >E£500M FY 2022
TCFD-Aligned Requirements
and Related Initiatives European Union: European Commission139 Large issuers on EU regulated markets140 FY 2023

European Union: Large EU undertakings subject to NFRD141 FY 2024

E. European Parliament and Council
Types of Financial Impact Large EU undertakings142 FY 2025
and Associated Drivers
Small and medium EU undertakings143 FY 2026

F. Non-EU undertakings144 FY 2028

Insights Gained and View
on Future Work Japan: Financial Services Agency All issuers FY 2023

Kenya: Central Bank of Kenya Licensed institutions FY 2023

Appendices

133
If a jurisdiction has TCFD-aligned requirements in effect now as well as requirements that go into effect in the future, it is counted as a jurisdiction
with requirements currently in effect. This applies specifically to the European Union.
134
For 2022, global GDP was $100.2 trillion (IMF, “IMF Datamapper,“ Accessed June 14, 2023).
135
The requirements address qualitative aspects of governance, strategy, and risk management. Segment 5 includes institutions that account for
less than 0.1% of GDP and use an optional simplified methodology to calculate regulatory capital, unless they are multiple banks, commercial
banks, investment banks, foreign exchange banks, or federal savings banks.
136
The requirements apply to 1) domestic systemically important banks and internationally active insurance groups beginning on or after October 1,
2024 and 2) small and medium-sized deposit taking institutions and all other federally regulated insurers beginning on or after October 1, 2025.
137
TCFD-aligned reporting requirements apply to “Group A” issuers, which are defined in Annex 2 of External Circular 031.
138
The Egyptian Financial Regulatory Authority’s announcement is in Arabic; however, the United Nations Sustainable Stock Exchanges Initiatives
provides a summary of the announcement in English.
139
See Article 449a of Regulation 575/2013/EU. While the regulation does not mention the TCFD, the European Banking Authority published final
draft implementing standards on uniform disclosure formats—as required under Article 434a—that incorporate several TCFD elements.
140
The regulation applies to large institutions as defined in Article 4(146) of Regulation 575/2013/EU.
141
The EU issued Directive 2014/95/EU (the Non-Financial Reporting Directive or NFRD) in late 2014 which required large companies to disclose
information on environmental (including climate-related) and other matters beginning in their 2017 financial year reports.
142
See Article 3(4) of Directive 2013/34/EU.
143
See Article 3(2) and Article 3(3) of Directive 2013/34/EU.
144
See Article 40a of Directive 2013/34/EU.

83
 The Task Force on Climate-related Financial Disclosures

Table D1

TCFD-Aligned Disclosure Requirements in Select Jurisdictions (continued)

Final Requirements
Time Report
Jurisdiction: Authority Scope Threshold Frame Type
Malaysia: Bursa Malaysia Stock Exchange Specific listed issuers145 FY 2025

Mauritius: Central Bank of Mauritius Licensed banks and deposit taking non-banks FY 2022

New Zealand: New Zealand Government Issuers: securities >NZ$60M FY 2023

Banks: assets >NZ$1B FY 2023

Asset managers: AUM >NZ$1B FY 2023

Insurers with premium income >NZ$250M FY 2023

Philippines:
All registrants146 FY 2022
Securities and Exchange Commission

Singapore: Singapore Exchange Specific industries147 FY 2023

Specific industries148 FY 2024

A.
State of Climate-Related Switzerland: Federal Council Employees ≥500 and assets >₣20M or revenues
FY 2024
>₣40M
Financial Disclosures
Switzerland:
Assets >₣100B or AUM >₣500B FY 2021
Financial Market Supervisory Authority
B.
Taiwan: Financial Supervisory Commission Banks and insurance companies149 FY 2023
Financial Statement
Considerations Thailand: Central Bank of Thailand All financial institutions FY 2023

United Kingdom: Financial Conduct Authority Issuers of standard-listed shares and GDR FY 2022
C. Asset managers: AUM >£50B
Case Studies on Scope 3 FY 2022
Asset owners: AUM >£25B
GHG Emissions Asset managers and asset owners: AUM >£5B FY 2023

United Kingdom: U.K. Parliament Specific U.K. companies and LLPs >500 employees150 FY 2022
D.
TCFD-Aligned Requirements Occupational pension schemes: assets >£5B FY 2022
and Related Initiatives Occupational pension schemes: assets >£1B FY 2023

Proposed Requirements
E. Time Report
Types of Financial Impact Jurisdiction: Authority Scope Threshold Frame Type
and Associated Drivers Australia: Treasury Large entities151 Phased

Canada: Canadian Securities Administrators Regulated issuers 152

Phased
F.
Hong Kong: Hong Kong Stock Exchange All issuers FY 2024
Insights Gained and View
on Future Work Singapore: The Accounting and Corporate
All issuers and large non-listed companies153 Phased
Regulatory Authority and Singapore Exchange
United States:
Appendices All registrants154 Phased
Securities and Exchange Commission

LEGEND
Scope (footnotes)145 146 147 148 149 150 151 152 153 154 Report Type

Listed Companies Listed and Private Companies Financial Filing/Annual Report Other
The Task Force
Financial Institutions Other Sustainability Report
reviewed whether these final and proposed

145
TCFD-aligned reporting requirements apply to “Main Market” listed issuers, which are defined in the Main Market Listing Requirements.
146
All issuers were required to report on a “comply or explain” basis beginning with their 2019 annual reports; and mandatory reporting became
effective three years later, with 2022 annual reports.
147
All issuers are required to report on a “comply or explain” basis for the year beginning on January 1, 2022. See SGX Group, Practice Note 7.6
Sustainability Reporting Guide, June 20, 2016. Issuers in the financial; agriculture, food, and forest products; and energy industries were subject
to mandatory reporting beginning on January 1, 2023.
148
Issuers in the transportation and materials and buildings industries are subject to mandatory reporting beginning on January 1, 2024.
149
See the press releases for “Guidelines for Domestic Banks’ Climate Risk Financial Disclosure” and “Guidelines on Climate-Related Financial
Disclosures of Insurance Companies.”
150
See The Companies Regulations 2022 and The Limited Liability Partnerships Regulations 2022.
151
See p. 6 of the proposed requirements for a summary of the types of large listed and unlisted companies and financial institutions in scope.
152
See Proposed National Instrument 51-107 Disclosure of Climate-Related Matters, October 18, 2021 (pp. 6-11).
153
See pp. 15-16 of the consultation paper for a summary of the phase in for listed companies and large non-listed companies.
154
See p. 290 of the proposed rule for a summary of the phase-in for specific types of registrants.
84
 The Task Force on Climate-related Financial Disclosures

TCFD-aligned disclosure requirements specify require some form of assurance of the climate-
how companies should determine materiality related information that is reported, while five
for climate-related reporting purposes. In indicated that assurance is not required.
its 2017 report, the Task Force indicated that
companies should determine materiality for
climate-related issues consistent with how they
determine the materiality of other information
2. GOVERNMENTAL, REGULATORY, AND
included in their annual financial filings (i.e., OTHER DEVELOPMENTS
financial materiality).155 Since then, the EU
This subsection summarizes efforts and
issued a directive that requires information
developments by governments, regulatory
to be reported from a double materiality
authorities, international and regional standard
perspective whereby companies are required
setters, and stock exchanges that support the
to report information necessary to understand
implementation of the TCFD recommendations
their respective developments, performance,
and occurred since the Task Force published
and positions (financial materiality) as well
its previous status report in October 2022. To
as the impact of their respective activities on
the extent a government, regulatory authority,
environmental, social, and employee matters,
or stock exchange mentioned in Table D1 (p.
A. respect for human rights, anti-corruption, and
83) issued a final or proposed TCFD-aligned
State of Climate-Related bribery matters (impact materiality). Of the
disclosure requirement during this period, a brief
Financial Disclosures 19 jurisdictions with final and proposed TCFD-
description of the requirement is included below.
aligned disclosure requirements, the Task Force
B. found that seven included explicit guidance Governmental and Regulatory
Financial Statement on materiality in the requirements — either Developments
Considerations financial materiality or double materiality (both
financial and impact materiality).156 Figure D2 Australia: In June 2023, the Australian
summarizes financial materiality and impact Government Treasury published for consultation
C. proposed climate-related financial disclosure
Case Studies on Scope 3 materiality.
requirements, which are generally in line with the
GHG Emissions
The Task Force also reviewed the final and TCFD recommendations and ISSB standards. As
proposed TCFD-aligned disclosure requirements proposed, the requirements would apply to large
D. listed and unlisted companies as well as financial
to determine whether some form of assurance
TCFD-Aligned Requirements institutions and would be phased in over a
is required on the information reported. Of the
and Related Initiatives
requirements reviewed for the 19 jurisdictions, three-year period beginning with the 2024–2025
the Task Force found that seven explicitly reporting year. Feedback received on a previous
E.
Types of Financial Impact
and Associated Drivers Figure D2
Financial Materiality and Impact Materiality
F.
Insights Gained and View In financial reporting, the term “material” generally refers to information whose omission or misstatement could
influence the economic decisions that users make based on a company’s financial statements. This type of materiality
on Future Work
— financial materiality — is the basis upon which the TCFD recommendations were developed. In its Corporate
Sustainability Reporting Directive, the European Commission indicated that reporting should be viewed from two
Appendices perspectives: one consistent with financial materiality and the other based on the impact of the company on the
environment and people (impact materiality).

FINANCIAL MATERIALITY IMPACT MATERIALITY

Information related to the impact of Information on a company’s impact
climate change on a company on the environment

Climate change Company impact on

COMPANY CLIMATE COMPANY CLIMATE
impact on company the environment
Primary Audience: Investors, Lenders, and Insurance Primary Audience: Consumers, Civil Society, Employees,
Underwriters and Investors
THE TCFD RECOMMENDATIONS
CORPORATE SUSTAINABILITY REPORTING DIRECTIVE
Adapted from European Commission, Guidelines on Reporting Climate-Related Information, June 17, 2019, p. 7

155
See TCFD, Recommendations of the Task Force on Climate-related Financial Disclosures, June 2017 (p. 41).
156
See Article 19a(1) and Article 29a(1) of Directive 2013/34/EU.

85
 The Task Force on Climate-related Financial Disclosures

consultation, conducted between December Japan: In January 2023, the Japan Financial
2022 and February 2023, informed the proposed Services Agency announced new rules
requirements. that require listed companies to disclose
sustainability information — including
Canada: In October 2022, the Canadian climate-related information — in four
Securities Administrators (CSA) issued a press categories generally aligned with the TCFD
release on the status of its proposed TCFD- recommendations. The governance and risk
aligned disclosure requirements for reporting management categories are required, while the
issuers published in October 2021. The CSA strategy and indicators and targets (i.e., metrics
announced it was reviewing the U.S. Securities and targets) categories are subject to materiality.
and Exchange Commission’s proposed climate- The rules went into effect on January 31, 2023,
related disclosure requirements and the ISSB’s and apply to securities registration statements
(then proposed) standards on disclosing and annual securities reports for fiscal years
sustainability-related and climate-related ending on and after March 31, 2023.
financial information to consider how those
proposals may impact or further inform its New Zealand: In November 2022, the Ministry
proposed disclosure requirements. In March of Business, Innovation and Employment and
2023, the Office of the Superintendent of the Ministry for the Environment published
A.
Financial Institutions released guidance on a consultation paper on the inclusion of an
State of Climate-Related
Financial Disclosures
climate-related risk management for financial assurance requirement in New Zealand’s
institutions that also includes its expectations on climate-related disclosure law. The law, passed
climate-related financial disclosure. The guidance in October 2021, applies to large publicly listed
B.
on disclosure references an annex that outlines companies, insurers, banks, non-bank deposit
Financial Statement
minimum mandatory climate-related financial takers, and investment managers and required
Considerations
disclosure expectations, which incorporate the the development of climate-related standards
Task Force’s 11 recommended disclosures. based on the TCFD recommendations.
C.
Case Studies on Scope 3 European Union: In December 2022, the EU Singapore: In July 2023, the Accounting and
GHG Emissions Parliament and Council approved a sustainability Corporate Regulatory Authority and Singapore
reporting directive (the Corporate Sustainability Exchange Regulation launched a public
D. Reporting Directive or CSRD), which superseded consultation on climate-related reporting in
TCFD-Aligned Requirements a previous reporting directive. The CSRD went line with the ISSB standards and the TCFD
and Related Initiatives into effect on January 5, 2023; and companies recommendations. The Singapore Exchange
subject to the previous reporting directive currently has climate-related disclosure
E. are required to report in line with the CSRD requirements for listed issuers in select
Types of Financial Impact beginning with fiscal year 2024. Other large industries, and this consultation paper proposes
and Associated Drivers companies are required to report beginning with expanding the companies subject to disclosure
fiscal year 2025; small and medium-sized public requirements to all listed issuers and large non-
F. companies are required to report beginning listed companies.
Insights Gained and View with fiscal year 2026; and non-EU companies
on Future Work are required to report beginning with fiscal year Switzerland: In November 2022, the Federal
2028. Companies subject to the CSRD will have to Council of Switzerland finalized an ordinance
Appendices report according to the sustainability reporting on climate-related reporting for large Swiss
standards developed by EFRAG (formerly companies that enters into force on January
known as the European Financial Reporting 1, 2024. Under the ordinance, large public
Advisory Group), which are aligned with the TCFD companies, banks, and insurance companies
recommendations.157 are required to make disclosures based on the
TCFD recommendations and its implementation
Hong Kong: In August 2023, the Hong Kong guidance, which was updated in 2021.
Monetary Authority (HKMA) released a circular
with high-level principles to assist authorized Thailand: In January 2023, the Thai Securities
institutions in planning for a net-zero transition. and Exchange Commission published guidelines
The HKMA developed the high-level principles for asset managers on managing and disclosing
based on the findings and recommendations of climate-related risks and opportunities.
international bodies, including findings in the The guidelines on disclosure describe how
Task Force's Guidance on Metrics, Targets, and asset managers could disclose information
Transition Plans. to stakeholders in accordance with the TCFD
recommendations. In addition, the Bank

157
EFRAG, Draft European Sustainability Reporting Standards, April 29, 2022 and EFRAG, Draft European Sustainability Reporting Standards
Appendix IV – TCFD Recommendations and ESRS Reconciliation Table, November 2, 2022. See Section D.2. International and Regional Standard
Setting for more information. On January 21, 2022, the European Financial Reporting Advisory Group changed its name to EFRAG.

86
 The Task Force on Climate-related Financial Disclosures

of Thailand released a policy statement in In March 2023, the Prague Stock Exchange
February 2023 requesting that all financial announced the release of sustainability
institutions disclose climate-related information reporting guidelines to help companies in the
in line with the TCFD recommendations at least Czech Republic understand their obligations
once a year beginning in 2024. under the CSRD and ESRS. The guidelines
encourage companies to adopt TCFD in 2023
International and Regional to support compliance with the CSRD and ease
Standard Setting convergence with IFRS S1 and S2.
In November 2022, EFRAG delivered draft
In April 2023, the Hong Kong Stock Exchange
sustainability reporting standards (the
released a consultation paper on revising
European Sustainability Reporting Standards
its ESG reporting framework to require all
or ESRS), which the EU Parliament and Council
issuers to disclose climate-related information
integrated into the CSRD in December 2022.
in their ESG reports in line with the TCFD
The ESRS align with the TCFD recommendations
recommendations and ISSB standards (vs
and the ISSB standards. In July 2023, after a
the current “comply and explain” approach).
public consultation, the European Commission
If adopted, the rule would go into effect on
adopted the first set of ESRS.
January 1, 2024, with an expected phased
A.
In December 2022, New Zealand’s External implementation approach for certain
State of Climate-Related
Financial Disclosures Reporting Board (XRB) finalized its climate- disclosure elements.
related disclosure standards, which
B. were developed in line with the TCFD
Financial Statement recommendations as required under legislation 3. INDUSTRY-LED INITIATIVES
Considerations passed in October 2021. The XRB’s standards
include Climate-Related Disclosures; Adoption This subsection provides brief descriptions
C. of Aotearoa New Zealand Climate Standards; of efforts by private-sector groups that
Case Studies on Scope 3 and General Requirements for Climate-Related support the implementation of the TCFD
GHG Emissions Disclosures — all of which went into effect on recommendations and occurred since the Task
January 1, 2023. Force published its previous status report in
D. October 2022.
In June 2023, the ISSB finalized its general
TCFD-Aligned Requirements
sustainability-related disclosure standards In October 2022, the We Mean Business
and Related Initiatives
(IFRS S1) and climate-related disclosures Coalition in conjunction with CDP, Ceres, and the
standards (IFRS S2). Both IFRS S1 and IFRS Environmental Defense Fund released a report
E.
S2 build upon the TCFD recommendations, on transition action plans that mentions the
Types of Financial Impact
with the latter integrating elements of all 11 TCFD recommendations as well as its guidance
and Associated Drivers
recommended disclosures. In July 2023, the on Scenario Analysis for Non-Financial Companies
ISSB published a comparison document that and Risk Management Integration and Disclosure
F. summarizes some differences between the along with other materials to support climate
Insights Gained and View
core content requirements in IFRS S2, including transition planning.
on Future Work
associated application guidance, and the TCFD’s
recommendations, recommended disclosures, In October 2022, the Japan TCFD Consortium
Appendices and guidance. published the third edition of its guidance
on climate-related financial disclosures,
Also in June 2023, the International Public which describes the content of the TCFD
Sector Accounting Standards Body announced recommendations to help Japanese companies
it would begin developing the first sustainability with TCFD implementation and reporting.
reporting standard for the public sector on
climate-related disclosures and published In November 2022, the U.K. Transition Plan
an overview of the project that indicates the Taskforce (TPT) released guidelines on climate
standard would be built off IFRS S2, which is transition plans for private-sector financial
based on the TCFD recommendations. and non-financial companies for consultation
until February 2023. The guidelines included
Stock Exchange Developments a disclosure framework and implementation
In December 2022, the Swiss Stock Exchange guidance, with the former building on the
released an investor relations handbook to help Task Force’s guidance on transition planning.
listed companies comply with upcoming Swiss In October 2023, the U.K. TPT published its
regulations on climate-related disclosures in line final framework.
with the TCFD recommendations.
In November 2022, the Glasgow Financial
Alliance for Net Zero (GFANZ) released a report

87
 The Task Force on Climate-related Financial Disclosures

that provides voluntary guidance for financial

institutions on developing net-zero transition Figure D3
plans. The report’s recommendations build Transition Plan Resources
on the Task Force’s work as well as the work of
others. See Figure D3 for more information on In October 2021, the Task Force issued guidance
transition plans. on metrics, targets, and transition plans. Since
the release of this guidance, there have been
In November 2022, the World Business Council several groups that have released guidance and
for Sustainable Development (WBCSD) launched tools to help companies develop transition plans.
a climate scenario tool, with climate-related Due to ongoing interest in this topic, the Task
transition risk scenarios designed specifically Force has compiled the following list of resources
for companies in the Food, Agriculture, and on developing a transition plan:
Forest Products industry. The scenario tool • The Transition Plan Taskforce Disclosure
was accompanied by a guide that describes Framework (U.K. TPT)
the features of the scenario tool and outputs
• Climate Transition Action Plans (We Mean
of scenario analysis and includes several
Business Coalition et al.)
case studies. The scenario tool and guide are
intended to help companies effectively apply • OECD Guidance on Transition Finance: Ensuring
A. Credibility of Corporate Climate Transition Plans
scenario analysis, better assess the resilience of
State of Climate-Related (OECD)
Financial Disclosures
their strategies, and disclose information in line
with the TCFD recommendations. In the guide, • Transition Planning and Climate Scenario
the WBCSD also indicated a companion guide on Analysis: Food, Agriculture and Forest Products
B.
using scenarios to support transition planning (WBCSD)
Financial Statement
— as outlined in the Task Force’s Guidance on • Financial Institution Net-Zero Transition Plans
Considerations
Metrics, Targets, and Transition Plans — would (GFANZ)
be forthcoming. The companion guide was
C. • CDP Technical Note: Reporting on Climate
published in February 2023.
Case Studies on Scope 3 Transition (CDP)
GHG Emissions In January 2023, the Centre for Sustainable • The Good Transition Plan (Climate Safe
Finance and the Cambridge Institute for Lending Network)
D. Sustainability Leadership (i.e., ClimateWise)
TCFD-Aligned Requirements released an independent review analyzing the
and Related Initiatives insurance industry’s role in mitigating climate
by the Task Force. The business-relevant
change. The report suggests that insurers use
E. climate scenario analysis reference approach
the TCFD framework as the industry standard.
Types of Financial Impact is intended to support energy companies in
The report also noted that TCFD disclosures by
and Associated Drivers using scenario analysis to assess the resilience
the insurance industry have increased over time.
of their strategies to climate-related risks and to
F. In January 2023, SBTi released guidance for the inform disclosures made in line with the TCFD
Insights Gained and View financial sector describing suggested pathways recommendations.
on Future Work for financial institutions that want to adopt the
In March 2023, the U.K. Climate Financial
SBTi-FI framework or the TCFD framework
Risk Forum published an updated guide for
Appendices or both.
U.K. companies to disclose climate-related
In February 2023, the WBCSD released a report risks in line with the TCFD recommendations.
describing proposals for a business-relevant The guide includes example disclosures and
climate scenario analysis reference approach for specific suggestions for asset managers,
companies in the energy system — as requested banks, and insurers.

88
E.
Types of Financial Impact
and Associated Drivers
 The Task Force on Climate-related Financial Disclosures

E. Types of Financial Impact and Associated Drivers

A key goal of the Task Force’s work has been
to promote better disclosure by companies Figure E1
on the financial impact of climate-related Strategy Recommendation
risks and opportunities on their businesses,
strategies, and financial planning. Investors, Disclose the actual and potential impacts of
lenders, and insurance underwriters (i.e., climate-related risks and opportunities on the
users) need such information to make informed company’s businesses, strategy, and financial
financial decisions — by understanding how planning wherever such information is material.
climate-related issues could potentially affect a
company’s financial performance and financial a) Describe the climate-related risks
position as reflected in its income statement, and opportunities the company has
cash flow statement, and balance sheet. The identified over the short, medium,
Task Force recognizes the challenges associated and long term.
with making such disclosures — some of which b) Describe the impact of climate-
A. are described in Section B. Financial Statement related risks and opportunities on the
State of Climate-Related Considerations. The Task Force also recognizes company’s businesses, strategy, and
Financial Disclosures that, while climate change affects nearly all financial planning.
economic sectors, the level of exposure and
c) Describe the resilience of the company’s
B. the impact of climate-related issues may
strategy, taking into consideration
Financial Statement differ by industry, geography, and company.
different climate-related scenarios,
Considerations Furthermore, the financial impact of climate-
including a 2°C or lower scenario.
related issues on companies is not always clear
C. or direct; and, for many companies, identifying
Case Studies on Scope 3 the issues, assessing potential impacts, and
GHG Emissions ensuring material issues are reflected in
recommended disclosures relates to Strategy c).
financial filings may be challenging.
This recommended disclosure asks companies
D. to describe the resilience of their strategies
TCFD-Aligned Requirements Since issuing its final recommendations in
2017, and at the request of the FSB, the Task under different climate-related scenarios, and
and Related Initiatives
Force has monitored companies’ reporting of the associated guidance encourages them
TCFD-aligned information and issued annual to describe the potential impact of climate-
E. related issues on their financial performance
Types of Financial Impact status reports that describe both current
practices related to such reporting as well and financial position.159 Notably, as part of a
and Associated Drivers 2021 survey, the Task Force asked companies
as other topics. Some of the topics covered
in past status reports include the challenges whether they disclosed the impact of climate-
F. related issues on their financial performance
Insights Gained and View
faced by companies in implementing the TCFD
recommendations and the types of climate- and financial position. Of the 100 companies
on Future Work responding, 20% indicated they disclosed the
related financial information investors and
other users find most useful in making impact on their financial performance, while only
Appendices 14% indicated they disclosed the impact on their
financial decisions.
financial position.160
Based on its previous work, the Task Force
understands that companies find its Strategy Also as part of its previous work, the Task Force
recommendation — which asks companies has solicited views from users of climate-related
to disclose the actual and potential impacts financial disclosures to understand which
of climate-related risks and opportunities types of information they find most useful for
on their businesses, strategies, and financial decision-making. In a 2020 survey of users,
planning (see Figure E1) — particularly difficult respondents identified the single-most useful
to implement.158 In fact, as described in the disclosure element — out of nearly 60 specific
past five status reports as well as in this one, disclosure elements drawn from the TCFD
the lowest level of disclosure across all 11 recommendations and related guidance — as
a company’s description of how its climate-

158
TCFD, 2019 Status Report, June 5, 2019 (pp. 56–57) and TCFD, 2022 Status Report, October 13, 2022 (pp. 61–62).
159
Financial performance refers to a company’s income and expenses as reflected in its income and cash flow statements (actual) or potential
income and expenses under different climate-related scenarios. Financial position refers to a company’s assets, liabilities, and equity as reflected
on its balance sheet (actual) or potential assets, liabilities, and equity under different climate-related scenarios.
160
TCFD, 2021 Status Report, October 14, 2021 (p. 57).

90
 The Task Force on Climate-related Financial Disclosures

related risks and opportunities have affected its describes common types of financial impact
business and strategy.161 In addition, in a 2021 and associated drivers and includes case
survey, the Task Force asked users about the studies from companies on their experiences
usefulness of several types of climate-related in implementing aspects of the Strategy
metrics, including the impact of climate-related recommendation. The Task Force believes
issues on a company’s financial performance such information may be useful to companies
and financial position. Of the 106 users beginning to implement Strategy b) and c) (see
responding, over 70% indicated a company’s Figure E1, p. 90) and, ultimately, disclosing in
disclosure of the impact on its financial line with those recommended disclosures.
performance (75%) and financial position (73%)
is very useful.162 Of the ten metrics rated, the
only two that were higher were Scope 1 and
Scope 2 GHG emissions at 91% and Scope 3
1. SCOPE AND APPROACH
GHG emissions at 80%.163 To gather information on the types and
associated drivers of financial impact that
Given users’ views on the usefulness of
companies have identified, the Task Force
information associated with the Task Force’s
used companies’ responses to the CDP
Strategy recommendation — especially
A. Climate Change 2022 Questionnaire (2022
information on financial performance and
State of Climate-Related questionnaire).164 The Task Force’s analysis
Financial Disclosures
financial position — and the relatively low
focused on the approximately 5,000 companies
level of disclosure of such information, the
that provided public or non-public responses
Task Force sought to provide companies
B. to the 2022 questionnaire based on investor
with information and insights on the types
Financial Statement requests made through CDP.165 While the 2022
of financial impacts associated with specific
Considerations questionnaire included nearly 300 questions,
climate-related risks and opportunities that
the Task Force reviewed responses to a set
other companies have identified. This section
C.
Case Studies on Scope 3
GHG Emissions

D. Key Takeaways
TCFD-Aligned Requirements
and Related Initiatives
Of the over 4,000 companies that identified climate-related issues with potential substantive
E. impact, 68% provided estimates of the potential financial impact — either as single amounts or as
ranges.
Types of Financial Impact
and Associated Drivers
The most common type of financial impact estimated for climate-related risks was increased
F. indirect operating costs. For climate-related opportunities, it was increased revenues from
Insights Gained and View increased demand.
on Future Work
There are inherent uncertainties in estimating potential financial impact from climate-related issues.
Appendices Transparency — particularly on assumptions made — is important to highlight these uncertainties
to investors and other stakeholders.

Estimating potential financial impact from climate change requires expertise from different functions
within a company. As a result, it may be useful to set up a cross-functional team for such efforts.

161
TCFD, 2020 Status Report, October 29, 2020 (pp. 29–31).
162
TCFD, Guidance on Metrics, Targets, and Transition Plans, October 14, 2021 (p. 16).
163
Ibid (p. 14).
164
The Task Force wishes to thank CDP for sharing select reporting results from the CDP Climate Change 2022 Questionnaire (CDP, “CDP Climate
Change 2022 Questionnaire,” Accessed May 1, 2023). The reporting results provided a standardized source of information on climate-related
risks and opportunities and associated potential financial impacts identified by thousands of companies. Collecting information similar to that
provided by CDP would entail reviewing individual companies’ reports, which would take thousands of hours and would not be feasible for the
Task Force.
165
Of the approximately 5,000 companies, around 3,600 made their responses public. Only public responses are available on the CDP website.

91
 The Task Force on Climate-related Financial Disclosures

of ten questions that asked companies to

provide information on climate-related risks Figure E2
and opportunities with the potential to have About CDP
substantive financial or strategic impact on their
businesses.166 These questions asked companies CDP is a global non-profit that runs an
about which specific types of climate-related environmental disclosure platform for
companies, cities, states and regions. Founded
risks and opportunities they identified as well
in 2000 and working with more than 740
as the types and magnitudes of associated
financial institutions with over $130 trillion
potential financial impacts. The types of climate-
in assets, CDP works with capital markets
related risks and opportunities used in the
and corporate procurement to encourage
2022 questionnaire were the same as those
companies to disclose their environmental
described in the Task Force’s 2017 report.167 (See
impacts, and to reduce greenhouse gas
Figure E2 for more information on CDP.) emissions, safeguard water resources, and
protect forests. Nearly 20,000 organizations
Box E1 and Box E2 (p. 93) provide an overview of
around the world disclosed data through CDP
the distribution of the roughly 5,000 companies
in 2022, including more than 18,700 companies
that responded to the 2022 questionnaire based
worth half of global market capitalization, and
on their respective locations, sectors, and sizes.
A. over 1,100 cities, states, and regions.
The companies were headquartered all around
State of Climate-Related CDP was an early supporter of the TCFD and
the world, with 40% in Asia Pacific and 32% in
Financial Disclosures aligned its climate change questionnaire with
Europe. In addition, companies were grouped
the TCFD’s recommendations in 2018. CDP
into sectors, as shown in the chart on the left
B. also operates the TCFD Knowledge Hub, which
in Box E2 (p. 93).168 Eighty eight percent (88%)
Financial Statement provides a wide range of resources—including
came from non-financial sectors, and 12%
Considerations free training courses—for companies and other
came from the financial sector. As shown in the
organizations interested in understanding and
chart on the right, 61% of the companies had a
C. implementing the TCFD recommendations. CDP
market capitalization of at least $1.5 billion.169
Case Studies on Scope 3 is also a founding member of the Science Based
In addition, 86% of the companies were public Targets initiative, We Mean Business Coalition,
GHG Emissions
companies, representing nearly $65 trillion of The Investor Agenda, and the Net Zero Asset
market capitalization. The vast majority of the Managers initiative.
D. remaining 14% were private companies, for
TCFD-Aligned Requirements which financial information was not available. Source: CDP Staff
and Related Initiatives

E.
Types of Financial Impact Box E1
and Associated Drivers Demographics by Region and Top 5 Countries
Percent and Number of Companies
F.
Insights Gained and View
Distribution by Region
on Future Work

Top 5 Countries by Number of Companies

Appendices
32% Japan 1,101

Europe United States of America 916

22% 40% United Kingdom 391
North 2% Republic of Korea 179
America Asia Pacific
Middle East France 171
4% and Africa
Latin
America

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire Base size: 5,021

166
The TCFD Secretariat reviewed questions from the “Risks and Opportunities” and “Business Strategy” modules of the 2022 questionnaire.
167
TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017 (pp. 10–11).
168
Companies were categorized based on the Global Industry Classification Standard (GICS) sector assigned to each company in the Bloomberg
Professional Service. For companies not found in the Bloomberg Professional Service or where GICS sectors were not assigned, the most
appropriate GICS sector was assigned to each company based on its primary activity as defined in the data provided by CDP.
169
Market capitalization is as of September 30, 2022, which is the date the CDP platform closed for 2022 reporting.

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 The Task Force on Climate-related Financial Disclosures

Box E2
Demographics by Sector and Company Size
Percent of Companies

Distribution by Sector Distribution by Market Capitalization

Industrials 22%
Consumer Discretionary 13%
Data Not
Information Technology 12%
Available,
Materials 12% Banks (5%) 14%
$1.5 – $6B,
Financials 12% Insurance (2%) 31%
Consumer Staples 8% Other (5%)
>$6B,
Health Care 5% 30%
Utilities 5%
<$1.5B,
Real Estate 4%
25%
Communication Services 4%
A. Energy 3%
State of Climate-Related
Financial Disclosures Source: CDP, Responses to CDP Climate Change 2022 Questionnaire Base size: 5,021

B.
Financial Statement
Considerations 2. SUMMARY OF RESULTS their climate-related risks or opportunities. In
terms of estimating potential financial impacts
C. This subsection summarizes — at an associated with their climate-related risks and
Case Studies on Scope 3 aggregate level — the types and magnitudes opportunities, over 50% of the companies
GHG Emissions of financial impacts associated with specific provided such estimates.170 The percentages
climate-related risks and opportunities that shown in Boxes E3 through E6 and Figures E3
D. companies identified in their responses to and E4 are based on those companies that
TCFD-Aligned Requirements the 2022 questionnaire. The Task Force also identified substantive climate-related issues
and Related Initiatives reviewed such information at a sector level, and provided estimates of potential financial
which is summarized in Appendix 4: Additional impacts. It is important to note that companies
E. Information on Financial Impact. The Task Force used their own definitions of substantive impact
Types of Financial Impact believes companies that are in the early stages and were not required to include all substantive
and Associated Drivers of incorporating financial issues related to climate-related issues they identified. Given
climate change into their internal processes may this, the percentages of companies identifying
F. find this information useful in understanding specific substantive climate-related issues
Insights Gained and View the types of climate-related risks and may be greater than those shown in Boxes E3
on Future Work opportunities to which they may be exposed as through E6 and Figures E3 and E4.
well as the types and potential size of associated
financial impacts. The Task Force also reviewed the types of
Appendices
substantive climate-related issues that were
Box E3 (p. 94) provides a breakdown of the identified by companies that provided estimates
5,021 companies that responded to the 2022 of potential financial impacts. As shown in
questionnaire based on investor requests in Box E4 (p. 94), the most common type of
terms of whether they identified climate-related climate-related risk identified was policy and
risks or opportunities with the potential to have legal risk at 73%, followed by acute physical
substantive financial or strategic impacts on risks at 56%. Notably, of the companies that
their businesses (referred to as “substantive identified policy and legal risk, the vast majority
risks” and “substantive opportunities”). Of these selected risks related to current and emerging
companies, 80% identified substantive climate- regulations, with only 4% identifying risks
related risks and 83% identified substantive related to their exposure to litigation. For
opportunities. Of the companies that did not substantive climate-related opportunities, 70%
identify substantive climate-related risks or identified opportunities related to products and
opportunities, 28% and 37%, respectively, services, followed by resource efficiency at 38%.
said they were in the process of evaluating

170
This does not include companies that indicated in the 2022 questionnaire that they were able to provide potential financial impact estimates but
did not include such estimates in their responses. Two percent (2%) of companies responded this way on climate-related risks, and 3% responded
this way on climate-related opportunities.

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 The Task Force on Climate-related Financial Disclosures

Box E3
Companies Identifying Substantive Issues and Estimating Impacts
Number and Percent of Companies

Companies Identifying Substantive Climate-Related Risks and Estimating Impacts

5,021 994
(100%) (20%)
4,027 1,272
(80%) (25%)
2,755
Reasons for No Substantive Risks (55%)
Non-Substantive Risk Only (39%)
Evaluation in Progress (28%)
Not Yet Evaluated (21%)
No Response (8%)
Other (4%)

Responded to Did Not Identify Identified Did Not Provide Provided Impact
Questionnaire Substantive Risks Substantive Risks Impact Estimates Estimates

A. Companies Identifying Substantive Climate-Related Opportunities and Estimating Impacts

State of Climate-Related 5,021 835
Financial Disclosures (100%) (17%) 4,186 1,511
(83%) (30%)
B. 2,675
Reasons for No Substantive Opportunities (53%)
Financial Statement Non-Substantive Opportunities Only (20%)
Considerations Unable to Realize Opportunities (5%)
Evaluation in Progress (37%)
Not Yet Evaluated (23%)
No Response (11%)
C. Other (5%)
Case Studies on Scope 3
GHG Emissions Responded to Did Not Identify Identified Substantive Did Not Provide Provided Impact
Questionnaire Substantive Opportunities Opportunities Impact Estimates Estimates

D. Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

TCFD-Aligned Requirements
and Related Initiatives
Box E4
E.
Types of Substantive Climate-Related Issues Identified
Types of Financial Impact
Percent of Companies
and Associated Drivers
Types of Substantive Risks Types of Substantive Opportunities
F.
Transition
Insights Gained and View
on Future Work Policy and Legal 73% Resource Efficiency 38%
Market 33% Energy Source 35%
Appendices Reputation 18% Products and Services 70%
Technology 14%
Markets 24%
Physical
Resilience 11%
Acute 56%
Chromic 30%
Base size: 2,755 Base size: 2,675

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

Box E5 (p. 95) shows the seven most frequently impacts related their financial positions at
estimated types of potential financial impacts a much lower rate, with 5% of companies
for both climate-related risks and opportunities. estimating decreased access to capital and
For climate-related risks, the most common 7% estimating decreased asset values or
type of financial impact that companies useful lives of assets. For climate-related
estimated was increased indirect operating opportunities, the most frequent type of
costs at 49%, which was closely followed by financial impact that companies estimated was
increased direct costs at 46% — both of which increased revenues resulting from increased
relate to a company’s financial performance. demand for products and services at 63%.
Companies provided estimates of financial

94
 The Task Force on Climate-related Financial Disclosures

Box E5
Types of Potential Financial Impact Estimated for Substantive Issues
Percent of Companies

Types of Potential Financial Impact for Substantive Climate-Related Risks1

Increased Indirect Operating Costs 31% 8% 10% 49%
Increased Direct Costs 29% 9% 8% 46%
Decreased Revenues from Reduced Demand 30% 3% 2% 35%
Decreased Revenues from Reduced Production Capacity 2% 27% 1% 30%
Increased Capital Expenditures 7% 6% 1% 14%
Decreased Asset Value or Useful Life 2% 5% 7%
Decreased Access to Capital 5% 5%

Legend: Transition Risks Only Physical Risks Only Both Transition and Physical Risks Base size: 2,755

Types of Potential Financial Impact for Substantive Climate-Related Opportunities

Increased Revenues from Increased Demand 63%
A.
State of Climate-Related Reduced Indirect Operating Costs 34%

Financial Disclosures Reduced Direct Costs 24%

Increased Revenues from New Markets 23%

B. Returns on Investment in Low-Emission Technology 9%

Financial Statement Increased Access to Capital 6%
Considerations Increased Revenue from Increased Production Capacity 4%

Base size: 2,675

C.
Case Studies on Scope 3 1. Percentages in bold represent the total percent of companies estimating a given type of financial impact.
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire
GHG Emissions

D.
TCFD-Aligned Requirements Figure E3 and Figure E4 (p. 96) provide a frequently cited risk type driving decreased
and Related Initiatives breakdown on the specific climate-related risks revenues from reduced demand (by 53% of
and opportunities, respectively, driving the companies). Acute physical risk was the most
E. types of potential financial impact included in frequently identified risk type driving decreased
Types of Financial Impact Box E5. As shown in Figure E3, policy and legal revenues from decreased production capacity
and Associated Drivers risk was the most frequently identified risk (by 71% of companies), decreased asset value or
type driving increased operating costs (by 74% useful life (by 54% of companies), and increased
F. of companies) and increased direct costs (by capital expenditure (by 38% of companies).
Insights Gained and View 64% of companies). Market risk was the most
on Future Work

Appendices Figure E3
Potential Financial Impacts and Associated Drivers: Climate-Related Risks
Percent of Companies

Transition Risk Types Physical Risk Types

Policy
Types of Potential Financial Impact1 and Legal Market Reputation Technology Acute Chronic
Increased Indirect Operating Costs (1,350) 74% 10% 2% 4% 22% 17%

Increased Direct Costs (1,267) 64% 19% 2% 6% 24% 16%

Decreased Revenues from Reduced Demand (958) 17% 53% 28% 13% 7% 7%

Decreased Rev. from Reduced Prod. Capacity (816) 4% 3% 2% 1% 71% 32%

Increased Capital Expenditures (408) 31% 5% 2% 22% 38% 15%

Decreased Asset Value or Useful Life (198) 18% 8% 3% 11% 54% 14%

Decreased Access to Capital (129) 11% 16% 71% 1% 2% 1%

1. The numbers in parentheses represents the base size. Legend:

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire Low to high percentage of companies

95
 The Task Force on Climate-related Financial Disclosures

As shown in Figure E4, opportunities related with returns on investment in low-emissions

to products and services were most frequently technology (by 58% of companies).
associated with increased revenues from
increased demand (by 89% of companies), Further, 65% and 56% of companies that
increased revenues through access to new provided estimates of potential financial
markets (by 58% of companies), and increased impact from their climate-related risks or
revenues from increased production capacity opportunities, respectively, had estimates that
(by 44% of companies). Resource efficiency were less than 5% of their revenue, as shown in
was the most frequently identified driver Box E6.171 In addition, 15% and 16% of
of reduced indirect operating costs (by 59% companies provided estimated financial impacts
of companies) and reduced direct costs (by from climate-related risks or opportunities,
57% of companies). Opportunities related to respectively, that ranged between 6% and 15%
energy source were most frequently associated of their revenue.172,173

Figure E4

A. Potential Financial Impacts and Associated Drivers: Climate-Related Opportunities

State of Climate-Related Percent of Companies
Financial Disclosures Opportunity Types
Resource Energy Products
B. Types of Potential Financial Impact1 Efficiency Source and Services Markets Resilience
Financial Statement Increased Revenues from Increased Demand (1,690) 4% 6% 89% 11% 3%
Considerations
Reduced Indirect Operating Costs (919) 59% 44% 5% 2% 8%

C. Reduced Direct Costs (647) 57% 41% 9% 2% 8%

Case Studies on Scope 3
Increased Revenues from New Markets (620) 2% 7% 58% 40% 3%
GHG Emissions
Returns on Inv. in Low-Emissions Technology (230) 15% 58% 17% 7% 7%
D. Increased Access to Capital (173) 6% 8% 18% 62% 9%
TCFD-Aligned Requirements
and Related Initiatives Increased Rev. from Increased Prod. Capacity (110) 25% 15% 44% 8% 14%

1. The numbers in parentheses represents the base size. Legend:

E. Source: CDP, Responses to CDP Climate Change 2022 Questionnaire Low to high percentage of companies
Types of Financial Impact
and Associated Drivers

F. Box E6
Insights Gained and View Potential Financial Impacts Associated with Drivers as Share of Revenue
on Future Work Percent of Companies

Appendices Percent of Revenue Climate-Related Risks Percent of Revenue Climate-Related Opportunities

0% to 5% 65% 0% to 5% 56%
6% to 15% 15% 6% to 15% 16%
16% to 30% 7% 16% to 30% 8%
31% to 50% 3% 31% to 50% 4%
Over 51% 5% Over 51% 11%
Data Not Available 5% Data Not Available 5%
Base size: 2,755 Base size: 2,675

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

171
Revenue figures are from the Bloomberg Professional Service as of September 30, 2022, which is the date the CDP platform closed for
2022 reporting.
172
Companies could provide a single-figure estimate or an estimated range. When a range was provided, the average of the minimum and
maximum estimates was used.
173
Companies could disclose multiple climate-related risks and opportunities with their potential financial impacts. In such cases, the sum
of a company’s financial impacts was used for its estimated potential financial impact.

96
 The Task Force on Climate-related Financial Disclosures

3. CASE STUDIES ON FINANCIAL IMPACT are a priority for the company. They are tied
to our strategic growth plan, and we disclose
Given both users’ interest in understanding the progress on these targets annually. The
the impact of climate-related issues on same year as the KODS were launched, we also
companies to support their financial decision- became a TCFD supporter and began to follow
making processes and preparers’ challenges the Task Force’s recommendations. Even with all
in disclosing financial impacts associated our experience on climate change issues, we still
with climate-related issues, the Task Force face challenges with disclosing in line with the
sought to provide a selection of case studies TCFD recommendations — in particular, a lack
on companies’ approaches to, challenges of standardized data and methodologies for
encountered on, and lessons learned from reporting climate-related financial information.
determining potential financial impacts
associated with climate change and disclosing We decided to transform these challenges
those impacts. into opportunities and aim to become a
leading example for the Brazilian market.
This subsection includes case studies by We partnered with a specialized consultancy
four companies — a forest, pulp, and paper firm to prepare our first TCFD disclosures the
A. company; a global mining and metals same year we became supporters. The TCFD
State of Climate-Related company; a financial services company; and framework provided critical guidance for
Financial Disclosures a global insurance company. The case studies standardized disclosures of climate-related
describe each company’s experience and information and better understanding of our
B. lessons learned in implementing the Strategy climate-related risks.
Financial Statement recommendation. They are intended to
Considerations provide practical insights for other companies In the pages that follow, we provide insights
on implementing and disclosing the actual from our experiences in evaluating and
C. or potential impacts of climate-related risks reporting information aligned with the TCFD
Case Studies on Scope 3 and opportunities on companies’ businesses, recommendations over the past three years.
GHG Emissions strategies, and financial planning. More specifically, we give details on our
approach to estimate and present potential
D. Case Study by a Forest, Pulp, and climate-related financial impacts and how
TCFD-Aligned Requirements Paper Company we use the estimated results to support our
and Related Initiatives strategic decision-making.
Klabin is an integrated forest, pulp, and paper
company headquartered in Brazil that manages Our Approach for Estimating Potential
E.
over 700,000 hectares of land. Approximately Financial Impact and Challenges Faced
Types of Financial Impact
and Associated Drivers 60% of the land is planted with species for To better understand the potential financial
industrial applications and the remaining kept impacts of climate change on our company,
F. as native preserved forests, with an important we have developed a risk identification and
Insights Gained and View biodiversity. Many of our assets and operations assessment process tailored to our specific
on Future Work are tied to nature, and we recognize that climate risks. Because of the range of physical and
change may cause important impacts on our transition risks we face — and their unique
business. Sustainability issues, including those characteristics — we are unable to apply one
Appendices
related to climate change, are incorporated standardized methodology across all risks.
into our business strategy. In addition, we were
one of the first Brazilian companies to have our Identifying and Assessing Climate-
decarbonization targets approved by the Science Related Risks
Based Targets initiative (SBTi) in May 2021.174 We began our process by identifying all
potential risks we face based on a range
In 2020, we took an important step in our
of different climate-related scenarios. For
sustainability journey with the launch of the
identification of physical risks, we used the
Klabin 2030 Agenda, called Klabin Objectives
Intergovernmental Panel on Climate Change
for Sustainable Development (KODS). KODS
Representative Concentration Pathways
are a set of short- (2021), medium- (2025), and
(RCPs) RCP 2.6 and RCP 8.5 scenarios;
long-term (2030) commitments that are aligned
and for transition risks, we used the IEA’s
with the Sustainable Development Goals of
“Sustainability Development Scenario.”175,176
the United Nations, including goal number 13
Next, we performed a qualitative assessment
on climate change. The KODS commitments

174
Klabin, Sustainability Report, June 2021.
175
Riahi, Keywan et al., RCP 8.5—A Scenario of Comparatively High Greenhouse Gas Emissions, August 13, 2011.
176
International Energy Agency, The Sustainability Development Scenario, December 4, 2019.

97
 The Task Force on Climate-related Financial Disclosures

of our potential vulnerability and potential of our potential financial impact calculation
impact to assign each risk a criticality rating methodologies in our TCFD ESG Panel.
of critical, high, medium, or low. An internal
multidisciplinary working group is responsible We calculated potential financial impact as a
for the input to this risk assessment process, percentage of earnings before interest, taxes,
contributing with their broad expertise in depreciation, and amortization (EBITDA) and
several areas, including business strategy, forest the required investment in resilience strategy.
research, climate change, and risk management. Figure E5 shows an example of our calculations
and describes how we quantified the potential
Calculating Potential Financial Impact financial impact from water scarcity. One of our
most significant physical risks was water scarcity.
Our risk assessment process identified
Our analysis of this risk was based on the climatic
water scarcity caused by climate change,
history of the region for the period 1981–2010
regulatory changes such as carbon pricing,
and climate-related scenarios, including RCP
and temperature increases as the highest-
8.5. Informed by these scenarios, we conducted
priority risks. We then calculated the potential
internal studies on current and future climate
financial impact of each of these risks based
conditions and the impact of climate change on
on methodologies tailored to each risk type.
the regions in which we have forestry operations.
A. Calculating potential financial impacts was
The potential climate-related effects — including
State of Climate-Related challenging in the current absence of a global,
Financial Disclosures
reduced water availability — could directly
standardized calculation methodology and
impact forest productivity, especially by reducing
a lack of guidance on which climate-related
the growth of our planted forests. Based on
B. scenarios to use. Therefore, we leveraged
research from our internal forest research team,
Financial Statement external research and studies to develop
the loss could be on average 3% to 5% for our
Considerations assumptions in the calculation process — for
forest productivity between 2020 and 2035. We
example, a study on projected carbon pricing
estimated the potential financial impact of this
C. in Brazil. We aimed to be transparent with
lower productivity to be 0.15% of EBITDA.
Case Studies on Scope 3 our assumptions and disclose the details
GHG Emissions

D. Figure E5
TCFD-Aligned Requirements Potential Financial Impacts of Temperature Increases
and Related Initiatives
Faster pace of forest pests and drop in forest productivity
E.
Amount of EBITDA Investment
Types of Financial Impact Time
Description Financial Percentage in Resilience
and Associated Drivers Frame
Impact (2021) and Strategy
The distribution and frequency of pests depends on a set of
F.
ecological and agroclimatic factors. The rise in the region’s
Insights Gained and View average temperature and other associated climate changes can
on Future Work accelerate pest proliferation cycles.
Medium
PESTS: Attack rate: 50% Volume of infested eucalyptus: 3,756,845 Medium 1.61%
Term
tons. Volume of infested pine: 5,461,349 tons. DISEASES:
Appendices
Infestation risk rate: 15% (eucalyptus) and 10% (pine) Volume
of infested eucalyptus: 1,502,738 tons. Volume of infested pine:
1,456,360 tons

Amount and frequency of intense drought, minimum BRL

temperature, average temperature, potential evapotranspiration 3,669,666.00
and water deficit are factors that affect the growth of the planted
pine and eucalyptus forest. Thus, the rise in temperature, all the
more constant, can imply an increase in evapotranspiration, and
consequent reduction of forest productivity for both pine and Long
Low 0.41%
eucalyptus. This effect can be intensified by increased periods of Term
drought or reduction of average precipitation.
Klabin has developed specific studies that pointed to an overall
trend of rising temperatures in the Paraná region, with an average
rise of 0.32°C per decade. For 2020-2035, these studies estimate a
loss of forest productivity of 3% for eucalyptus and 5% for pine.

Klabin, “ESG Panel: Task Force on Climate-Related Disclosures,” Accessed May 11, 2023.
Notes: Medium term is defined as two to three years, and long term is defined as beyond four years.
Some content was reformatted in order to fit the page.

98
 The Task Force on Climate-related Financial Disclosures

Informing Actions to Mitigate Risk a growing global population, in terms of basic

infrastructure and improvements in living
For each of the highest-priority risks, we
standards, and are critical raw materials for
developed and disclosed a corresponding
many of the systems and technologies required
resilience strategy, each of which describes
to deliver the energy transition. We recognize
how to mitigate our identified risk. For risks
that climate change presents both significant
related to water scarcity, for example, we
risks and opportunities for our business model,
described our actions to reduce and monitor
including the potential to cause material
water consumption and our projects to
financial impact. We assess and disclose these
increase the reuse of water. The assessment of
risks and opportunities in our climate-related
financial impacts from risks has proven crucial
disclosures, including our integrated annual
for effectively prioritizing our risk mitigation
report and climate change report, which we
actions. Our risk management function
have been preparing in alignment with the
organizes quarterly review meetings to reassess
TCFD framework since 2019. We have a target
the risks and monitor the implementation of our
to be carbon neutral across Scope 1 and Scope
resilience strategies.
2 GHG emissions by 2040, and an ambition to
Lessons Learned reduce our Scope 3 GHG emissions by 50% by
A. the same year.
We have learned that it is important to have a
State of Climate-Related
consistent and broad methodology to assess, Sustainability considerations — including those
Financial Disclosures
compare, and prioritize risks. The definitions of related to climate change — are fully integrated
risk criticality must be very clear, and a group into our work and are central to our strategy
B. that includes multi-disciplinary expertise is and decision-making, most notably in decisions
Financial Statement
best positioned to prioritize risks. The breadth related to our asset portfolio maintaining a
Considerations
of perspective is particularly important in resilient and competitive position. Accordingly,
the assessment of vulnerability. To achieve understanding the resilience of our current
C. this breadth, we considered vulnerability portfolio to the financial implications of climate
Case Studies on Scope 3 across different time frames, scenarios, and change is essential for ourselves and our
GHG Emissions
socioeconomic trajectories. stakeholders. We undertake comprehensive
assessments of the resilience of our product
D. We have also come to appreciate that disclosing portfolio. Given their material impact on our
TCFD-Aligned Requirements the potential financial impact in the form of industry and operations, we focus specifically
and Related Initiatives tangible financial metrics, such as EBITDA, on transition risks and opportunities, including
facilitates communication with internal and understanding the potential impact across
E. external stakeholders as it can easily be different climate-related scenarios. In the
Types of Financial Impact understood by a wide range of stakeholders. following pages, we describe our three-step
and Associated Drivers This approach enables us to provide a clear process of quantifying potential financial impact
picture of our exposure to climate-related risks, and the learnings we have gained.
F. demonstrate our commitment to manage these
Insights Gained and View risks, and effectively prioritize actions internally. Our Approach to Quantifying Potential
on Future Work Financial Impacts
Finally, we recognize the need for continuous
improvement in our evaluation and disclosure Our three-step quantification process begins
Appendices
of climate-related risks and intend to update by selecting and benchmarking climate-related
our risk model to identify risks based on new scenarios, which we use to establish end-sector
scenarios, including a net-zero scenario. We technology pathways that inform commodity
acknowledge that improving our models will demand estimates. In the past, we have used
require ongoing effort and collaboration with in-house climate-related scenarios based on
experts in the field. However, we believe that IEA’s Current Policies, Announced Policies, and
this is a critical step to enable resilience of our Sustainable Development scenarios. For our
business in terms of climate change. most recent analysis, we opted to use scenarios
from Wood Mackenzie’s Energy Transitions
Case Study by a Global Mining and Service, as it offers a comprehensive set of
Metals Company third-party-developed global scenarios that
provide sufficient detail on relevant sectors that
Anglo American is a global mining company use our metals and minerals. Wood Mackenzie’s
headquartered in the U.K. We produce a scenarios also meet the conditions outlined by
diversified range of metals and minerals which the IPCC for a 1.5°C pathway and are within the
play a significant role in meeting the needs of benchmarks of other IPCC-recognized scenarios.

99
 The Task Force on Climate-related Financial Disclosures

Where existing scenarios do not contain resilience of our current portfolio, at this
sufficient information for our needs, we stage of analysis, we keep production volumes
augment them with internal assessments constant and consider only existing assets and
developed by our research teams. For example, organic growth opportunities. It is important
in the case of the platinum group metals, to note that the results of the assessments are
for which external scenarios do not provide not meant to be taken as definitive results or
sufficient detail, we have developed internal financial guidance.
estimates using the Wood Mackenzie scenario
variables as inputs. Insights That Support Our Resilience
Planning and Influence Our
Next, we use proprietary models to develop Business Strategy
product demand, supply, and price forecasts
Performing scenario analysis provides
by scenario. Our models are continuously
our external stakeholders — through our
improved and refined based on our in-house
disclosures — a deeper understanding of
knowledge of markets’ supply and demand for
our business. One of the main benefits is the
each product. The forecasts produced by the
enhanced understanding of the sensitivity of
models help us assess how various profit pools
our product profit pools to the energy transition
might develop in the future, and to estimate
A. and the associated long-term resilience of our
potential impacts on cash flows and other key
State of Climate-Related portfolio (see Figure E6). Our climate-related
Financial Disclosures
metrics in the financial statements.
scenario analysis and modelling show that
Finally, we use the results of our forecasting to our portfolio is resilient in our considered
B. assess the strategic resilience of our product scenarios, largely due to the high quality
Financial Statement portfolio. Our aim is to understand how Anglo and long expected life of our assets, our
Considerations American’s asset positioning and ability to exposure to metals and minerals that support
generate cash flow may be impacted based a lower carbon future and the diversified mix
C. on the different climate-related scenarios of products in our portfolio, as well as our
Case Studies on Scope 3 and profit pool forecasts. To focus on the potential organic growth pathways.
GHG Emissions

D. Figure E6
TCFD-Aligned Requirements Results of Our Analysis Translated into Outlooks on the Resilience of Our Portfolio
and Related Initiatives
Recommended References
disclosures
E.
Types of Financial Impact […]
and Associated Drivers
c) Describe the Summary: Anglo American’s strategy seeks opportunities in the metal and mineral needs of the
resilience of the future, including, critically, the impacts of climate change and the energy transition. The resilience of
F. organisation’s our portfolio to a changing climate also forms a key part of the Group’s strategy. We draw on multiple
Insights Gained and View strategy, taking sources to judge the contribution that individual assets would make to the portfolio under different
into consideration climate scenarios and, amongst other things, this informs the way that we allocate capital.
on Future Work
different climate-
related scenarios, Integrated Annual Report 2022: Pages 28–35 and page 46 describe the Group’s portfolio strategy
Appendices including a 2°C or and evolution and how that has been influenced by climate change. Pages 40–41 describe the
lower scenario. technological innovations being delivered across the Group to reduce energy and water consumption,
and pages 43–44 describe the efforts of our Marketing business to deliver products that help enable
our customers to achieve their climate change ambitions. Page 46 gives more detail on our strategy
to deliver a future-enabling portfolio and Page 65 describes our approach to capital allocation to
achieve our carbon reduction targets, including the carbon pricing we use when appraising investment
decisions. Pages 45–46 describe our approach to transition risk and explain how we believe Anglo
American will remain resilient in a 1.5˚C future. Pages 64–66 describe how broader sustainability
considerations, including climate change, are embedded in our capital allocation decisions.

Climate Change Report 2021: Pages 15–19 give a detailed overview of Anglo American’s strategic and
financial resilience to a 3°C, 2°C and 1.5°C scenario, including potential impacts on cash flow (upside
and downside).

Climate Change Report 2022: Page 15 explains the strategic principles that guide our portfolio choices
and how we assess the resilience of our portfolio in a 1.5˚C world. Page 17 gives further details on the
role we believe our products have to play in a low carbon future, including the risks and opportunities
related to each of the products and commodities we produce as we make that transition. Pages 19–22
describe our approach to adaptation and physical resilience in the face of a changing climate.

Anglo American, Integrated Annual Report, pp. 116–117

Note: Some content was reformatted in order to fit the page; and some content was removed, denoted by […].

100
 The Task Force on Climate-related Financial Disclosures

As described in our reporting, the results of our production, and trade flows. During the scenario
analyses indicate our cash flows should remain process, we tend to limit the variables we adjust
relatively stable across ~3°C, 2°C, and 1.5°C in order to keep the analysis and its impact as
scenarios. However, there is a greater variation transparent as possible.
of outcomes in the lower temperature scenarios
given the broad range of potential pathways Quantifying financial impacts of climate change
involved. For example, in the next decade, requires engagement across several internal
under a 1.5°C scenario our cash flow could be functions and the task cannot be accomplished
up to 30% higher than under a ~3°C scenario, by climate subject-matter experts alone. Our
while in the subsequent decade, our cash flow quantification process depends on a range of
could be 20%–25% lower under a 1.5°C scenario in-house experts on product-specific markets,
than a ~3°C scenario. overall business strategy, and the evolution of
government policies and regulations.
Although there is still more work to do in
further improving our analysis and disclosures, Finally, analyzing impact at the product level
the scenario-based quantification of financial is critical to understanding how resilient our
risks and opportunities has allowed us to gain business is to climate change. By analyzing
a deeper understanding of the role of our the potential impacts on specific products
A. and their respective profit pools, we can
products in the low-carbon transition and
State of Climate-Related identify areas where we can optimize growth
Financial Disclosures
how to maintain a portfolio of products that is
resilient to the risks and opportunities of the and profitability while mitigating climate-
low-carbon transition. related risks. This approach also enables us to
B. determine which products are most impacted
Financial Statement Lessons Learned by climate change, allowing us to develop
Considerations strategies to reduce associated risks and
Our scenario analysis benefits from externally
sourced climate-related scenarios, which provide capture related opportunities.
C.
Case Studies on Scope 3 an integrated, dynamic view of global energy
transition pathways with sufficient detail to Case Study by a Financial
GHG Emissions
enable us to understand the financial implications Services Company
of different product demand scenarios. Given
D. Mitsubishi UFJ Financial Group (MUFG) is a
TCFD-Aligned Requirements
today’s pace of change, we also believe it is
financial services group headquartered in Japan.
and Related Initiatives necessary to update our scenarios on an ongoing
We provide commercial banking services to
basis. When choosing between various scenario
clients in all major markets — including markets
options, we take various factors into account,
E. in advanced economies (such as Europe and the
including whether the data is openly available to
Types of Financial Impact U.S.) and developing economies (such as Asia).
and Associated Drivers
and accessible by our stakeholders and whether it
We have existing lending relationships with
has been validated by external parties.
clients in a wide range of industries, including
F. One of the most significant learnings from our GHG emissions-intensive sectors that are having
Insights Gained and View disclosure process is that it is often necessary to to adapt their business models as part of the
on Future Work augment existing global climate-related scenarios transition to a low-carbon economy. Given the
to better fit our individual circumstances and existing exposures we have, facilitating our
Appendices better understand potential financial impacts clients’ transition to become net-zero aligned
on our business. A one-size-fits-all approach is is an essential step for our net-zero journey.
usually not sufficient. We augment scenarios from This transition is expected to result in major
public sources and third-party vendors using changes to the global and regional industrial
our proprietary knowledge of the markets in landscape, creating both climate-related risks
which we operate for the results to maximize our and opportunities for our clients — which in
understanding of the implications of changes in turn represent risks and opportunities for us.
supply and demand for our products.
Supporting our clients in accelerating their
It is particularly difficult to assess the impact of climate transition journeys by providing them
a 1.5°C scenario on future product prices and with transition finance is at the center of our
profit pools because there are many scenario strategy for managing and mitigating climate
variables that could radically diverge, such as related risks. In 2021, we pledged to achieve net-
macroeconomic inputs, underlying costs of mined zero GHG emissions from our finance portfolio

101
 The Task Force on Climate-related Financial Disclosures

by 2050.177 We are the first Japanese financial we have participated in a pilot project led
institution to have joined the Net-Zero Banking by United Nations Environment Programme
Alliance (NZBA) — and our representative leads Finance Initiative (UNEP-FI) that supports the
the NZBA’s work on developing a guideline for development of industry practice for climate-
transition finance.178 related financial disclosures for the banking
industry. Based on the results of this pilot, we
As both a preparer and user of climate-related have conducted an analysis of transition risks
disclosures, we aim to “lead by example” by up to the year 2050 and physical risks through
disclosing information to investors and other 2100. We have disclosed the results of our
stakeholders in line with the TCFD framework scenario analyses and estimated the potential
through our Sustainability Report and TCFD impact of transition risks to range from 1.5
Report.179 We have been TCFD supporters since billion to 28.5 billion yen in total credit losses on
the TCFD recommendations were first published an annual basis (see Figure E7).
in 2017. In particular, the following describes
how we assess, manage, and disclose potential Our comprehensive approach to determining
financial impact associated with transition risks. potential financial impact combines a top-down
method at the sector level with a bottom-
Our Approach to Estimating Potential up method at the individual company level.
A. Financial Impact and Challenges Faced The top-down approach entails conducting
State of Climate-Related
Financial Disclosures Based on the recommendations of the TCFD, sensitivity analyses under different climate-
we disclose our analyses of physical and related scenarios. This is done in order to
transition climate-related risks and associated assess the potential impact of transition risks
B.
potential impacts for major risk categories on credit ratings and on credit portfolios in
Financial Statement
including, but not limited to, credit risk, market certain prioritized sectors. Our analysis is based
Considerations
risk, and liquidity risk. We have identified on scenarios provided by IEA and Network for
climate change as one of our priority risk Greening the Financial System (NGFS), including
C.
drivers on which to focus and, therefore, have the IEA sustainable development well-below 2°C
Case Studies on Scope 3
expanded our classification and disclosure of scenario and the NGFS 1.5°C scenario.
GHG Emissions
climate-related risks and integrated them into
In the bottom-up method, we engage
D. our Risk Appetite Framework.
with clients in prioritized sectors to better
TCFD-Aligned Requirements understand their strategies and transition plans.
Top-Down and Bottom-Up Analysis of
and Related Initiatives Accordingly, both publicly disclosed client data
Potential Financial Impact
and direct inputs from our client engagements
E. We conduct scenario analysis to estimate the serve as inputs into our analysis. To improve
Types of Financial Impact total potential impact of our exposure to both the accuracy of this analysis, we have improved
and Associated Drivers transition risks and physical risks. Since 2019, the granularity of our bottom-up approach

F.
Insights Gained and View
on Future Work Figure E7
Potential Financial Impact Analysis for Climate-Related Transition Risk
Appendices
• Various scenarios, including the sustainable development scenario (the [less than]
Scenario
2°C scenario) of the IEA and the 1.5°C scenario that the NGFS has released
• An integrated approach is adopted to assess the impact by combining the bottom-
up approach at the individual company level and the top-down approach at the
Analytical method sector level. Using this approach, the impact on credit ratings in each scenario is
analyzed along with the effect on the overall financial impact of the sector’s credit
portfolio.
Target sector • Energy, utilities, automotive, steel, air, and maritime sectors

Target period • Until 2050 using the end of March 2022 as the standard

Result of analysis • Single-year basis: 1.5 billion yen to 28.5 billion yen
MUFG, Sustainability Report 2022, p. 99
Note: Some content was reformatted in order to fit the page.

177
MUFG, Carbon Neutrality Declaration, May 2021.
178
MUFG, “MUFG Appointed as a Lead for the Net Zero Banking Alliance Financing & Engagement Work Track Group,” November 22, 2021.
179
MUFG, Sustainability Report 2022, September 2022 and MUFG, TCFD Report 2022, October 2022.

102
 The Task Force on Climate-related Financial Disclosures

while also verifying the validity of the sensitivity transition plans and provide financial solutions,
analyses conducted as a part of the top-down including transition finance.
approach. Results show that a deep engagement
with our clients and support for their transitions Lessons Learned
are necessary to mitigate climate-related risks While our disclosure of the potential financial
and the associated potential financial impacts impacts of climate-related transition risk has
within our own portfolio. been positively received by our stakeholders, it
has not been without its challenges, such as the
The challenges we faced are mainly related complexity of applying scenario analysis for risk
to data availability and sector-specific future over the long term until 2050. Since the analysis
outlooks. Indeed, the lack of a fully standardized results are based on many assumptions — and
disclosure format required us to gather client- the level of uncertainty around them is high —
specific data with ad hoc forms for different it is necessary to carefully incorporate them
clients. In addition, for certain sectors for which into our strategy and financial planning — and
scenario outlooks were not fully provided by at the same time, continuously improve
IEA and NGFS, we had to develop supplemental our methodology.
outlooks internally as inputs for our analysis.
In these cases, we validated our approach The process of quantifying the potential financial
A.
by consulting relevant divisions within our impacts of climate-related risks has provided
State of Climate-Related
Financial Disclosures
organization and third parties. important insights that inform the actions of
our management team. We have come to realize
Approach to Mitigating Climate- that the qualitative information we gain from
B. Related Risks
Financial Statement engagement with our clients is often just as
Considerations To achieve our net-zero commitment while also useful as the outcome of the quantification.
building a resilient portfolio, we must take a
client-centric approach to risk mitigation and Through both engagement with our clients
C.
transition planning. We have disclosed our and internal research, we have learned the
Case Studies on Scope 3
climate targets as part of a roadmap to carbon importance of acquiring a full understanding
GHG Emissions
neutrality in our Progress Report 2023 (see of the unique characteristics of an industry
Figure E8, p. 104).180 The initiatives within our or region as well as each client’s transition
D. strategy.181 In fact, engagement with our clients
TCFD-Aligned Requirements
roadmap are designed to mitigate climate-
related financial risks, support our clients in Japan and the rest of Asia has allowed us to
and Related Initiatives
as they pursue decarbonization through the understand that a “whole of economy” transition
provision of transition finance, and reduce is required. The key sectors to unlock this journey
E. to accelerate energy transition are the power
financed GHG emissions to net zero by
Types of Financial Impact and industrial sectors — as approximately 70%
and Associated Drivers
2050. As part of the initiatives to reach this
mission, we are committed to supporting the of GHG emissions in Japan and the South East
decarbonization of our clients through the Asian region are from these sectors (almost
F. 50% from power) — which we have therefore
provision of financial services, including the
Insights Gained and View prioritized for our scenario analysis. Energy
initiative to provide a total of 35 trillion yen (of
on Future Work transition in any given economy requires an “all-
which 18 trillion yen is earmarked for climate
change) in sustainable financing from FY 2019 hands-on-deck” approach, including engaging
Appendices with not only the local government but also the
through FY 2030.
entire supply chain. We believe that providing
The insights from the assessment of the transition finance for the purpose of executing
potential financial impact confirm the credible energy transition plans will unlock
importance of managing and mitigating climate- decarbonization opportunities in other sectors,
related risks and opportunities. Rather than including those that are GHG emissions intensive.
divesting from high-emitting sectors and
clients, we are committed to engaging with Our engagement strategy — informed by
our clients to support them in developing our scenario analysis — is premised on the
and implementing credible transition plans understanding that to reach a single target
to reduce their GHG emissions. Thus far, we (i.e., net zero by 2050), each of our clients will
have engaged with more than 1,500 corporate have a different starting point and pathway
clients globally to understand and support their depending on their business model — as well
as on the countries and regions in which they

180
MUFG, Progress Report 2023, April 2023.
181
MUFG, Transition Whitepaper 2022, October 26, 2022.

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 The Task Force on Climate-related Financial Disclosures

Figure E8
Roadmap for Achieving Carbon Neutrality

NEW (year)
Milestones 2019 2020 2021 2022 ... 2030 ... 2040
1 Net Zero GHG Emissions
from the Financed Portfolio
Power: Interim Target for 2030 328 307 299 156-192
(emission intensity) gCO2e/kWh gCO2e/kWh gCO2e/kWh gCO2e/kWh
76 MtCO2e
Oil & Gas: Interim Target for 84 81
(from FY -15%- -28%
2030 (emission reduction rate) MtCO2e MtCO2e
2019 -9%)
Real Estate: Interim Target for
2030 (emission intensity)
65 44-47
Commercial Real Estate kgCO2e/m2 kgCO2e/m2
27 23
Residential Real Estate kgCO2e/m2 kgCO2e/m2
A.
Steel: 2030 Interim Target 22
State of Climate-Related (emission reduction rate) MtCO2e
-22%

Financial Disclosures Shipping: 2030 Interim Target PCA +0.6% PCA ≤ 0%

(PCA Score1)
B. 2 Decarbonization through
Financial Services
Financial Statement 19.4 trillion
3.7 trillion yen 7.9 trillion yen 14.5 trillion yen yen through 35.0 trillion yen
Considerations (including 2.2 (including 2.2 (including 2.2 the first half (including 18.0
Sustainable Finance (Total trillion yen trillion yen for trillion yen for (including 6.6 trillion yen for
since FY2019) for the the environ- the environ- trillion yen the environ-
for the
C. environment) ment) ment)
environment)
ment)

Case Studies on Scope 3 Credit balance targets for

coal-fired power generation
GHG Emissions
From FY2019
USD 3.58 USD 3.77 USD 2.95
Project finance (FY) billion billion billion
50% Zero
reduction
D.
Approx. 120 Approx. 90
TCFD-Aligned Requirements Corporate finance (FY) billion yen billion yen
Zero
and Related Initiatives Shifted to 100%
Shifted to 100%
renewable
renewable
energy
energy
E. procured
procured at Group and
Net zero GHG
global
3 Net Zero GHG Emissions all domestic
Types of Financial Impact from Own Operations
domestically
consolidated Domestic GHG emissions emissions from
by the Bank, own operations
and Associated Drivers subsidiaries emissions 2/3 50%
the Trust Bank, reduction reduction from
for their own
and the from FY2020 FY2020
contracted
Securities HD (FY2025) (FY2026)
electricity
F.
Reduce GHG
Insights Gained and View emissions per
on Future Work economic inten-
4 Decarbonization initiatives
as an Asset Manager
sity by 50% from
2019 for 55%
of assets under
Appendices management

1. A measure of consistency that indicates the difference from the required level across the portfolio. Calculates the Vessel Climate Alignment
(VCA) of individual vessels providing financing as a weighted average of the percentages in the loan portfolio.

MUFG, Progress Report 2023, p. 3

Note: Some content was reformatted in order to fit the page.

operate. We will continue to engage with our confident that this approach will allow us to seize
clients to understand their transition strategies, this opportunity to reduce our — and our clients’
respectfully challenge their transition plans, — climate-related risks over time.
and provide financing to support them. We are

104
 The Task Force on Climate-related Financial Disclosures

Case Study by a Global

Insurance Company other factors. To identify perils and regions that
will most likely be impacted by climate change,
AXA is an insurance company headquartered we have developed maps using data from the
in France. We are engaged in insurance, IPCC and other scientific reports. In assessing
reinsurance, asset management, and banking risk exposure to natural hazards, our models
businesses on a global scale — and as such, we are based on asset-level data, which include
are exposed to a wide variety of risks, including the geolocation of buildings and their primary
market risks, credit risks, insurance risks, usage. Whenever possible, we also incorporate
operational risks, and other material risks. We more detailed information from real estate
invest in companies that have a clear path to managers about the physical characteristics
reduce emissions and limit warming to 1.5°C, of each building, as doing so can provide more
based on ambitious science-based targets. precise and asset-specific results. From a risk
Addressing climate-related risks is part of our modelling perspective, it is critical to include
risk management framework and disclosures. detailed information regarding vulnerability in
We have published climate-related disclosures order to have an accurate representation of the
since 2016 and have been TCFD supporters risk leveraging internal data or national data
A. since its recommendations were first released in (e.g., eventual flood defense system presence).
State of Climate-Related 2017. Since our first publication, we have tested Therefore, our models consider up to 200
Financial Disclosures different approaches to analyzing climate- vulnerability curves.183
related risks and opportunities of our various
Furthermore, our NatCat modelling informs
B. asset classes. Scenario analysis has been central
our forward-looking analysis up to 2050. This
Financial Statement to our approach to understanding different
analysis depends on climate scenarios and
Considerations potential outcomes. We engage with industry
time horizons considered (e.g., IPCC climate
groups and data providers to continuously
scenarios RCP 2.6, 4.5, and 8.5).184 AXA
C. refine our methodologies.
identified different approaches that range from
Case Studies on Scope 3
We have been experimenting with various simple to sophisticated to assess the future
GHG Emissions
methods of analyzing the impact of climate- of natural hazards risks based on exposure to
related events on our investments since 2016. different peril and region combinations. The
D.
Today, we use a host of climate-related metrics simple approach relies on available literature
TCFD-Aligned Requirements
to measure and monitor our climate impact and datasets (e.g., open-source datasets for
and Related Initiatives
and climate-related risk and opportunities for floods) that provide a percentage of impact
our asset classes.182 For example, we collect (projection factors) for hazard, exposure,
E. and vulnerability at different time intervals.
Types of Financial Impact and analyze data on building-level impacts of
extreme events on our real assets expressed This provides insights on where the risk may
and Associated Drivers
in absolute monetary terms. For each metric significantly evolve — along with the associated
and asset class, we have developed a tailored uncertainties — and enables AXA to identify
F. and prioritize areas requiring further study.
methodology. Some of the methodologies use
Insights Gained and View The most sophisticated approach integrates
on Future Work in-house models while others are produced
by external providers such as MSCI and a modified view of hazard, exposure, and
S&P Trucost. vulnerability within the NatCat models in
Appendices order to capture forward-looking scenarios.
Our Approach for Estimating Potential
Financial Impact and Challenges Faced One challenge we have dealt with is the level
of uncertainty around certain assumptions at
Our Investment and Risk Management team the basis of our analysis. This is particularly
has developed Natural Catastrophe models the case for natural climate variability, climate
(henceforth called “NatCat” models) to estimate model uncertainty, and scenario uncertainty
the potential financial losses from climate (i.e., RCPs). Since this uncertainty cannot be
change-related hazards. eliminated from such work, it is appropriate
to acknowledge and — wherever possible —
Developing In-House NatCat Modelling and
assess it. In order to do so, our multi-model
Forward-Looking Risk Frameworks
approach leverages an ensemble of datasets
Our in-house NatCat models include different that provide a more comprehensive view
hazards depending on asset type, region, and of climate change impact across different

182
For more details, see AXA, Climate and Biodiversity Report, June 29, 2023 (p. 19).
183
A vulnerability curve describes the relationship between the hazard intensity and the degree of damage to a given asset or group of assets.
184
Representative Concentration Pathways have been defined by IPCC experts and used as climate model inputs to evaluate the impact of different
mitigation policies (from no mitigation actions to the complete cessation of high-carbon activities).

105
 The Task Force on Climate-related Financial Disclosures

scenarios. Further, it is important to be Quantifying the Financial Impacts of Climate

transparent about these assumptions and Change on Our Real Estate Investments
uncertainties, and to properly communicate them. We leverage our in-house risk modelling
framework to assess the potential direct financial
We also faced challenges in gathering data at
impact of physical climate-related risks on
the required level of granularity. The asset-
our real estate portfolio (building damages)
level data we use to run the analysis currently
following possible extreme whether events in
relies on the geolocation of buildings and their
the current climate. In 2022, this assessment
main occupancy: datasets that have limited
covered more than €45 billion in direct property
granularity. We have also been working to
investments and analyzed the financial impact of
improve the process over time to incorporate
floods, windstorms, and hail in 20 countries. The
more detailed information about the physical
results are disclosed as average annual losses
characteristics of buildings into the model,
and losses from a one-in-a-fifty-year event for
which can generate more refined and asset-
the full portfolio. Furthermore, the results are
specific results. Currently, such detailed
broken down by country and event. Based on our
information is not systematically available for
assessment, our portfolio’s highest risk exposure
the real estate portfolio, but we have started
is from flooding (representing 40% of potential
to engage with real estate managers to source
A. average annual losses), followed by windstorms
granular information about a given building’s
State of Climate-Related (32%) and hail (28%) (see Figure E9).
Financial Disclosures
structure, year of construction, height and floor
levels owned, total value, and insured value.
B.
Financial Statement
Considerations Figure E9
Breakdown of Average Annual Losses by Peril and Country
C.
Case Studies on Scope 3 Austria,
Austria,
Poland,
Poland,
Australia,
Australia, Finland,
Finland,
Ireland,
Ireland,
Sweden,
Sweden, Luxembourg
Luxembourg
GHG Emissions Belgium,
Belgium,
Denmark,
Denmark, Finland,
Finland, Denmark,
Denmark,Poland,
Poland,
Austria, 1%1%
Austria,
Austria, Poland, Australia, Finland, Ireland, Sweden, Luxembourg
Report
2023 Climate and Biodiversity Report

France,
France,
Ireland,
Ireland,
Italy,
Italy, Norway,
Norway,
Italy,
Italy,
Japan,
Japan,United
United
Kingdom
Kingdom
Belgium, Denmark,
Luxembourg,
Luxembourg, Finland, Japan
Netherlands,
Netherlands, Japan Denmark, Poland,
Portugal, Austria,
Portugal,
Spain 1%
Spain1%1%
Report

Norway,
Norway, France,
Portugal,
Portugal,Ireland,
Spain,
Spain, Italy,
Sweden 2%2%
SwedenJapan Norway, Italy, Japan,
<1% <1%United Kingdom
Netherlands
Netherlands
and Biodiversity

D. Luxembourg, Netherlands, <1%<1% United

United
Kingdom
Kingdom Portugal, Spain 1% 1%1%
Norway, Portugal, Spain, Sweden 2% 7%7% <1% Netherlands Belgium
Belgium
and Biodiversity

TCFD-Aligned Requirements <1% United Kingdom 1% 2%2%

7% Belgium
Germany
Germany
and Related Initiatives 2% 8%8%
Switzerland
Switzerland Germany
Climate

Germany
Germany 21%21% 8% Australia
46%
46% Switzerland Australia
Climate

E. Germany €2m
€2m 21% €1.4m
€1.4m 10%10%
2023 2023

46% Australia
Types of Financial Impact €2m €1.4m 10%
and Associated Drivers United
United
States
States Switzerland
Switzerland
47% 47% 14%14%
United States Switzerland
F. United
United
States
States 47% 14%
24%24%
Insights Gained and View United States France
France
24% 16% 16%
on Future Work France
Average
Average
annual
annual
flood
flood
lossloss
perper
country
country Average
Average
annual
annual
hail
16%hail
lossloss
perper
country
country
Average annual flood loss per country Average annual hail loss per country
Appendices Sweden,
Sweden,
Australia,
Australia,
Poland,
Poland,
Austria,
Austria,
Finland
Finland
Norway,
Norway,
Italy,
Italy,
Portugal,
Portugal,
Spain 1%1%
Spain
Sweden, Australia, Poland, Austria,
<1% Finland
<1%Luxembourg
Luxembourg
Norway, Italy, Portugal, Spain 1% 1%1%
<1% Luxembourg
Denmark
Denmark
1%
1%1%
DenmarkIreland
Ireland
1% 3%3% Switzerland
Japan
Japan IrelandSwitzerland
23% 23% 5%5%
3% Switzerland
Japan United
United
Kingdom
Kingdom
23% 5% 6%6%
United Kingdom
Belgium
Belgium
6%
6%6%
€1.6m
€1.6m Belgium
Netherlands
Netherlands
6%7%
€1.6m 7%
Netherlands
7%
United
United
States
States Germany
Germany
20% 20% 7% 7%
United States Germany
20% 7%
France
France
19% 19%
France
19%
Average
Averageannual windstorm
annual windstormlossloss
perper
country
country
Average annual windstorm loss per country

AXA, Climate and Biodiversity Report, p. 38

106
 The Task Force on Climate-related Financial Disclosures

We incorporate the results of the potential variety of specific expertise, such as actuaries,
financial impact assessment of real estate engineers, and climate risk researchers. At the
directly into our investment decision-making same time, it is critical to build and engage a
processes. For example, we leverage the outputs network of external collaborations, including
of our analysis during acquisition processes — scientists and academics, to ensure that data
specifically in the technical due diligence phase and methodologies are aligned with the most
— as well as in designing adaptation strategies advanced studies and research on an ongoing
for assets where required. basis. To foster collaborations with external
stakeholders, AXA has a dedicated climate
Lessons Learned research team that is involved in several joint
Although there is a common misconception research initiatives.
that climate-related risks are only related to
hazards, in order to assess potential financial We believe that openly sharing our
impacts, it is important to take into account methodologies and results has significant value
all the components of climate risk: physical for research and industry communities working
hazards, exposures, and vulnerability. Each of on these topics. Introducing climate into risk
these elements plays a unique role in driving assessment processes is a complex exercise;
climate-related risks and the associated actual therefore, we are fostering a collaborative
A.
and potential financial impact. approach with our stakeholders to accelerate
State of Climate-Related
Financial Disclosures
best practices being defined and then shared.
Developing internal climate risk models
B. requires a multidisciplinary team with a
Financial Statement
Considerations

C.
Case Studies on Scope 3
GHG Emissions

D.
TCFD-Aligned Requirements
and Related Initiatives

E.
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View
on Future Work

Appendices

107
F.
Insights Gained and
View on Future Work
 The Task Force on Climate-related Financial Disclosures

F. Insights Gained and View on Future Work

On July 6, 2023, the Financial Stability Board 2) investors and other users’ identification of
(FSB) announced that the International non-comparable reporting by companies as a
Sustainability Standards Board’s (ISSB's) major obstacle to incorporating climate-related
general sustainability-related and climate- issues into their financial decisions.189 In light of
related disclosure standards — released in these concerns and consistent with its remit, the
June 2023 — can be seen as a culmination Task Force drew on existing climate-related
of the Task Force’s work.185 As such, the FSB disclosure regimes to develop a singular,
disbanded the TCFD with the release of this accessible framework for climate-related
status report and asked “the ISSB to deliver a financial disclosure.
report in 2024 on progress in firms’ disclosures,
[…] including early take-up of the ISSB standard In addition, when it released its recommendations
for climate-related disclosures and progress in in June 2017, the Task Force indicated its
achieving interoperability.”186 The Task Force recommendations provide a common set of
wishes to commend the FSB on its leadership principles that should help existing disclosure
in establishing the TCFD as an industry-led task regimes come into closer alignment over time.
A.
force to develop voluntary recommendations It further noted that preparers, users, and
State of Climate-Related
Financial Disclosures on climate-related financial disclosure and for other stakeholders share a common interest
supporting its work to promote and monitor in encouraging such alignment as it relieves
adoption of the recommendations for the past a burden for reporting entities, reduces
B.
several years. Since this is the Task Force’s fragmented disclosure, and provides greater
Financial Statement
last report, it reflected on its experiences and comparability for users. The Task Force also
Considerations
insights gained over the past eight years as well encouraged standard setting bodies to support
as areas that warrant continued focus or further adoption of the recommendations and alignment
C.
work, as described below. with the 11 recommended disclosures.
Case Studies on Scope 3
GHG Emissions
The Task Force believes its recommendations,
D. 1. MEETING THE REMIT FROM THE FSB which provide a singular, accessible
TCFD-Aligned Requirements
framework for climate-related financial
and Related Initiatives The FSB created the Task Force in late 2015
disclosure, have helped existing disclosure
and asked it to make recommendations
on consistent climate-related financial regimes come into closer alignment over time.
E.
Types of Financial Impact disclosures for use by companies in providing
and Associated Drivers information to investors, lenders, and insurance
underwriters.187 The FSB also emphasized that In reflecting on its work (see Box F1, p. 110)
F. any disclosure recommendations by the Task and related developments over the past eight
Insights Gained and View Force would be voluntary and would need to 1) years, the Task Force believes it has successfully
on Future Work incorporate the principle of materiality; 2) weigh met its remit. The TCFD recommendations
the balance of costs and benefits; and 3) not add have been a key driver of greater consistency
Appendices to the already well developed body of existing among major climate-related disclosure
climate-related disclosure schemes.188 regimes that existed when the Task Force was
created as well as climate-related disclosure
In developing its recommendations, the Task requirements and standards that have been
Force sought to balance the needs of the users developed more recently, effectively reducing
of disclosures with the challenges faced by the fragmentation and supporting consistency
preparers and was keenly aware of 1) companies’ across reporting regimes. For example,
concerns that multiple climate-related disclosure by 2019, several major climate-related
frameworks increase the administrative disclosure regimes had incorporated the TCFD
burden and cost of their disclosure efforts and recommendations into their requirements

185
FSB, “FSB Plenary Meets in Frankfurt,” July 6, 2023.
186
FSB, FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report, July 13, 2023.
187
FSB, “FSB to Establish Task Force on Climate-related Financial Disclosures,” December 4, 2015.
188
FSB, “Proposal for a Disclosure Task Force on Climate-Related Risks,” November 9, 2015.
189
TCFD, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 29, 2017.

109
 The Task Force on Climate-related Financial Disclosures

and guidance.190 In addition, as described of Securities Commissions endorsed the ISSB

elsewhere in this report and previous reports, standards and called on its 130 member
several governments, regulators, and standard jurisdictions “to consider ways in which they
setters have incorporated or drawn from might adopt, apply or otherwise be informed
the TCFD recommendations in developing by the ISSB standards within the context of
climate-related reporting requirements and their jurisdictional arrangements, in a way
standards, including the U.S. Securities and that promotes consistent and comparable
Exchange Commission, the U.K. Parliament, climate-related and other sustainability-related
the European Commission, and the ISSB.191,192 disclosures for investors.”193
Furthermore, the International Organization

Box F1
TCFD Major Milestones 2016–2023
2016
March 2016: Consultation on Phase I Report
Task Force on Climate-Related Financial Disclosures—Phase I Report

Public Consultation Sought feedback on the scope and objectives of the Task Force’s work to
Phase 1 Report develop recommendations on climate-related financial disclosures.
A. 1

State of Climate-Related Public Consultation December 2016: Consultation on TCFD Recommendations

Financial Disclosures TCFD Recommendations Sought feedback on the draft TCFD recommendations and engaged with users, preparers,
and other stakeholders in relevant industries and sectors around the world.
2017 100+ TCFD Supporters
B. 2016–2017: Engagement with Over 2,700 Individuals in 43 Countries
Final TCFD Recommendations 128 Industry Interviews and 5 10 Webinars and 793
Financial Statement
Focus Groups in 20 countries Attendees in 30 countries
Considerations TCFD Recommendations
Supported by 100+ CEOs 523 Responses on Public Outreach Events in
Consultations from 34 countries 13 countries
390 Investors Called on G20
C. Leaders to Support TCFD
DRAFT – FOR DISCUSSION PURPOSES ONLY

Case Studies on Scope 3 June 2017: Final TCFD Recommendations Final Report

Recommendations
Recommendations of
the Task Force

Published its final recommendations on climate-related financial disclosures along

on Climate-related

GHG Emissions
Financial Disclosures

with implementation guidance and a technical supplement on scenario analysis.

2018 ~500 TCFD Supporters Recommendations of the Task Force on Climate-related Financial Disclosures
June 2017

2017–2018: Conferences and Workshops Held to Drive Adoption

D. TCFD Knowledge Hub
Held two scenario analysis conferences Hosted three implementation workshops in
TCFD-Aligned Requirements WBCSD TCFD Preparer in Europe and North America. Europe and Asia Pacific.
and Related Initiatives Forum Report
May 2018: TCFD Knowledge Hub
First TCFD Status Report
Launched the TCFD Knowledge Hub to help companies implement the
E. CDP, CDSB, and PRI Aligned TCFD recommendations.
Types of Financial Impact with TCFD DRAFT – FOR DISCUSSION PURPOSES ONLY

September 2018: The Task Force’s First Status Report

2018 Status Report
DRAFT

and Associated Drivers

Task Force on
Climate-related

2019 ~800 TCFD Supporters

Financial Disclosures:

Included an overview of TCFD-aligned disclosure practices disclosure examples

Status Report

user case studies describing how TCFD-aligned information is used. September 2018

F. Japan TCFD Consortium

The Task Force on Climate-related Financial Disclosures i

2018–2019: TCFD Implementation and Use Survey

Insights Gained and View Second TCFD Status Report
Surveyed preparers on implementing the TCFD recommendations and related challenges
on Future Work European Commission and users on the usefulness, availability, and quality of TCFD-aligned disclosures.
Guidelines in Line with TCFD
Recommendations June 2019: 2019 Status Report
Appendices
2019 Status Report

Task Force on

Included an overview of TCFD-aligned disclosure practices disclosure examples

Climate-related

WBCSD TCFD Preparer Forum Reports

Financial Disclosures:
Status Report

user case studies survey results insights on disclosing strategy resilience.

June 2019

2020 1,500+ TCFD Supporters

The Task Force on Climate-related Financial Disclosures i

March 2020: User Survey on Decision-Useful Information

Surveyed expert users on most useful climate-related information for financial decision-
WBCSD TCFD Preparer Forum Report
making. Expert users rated 60+ disclosure elements drawn from the TCFD framework.
Risk Management Guidance

Legend: TCFD Reports and Other Resources Support from Prepares, Users, and Official Bodies External Engagement

190
See Principles for Responsible Investment, “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework,” December 18, 2017;
Climate Disclosure Standards Board (now part of the IFRS Foundation), Framework for Reporting Environmental and Social Information, January
2022; CDP, “How CDP is aligned to the TCFD,” Accessed June 21, 2023; and Sustainability Accounting Standards Board (now part of the IFRS
Foundation), TCFD Implementation Guide, May 1, 2019.
191
See Section D. TCFD-Aligned Requirements and Related Initiatives for additional information.
192
U.S. Securities and Exchange Commission, “Press Release: SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures
for Investors,” March 21, 2022; U.K. Parliament, “Companies Act 2006 s414(CA),” (as amended), Accessed June 21, 2023; European Parliament
and European Council, Directive 2022/2464 as Regards Corporate Sustainability Reporting, December 14, 2022; IFRS Foundation, “ISSB Issues
Inaugural Global Sustainability Disclosure Standards,” June 26, 2023.
193
International Organization of Securities Commissions, “IOSCO Endorses the ISSB’s Sustainability-Related Financial Disclosures Standards,”
July 25, 2023.

110
 The Task Force on Climate-related Financial Disclosures

Box F1
TCFD Major Milestones 2016–2023 (continued)
October 2020: Guidance on Risk Management and Scenario Analysis
Task Force on

Scenario Analysis Guidance

Climate-related
Financial Disclosures
Guidance on Risk Management
Integration and Disclosure

Task Force on
Climate-related
Financial Disclosures

Issued guidance on 1) integrating climate-related issues into existing risk

Guidance on Scenario Analysis
for Non-Financial Companies

Third TCFD Status Report

management processes and disclosing relevant information and 2) conducting October 2020

Public Consultation: Forward-Looking climate-related scenario analysis for non-financial companies. October 2020

Financial Sector Metrics

October 2020: 2020 Status Report
2021 2,600+ TCFD Supporters Included an overview of TCFD-aligned disclosure practices disclosure examples
Task Force on
Climate-related
Financial Disclosures
2020 Status Report

insights from users on most useful TCFD-aligned information for financial

WBCSD TCFD Preparer Forum Report decision-making case studies by preparers regulatory developments. October 2020

Public Consultation: Metrics, Targets, 2020–2021: Consultations on Metrics, Targets, and Transition Plans
and Transition Plans
Sought feedback on various forward-looking, Sought feedback on proposed
Metrics, Targets, and Transition climate-related metrics for the financial sector guidance on metrics, targets, and
Plans Guidance in October 2020. transition plans in June 2021.

Updated Implementation Guidance October 2021: 2021 Status Report Task Force on
Climate-related

Included an overview of TCFD-aligned disclosure practices disclosure

Financial Disclosures

Fourth TCFD Status Report

2021 Status Report

examples insights on disclosing financial impact of climate-related issues

FSB Report Encouraging Use of the
A. TCFD Framework
regulatory developments. October 2021

State of Climate-Related
ISSB to Develop Standards Based October 2021: Guidance on Metrics, Targets, and Transition Plans
Financial Disclosures
Task Force on
Climate-related
Financial Disclosures
Guidance on Metrics, Targets,

and Updated Implementation Guidance

and Transition Plans

on TCFD
Task Force on
Climate-related
Financial Disclosures
Implementing the Recommendations
of the Task Force on Climate-related
Financial Disclosures

Issued guidance on seven, core cross-industry metrics and transition plans

Mexico TCFD Consortium
and updated implementation guidance to reflect industry developments.
B.
October 2021

October 2021

Financial Statement 2022 3,900+ TCFD Supporters

This document updates and supersedes the 2017 Annex "Implementing
the Recommendations of the Task Force on Climate-related Financial Disclosures"

February 2022: TCFD Workshop Presentation Series

Considerations Released a set of five presentations to support TCFD implementation.
U.S. SEC Proposed Rules
Leveraging TCFD
February and March 2022: Surveys on Reporting Trends and Challenges
C. ISSB Draft Standards Based on TCFD Sought input from asset managers and Sought input from preparers on TCFD
Case Studies on Scope 3 asset owners on reporting of climate- implementation over five-year period
EFRAG Draft Standards in Line related information to clients and and from users on using TCFD-aligned
GHG Emissions with TCFD beneficiaries, respectively. information for decision-making.
Fifth TCFD Status Report
D. October 2022: 2022 Status Report
TCFD-Aligned Requirements 2023 4,850+ TCFD Supporters Included an overview of TCFD-aligned disclosure practices disclosure Task Force on
Climate-related
Financial Disclosures
Overview

examples progress and challenges with TCFD implementation over past

and Related Initiatives five years users’ views of the usefulness of TCFD-aligned disclosures
ISSB Final Standards
regulatory developments. December 2022

First Set of Final EFRAG Standards

E. October 2023: The Task Force’s Last Status Report
Types of Financial Impact Last TCFD Status Report Included an overview of TCFD-aligned disclosure practices disclosure
Task Force on
Climate-related
Financial Disclosures
2023 Status Report

and Associated Drivers examples regulatory developments case studies by preparers

TCFD Disbanded
climate-related issues in financial statements insights gained over the
past eight years areas of continued focus and further work.
October 2023

F.
Insights Gained and View
on Future Work Legend: TCFD Reports and Other Resources Support from Prepares, Users, and Official Bodies External Engagement

Appendices

2. I NSIGHTS GAINED FROM THE TASK and willingness of thousands of companies to

FORCE’S WORK implement the recommendations on a voluntary
basis; the tremendous support from investors
As part of reflecting on its experiences (see and others in asking companies to disclose
Box F1, p. 110) and insights gained over the past information in line with the recommendations;
eight years, the Task Force considered reasons and the FSB’s work to promote use of the TCFD
why its voluntary climate-related financial recommendations by governments, regulators,
disclosure recommendations and overall and standard setters as a basis for climate-
framework were well received by both the related financial disclosure requirements. The
private sector and the public sector, ultimately Task Force believes the insights gained from
serving as the foundation upon which several its work could be useful for similar types of
jurisdictional and international climate-related initiatives. As such, the Task Force summarizes
reporting requirements and standards were the major contributing factors to the success
built. The Task Force attributes the global spread of its recommendations in Table F1 (p. 112) and
of the TCFD recommendations to the support provides further details in the paragraphs below.

111
 The Task Force on Climate-related Financial Disclosures

Table F1
Major Contributing Factors to Success of the TCFD Recommendations

Supported by the FSB, including encouraging financial authorities to promote the TCFD
framework

Focused on decision-useful information structured around companies’ strategy, risk

management, and governance processes

Developed by a global, industry-led group of expert preparers and users to ensure relevance
and balance

Backed by preparers, users, and industry associations from the start, with continuous
involvement and support throughout

Developed as a voluntary framework to allow for gradual development of reporting

A.
approaches based on experience
State of Climate-Related
Financial Disclosures
Supplemented by guidance based on practical experience to facilitate learning, support
implementation, and direct attention to areas identified by preparers as challenging
B.
Financial Statement
Considerations Built on existing frameworks and practices with a strong commitment from the outset to
promote convergence and simplification of reporting

C.
Case Studies on Scope 3 Supported by full time, professional secretariat staff with strong private-sector and public-
sector experience
GHG Emissions

D.
TCFD-Aligned Requirements
and Related Initiatives FSB Support: The FSB created the Task Force FSB Roadmap for Addressing Climate-Related
and asked it to make recommendations on Financial Risks, which laid out a comprehensive
E. consistent climate-related financial disclosures and coordinated plan for addressing climate-
Types of Financial Impact for use by companies in providing information related financial risks. In the report, the
and Associated Drivers to investors and other users for financial FSB welcomed the IFRS Foundation’s “work
decision-making. With the release of the Task to develop a baseline global sustainability
F. Force’s recommendations in 2017 and each reporting standard under robust governance
Insights Gained and View year thereafter, the FSB asked the Task Force and public oversight, built from the TCFD
on Future Work to continue its work — promoting adoption framework and the work of an alliance of
of the TCFD framework; providing further sustainability standard setters.”195 The FSB also
Appendices guidance; supporting educational efforts; recognized that some jurisdictions were already
monitoring climate-related financial disclosure taking domestic steps in a more accelerated
practices in terms of their alignment with the timeframe than the IFRS’s work and indicated
TCFD recommendations; and preparing annual the following:
status reports. In addition, in July 2021, the
FSB published its Report on Promoting Climate-
Related Disclosures, in which it encouraged “[t]he TCFD framework provides a basis for
financial authorities “to use a framework based initiatives that jurisdictions may wish to take,
on the TCFD Recommendations across all based on domestic regulatory frameworks,
sectors (non-financial corporates and financial while work towards a global baseline corporate
institutions) for climate-related financial
reporting standard progresses. This would be
disclosures, in line with jurisdictions’ regulatory
an important step forward on the path towards
and legal requirements.”194
a global baseline standard that is interoperable
Concurrent with its Report on Promoting Climate- with jurisdiction-specific requirements in order
Related Disclosures, the FSB also published the to achieve comparability in disclosures.”

194
FSB, Report on Promoting Climate-Related Disclosures, July 7, 2021.
195
FSB, FSB Roadmap for Addressing Climate-Related Financial Risks, July 7, 2021.

112
 The Task Force on Climate-related Financial Disclosures

The Task Force recognizes that the FSB’s support by companies and other organizations in their
of the Task Force and promotion of the TCFD financial reporting.
recommendations as a foundation for financial
authorities to use in developing climate-related The Task Force conducted extensive outreach
reporting requirements were critical factors to and engagement — through public consultations,
the success of the TCFD recommendations and industry interviews, focus groups, outreach
their incorporation into the ISSB standards, events, and webinars — to support the
which were endorsed by the International development of its recommendations. Such
Organization of Securities Commissions.196 engagement served two primary purposes —
1) to raise the level of awareness and educate
Decision-Useful Information: In developing stakeholders on the Task Force’s work and 2) to
the recommendations, the Task Force focused solicit feedback from stakeholders on the Task
on the types of information needed by Force’s proposed recommended disclosures and
investors, lenders, and insurance underwriters implementation guidance. In total, more than
to appropriately assess and price climate- 2,700 individuals in 43 countries were included in
related risks and opportunities as part of their the Task Force’s outreach and engagement. The
financial decision-making. The Task Force Task Force believes its members’ expertise and
structured its recommendations around four extensive stakeholder engagement were key in
A.
thematic areas that represent core elements of developing a singular, accessible framework for
State of Climate-Related
Financial Disclosures
how companies operate: governance, strategy, climate-related financial disclosure.
risk management, and metrics and targets. In
addition, the Task Force focused specifically Involvement and Support of Preparers,
B. Users, and Others: Another contributing factor
on the impact of climate-related risks and
Financial Statement to the success of the TCFD recommendations
opportunities on a company rather than a
Considerations relates to the support received from individual
company’s impact on the environment, with the
latter being the focus of most of the existing companies, investor groups, and industry
C. groups. When the final TCFD recommendations
climate-related disclosure regimes at the time.
Case Studies on Scope 3 were published in 2017, over 100 CEOs and
GHG Emissions Global Industry Experts: In creating the Task their companies with a combined market
Force, the FSB modeled it on its successful cap of around $3.5 trillion and financial
D. Enhanced Disclosure Task Force (EDTF), which institutions responsible for assets of about
TCFD-Aligned Requirements was an industry-led group established in 2012 $25 trillion publicly committed to support
and Related Initiatives to make recommendations on financial risk the recommendations. In addition, several
disclosures for banks.197 The EDTF comprised investor groups expressed support for the
E. preparers, auditors, and users of banks’ TCFD recommendations over the past several
Types of Financial Impact financial statements. Similarly, in identifying years. One of the first investor-led initiatives
and Associated Drivers TCFD members, the FSB selected preparers and to support the TCFD was a combined group
users of climate-related financial disclosures of 390 investors — coordinated by the Asia
F. from across the G20’s constituency, covering a Investor Group on Climate Change; CDP;
Insights Gained and View broad range of sectors. Ceres; Investor Group on Climate Change;
on Future Work Institutional Investors Group on Climate
Given the Task Force’s remit and expertise Change; and signatories of the Principles
Appendices of its members, it sought to develop a set of for Responsible Investment — that called
recommendations on climate-related financial on G20 leaders and their nations to support
disclosure — for inclusion in mainstream the TCFD recommendations.198 In addition,
financial filings — that could be adopted by Climate Action 100+ engaged the world’s
companies of all sizes across sectors and largest corporate greenhouse gas emitters
jurisdictions. As such, the Task Force engaged to strengthen climate-related disclosures by
with key stakeholders throughout the implementing the TCFD recommendations.
development of its recommendations to ensure
that its work would 1) promote alignment The Task Force also received support from
across existing disclosure regimes; 2) consider several industry associations or groups,
the perspectives of users and the concerns including the World Economic Forum, the World
of preparers of climate-related financial Business Council for Sustainable Development
disclosures; and 3) be efficiently implemented (WBCSD), the Institute of International Finance,

196
T
 he International Organization of Securities Commissions endorsed the ISSB standards and called on its 130 member jurisdictions, regulating
more than 95% of the world’s financial markets, to consider ways in which they might adopt, apply, or otherwise be informed by the ISSB
standards within the context of their jurisdictional arrangements. International Organization of Securities Commissions, “IOSCO Endorses the
ISSB’s Sustainability-Related Financial Disclosures Standards,” July 25, 2023.
197
FSB, “FSB Announces the Formation of the Enhanced Disclosure Task Force,” May 10, 2012.
198
Asia Investor Group on Climate Change, et al., “Letter from Global Investors to Governments of the G20 Nations,” July 3, 2017.

113
 The Task Force on Climate-related Financial Disclosures

as well as others. These groups provided In 2017, it published general and sector-specific
support for the TCFD recommendations in guidance on implementing the recommendations
various ways, such as providing forums in (referred to as the annex) and a technical
which companies learned more about the TCFD supplement on conducting climate-related
recommendations and their implementation scenario analysis to support the development
as well as developing implementation guidance of TCFD-aligned disclosures. In 2020, the Task
for companies in specific sectors. For example, Force published guidance on risk management
the WBCSD established the TCFD Oil and Gas and scenario analysis to clarify certain topics
Preparer Forum in October 2017, with input and address feedback received from companies
from the TCFD Secretariat. The forum brought and other organizations implementing the
together four major oil and gas companies to recommendations. It also released a consultation
show how they were implementing the TCFD paper on forward-looking metrics for the
recommendations and give practical examples financial sector. In 2021, the Task Force published
of effective climate-related disclosure.199 Over guidance on metrics, targets, and transition plans
the past six years, the WBCSD has led several and updated its annex.
other industry-specific TCFD forums, including
ones for the following sectors: electric utilities; In addition, in its annual status reports, the
chemical; automotive; construction and building Task Force addressed various topical issues
A.
materials; and food, agriculture, and forest to further support implementation. For
State of Climate-Related
Financial Disclosures products. It also published a business-relevant example, for its 2020 status report, the Task
approach to climate-related scenario analysis in Force conducted a survey to better understand
line with TCFD’s recommendations. specific types of climate-related information
B.
that investors and others find the most useful
Financial Statement
The Task Force wishes to emphasize that for decision-making — the purpose of which
Considerations
there have been many different groups and was to help preparers develop more effective
organizations — more than 80 — that provided climate-related financial disclosures. In addition,
C.
support related to TCFD implementation since all the status reports include examples of
Case Studies on Scope 3
the recommendations were finalized. The Task companies’ disclosures that align with the
GHG Emissions
Force believes that this support significantly recommendations; and many include case
contributed to the willingness of thousands of studies from companies preparing disclosures
D.
companies to implement the recommendations or organizations using TCFD-aligned disclosures
TCFD-Aligned Requirements
on a voluntary basis. for decision-making. The Task Force believes
and Related Initiatives
its efforts to continually support preparers in
implementing the recommendations helped
E. The Task Force expresses its deep gratitude drive greater adoption of the recommendations
Types of Financial Impact to all the investor groups, industry associations, and better disclosure over time.
and Associated Drivers
and other groups that provided invaluable
support to preparers and users in Convergence and Simplification of Reporting:
F. From the outset, the Task Force sought to
implementing the TCFD recommendations and
Insights Gained and View develop a climate-related financial disclosure
on Future Work using them for financial decision-making.
framework that would simplify reporting for
companies and lead to convergence of climate-
Appendices related disclosure regimes over time. The Task
Voluntary Framework: Importantly, the Force believes its recommendations, which
Task Force developed a voluntary framework provide a singular, accessible framework for
on climate-related financial disclosures, climate-related financial disclosure, helped
which allowed companies to develop and existing disclosure regimes come into closer
refine reporting approaches gradually based alignment over time.
on experience and ongoing feedback from
investors and other users. Professional Secretariat: The Task Force
was chaired by Michael Bloomberg — Chair
Guidance Based on Practical Experience: Given and Founder, Bloomberg LP and Bloomberg
the composition of its members, the Task Force Philanthropies — and supported by full-time,
was keen to provide preparers with guidance professional Secretariat staff with strong
and other insights based on practical experience. private-sector and public-sector experience.
Over the past six years, the Task Force published
guidance on several topics to support preparers
in implementing the TCFD recommendations.

199
WBCSD, Climate-Related Financial Disclosure by Oil and Gas Companies: Implementing the TCFD Recommendations, July 18, 2018.

114
 The Task Force on Climate-related Financial Disclosures

3. A REAS OF CONTINUED FOCUS OR recommendations that are supplemented

FURTHER WORK by implementation guidance and promoted,
monitored, and refined based on learning
The Task Force also reflected on areas that it experiences.
believes warrant continued focus or further
work by the ISSB or other appropriate bodies, Interoperability
as described below and summarized in Table F2. As indicated by the FSB, the ISSB’s publication
Importantly, the Task Force recognizes some of of general sustainability and climate-
the issues highlighted below are part of the ISSB’s related disclosure standards is a substantial
current and planned work over the next two achievement and represents a culmination of
years, including ensuring interoperability of the the Task Force’s work.201 Since the ISSB standards
standards with other sustainability standards; are meant to serve as a global framework for
supporting implementation of the standards; sustainability (and climate-related) disclosures
and researching targeted enhancements to the and support consistent reporting by different
standards.200 As the ISSB and other appropriate companies around the world, the Task Force
bodies continue to drive improvements in believes ensuring interoperability of the ISSB
climate-related financial disclosure and support standards with jurisdictional frameworks is
A. companies’ efforts to make such disclosures, the critical. In particular, the Task Force emphasizes
State of Climate-Related Task Force believes it is especially important to the importance of consistent company reporting
Financial Disclosures recognize the dynamic nature of climate-related across jurisdictions and avoiding the need for
(as well as broader sustainability) issues and the companies to report through multiple venues.
B. need for ongoing assessment and adjustment, as
Financial Statement appropriate, as practices continue to evolve. In Implementation Guidance
Considerations addition, the Task Force strongly encourages the As noted previously, the Task Force believes
ISSB and other appropriate bodies to consider its efforts to continually support preparers
C. the insights gained by the Task Force over the in implementing the recommendations —
Case Studies on Scope 3 past eight years as they further develop other through the development of guidance, case
GHG Emissions areas of sustainability reporting. In particular, studies, examples of disclosure, and so
the Task Force believes an effective model forth — helped drive greater adoption of the
D. for such work is to create a group of expert recommendations and better disclosure over
TCFD-Aligned Requirements practitioners — representing preparers, users, time. As such, the Task Force encourages the
and Related Initiatives and other stakeholders — supported by a strong ISSB and other appropriate bodies to continue
Secretariat to develop voluntary disclosure this type of work.
E.
Types of Financial Impact
and Associated Drivers
Table F2
F. Areas Warranting Continued Focus or Further Work
Insights Gained and View
on Future Work Ensuring interoperability of the ISSB standards with jurisdictional frameworks to support
consistent company reporting across jurisdictions and avoid the need for companies to report
Appendices through multiple venues.

Developing implementation guidance on topics such as climate-related physical risk assessment

and adaptation planning, climate-related scenario analysis at a sector or industry level, and Scope
3 GHG emissions measurement at a sector or industry level.

Continuing to focus on companies’ disclosure of the resilience of their strategies under

different climate-related scenarios, including a climate-related scenario aligned with the latest
international agreement on climate change.

Continuing to focus on decision-useful disclosure on other sustainability topics — such as

biodiversity, water, and social issues — and consider the linkages between climate-related and
other sustainability issues (for example, in the context of companies’ transition plans).

Developing a consistent climate-related financial disclosure framework for use by countries

and other sovereign entities. Consistent and comparable reporting by sovereigns would support
companies in preparing comprehensive TCFD-aligned disclosures and transition plans that
appropriately reflect their operating environment.

200
ISSB, Consultation on Agenda Priorities, May 4, 2023.
201
FSB, FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report, July 13, 2023.

115
 The Task Force on Climate-related Financial Disclosures

Some of the areas where the Task Force Disclosing Resilience of Strategy under
sees the need for additional guidance are Different Climate-Related Scenarios
described below.
In its 2017 report, the Task Force indicated that
• P
 hysical Risk Assessment and Adaptation one of its key recommended disclosures is on
Planning: Over the years, the Task Force the resilience of a company’s strategy under
has received feedback that companies are different climate-related scenarios, including
interested in guidance on climate-related a 2°C or lower scenario (i.e., a scenario aligned
physical risks, including on developing with the latest international agreement on
adaptation plans. The Task Force encourages climate change). 205 The Task Force emphasized
the appropriate bodies to further explore and that a company’s disclosure of how its strategy
develop the type(s) of guidance needed by might change to address potential climate-
the industry. related risks and opportunities is a key step to
better understanding the potential implications
• C
 limate-Related Scenario Analysis: of climate change on the company. The Task
Another area warranting further guidance Force continues to believe companies should
relates to companies performing climate- disclose the resilience of their strategies under
related scenario analysis; assessing the different climate-related scenarios, including a
A. resilience of their strategies under different scenario aligned with the latest international
State of Climate-Related climate-related scenarios; and disclosing agreement on climate change. Investors and
Financial Disclosures others use such information to inform their
any resulting material information. The Task
Force published guidance on scenario analysis expectations about the future performance of
B. in June 2017 and October 2020 to support companies.
Financial Statement preparers in using climate-related scenario
Considerations analysis for purposes of disclosing in line with Decision-Useful Disclosure on Other
its recommendations. 202 However, the Task Sustainability Topics
C. Force believes further guidance — such as The Task Force recognizes there are several
Case Studies on Scope 3 guidance on climate-related scenario analysis other sustainability-related issues — such as
GHG Emissions at a sector or industry level — would help biodiversity, water, and social issues — that may
preparers in disclosing the resilience of their warrant further consideration by the appropriate
D. companies’ strategies. A recent example of bodies in terms of promoting decision-useful
TCFD-Aligned Requirements such guidance is the WBCSD’s Climate Scenario disclosure.206 Further, these issues may have
and Related Initiatives Analysis Reference Approach for companies in linkages with climate-related issues that are
the energy system. 203 important for investors and others to consider,
E. for example, in the context of companies’
Types of Financial Impact • S
 cope 3 GHG Emissions: The Task Force is
transition plans. The Task Force is encouraged
and Associated Drivers aware that many companies find calculating
by current work underway — such as that
and disclosing Scope 3 GHG emissions
by the Taskforce on Nature-related Financial
F. difficult. The development of sector-specific
Disclosures to develop a risk management
Insights Gained and View guidance on calculating such emissions may
and disclosure framework on nature-related
on Future Work be useful in improving the consistency of
risks and the Science Based Targets Network
companies’ disclosures. One example of
to develop corporate science-based targets for
Appendices such guidance relates to the Partnership for
nature — and recognizes that such areas warrant
Carbon Accounting Financials’ standard for
continued attention in the future.207
the financial sector that provides detailed
methodological guidance on measuring and Climate-Related Disclosure by Sovereigns
disclosing financed and insurance-associated
GHG emissions. 204 The Task Force encourages While the Task Force believes more companies
the appropriate bodies to consider developing should be disclosing decision-useful climate-
other sector-specific guidance on measuring related financial information, it also recognizes
Scope 3 GHG emissions. significant progress has been made over the

202
 CFD, Technical Supplement – The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities, June 29, 2017 and TCFD,
T
Guidance on Scenario Analysis for Non-Financial Companies, October 29, 2020.
203
WBCSD, Climate Scenario Analysis Reference Approach, February 1, 2023.
204
Partnership for Carbon Accounting Financials (PCAF), The Global GHG Accounting and Reporting Standard Part A: Financed Emissions (Second
Edition), December 19, 2022 and PCAF, The Global GHG Accounting and Reporting Standard Part C: Insurance-Associated Emissions, November
16, 2022.
205
The Task Force used the phrase “a 2°C or lower scenario” in its report based on the Paris Agreement and views the phrase “a scenario aligned
with the latest international agreement on climate change” as consistent with its intent in using “a 2°C or lower scenario.”
206
The Organization for Economic Cooperation and Development, Biodiversity: Finance and the Economic and Business Case for Action, December 6,
2019.
207
Taskforce on Nature-related Financial Disclosures, “About the Taskforce on Nature-related Financial Disclosures,” Accessed July 24, 2023 and
Science Based Targets Network, “Our Mission, Science Based Targets Network,” Accessed July 24, 2023.
116
 The Task Force on Climate-related Financial Disclosures

past several years. For example, the percentage disclosures and transition plans. Investors and
of companies disclosing information in line other users are also increasingly interested
with the Task Force’s recommendations has in understanding sovereigns’ exposure to
steadily increased each year as has the amount climate-related risks and actions they are taking
of TCFD-aligned information companies disclose to address these risks given that sovereign
(see Box A1, p. 4). Furthermore, based on a debt represents half of the $129 trillion global
survey conducted last year, the vast majority of bond market (see Figure F1). 209,210 In addition,
respondents that use climate-related financial sovereign debt plays a central role as a
disclosures for decision-making or other reference rate for the pricing of other financial
purposes saw an increase in the availability instruments — which is important to both
and quality of such disclosures since 2017. The preparers and users.
Task Force expects further progress will be
made given the ISSB’s finalization of its climate- Figure F1
related disclosure standards — which are based
on the TCFD recommendations — and various
Global Bond Market,
jurisdictions’ efforts to require such disclosures. December 2022
In light of this, the Task Force believes an Supranationals and Regional
and Local Governments and Governmental Banks
A. important next step is the development of a Agencies 4%
State of Climate-Related consistent climate-related financial disclosure 11%
Financial Disclosures framework for use by countries and other
sovereign entities — consistent with the
B. TCFD recommendations and ISSB standards,
Financial Statement as appropriate — and is encouraged by
the International Public Sector Accounting Sovereigns
Considerations 52%
Standards Body's (IPSASB's) plans to develop Corporate
a climate-related disclosure standard for the 33%
C.
Case Studies on Scope 3 public sector. 208
GHG Emissions
Need for Sovereigns’ Disclosure of Climate- Source: Bloomberg Finance L.P.
Related Information
D.
TCFD-Aligned Requirements Both preparers and users have an interest in
countries and other sovereign entities’ (referred In early 2022, the World Bank published
and Related Initiatives
to as sovereigns) disclosure of climate-related a report calling for the development of a
information. For preparers, understanding reporting framework or guidance tailored
E. to sovereigns for reporting on climate and
Types of Financial Impact the latest international agreement on climate
change and the associated commitments in the nature issues. 211 In the report, the World
and Associated Drivers
jurisdictions in which they operate is critical Bank indicated “[s]overeign reporting would
in conducting scenario analysis to assess the help meet the needs of investors who are
F. increasingly requesting such disclosures for
Insights Gained and View resilience of their companies’ strategies and
developing transition plans. Furthermore, all asset classes in their portfolios so that they
on Future Work
understanding jurisdictions’ actions as they can measure portfolio alignment with the Paris
relate to climate-related commitments and Agreement.” 212 The World Bank encouraged the
Appendices IPSASB to lead such an effort.
their climate-related risks is important for
companies in preparing comprehensive TCFD-
IPSASB Climate-Related Disclosure Standard
aligned disclosures and transition plans. For
example, information on a jurisdiction’s GHG In May 2022, the IPSASB issued a consultation
emissions reduction targets and plans to reach paper seeking feedback on developing public
those targets provides important context sector sustainability reporting guidance —
for companies in setting their own climate- which it proposed to align with the ISSB’s work
related targets. Likewise, such information and the TCFD recommendations. 213 On June
is useful to investors and other users when 14, 2023, the IPSASB announced its decision to
evaluating companies’ climate-related financial develop a climate-related disclosure standard

208
IPSASB, “IPSASB Begins Development of Climate-Related Disclosures Standard for the Public Sector,” June 14, 2023.
209
For example, the ASCOR (Assessing Sovereign Climate-related Opportunities and Risks) project is focused on developing a tool to help investors
assess sovereign exposure to climate-related risk. ASCOR is comprised of investor networks, asset owners, and asset managers.
210
As of December 2022, sovereign debt was 52% of the total global bond market (source: Bloomberg Professional Service).
211
World Bank, Sovereign Climate and Nature Reporting: Proposal for a Risks and Opportunities Disclosure Framework, January 31, 2022.
212
Ibid, p. vii.
213
IPSASB, Consultation Paper: Advancing Public Sector Sustainability Reporting, May 9, 2022.

117
 The Task Force on Climate-related Financial Disclosures

for the public sector. 214 The IPSASB indicated for both preparers and users of climate-
that there was “strong global stakeholder related financial disclosures. Consistent and
support for the proposals in its consultation comparable reporting by sovereigns would
paper,” with significant support for developing support companies in preparing comprehensive
guidance on climate-related disclosures first. TCFD-aligned disclosures and transition plans
The Task Force is encouraged by the IPSASB’s that appropriately reflect their operating
efforts to date and believes development of a environment. Such reporting would also
consistent climate-related financial disclosure improve investors’ ability to appropriately
framework for sovereigns — consistent assess and price their climate-related risks and
with the TCFD recommendations and ISSB effectively allocate capital.
standards, as appropriate — is important

A.
State of Climate-Related
Financial Disclosures

B.
Financial Statement
Considerations

C.
Case Studies on Scope 3
GHG Emissions

D.
TCFD-Aligned Requirements
and Related Initiatives

E.
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View
on Future Work

Appendices

214
IPSASB, “IPSASB Begins Development of Climate-Related Disclosures Standard for the Public Sector,” June 14, 2023.

118
Appendices
 The Task Force on Climate-related Financial Disclosures

Appendix 1: Task Force Members

CHAIRMAN AND VICE CHAIRS
Michael Bloomberg
Chair
Founder
Bloomberg LP and Bloomberg Philanthropies

Denise Pavarina Graeme Pitkethly

Vice Chair Vice Chair
Board Member Chief Financial Officer
Banco Bradesco S.A. Unilever

Yeo Lian Sim

Vice Chair
Special Advisor, Diversity
A. Singapore Exchange
State of Climate-Related
Financial Disclosures
MEMBERS
B. Jane Ambachtsheer David Blood
Financial Statement Global Head of Sustainability Senior Partner
Considerations BNP Paribas Asset Management Generation Investment Management

Richard Cantor Koushik Chatterjee

C.
Case Studies on Scope 3 Vice Chair Group Executive Director, Finance and Corporate
GHG Emissions Moody’s Investors Service Tata Steel Limited

Rosanna Fusco Alan X. Gómez Hernández

D. Co-founder
Head of Climate Change Strategy and Positioning
TCFD-Aligned Requirements Mexico TCFD Consortium
Eni
and Related Initiatives
Imre Guba Thomas Kusterer
E. Director and Corporate Reporting Specialist Chief Financial Officer
Types of Financial Impact S&P Global Ratings EnBW Energie Baden-Wurttemberg AG
and Associated Drivers
Geraldine Leegwater Mark Lewis
F. Chief Investment Management and Head of Climate Research
Insights Gained and View Member of the Executive Committee Andurand Capital Management
on Future Work PGGM

Ruixia Liu Richard Manley

Appendices Managing Director, Head of Sustainable
Chief Expert of Task Force of Climate
Risk Management Investing Global Leadership Team
Industrial and Commercial Bank of China CPP Investments

Masaaki Nagamura Mathew Nelson

Fellow, International Initiatives Partner, Oceania Chief Sustainability Officer
Tokio Marine Holdings, Inc. EY

Catherine Saire Ashley Schulten

Partner, Sustainability Services Head of ESG Investment, Global Fixed Income
Deloitte BlackRock

120
 The Task Force on Climate-related Financial Disclosures

Martin Skancke Roslyn Stein

Chair, Risk Committee Group Head of Climate and Biodiversity
Storebrand AXA
(Until August 2023)

Lucy Thomas Sylvain Vanston

Head of Sustainable Investing and Impact Executive Director, Climate Investment Research
UBS Asset Management MSCI

Steve Waygood Simon Weaver

Chief Responsible Investment Officer Partner, Co-Head of Climate Risk and Strategy
Aviva Investors KPMG

Martin Weymann Fiona Wild

Head Group Sustainability Group Climate and Sustainability Officer
Swiss Re BHP

Jon Williams
A. Partner, Sustainability and Climate Change
State of Climate-Related
PwC
Financial Disclosures
(Until June 2023)

B.
Financial Statement SPECIAL ADVISOR
Considerations Russell Picot
Chair, Trustee Board
C. HSBC Bank (U.K.) Pension Scheme
Case Studies on Scope 3 Former Group Chief Accounting Officer, HSBC
GHG Emissions
Deputy Chair, Chair of Investment Committee
D. Universities Superannuation Scheme Limited
TCFD-Aligned Requirements
and Related Initiatives SECRETARIAT
Mary Schapiro Mara Childress
E.
Vice Chair for Global Public Policy and Director, Global Public Policy
Types of Financial Impact
Special Advisor to the Founder and Chair Bloomberg LP
and Associated Drivers
Bloomberg LP
Stacy Coleman
F. TCFD Secretariat
Insights Gained and View
on Future Work Curtis Ravenel
TCFD Secretariat
Appendices
FINANCIAL STABILITY
BOARD OBSERVERS
Rupert Thorne Jürgen Kirchhof
Deputy to the Secretary General Secretariat Member

This report was developed with the support of Bloomberg LP’s Tom Coleman and Boston Consulting
Group’s Roy Choudhury, Veronica Chau, Lorenzo Fantini, Jesper Nielsen, Arjun Nath, Mahmoud
Raya, Giovanni Covazzi, Alexander Puutio, Sofia Wiklund, Maria Vittoria Maranzano, Roni Grader,
Kristin John, Em Cruz, and Kieran Anderson.

121
 The Task Force on Climate-related Financial Disclosures

Appendix 2: Company Selection and AI

Review Methodology
As described in Section A.1. TCFD-Aligned published annual reports separate from their
Reporting by Public Companies and Section A.2. parent company.
TCFD-Aligned Reporting by Public Companies by
Region, the Task Force used artificial intelligence • Removed smaller companies from the
(AI) technology to review the alignment of population to maintain focus on larger
information included in companies’ public companies. We retained banks and insurance
reports with the TCFD recommendations. This companies with total assets of at least
appendix describes the Task Force’s process for $10 billion and $1 billion, respectively, and
selecting the companies included in the reviews, companies in the six non-financial industries
the types of documents reviewed, and the AI with annual revenue of $1 billion or more. This
review methodology. resulted in 4,446 total companies; and the
break-down by industry and sub-industry is
Companies Included in the AI Reviews shown in Figure A2-1 (p. 123).
A.
State of Climate-Related The AI technology was used to review financial
• Removed companies that did not have reports
Financial Disclosures filings, annual reports, integrated reports,
available in English.
sustainability reports, and other relevant
B. reports of public companies from five regions • Removed companies that did not have annual
Financial Statement in eight industries. 215 Six of the eight industries reports available for review for fiscal years
Considerations align with groups highlighted in the Task Force’s 2017, 2018, and 2019. This was done to ensure
2017 report — Banking; Insurance; Energy; a consistent population of companies and
C. Materials and Buildings; Transportation; and comparable reporting across all three years.
Case Studies on Scope 3 Agriculture, Food, and Forest Products. To
GHG Emissions incorporate other types of companies that • This methodology resulted in a final review
may be exposed to climate-related risks, two population of 1,701 companies.
D. additional industries — Technology and Media
and Consumer Goods — were also included. To identify the final review population for the
TCFD-Aligned Requirements
past three status reports — including this one,
and Related Initiatives
For the AI review population used in Section A.1. the Task Force began with the list of companies
TCFD-Aligned Reporting by Public Companies, included in the final review population for the
E.
the Task Force sought to maintain as much previous year’s status report and removed
Types of Financial Impact
consistency with the final review population companies that no longer existed or did not
and Associated Drivers
used in the 2020 status report as possible. For have annual reports available for the three
the 2020 status report, the Task Force selected relevant fiscal years. For this status report,
F.
companies using the following methodology: the Task Force began with an initial review
Insights Gained and View
population of 1,434 companies, which was
on Future Work • I dentified a set of public companies — the final review population used in the 2022
companies with public debt or equity — in status report. Of the 1,434 companies, 69 were
Appendices the eight selected industries using the 29 removed based on the criteria mentioned
subindustries listed in Figure A2-1 (p. 123). above, leading to a final review population of
The 29 sub-industries are adapted from 1,365 for this report. 216
the Global Industry Classification Standard
subsectors and industries. For this year’s report, the Task Force also used
the AI technology to review fiscal year 2022
• R
 emoved subsidiaries to avoid double reports for a larger and more geographically
counting of companies. Identified companies diverse set of public companies (around 3,100)
that shared the same industry and ultimate to provide AI review results for each of the
parent for capital structure purposes and eight industries by region (Asia Pacific, Europe,
retained the company with the largest annual Latin America, Middle East and Africa, and
revenue (for non-financial industries) or the North America). The Task Force used the same
largest total assets (for financial industries). AI technology and followed the same general
This approach was followed to avoid, as much approach described above. The one difference
as possible, including companies that related to the scope of public companies
included in the review.

215
Other relevant reports include those specifically focused on climate change or the TCFD recommendations.
216
In the interest of maintaining a consistent sample of companies, the Task Force did not remove companies from the review population if their
total assets or annual revenue fell below the relevant size threshold after the 2020 selection process.
122
 The Task Force on Climate-related Financial Disclosures

Figure A2-1
Industry and Sub-Industry of Companies Selected for Review in 2020

Industries Sub-Industries

Banking Regional Banks Investment and Asset

608 Companies Large, Diversified Banks Management Firms

Insurance Multi-line Insurance Life and Health Insurance

246 Companies Property and Casualty Insurance Reinsurance

Energy Oil and Gas Utilities

483 Companies Coal

Transportation Air Freight Rail Transportation

A. 456 Companies Passenger Air Transportation Trucking Services
State of Climate-Related Maritime Transportation Automobiles
Financial Disclosures
Materials and Buildings Chemicals Metals and Mining
B. 1,580 Companies Construction Materials Real Estate Management
Financial Statement Capital Goods and Development
Considerations
Agriculture, Food, & Forest Beverages Packaged Foods and Meats
C. 325 Companies Agriculture Paper and Forest Products
Case Studies on Scope 3
GHG Emissions
Technology and Media Technology Hardware Interactive Media
292 Companies and Equipment and Services
D.
TCFD-Aligned Requirements
Consumer Goods Consumer Retailing Textiles and Apparel
and Related Initiatives
456 Companies

E.
Types of Financial Impact Total: 4,446 Companies
and Associated Drivers

F. The Task Force began with the 1,365 companies To determine the number of companies needed
Insights Gained and View used in the review of the past three fiscal years to achieve statistically significant results in
on Future Work of reporting, which was originally identified a given region, the Task Force began with a
using specific size thresholds so that only the confidence level of 95% and then lowered it
Appendices largest companies were included. To achieve for regions where many companies reported
statistically significant AI review results at an in languages other than English.217 The lowest
industry level for each region, the Task Force confidence level used was 80%, and, for some
supplemented the AI review population with industries in Latin America, there were still not
an additional 1,748 companies, which required enough companies with reports in English to
including companies of all sizes. In addition, provide AI review results that were statistically
because the AI technology cannot process significant at this level. 218
reports in languages other than English, the
number of companies that could be included
in the reviews for Asia Pacific, Europe, Latin
America, and the Middle East and Africa was
smaller than it otherwise would be.

217
T
 he confidence level for Asia Pacific and Europe was 90%, 85% for the Middle East and Africa, 80% for Latin America, and 95% for
North America.
218
A
 nalysis was not feasible due to there not being enough companies with reports in English for Consumer Goods and Technology
and Media in Latin America.

123
 The Task Force on Climate-related Financial Disclosures

Documents Reviewed language models that can represent whole

sentences and paragraphs mathematically and
The Task Force focused on companies’ capture meaning in context. 219
fiscal year 2020, 2021, and 2022 financial
filings, annual reports, integrated reports, Training the AI Model
sustainability reports, and other relevant
The AI technology employed a language
reports. These documents were identified using
model that was trained to identify TCFD-
the Bloomberg Terminal.
aligned information. The model was based
• F
 inancial Filings (including 10-Ks, 20-Fs, on a deep learning-based natural language
annual report and accounts, and registration processing model trained on a large database
documents): Reports that describe of text — namely, Robustly Optimized
companies’ audited financial results under Bidirectional Encoder Representations from
the corporate, compliance, or securities Transformers Pretraining Approach (RoBERTa).
laws of the jurisdictions in which they RoBERTa encodes text into a mathematical
operate. While reporting requirements differ representation based on its context. For
internationally, financial filings generally instance, while other approaches might have
contain financial statements and other encoded the word “cement” in the two phrases
A. information such as governance statements “GHG emissions per ton cement” and “cement
State of Climate-Related and management commentary. our approach” in the same way, RoBERTa
Financial Disclosures takes the context into account and provides a
• A
 nnual or Integrated Reports: Reports different representation for “cement” in the
B. that describe companies’ activities for the two phrases. This allows RoBERTa models (and
Financial Statement preceding year (annual reports) or the other similar architectures) to consider the
Considerations broader range of measures that contribute to contextual meaning of words while making
companies’ long-term value and the role they classification decisions.
C. play in society (integrated reports).
Case Studies on Scope 3 A language model built on the RoBERTa
GHG Emissions • S
 ustainability Reports (including Corporate architecture was trained jointly with a
Social Responsibility and Environmental, proprietary dataset of climate-related text
Social, and Governance reports): Reports and passages of text or excerpts identified as
D.
TCFD-Aligned Requirements that describe companies’ impact on the aligning with the Task Force’s 11 recommended
and Related Initiatives environment and society as well as their disclosures — referred to as labeled data. To
corporate governance. create the labeled data, a panel of subject matter
experts developed a “definition” for each of
E.
• O
 ther Relevant Reports: Reports that the 11 recommended disclosures and trained
Types of Financial Impact
describe how climate change may affect “annotators” to classify text passages according
and Associated Drivers
companies’ businesses, strategies, or financial to these definitions. Once the annotators’
planning, including those focused on the performance on identifying TCFD-aligned
F.
TCFD recommendations. information was deemed satisfactory, they
Insights Gained and View
reviewed a large sample of text passages and
on Future Work AI-Based Review Methodology labelled them. The annotators’ labelling was
The AI technology used to review companies’ continuously checked by subject matter experts.
Appendices
publicly available reports for this report was
different from the AI technology used in the Review of Company Reports
Task Force’s previous status reports. The As part of the review process, text passages
goal of the AI review was to automatically were first extracted from the documents
identify information in financial filings and available for review using a separate AI model
other company reports that aligned with one that incorporated computer vision techniques,
or more of the 11 recommended disclosures which enables identification of paragraphs and
(referred to as TCFD-aligned information). One allows certain types of information — such as
of the challenges in designing an automated that included in tables — to be evaluated as
AI technology to review company reports text. Millions of text passages and tables were
for TCFD-aligned information is that the identified across the available documents. Given
language and semantics used to describe a the large number of text passages, a “prefilter”
particular recommended disclosure could differ was used to identify text passages and tables
across countries, sectors, and even between containing specific keywords and phrases
companies in the same sector. To help address that could indicate the potential presence of
these challenges, the AI technology used

219
Liu et al., RoBERTa: A Robustly Optimized BERT Pretraining Approach, July 26, 2019.

124
 The Task Force on Climate-related Financial Disclosures

TCFD-aligned information.220 The text passages

identified by the prefilter were input into Figure A2-2
the trained language model, which assessed Paragraph-Level Model
alignment with the 11 recommended disclosures. Performance
Recommended F1 Score
Performance Validation
Disclosure Model Human1
The performance of the AI technology was
Governance a) 0.85 0.88
assessed by comparing model predictions
with the human-annotated labels on a set of Governance b) 0.86 0.88
text passages. The set of text passages that Strategy a) 0.65 0.78
was used to evaluate performance was only
run once through the model to ensure that Strategy b) 0.38 0.53
the model prediction was unbiased. If the Strategy c) 0.69 0.74
model’s determination of whether a passage
Risk Management a) 0.66 0.53
sufficiently captured a particular recommended
disclosure matched the label, it was marked as Risk Management b) 0.53 0.46
correctly classified. Risk Management c) 0.80 0.87
A.
State of Climate-Related Two important measures of model performance Metrics and Targets a) 0.85 0.91
Financial Disclosures are recall and precision. Recall is the proportion Metrics and Targets b) 0.88 0.94
of true positives captured by a model, while
precision is the proportion of positive model Metrics and Targets c) 0.90 0.91
B.
Financial Statement predictions that are true positives. The F1 score 1. Human F1 scores serve as reference points to the corresponding
model F1 scores and represent the performance of annotators’
Considerations is the harmonic mean of precision and recall
assessments in comparison to subject matter experts’
and hence an indicator of the performance assessments.

C.
of a model. 221 The F1 score is commonly used
Case Studies on Scope 3 in machine learning applications to evaluate
GHG Emissions performance. The model F1 scores and maintain a balance between precision and recall,
the human reviewers’ F1 scores for the 11 the model was tuned to require high recall, which
recommended disclosures are shown lowered the F1 score for Strategy a) to 0.58.
D.
TCFD-Aligned Requirements
in Figure A2-2.
Outcome
and Related Initiatives
There is often a tradeoff between precision
and recall — tuning the model to be stricter on The AI technology was applied to the excerpts
E. classifying a passage as a relevant disclosure from the reports of the reviewed companies.
Types of Financial Impact can increase precision at the expense of recall. If a company had a text paragraph in any
and Associated Drivers of its reports for a given fiscal year that
The model was tuned such that precision
matched recall and hence was not biased. One was classified as aligning with one of the 11
F. exception was on Strategy a) where the prefilter recommended disclosures, the company was
Insights Gained and View was found — based on a sample of qualitative classified as reporting in line with that specific
on Future Work “manual” reviews — to not identify certain recommended disclosure for that year. The
types of disclosures. In order to reduce bias and results were aggregated for analysis.
Appendices

220
F or instance, “Board of Directors also oversees climate-related issues” was one such phrase used to identify a potential disclosure of
Governance a). Many phrases were included to ensure all relevant content was detected. The prefilter was designed with support from the
subject matter experts.
221
T he harmonic mean is the reciprocal of the arithmetic mean of the reciprocals of the values.

125
 The Task Force on Climate-related Financial Disclosures

Appendix 3: AI Review Results by Industry

As summarized in Section A.1. TCFD-Aligned Banking
Reporting by Public Companies, the Task
The AI technology reviewed reports from 235
Force developed an approach using artificial
banks in three sub-industries: investment and
intelligence (AI) technology to review the
asset management firms, large and diversified
alignment of information included in public
banks, and regional banks. The 235 banks
companies’ fiscal years 2020, 2021, and 2022
ranged in size from about $4 billion to $5 trillion
reports with the Task Force’s 11 recommended
in assets, with a mean asset size of nearly $337
disclosures. This appendix provides the AI
billion in assets. The AI review results for banks
review results for companies in each of the
are shown in Figure A3-1. The largest increase
eight industries covered as follows: Banking;
in disclosure between 2020 and 2022 for the
Insurance; Energy; Materials and Buildings;
banking industry was 35 percentage points for
Transportation; Agriculture, Food, and Forest
Strategy a).
Products; Technology and Media; and
Consumer Goods.
A.
State of Climate-Related
Financial Disclosures Figure A3-1
Banking Review Results
B.
Financial Statement Pt. Change
Considerations Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
Governance a) Board Oversight 22 35%
C. 51%
57%
Case Studies on Scope 3
b) Management’s Role 18 22%
GHG Emissions
34%
40%
D. Strategy a) Risks and Opportunities 35 34%
TCFD-Aligned Requirements 58%
and Related Initiatives 69%
b) Impact on Organization 13 22%
27%
E. 35%
Types of Financial Impact 2%
c) Resilience of Strategy 7
and Associated Drivers 7%
9%
Risk Management a) Risk ID and Assessment 24 16%
F.
29%
Insights Gained and View Processes
40%
on Future Work 20%
b) Risk Management Processes 26
37%
Appendices 46%
c) Integration into Overall Risk 21 17%
28%
Management
38%
Metrics and a) Climate-Related Metrics 16 45%
54%
Targets
61%
b) Scope 1,2,3 GHG Emissions 18 40%
49%
58%
c) Climate-Related Targets 19 28%
41%
47%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 235

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 The Task Force on Climate-related Financial Disclosures

Insurance of around $129 billion in assets. The AI review

results for these companies are shown in Figure
The AI technology reviewed reports from
A3-2. In 2022, insurance companies most often
117 insurance companies in four categories:
disclosed information aligned with Strategy a)
multiline insurance, property and casualty
at 68%. Additionally, between 2020 and 2022,
insurance, reinsurance, and life and health
the percent of insurance companies reporting
insurance. The 117 insurance companies
information aligned with Risk Management a)
reviewed ranged in size from about $1 billion
increased by 26 percentage points.
to $1.6 trillion in assets, with a mean asset size

Figure A3-2
Insurance Review Results
Pt. Change
Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
Governance a) Board Oversight 16 49%
60%
A. 65%
State of Climate-Related b) Management’s Role 13 31%
Financial Disclosures 44%
44%
Strategy a) Risks and Opportunities 17 51%
B. 60%
Financial Statement 68%
Considerations b) Impact on Organization 13 32%
38%
45%
C.
c) Resilience of Strategy 8 5%
Case Studies on Scope 3 13%
GHG Emissions 13%
Risk Management a) Risk ID and Assessment 26 18%
D. 33%
Processes
44%
TCFD-Aligned Requirements
b) Risk Management Processes 17 34%
and Related Initiatives
48%
51%
E. c) Integration into Overall Risk 16 20%
Types of Financial Impact 36%
Management 36%
and Associated Drivers
Metrics and a) Climate-Related Metrics 7 49%
53%
F. Targets
56%
Insights Gained and View 44%
b) Scope 1,2,3 GHG Emissions 9
on Future Work 47%
53%
Appendices c) Climate-Related Targets 18 32%
46%
50%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 117

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 The Task Force on Climate-related Financial Disclosures

Energy on average, disclosed information in line with

more of the 11 recommended disclosures than
The AI technology reviewed reports from
companies in other industries (see Figure A3,
205 energy companies in three categories:
p. 6). For all three years of reporting reviewed,
oil and gas, coal, and utilities. The 205 energy
the energy companies reviewed had the highest
companies ranged in size from about $118
percent of disclosure across all industries for
million to $399 billion in annual revenue, with a
information aligned with Governance a) and b),
mean annual revenue of nearly $26 billion. The
Strategy b), and Metrics and Targets a), b), and c).
AI review results for these companies are shown
in Figure A3-3. In 2022, energy companies,

Figure A3-3
Energy Review Results
Pt. Change
Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
Governance a) Board Oversight 16 60%
A.
74%
State of Climate-Related 76%
Financial Disclosures 39%
b) Management’s Role 18
49%
B. 57%
Financial Statement Strategy a) Risks and Opportunities 21 49%
71%
Considerations 70%
b) Impact on Organization 17 41%
C. 55%
Case Studies on Scope 3 58%
GHG Emissions c) Resilience of Strategy 7 9%
14%
16%
D. 21%
Risk Management a) Risk ID and Assessment 21
TCFD-Aligned Requirements 31%
Processes
and Related Initiatives 42%

b) Risk Management Processes 15 30%

44%
E.
45%
Types of Financial Impact
c) Integration into Overall Risk 14 18%
and Associated Drivers 26%
Management 32%
F. Metrics and a) Climate-Related Metrics 11 70%
Insights Gained and View 78%
Targets
81%
on Future Work
b) Scope 1,2,3 GHG Emissions 13 64%
71%
Appendices 77%
c) Climate-Related Targets 20 60%
75%
80%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 205

128
 The Task Force on Climate-related Financial Disclosures

Materials and Buildings in annual revenue, with a mean annual revenue

of $14 billion. The AI review results for these
The AI technology reviewed reports from
companies are shown in Figure A3-4. In 2022,
345 materials and buildings companies in
the highest level of reporting for materials and
five categories: capital goods, chemicals,
buildings companies was on Metrics and Targets
construction materials, metals and mining, and
a) at 81%, followed by Metrics and Targets c)
real estate management and development. The
at 77%.
345 materials and buildings companies ranged
in size from about $298 million to $255 billion

Figure A3-4
Materials and Buildings Review Results
Pt. Change
Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
Governance a) Board Oversight 29 42%
A. 58%
State of Climate-Related 71%
Financial Disclosures b) Management’s Role 21 25%
39%
46%
B. 39%
Strategy a) Risks and Opportunities 27
Financial Statement 57%
Considerations 66%
b) Impact on Organization 21 25%
40%
C.
46%
Case Studies on Scope 3
c) Resilience of Strategy 9 3%
GHG Emissions 9%
12%
D. Risk Management a) Risk ID and Assessment 26 14%
TCFD-Aligned Requirements 28%
Processes
40%
and Related Initiatives
b) Risk Management Processes 20 18%
30%
E. 38%
Types of Financial Impact c) Integration into Overall Risk 14 8%
and Associated Drivers Management
19%
22%
Metrics and a) Climate-Related Metrics 11 70%
F. 76%
Insights Gained and View Targets
81%
on Future Work 62%
b) Scope 1,2,3 GHG Emissions 13
69%
Appendices 75%
c) Climate-Related Targets 30 47%
69%
77%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 345

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 The Task Force on Climate-related Financial Disclosures

Transportation disclosed information aligned with Metrics and

The AI technology reviewed reports from 126 Targets c) at 73%. Transportation companies
transportation companies in six categories: air had the largest increase in the average number
freight, automobiles, maritime transportation, of recommended disclosures reported per
passenger air transportation, rail transportation, company for any industry, increasing by 2.3
and trucking services. The 126 transportation recommended disclosures between 2020 and
companies ranged in size from $812 million to 2022. In addition, the recommended disclosure
$294 billion in annual revenue, with a mean with the largest increase in reporting was
annual revenue of over $19 billion. The AI Governance a), with an increase of 37 percentage
review results are shown in Figure A3-5. In points between 2020 and 2022.
2022, transportation companies most often

Figure A3-5
Transportation Review Results
Pt. Change
A.
Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
State of Climate-Related
Governance a) Board Oversight 37 33%
Financial Disclosures
52%
70%
B. b) Management’s Role 23 21%
Financial Statement 40%
Considerations 44%
Strategy a) Risks and Opportunities 26 29%
48%
C. 55%
Case Studies on Scope 3 17%
b) Impact on Organization 23
GHG Emissions 35%
40%
c) Resilience of Strategy 3 3%
D.
7%
TCFD-Aligned Requirements
6%
and Related Initiatives
Risk Management a) Risk ID and Assessment 20 10%
23%
Processes
E. 30%
Types of Financial Impact b) Risk Management Processes 24 13%
and Associated Drivers 25%
37%
c) Integration into Overall Risk 9 12%
F. 18%
Management
Insights Gained and View 21%
on Future Work Metrics and a) Climate-Related Metrics 16 54%
65%
Targets
70%
Appendices
b) Scope 1,2,3 GHG Emissions 17 47%
58%
64%
c) Climate-Related Targets 31 42%
69%
73%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 126

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 The Task Force on Climate-related Financial Disclosures

Agriculture, Food, and Forest Products of over $12 billion. The AI review results
for these companies are shown in Figure
The AI technology reviewed reports from
A3-6. In 2022, agriculture, food, and forest
115 agriculture, food, and forest products
products companies most frequently disclosed
companies in four categories: beverages,
information on Metrics and Targets a), at 71%,
packaged foods and meats, agriculture, and
although reporting on the recommended
paper and forest products. The 115 agriculture,
disclosure decreased by one percentage point
food, and forest products companies ranged in
between 2021 and 2022. Between 2020 and
size from about $276 million to $102 billion in
2022, the largest increase in disclosure — at 30
annual revenue, with a mean annual revenue
percentage points — was for Strategy a).

Figure A3-6
Agriculture, Food, and Forest Products Review Results
Pt. Change
Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
A. Governance a) Board Oversight 26 31%
State of Climate-Related 49%
57%
Financial Disclosures
b) Management’s Role 23 16%
23%
B. 39%
Financial Statement Strategy a) Risks and Opportunities 30 27%
Considerations 50%
57%
b) Impact on Organization 22 27%
C.
41%
Case Studies on Scope 3 49%
GHG Emissions 3%
c) Resilience of Strategy 14
10%
D. 17%

TCFD-Aligned Requirements Risk Management a) Risk ID and Assessment 26 10%

23%
and Related Initiatives Processes
36%
b) Risk Management Processes 20 15%
E. 30%
Types of Financial Impact 35%
and Associated Drivers c) Integration into Overall Risk 11 7%
13%
Management
18%
F. 61%
Metrics and a) Climate-Related Metrics 10
Insights Gained and View 72%
Targets
on Future Work 71%
b) Scope 1,2,3 GHG Emissions 14 50%
62%
Appendices
64%
c) Climate-Related Targets 20 49%
63%
69%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 115

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 The Task Force on Climate-related Financial Disclosures

Technology and Media of $22 billion. The AI review results for these
companies are shown in Figure A3-7. In 2022,
The AI technology reviewed reports from
reporting on Risk Management c) decreased
91 technology and media companies in two
by 6%, making the disclosure the second least
categories: interactive media and services and
reported across all recommended disclosures at
technology hardware and equipment. The 91
7%. In 2022, technology and media companies,
technology and media companies ranged in
on average, reported on fewer recommended
size from about $733 million to $394 billion in
disclosures (3.7) than any of the other industries
annual revenue, with a mean annual revenue
reviewed (see Figure A3, p. 6).

Figure A3-7
Technology and Media Review Results
Pt. Change
Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
A. Governance a) Board Oversight 32 11%
State of Climate-Related 40%
Financial Disclosures 43%
b) Management’s Role 25 7%
26%
B. 32%
Financial Statement 18%
Strategy a) Risks and Opportunities 20
Considerations 29%
38%
b) Impact on Organization 12 15%
C.
26%
Case Studies on Scope 3
27%
GHG Emissions 1%
c) Resilience of Strategy 4
2%
D. 5%
TCFD-Aligned Requirements Risk Management a) Risk ID and Assessment 12 2%
8%
and Related Initiatives Processes
14%

b) Risk Management Processes 13 7%

E. 18%
Types of Financial Impact 20%
and Associated Drivers c) Integration into Overall Risk 5 2%
13%
Management
7%
F.
Metrics and a) Climate-Related Metrics 26 41%
Insights Gained and View 56%
on Future Work Targets
67%
b) Scope 1,2,3 GHG Emissions 30 35%
Appendices 56%
65%
c) Climate-Related Targets 32 24%
44%
56%
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 91

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 The Task Force on Climate-related Financial Disclosures

Consumer Goods revenue, with a mean annual revenue of more

than $26 billion. The AI review results for
The AI technology reviewed reports from 131
these companies are shown in Figure A3-8. In
consumer goods companies in two categories:
2022, consumer goods companies most often
consumer retailing and textiles and apparel.
disclosed information aligned with Metrics and
The 131 consumer goods companies ranged in
Targets c) at 63%.
size from $599 million to $611 billion in annual

Figure A3-8
Consumer Goods Review Results
Pt. Change
Recommendation Recommended Disclosure 2020–2022 Percent of Companies Disclosing
Governance a) Board Oversight 34 24%
51%
58%
b) Management’s Role 19 13%
A. 28%
State of Climate-Related 32%
Financial Disclosures Strategy a) Risks and Opportunities 23 23%
46%
46%
B. 18%
b) Impact on Organization 10
Financial Statement 27%
Considerations 28%
c) Resilience of Strategy 5 3%
5%
C. 8%
Case Studies on Scope 3 8%
Risk Management a) Risk ID and Assessment 14
GHG Emissions 18%
Processes
22%
D. b) Risk Management Processes 17 12%
TCFD-Aligned Requirements 24%
29%
and Related Initiatives
c) Integration into Overall Risk 8 3%
9%
Management
E. 11%
Types of Financial Impact Metrics and a) Climate-Related Metrics 15 47%
and Associated Drivers 59%
Targets
62%

b) Scope 1,2,3 GHG Emissions 14 40%

F. 52%
Insights Gained and View 54%
on Future Work 39%
c) Climate-Related Targets 24
54%
63%
Appendices
0% 20% 40% 60% 80% 100%
Legend: FY 2020 FY 2021 FY 2022 Base size: 131

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 The Task Force on Climate-related Financial Disclosures

Appendix 4: Additional Information on

Financial Impact
As summarized in Section E. Types of Financial Climate-Related Issues Identified and
Impact and Associated Drivers, the Task Force Estimated Impact by Sector
analyzed responses from the approximately
The Task Force reviewed companies’ identification
5,000 companies — or subsets of these
of substantive climate-related issues and
companies — that provided public or non-public
estimation of potential financial impacts by
responses to the CDP Climate Change 2022
sector, as shown in Figure A4-1. Notably, 95% of
Questionnaire (2022 questionnaire). 222
the companies in the utilities sector identified
This appendix provides additional information substantive climate-related risks, and 72%
on this analysis, including the following: provided estimated potential financial impacts.
In addition, a high percentage of companies
• c ompanies’ identification of substantive in the energy sector and materials sector
climate-related issues and estimation of identified substantive climate-related risks
A. potential financial impacts by sector and and estimated the potential financial impacts
State of Climate-Related — 94% and 60%, respectively, for the energy
Financial Disclosures • t he types of substantive climate-related sector — and 91% and 67%, respectively, for the
risks and opportunities companies identified materials sector. The percentage of companies
B. by sector. that identified substantive climate-related
Financial Statement
Considerations
Figure A4-1
C.
Case Studies on Scope 3
Companies Identifying Substantive Issues and Estimating Impacts by Sector
Percent of Companies
GHG Emissions

D. Other
Total Banks Insurance Financial Energy Utilities Materials
TCFD-Aligned Requirements (5,021) (235) (110) (234) (174) (238) (581)
and Related Initiatives
Identified
Substantive Risks 80% 81% 84% 64% 94% 95% 91%
E.
Provided
Types of Financial Impact Estimated Impact 55% 58% 60% 36% 60% 72% 67%
and Associated Drivers
Consumer Consumer Information Comm.
Real Estate Industrials Discretionary Staples Health Care Technology Services
F. (218) (1,116) (634) (404) (262) (600) (215)
Insights Gained and View
Identified
on Future Work 82% 80% 82% 87% 71% 66% 70%
Substantive Risks
Provided
Appendices Estimated Impact 63% 53% 53% 60% 48% 43% 50%

Other
Total Banks Insurance Financial Energy Utilities Materials
(5,021) (235) (110) (234) (174) (238) (581)

Identified
Substantive Opp.1 83% 87% 87% 74% 93% 96% 92%

Provided
Estimated Impact 53% 62% 57% 35% 55% 72% 63%

Consumer Consumer Information Comm.

Real Estate Industrials Discretionary Staples Health Care Technology Services
(218) (1,116) (634) (404) (262) (600) (215)
Identified
Substantive Opp.1 83% 85% 83% 86% 73% 74% 73%

Provided
Estimated Impact 58% 53% 52% 59% 47% 40% 48%

1. Identified Substantive Opportunities Legend:

Source: CDP, Responses to CDP Climate Change 2022 Questionnaire Low to high percentage of companies

 CDP, “CDP Climate Change 2022 Questionnaire,” Accessed May 1, 2023.

222

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 The Task Force on Climate-related Financial Disclosures

opportunities and estimated the associated with over half of companies that identified
potential financial impacts followed a substantive risks in every sector selecting at
similar pattern. least one substantive policy and legal risk.
The least identified transition risk type was
Types of Climate-Related Risks and technology risk at 14% for companies overall —
Opportunities Identified by Sector the range across the sectors was from 6% for
Figure A4-2 and Figure A4-3 show the insurance companies to 18% for industrials and
percentage of companies in each sector real estate companies. For physical risks, 56% of
that identified substantive climate-related risks companies identified acute physical risks, with
by type (transition or physical) and provided a range from 39% for companies in the energy
estimates of their potential financial impacts. sector to a high of 83% for companies in the
The most common transition risk companies insurance sector.
identified was policy and legal risk at 73%,

Figure A4-2
Types of Substantive Climate-Related Transition Risks by Sector
Percent of Companies1
A.
State of Climate-Related Other
Financial
Financial Disclosures Total Banks Insurance Services Energy Utilities Materials
(2,755) (136) (66) (85) (104) (172) (390)
B. Policy & Legal 73% 73% 50% 74% 83% 56% 81%
Financial Statement
Considerations Market 33% 24% 29% 24% 38% 25% 34%

Reputation 18% 21% 24% 28% 22% 12% 13%

C.
Case Studies on Scope 3 Technology 14% 12% 6% 7% 16% 13% 13%
GHG Emissions
Consumer Consumer Information Comm.
Real Estate Industrials Discretionary Staples Health Care Technology Services
D. (137) (593) (339) (244) (126) (256) (107)
TCFD-Aligned Requirements
Policy & Legal 80% 74% 73% 75% 67% 72% 69%
and Related Initiatives
Market 45% 37% 33% 29% 25% 33% 32%
E.
Reputation 27% 16% 15% 17% 19% 22% 24%
Types of Financial Impact
and Associated Drivers Technology 18% 18% 14% 10% 9% 15% 10%

1. Includes companies that identified substantive climate-related risks and Legend:

F. provided estimates of potential financial impacts of these risks. Low to high percentage of companies
Insights Gained and View Source: CDP, Responses to CDP Climate Change 2022 Questionnaire
on Future Work

Appendices Figure A4-3

Types of Substantive Climate-Related Physical Risks by Sector
Percent of Companies1

Other
Financial
Total Banks Insurance Services Energy Utilities Materials
(2,755) (136) (66) (85) (104) (172) (390)

Acute 56% 65% 83% 51% 39% 66% 52%

Chronic 30% 22% 24% 25% 20% 44% 29%

Consumer Consumer Information Comm.

Real Estate Industrials Discretionary Staples Health Care Technology Services
(137) (563) (339) (244) (126) (256) (107)

Acute 49% 50% 59% 53% 63% 57% 64%

Chronic 46% 25% 29% 49% 26% 23% 28%

1. Includes companies that identified substantive climate-related risks and provided Legend:
estimates of potential financial impacts of these risks. Low to high percentage of companies
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire

135
 The Task Force on Climate-related Financial Disclosures

Figure A4-4 shows further detail on the types related opportunities such as opportunities in
of substantive climate-related opportunities new markets (24%) — which ranged from 13%
companies identified by sector. Seventy percent for consumer discretionary companies to 52%
(70%) of companies identified substantive for insurance companies — and resilience at
opportunities related to products and services 11%, with a range from 3% for companies in the
— ranging from 65% to 80% across sectors. energy sector to 20% for companies in the real
Fewer companies identified other climate- estate sector.

Figure A4-4
Types of Substantive Climate-Related Opportunities Identified by Sector
Percent of Companies1

Other
Financial
Total Banks Insurance Services Energy Utilities Materials
(2,675) (145) (63) (83) (96) (172) (366)

Resource Efficiency 38% 32% 24% 30% 34% 22% 34%

A.
State of Climate-Related Energy Source 35% 16% 13% 20% 46% 50% 36%
Financial Disclosures
Products & Services 70% 80% 70% 67% 65% 69% 72%

B. Markets 24% 39% 52% 35% 20% 27% 24%

Financial Statement
Resilience 11% 5% 16% 14% 3% 10% 10%
Considerations

Consumer Consumer Health Information Comm.

C. Real Estate Industrials Discretionary Staples Care Technology Services
Case Studies on Scope 3 (127) (589) (327) (238) (124) (242) (103)
GHG Emissions
Resource Efficiency 52% 34% 40% 53% 60% 40% 47%

D. Energy Source 50% 29% 35% 49% 49% 31% 36%

TCFD-Aligned Requirements
Products & Services 65% 74% 73% 59% 40% 77% 68%
and Related Initiatives
Markets 31% 27% 13% 17% 17% 17% 19%
E. Resilience 20% 8% 13% 17% 14% 11% 12%
Types of Financial Impact
and Associated Drivers 1. Includes companies that identified substantive climate-related risks and Legend:
provided estimates of potential financial impacts of these risks. Low to high percentage of companies
Source: CDP, Responses to CDP Climate Change 2022 Questionnaire
F.
Insights Gained and View
on Future Work

Appendices

136
 The Task Force on Climate-related Financial Disclosures

Appendix 5: Glossary
Glossary financial statements and other information
such as governance statements and
ANNUAL OR INTEGRATED REPORTS refer to
management commentary.224
reports that describe companies’ activities for the
preceding year (annual reports) or the broader FINANCIAL PLANNING refers to a company’s
range of measures that contribute to companies’ consideration of how it will achieve and fund its
long-term value and the role they play in society objectives and strategic goals. The process of
(integrated reports). financial planning allows companies to assess
future financial positions and determine how
BOARD OF DIRECTORS (OR BOARD) refers to
resources can be used in pursuit of short and
a body of elected or appointed members who
long-term objectives. As part of financial planning,
jointly oversee the activities of a company or
companies often create “financial plans” that
organization. Some countries use a two-tiered
outline the specific actions, assets, and resources
system where “board” refers to the “supervisory
(including capital) necessary to achieve these
board” while “key executives” refers to the
objectives over a one-to-five-year period.
A. “management board.”223
However, financial planning is broader than the
State of Climate-Related
CLIMATE-RELATED OPPORTUNITY refers to development of a financial plan as it includes long-
Financial Disclosures
the potential positive impacts related to climate term capital allocation and other considerations
change on a company. Efforts to mitigate that may extend beyond the typical three-to-five-
B. year financial plan (e.g., investment, research and
and adapt to climate change can produce
Financial Statement development, manufacturing, and markets).
Considerations
opportunities for companies, such as through
resource efficiency and cost savings; the adoption
GOVERNANCE refers to the system by
and utilization of low-emission energy sources;
C. which a company is directed and controlled
the development of new products and services;
Case Studies on Scope 3 in the interests of shareholders and other
and building resilience along the supply chain.
GHG Emissions stakeholders.225 Governance involves a set of
CLIMATE-RELATED RISK refers to the potential relationships between a company’s management,
D. negative impacts of climate change on a company. its board, its shareholders, and other
TCFD-Aligned Requirements Physical risks emanating from climate change stakeholders. Governance provides the structure
and Related Initiatives can be event driven (acute) such as increased and processes through which the objectives of the
severity of extreme weather events (e.g., cyclones, company are set, progress against performance is
E. droughts, floods, and fires). They can also relate monitored, and results are evaluated.226
Types of Financial Impact to longer-term shifts (chronic) in precipitation and
and Associated Drivers GREENHOUSE GAS (GHG) EMISSIONS
temperature and increased variability in weather
SCOPE LEVELS227
patterns (e.g., sea level rise). Climate-related risks
F. can also be associated with the transition to a • Scope 1 refers to all direct GHG emissions.
Insights Gained and View low-carbon global economy, the most common
on Future Work of which relate to policy and legal actions, • S
 cope 2 refers to indirect GHG emissions from
technology changes, market responses, and consumption of purchased electricity, heat,
Appendices reputational considerations. or steam.

FINANCIAL FILINGS refer to the annual • S

 cope 3 refers to other indirect emissions
reporting packages in which companies are not covered in Scope 2 that occur in the value
required to deliver their audited financial chain of the reporting company, including both
results under the corporate, compliance, or upstream and downstream emissions. Scope
securities laws of the jurisdictions in which they 3 GHG emissions could include: the extraction
operate. While reporting requirements differ and production of purchased materials and
internationally, financial filings generally contain fuels, transport-related activities in vehicles not

223
 rganization of Economic Cooperation and Development (OECD), G20/OECD Principles of Corporate Governance, November 30, 2015, OECD
O
Publishing, Paris.
224
 ased on CDSB, CDSB Framework for Reporting Environmental Information, Natural Capital and Associated Business Impacts,
B
April 1, 2018.
225
 adbury, A., Report of the Committee on the Financial Aspects of Corporate Governance, December 1, 1992.
C
226
 ECD, G20/OECD Principles of Corporate Governance, November 30, 2015, OECD Publishing, Paris.
O
227
 orld Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD), The Greenhouse Gas Protocol: A Corporate
W
Accounting and Reporting Standard (Revised Edition), March 2004.

137
 The Task Force on Climate-related Financial Disclosures

owned or controlled by the reporting entity, large segment of the economy or grouping
electricity-related activities (e.g., transmission of business types, while “industry” is used to
and distribution losses), outsourced activities, describe more specific groupings of companies
and waste disposal. 228 within a sector.

MANAGEMENT refers to those positions STRATEGY refers to a company’s desired

a company views as executive or senior future state. A company’s strategy establishes
management positions. a foundation against which it can monitor
and measure its progress in reaching that
RISK MANAGEMENT refers to a set of processes desired state. Strategy formulation generally
that are carried out by a company’s board and involves establishing the purpose and scope
management to support the achievement of its of the company’s activities and the nature
objectives by addressing its risks and managing of its businesses, considering the risks and
the combined potential impact of those risks. opportunities it faces and the environment in
which it operates.
SCENARIO ANALYSIS is a process for
identifying and assessing a potential range of SUSTAINABILITY REPORT is a report that
outcomes of future events under conditions describes a company’s impact on society,
A. of uncertainty. In the case of climate change, often addressing environmental, social, and
State of Climate-Related for example, scenarios allow a company to governance issues.
Financial Disclosures explore and develop an understanding of how
the physical and transition risks of climate TRANSITION PLAN refers to an aspect of a
B. change may impact its businesses, strategy, and company’s overall business strategy that lays
Financial Statement financial performance over time. out a set of targets and actions supporting
Considerations its transition toward a low-carbon economy,
SECTOR refers to a segment of companies including actions such as reducing its
C. performing similar business activities in GHG emissions.
Case Studies on Scope 3 an economy. A sector generally refers to a
GHG Emissions

D.
TCFD-Aligned Requirements
and Related Initiatives

E.
Types of Financial Impact
and Associated Drivers

F.
Insights Gained and View
on Future Work

Appendices

228
WRI and WBCSD, The Corporate Value Chain (Scope 3) Accounting and Reporting Standard, April 16, 2013.

138
 The Task Force on Climate-related Financial Disclosures

Appendix 6: References
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of-consultation-papers/pubic-consultation-on-srac’s-recommendations/consultation-paper-
recommendations-by-srac.pdf.

Anglo American. Integrated Annual Report. March 7, 2023.

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Asia Investor Group on Climate Change, et al. “Letter from Global Investors to Governments of the
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Association of Chartered Certified Accountants. Climate Action and the Accounting Profession:
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State of Climate-Related ACCA_Global/professional-insights/Climate_action_the_accountancy_profession/PI-CLIMATE-
Financial Disclosures ACTION%20v3.pdf.

B. Australian Accounting Standards Board and Auditing and Assurance Standards Board. Climate
Financial Statement Related and Other Emerging Risks Disclosures: Assessing Financial Statement Materiality Using AASB
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C.
Case Studies on Scope 3 Australian Treasury. Climate-related Financial Disclosure Consultation Paper. June 27, 2023.
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AXA. Climate and Biodiversity Report. June 29, 2023. https://www-axa-com.cdn.axa-contento-118412.

D.
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TCFD-Aligned Requirements
report_2023_va.pdf.
and Related Initiatives
Banco Bradesco. Climate Report. June 2023.
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Types of Financial Impact
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Banco Santander. 2022 Annual Report. March 7, 2023. https://www.santander.com/content/dam/

Appendices
santander-com/en/documentos/informe-financiero-anual/2022/ifa-2022-consolidated-annual-
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Bank for International Settlements. BIS Papers No 103: Pricing of Climate Risks in Financial Markets: A
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Bank of Mauritius. Guideline on Climate-related and Environmental Financial Risk Management.

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Bank of Thailand. Policy Statement of the Bank of Thailand Re: Internalizing Environmental and Climate
Change Aspects into Financial Institution Business. February 15, 2023. https://www.bot.or.th/
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BHP. Annual Report 2022. September 6, 2022. https://www.bhp.com/-/media/documents/investors/

annual-reports/2022/220906_bhpannualreport2022.pdf.

BHP. Climate Change: Portfolio Analysis. September 29, 2015. https://www.bhp.com/-/media/bhp/

documents/investors/reports/2015/bhpbillitonclimatechangeporfolioanalysis2015.pdf.

139
 The Task Force on Climate-related Financial Disclosures

BHP. Climate Change: Portfolio Analysis – Views after Paris. October 11, 2016.
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BHP. Climate Change Report 2020. February 2020. https://www.bhp.com/-/media/documents/

investors/annual-reports/2020/200910_bhpclimatechangereport2020.pdf.

BHP. Climate Transition Action Plan 2021. September 14, 2021. https://www.bhp.com/-/media/
documents/investors/annual-reports/2021/210914_bhpclimatetransitionactionplan2021.

BHP. Scope 1, 2 and 3 GHG Emissions Calculation Methodology 2022. September 6, 2022.
https://www.bhp.com/-/media/documents/investors/annual-reports/2022/220906_
bhpscope12and3emissionscalculationmethodology2022.pdf.

Boston Consulting Group (BCG). Directors Can Up Their Games on Environmental, Social
and Governance Issues. March 30, 2022. https://web-assets.bcg.com/7e/71/
fc29b62542e6bac1732ebd890bbc/bcg-directors-can-up-their-game-on-environmental-social-
and-governance-issues-mar-2022.pdf.
A.
State of Climate-Related BCG. “From Tailwinds to Turbulence.” May 25, 2022. https://www.bcg.com/publications/2022/
Financial Disclosures tailwinds-to-turbulence-for-global-assets-under-management.

B. Brazil Government. Resolução CVM 59. December 22, 2021. https://conteudo.cvm.gov.br/export/

Financial Statement sites/cvm/legislacao/resolucoes/anexos/001/resol059consolid.pdf.
Considerations
Bursa Malaysia. “Bursa Malaysia Enhances Sustainability Reporting Framework with New Climate
Change Reporting.” September 26, 2022.
C.
https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/content_
Case Studies on Scope 3
entry5c11a9db758f8d31544574c6/63312a2439fba20d86ba8e16/files/26Sept_2022_Bursa_
GHG Emissions
Malaysia_Enhances_Sustainability_Reporting_Framework_With_New_Climate_Change_
Reporting.pdf.
D.
TCFD-Aligned Requirements Bursa Malaysia. Main Market Listing Requirements. June 1, 2023.
and Related Initiatives https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/content_
entry5ce3b50239fba2627b2864be/64e730445b711a1c197fda7f/files/29MainLR_1July2023__1_
E. Edited.pdf.
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and Associated Drivers Cadbury, A. Report of the Committee on the Financial Aspects of Corporate Governance. December 1,
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F.
Insights Gained and View Canadian Office of the Superintendent of Financial Institutions. Climate Risk Management Guideline.
on Future Work March 2023. https://www.osfi-bsif.gc.ca/Eng/Docs/b15-dft.pdf.

Canadian Securities Administration. “Canadian Securities Regulators Consider Impact of

Appendices International Developments on Proposed Climate-Related Disclosure Rule.” October 12, 2022.
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impact-of-international-developments-on-proposed-climate-related-disclosure-rule/.

Canadian Securities Administration. Proposed National Instrument 51-107 Disclosure of Climate-

Related Matters. October 18, 2021. https://www.osc.ca/sites/default/files/2021-10/
csa_20211018_51-107_disclosure-update.pdf.

CDP. “CDP Climate Change 2022 Questionnaire.” Accessed May 1, 2023. https://guidance.cdp.net/en/
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CDP. CDP Technical Note: Reporting on Climate Transition Plans. February 16, 2023. https://cdn.cdp.
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Climate_transition_plans.pdf.

CDP. “How CDP is aligned to the TCFD.” Accessed June 26, 2023.
https://www.cdp.net/en/guidance/how-cdp-is-aligned-to-the-tcfd.

140
 The Task Force on Climate-related Financial Disclosures

Cemex. 2022 Integrated Report. March 29, 2023.

https://www.cemex.com/documents/d/cemex/integratedreport2022.

Central Bank of Brazil. New Regulation on Social, Environmental, and Climate-Related Risk Disclosures.
September 15, 2021. https://www.bcb.gov.br/content/about/legislation_norms_docs/BCB_
Disclosure-GRSAC-Report.pdf.

Central Bank of Brazil. Resolution 4,553 of January 30, 2017. January 30, 2017.
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Central Bank of Kenya. Guidance on Climate-Related Risk Management. October 15, 2021.
https://www.centralbank.go.ke/wp-content/uploads/2021/10/Guidance-on-Climate-Related-
Risk-Management.pdf.

Climate Disclosure Standards Board (CDSB). Accounting for Climate: Integrating Climate-Related
Matters into Financial Reporting. December 2020.
https://www.cdsb.net/sites/default/files/cdsb_climateaccountingguidance_s_110121.pdf.
A.
State of Climate-Related CDSB. CDSB Framework for Reporting Environmental Information, Natural Capital and Associated
Financial Disclosures Business Impacts. April 1, 2018.
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B.
Financial Statement CDSB. Framework for Reporting Environmental and Social Information. January 2022.
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Climate Financial Risk Forum. Climate Financial Risk Forum Guide 2023 Climate Disclosures Dashboard
C.
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Case Studies on Scope 3
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GHG Emissions
Climate Wise. The ClimateWise Principles Independent Review for 2022. January 23, 2023.
D. https://www.cisl.cam.ac.uk/files/cisl_climatewise_principles_2022_03-23.pdf.
TCFD-Aligned Requirements
and Related Initiatives Coca-Cola FEMSA. 2022 Task Force on Climate-Related Financial Disclosures (TCFD) Report. August
2023. https://coca-colafemsa.com/wp-content/uploads/2023/08/TCFD-ingles.pdf.
E.
Types of Financial Impact ContourGlobal Limited. Annual Report and Financial Statements. April 19, 2023.
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F.
Deloitte. A Closer Look — IAS 36 Impairment of Non-Financial Assets — Reminders and Hot Topics.
Insights Gained and View
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on Future Work
download/file/A%20Closer%20Look%20-%20IAS%2036%20reminders.pdf.

Appendices Deloitte. ESG Executive Survey Preparing for High-Quality Disclosures. March 31, 2022.
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Deloitte. The Audit Committee Frontier – Addressing Climate Change. November 2021.
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report-addressing-climate-change-en.pdf.

EFRAG. Draft European Sustainability Reporting Standards. April 29, 2022. https://www.efrag.org/
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EFRAG. Draft European Sustainability Reporting Standards Appendix IV – TCFD Recommendations

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EFRAG. Draft European Sustainability Reporting Standards Cover Letter. November 2022.
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141
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Enel Américas. Integrated Annual Report Enel Américas 2022. April 11, 2023. https://beyondreporting.
enelamericas.com/content/dam/eneldhafcprogram/americas/pdf/memoria-enel-americas-
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European Commission (E.C.). Commission Implementing Regulation (EU) 2022/2453 of 30 November

2022 Amending the Implementing Technical Standards Laid Down in Implementing Regulation (EU)
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E.C. “European Sustainability Reporting Standards - First Set.” Accessed July 31, 2023.
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sustainability-reporting-standards-first-set_en.

E.C. Guidelines on Reporting Climate-Related Information. June 17, 2019. https://ec.europa.eu/finance/

docs/policy/190618-climate-related-information-reporting-guidelines_en.pdf.

E.C. “The Commission Adopts the European Sustainability Reporting Standards.” July 31, 2023.
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A. standards-2023-07-31_en.
State of Climate-Related
Financial Disclosures European Parliament and European Council. Directive 2013/34/EU of The European Parliament and of
the Council of 26 June 2013 on the Annual Financial Statements, Consolidated Financial Statements
B. and Related Reports of Certain Types of Undertakings, Amending Directive 2006/43/EC of the
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European Parliament and European Council. Directive 2014/95/EU of the European Parliament and the
C.
Case Studies on Scope 3 Council of 22 October 2014 Amending Directive 2013/34/EU as Regards Disclosure of Non-Financial
GHG Emissions and Diversity Information by Certain Large Undertakings and Groups. October 22, 2014.
http://data.europa.eu/eli/dir/2014/95/oj.
D. European Parliament and European Council. Directive (EU) 2022/2464 of the European Parliament and
TCFD-Aligned Requirements
of the Council of 14 December 2022 Amending Regulation (EU) No 537/2014, Directive 2004/109/
and Related Initiatives
EC, Directive 2006/43/EC and Directive 2013/34/EU, as Regards Corporate Sustainability Reporting.
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E.
Types of Financial Impact European Parliament and European Council. Regulation (EU) No 575/2013 of the European Parliament
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Regulation (EU) No 648/2012. June 26, 2013 (as amended June 28, 2023).
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Insights Gained and View
on Future Work European Securities and Markets Authority. European Common Enforcement Priorities for 2022 Annual
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Eversheds Sutherland and KPMG. “Climate Change and Corporate Value: What Companies Really
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External Reporting Board (XRB). "Aotearoa New Zealand Climate Standards." December 15, 2022.
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climate-standards/.

XRB. Aotearoa New Zealand Climate Standard 1: Climate-related Disclosures. December 2022.
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XRB. Aotearoa New Zealand Climate Standard 2: Adoption of Aotearoa New Zealand Climate Standards.
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XRB. Aotearoa New Zealand Climate Standard 3: General Requirements for Climate-related Disclosures.
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142
 The Task Force on Climate-related Financial Disclosures

Exxaro Resources Limited. Exxaro Resources Limited Integrated Report 2022. April 14, 2023. https://
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Falabella. Annual Report 2022. April 4, 2023. https://s22.q4cdn.com/351912490/files/doc_financials/

annual/2023/Falabella-Annual-Report-2022.pdf.

Financial Accounting Standards Board (FASB). “Accounting Standards Codification Topic 360.”
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FASB. “Accounting Standards Codification Topic 450.” Accessed June 14, 2023. https://asc.fasb.org/.

FASB. Intersection of Environmental, Social and Governance Matters with Financial Accounting
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Educational_Paper_FINAL.pdf.

FASB. Statement of Financial Accounting Concepts No. 8. August 2018. https://d2x0djib3vzbzj.

cloudfront.net/Concepts%20Statement%208%20Chapter%203%20As%20Amended.pdf.

Financial Conduct Authority. Enhancing Climate-Related Disclosures by Asset Managers, Life Insurers
A. and FCA-Regulated Pension Providers. December 17, 2021.
State of Climate-Related https://www.fca.org.uk/publication/policy/ps21-24.pdf.
Financial Disclosures
Financial Reporting Council (FRC). CRR Thematic Review of Climate-Related Metrics and Targets. July
B. 26, 2023. https://www.frc.org.uk/getattachment/5ecb5ecf-cb99-4085-918d-8fd767b4e594/
Financial Statement CRR_Thematic_review_of_climate-related_metrics_and_targets_2023.pdf.
Considerations
FRC. CRR Thematic Review of TCFD Disclosures and Climate in the Financial Statements. July 2022.
C. https://www.frc.org.uk/getattachment/65fa8b6f-2bed-4a67-8471-ab91c9cd2e85/FRC-TCFD-
Case Studies on Scope 3 disclosures-and-climate-in-the-financial-statements_ July-2022.pdf.
GHG Emissions
FRC. FRC Statement of Intent on Environmental, Social and Governance Challenges. July 2021.
https://www.frc.org.uk/getattachment/691f28fa-4af4-49d7-a4f5-49ad7a2db532/FRC-LAB-
D.
ESG-Paper_2021.pdf.
TCFD-Aligned Requirements
and Related Initiatives
Financial Reporting Council Lab. Improving ESG Data Production. August 2022.
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E.
Types of Financial Impact Financial Stability Board (FSB). “Formation of the Enhanced Disclosure Task Force.” May 10, 2012.
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F. FSB. “FSB Plenary Meets in Frankfurt.” July 6, 2023.

Insights Gained and View https://www.fsb.org/wp-content/uploads/R060723.pdf.
on Future Work
FSB. FSB Roadmap for Addressing Financial Risks from Climate Change: 2023 Progress Report. July 13,
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Appendices
FSB. “FSB to Establish Task Force on Climate-related Financial Disclosures.” December 4, 2015.
https://assets.bbhub.io/company/sites/60/2015/12/12-4-2015-Climate-change-task-force-
press-release.pdf.

FSB. “Proposal for a Disclosure Task Force on Climate-Related Risks.” November 9, 2015. https://
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FSB. Report on Promoting Climate-Related Disclosures. July 7, 2021.

https://www.fsb.org/wp-content/uploads/P070721-4.pdf.

Financial Superintendent of Colombia. Annex 2: Disclosure of Information on Social and Environmental

Issues, Including Climate Related Issues. December 2021. https://www.superfinanciera.gov.co/
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Financial Superintendent of Colombia. External Circular 031. December 22, 2021. https://www.
superfinanciera.gov.co/descargas/institucional/pubFile1058633/ce031_21_english.docx.

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Financial Supervisory Commission (FSC) Republic of China (Taiwan). “Guidelines on Climate-related

Financial Disclosures of Insurance Companies.” November 30, 2021.
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FSC Republic of China (Taiwan). “Guidelines for Domestic Banks’ Climate Risk Financial Disclosure.”
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Forbes. “The World’s Largest Public Companies.” Accessed June 8, 2023.

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FORVIA. Sustainability Report 2021-22. November 1, 2022. https://www.faurecia.com/sites/groupe/

files/documents/FORVIA_Sustainability%20Report%202021-2022.pdf.

FORVIA. Universal Registration Document 2022. February 28, 2023. https://www.faurecia.com/sites/

groupe/files/documents/FAU2022_FORVIA_URD_EN_MEL_V2_compressed.pdf.

A. Glasgow Financial Alliance for Net Zero. Financial Institution Net-Zero Transition Plans: Fundamental,
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B.
Hong Kong Monetary Authority. Planning for Net-Zero Transition. August 29, 2023. https://www.
Financial Statement
hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2023/20230829e1.pdf.
Considerations
Hong Kong Stock Exchange. Enhancement of Climate-related Disclosures Under the Environmental,
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D. Hubbard, Douglas. How to Measure Anything: Finding the Value of Intangibles in Business. July 2007.
TCFD-Aligned Requirements
and Related Initiatives International Energy Agency (IEA). Iron and Steel CCS Study. April 2013. https://ieaghg.org/
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ccs-study-techno-economics-integrated-steel-mill.
Types of Financial Impact
IEA. Iron and Steel Technology Roadmap. October 21, 2020. https://iea.blob.core.windows.net/assets/
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Insights Gained and View assets/ebf178cc-b1c9-4de9-a3aa-51a080c0f8c3/SDS-webinar-2019-draft06.pdf.
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International Federation of Accountants. Climate-Related Disclosures Project Brief and Outline. June
2023. https://ifacweb.blob.core.windows.net/publicfiles/2023-06/Final%20Draft%20Climate-
related%20Disclosures%20Project%20Brief%20-%20Clean.pdf.

International Financial Reporting Standards (IFRS) Foundation. “Analysis of the IFRS Accounting
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IFRS Foundation. “Business Combinations — Disclosures, Goodwill and Impairment.” Accessed July
12, 2023. https://www.ifrs.org/projects/work-plan/goodwill-and-impairment/.

IFRS Foundation. “Climate-Related and Other Uncertainties in the Financial Statements.” Accessed
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IFRS Foundation. Comparison IFRS S2 Climate-related Disclosures with the TCFD Recommendations.
July 2023. https://www.ifrs.org/content/dam/ifrs/supporting-implementation/ifrs-s2/ifrs-s2-
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IFRS Foundation. “Connectivity in Practice: The IASB’s New Project on Climate-Related Risks in the
Financial Statements.” March 23, 2023. https://www.ifrs.org/news-and-events/news/2023/03/
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IFRS Foundation. Draft IFRS S1 General Requirements for Disclosure of Sustainability-related

Financial Information. March 2022. https://www.ifrs.org/content/dam/ifrs/project/general-
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IFRS Foundation. Draft IFRS S2 Climate-Related Disclosures. March 2022. https://www.ifrs.org/

content/dam/ifrs/project/climate-related-disclosures/issb-exposure-draft-2022-2-climate-
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A. IFRS Foundation. “Effects of Climate-Related Matters on Financial Statements.” July 2023.

State of Climate-Related https://www.ifrs.org/content/dam/ifrs/supporting-implementation/documents/effects-of-
Financial Disclosures climate-related-matters-on-financial-statements.pdf.

B.
IFRS Foundation. Exposure Draft IFRS® Sustainability Disclosure Standard. March 1, 2022. https://www.
Financial Statement ifrs.org/content/dam/ifrs/project/general-sustainability-related-disclosures/exposure-draft-
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IFRS Foundation. IAS 1 Presentation of Financial Statements. February 2021. https://www.ifrs.org/

C. content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ias-1-presentation-
Case Studies on Scope 3
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GHG Emissions
IFRS Foundation. IAS 16 Property, Plant and Equipment. May 2020. https://www.ifrs.org/content/
D. dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ias-16-property-plant-and-
TCFD-Aligned Requirements equipment.pdf?bypass=on.
and Related Initiatives
IFRS Foundation. IAS 36 Impairment of Assets. May 2013. https://www.ifrs.org/content/dam/ifrs/
E. publications/pdf-standards/english/2021/issued/part-a/ias-36-impairment-of-assets.pdf.
Types of Financial Impact
and Associated Drivers IFRS Foundation. IAS 37 Provisions, Contingent Liabilities and Contingent Assets. May 2020.
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F.
Insights Gained and View
IFRS Foundation. IAS 38 Intangible Assets. May 2014. https://www.ifrs.org/content/dam/ifrs/
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Appendices IFRS Foundation. IFRS 13 Fair Value Measurement. May 2011. https://www.ifrs.org/content/dam/
ifrs/publications/pdf-standards/english/2022/issued/part-a/ifrs-13-fair-value-measurement.
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IFRS Foundation. IFRS for SMEs® Accounting Standard. May 16, 2023. https://www.ifrs.org/content/
dam/ifrs/supporting-implementation/smes/smes-effectsclimaterelatedmatters-may2023.pdf.

IFRS Foundation. “IFRS Foundation Welcomes Culmination of TCFD Work and Transfer of TCFD
Monitoring Responsibilities to ISSB from 2024.” July 10, 2023. https://www.ifrs.org/news-and-
events/news/2023/07/foundation-welcomes-tcfd-responsibilities-from-2024/.

IFRS Foundation. “IFRS Foundation Work Plan.” Accessed July 12, 2023.
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IFRS Foundation. “IFRS - IASB Update March 2023.” March 20, 2023.
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IFRS Foundation. IFRS Practice Statement 2: Making Materiality Judgements. September 2, 2017.
https://www.ifrs.org/content/dam/ifrs/publications/amendments/english/2017/ifrs-practice-
statement-2-making-materiality-judgements.pdf.

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IFRS Foundation. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial

Information. June 26, 2023. https://www.ifrs.org/issued-standards/ifrs-sustainability-
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IFRS Foundation. IFRS S2 Climate-Related Disclosures. June 26, 2023. https://www.ifrs.org/issued-

standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-disclosures.html/
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IFRS Foundation. “ISSB Issues Inaugural Global Sustainability Disclosure Standards.” June 26, 2023.
https://www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/.

IFRS Foundation. “Ten Things to Know about the First ISSB Standards.” June 27, 2023. https://www.
ifrs.org/news-and-events/news/2023/06/ten-things-to-know-about-the-first-issb-standards/.

Institutional Investors Group on Climate Change. “Investors Put Audit Committee Chairs on Notice
over Continued Omission of Climate Risks in Financial Reporting Ahead of 2022 AGM Season.”
April 5, 2022. https://web.archive.org/web/20230602193203/https:/www.iigcc.org/news/
A. investors-put-audit-committee-chairs-on-notice-over-continued-omission-of-climate-risks-in-
State of Climate-Related financial-reporting-ahead-of-2022-agm-season/.
Financial Disclosures
International Materials Data System. “IMDS.” Accessed July 1, 2023.
B.
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Financial Statement
International Monetary Fund. “Datamapper, GDP, current prices.” Accessed June 14, 2023.
Considerations
https://www.imf.org/external/datamapper/NGDPD@WEO/WEOWORLD.

C. International Organization of Securities Commissions. IOSCO Endorses the ISSB’s Sustainability-

Case Studies on Scope 3 related Financial Disclosure Standards. July 25, 2023.
GHG Emissions https://www.iosco.org/news/pdf/IOSCONEWS703.pdf.

D. International Public Sector Accounting Standards Board (IPSASB). Consultation Paper: Advancing
TCFD-Aligned Requirements Public Sector Sustainability Reporting. May 9, 2022.
and Related Initiatives https://www.ipsasb.org/publications/login/59185.

E.
IPSASB. “IPSASB Begins Development of Climate-Related Disclosures Standard for the Public
Types of Financial Impact Sector.” June 14, 2023. https://www.ipsasb.org/news-events/2023-06/ipsasb-begins-
and Associated Drivers development-climate-related-disclosures-standard-public-sector.

International Sustainability Standards Board. Consultation on Agenda Priorities. May 4, 2023.

F. https://www.ifrs.org/content/dam/ifrs/project/issb-consultation-on-agenda-priorities/issb-
Insights Gained and View
rfi-2023-1.pdf.
on Future Work
Invesco Ltd. 2022 Task Force on Climate-Related Financial Disclosures Report. December 29, 2022.
Appendices https://www.invesco.com/emea/en/insights/climate-change-report.html.

Japan Financial Services Agency. “Regarding the Results of Public Comments on the Proposed
Amendments to the ‘Cabinet Office Ordinance on Disclosure of Corporate Information, etc.’”
January 31, 2023. https://www.fsa.go.jp/news/r4/sonota/20230131/20230131.html.

Klabin. “ESG Panel: Task Force on Climate-Related Disclosures.” Accessed May 11, 2023.
https://esg.klabin.com.br/en/tcfd-asg#aumento-temperatura-impacto-negocios.

Klabin. Sustainability Report. June 2022. https://rs.klabin.com.br/en/sustainability-report-2021.

Konica Minolta. Sustainability Report 2022. August 2022. https://www.konicaminolta.com/about/csr/

csr/download/2022/pdf/Konicaminolta_Sustainability_E_2022.pdf.

KPMG. “Can Capital Markets Save the Planet,” October 28, 2021. https://kpmg.com/xx/en/home/
insights/2021/10/can-capital-markets-save-the-planet.html.

Liu, Y. et al. RoBERTa: A Robustly Optimized BERT Pretraining Approach. July 26, 2019.
https://arxiv.org/pdf/1907.11692.pdf.

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MGM. TCFD Report. May 18, 2023. https://www.mgmresorts.com/content/dam/MGM/corporate/csr/

disclosures/mgm-resorts-tcfd-report-2022.pdf.

Mitsubishi UFJ Financial Group (MUFG). Carbon Neutrality Declaration. May 2021.
https://www.mufg.jp/dam/csr/environment/cnd/cnd_en.pdf.

MUFG. “MUFG Appointed as a Lead for the Net Zero Banking Alliance Financing & Engagement Work
Track Group.” November 22, 2021.
https://www.mufg.jp/dam/pressrelease/2021/pdf/news-20211122-001_en.pdf.

MUFG. Progress Report 2023. April 2023.

https://www.mufg.jp/dam/csr/report/progress/202304_en.pdf.

MUFG. Sustainability Report 2022. September 2022.

https://www.mufg.jp/dam/csr/report/2022/sr2022_en.pdf.

MUFG. TCFD Report 2022. October 2022.

https://www.mufg.jp/dam/csr/report/2022/tcfd2022_en.pdf.
A.
MUFG. Transition Whitepaper 2022. October 26, 2022.
State of Climate-Related
https://www.mufg.jp/dam/csr/report/transition/wp2022.pdf.
Financial Disclosures
Moody’s. 2022 Stakeholder Sustainability Report. May 3, 2022. https://www.moodys.com/sites/
B. products/ProductAttachments/Sustainability/2022-stakeholder-sustainability.pdf.
Financial Statement
Considerations Moody’s. 2022 TCFD Report. April 19, 2023. https://www.moodys.com/sites/products/
ProductAttachments/Sustainability/2022-tcfd-report.pdf.
C.
Case Studies on Scope 3 Moody’s. Moody’s Corporation 2022 CDP Response. July 28, 2022.
GHG Emissions https://www.moodys.com/sites/products/ProductAttachments/BX14244_
Moody%E2%80%99s%202022%20CDP%20Response.pdf.
D.
New Zealand Government. Assurance over Climate-Related Disclosures: Occupational Regulation
TCFD-Aligned Requirements
and Expanding the Scope of Assurance. November 2, 2022. https://www.mbie.govt.nz/
and Related Initiatives
dmsdocument/25652-assurance-over-climate-related-disclosures-occupational-regulation-
and-expanding-the-scope-of-assurance.
E.
Types of Financial Impact New Zealand Government. Financial Sector (Climate-Related Disclosures and Other Matters)
and Associated Drivers Amendment Act 2021. October 27, 2021.
https://www.legislation.govt.nz/act/public/2021/0039/latest/LMS479633.html.
F.
Insights Gained and View Nick Anderson. IFRS Standards and Climate-Related Disclosures. November 2019. https://www.ifrs.
on Future Work org/content/dam/ifrs/news/2019/november/in-brief-climate-change-nick-anderson.pdf.

Appendices
Old Mutual. Old Mutual Climate Report 2022. April 14, 2023. https://www.oldmutual.com/v3/assets/
blt566c98aeecc1c18b/blt6a0662e7367e63c0/64463cb5d2002548587a26b2/Climate_Report
_2022.pdf.

Organization of Economic Cooperation and Development (OECD). Biodiversity: Finance and the
Economic and Business Case for Action. December 6, 2019.
https://www.oecd-ilibrary.org/environment/biodiversity-finance-and-the-economic-and-
business-case-for-action_a3147942-en.

OECD. G20/OECD Principles of Corporate Governance. November 30, 2015.

https://www.oecd.org/corporate/principles-corporate-governance/.

OECD. OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans.
October 3, 2022. https://www.oecd-ilibrary.org/environment/oecd-guidance-on-transition-
finance_7c68a1ee-en.

Partnership for Carbon Accounting Financials (PCAF). The Global GHG Accounting and
Reporting Standard Part A: Financed Emissions. Second Edition. December 19, 2022.
https://carbonaccountingfinancials.com/files/downloads/PCAF-Global-GHG-Standard.pdf.

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PCAF. The Global GHG Accounting and Reporting Standard Part C: Insurance-Associated Emissions.
November 16, 2022. https://carbonaccountingfinancials.com/files/downloads/pcaf-standard-
part-c-insurance-associated-emissions-nov-2022.pdf.

Pension Protection Fund. Pension Protection Fund Climate Change Report 2021/2022. June 18, 2023.
https://www.ppf.co.uk/-/media/PPF-Website/Public/Years/2022-08/P/Pension_Protection_
Fund_Climate_Change_Report_2022.pdf.

Pensions and Investments. “The Largest Money Managers.” December 31, 2021.
https://www.pionline.com/largest-money-managers/2022-full-list.

Philippines Securities and Exchange Commission. Sustainability Reporting Guidelines for Publicly-
Listed Companies. February 15, 2019.
https://www.sec.gov.ph/wp-content/uploads/2019/10/2019MCNo04.pdf.

Prague Stock Exchange. “Prague Stock Exchange Launches Sustainability Reporting Guidelines.”
March 9, 2023. https://www.pse.cz/en/news/prague-stock-exchange-launches-sustainability-
reporting-guidelines.
A.
State of Climate-Related Prague Stock Exchange. Sustainability Reporting Guidelines. March 2023.
Financial Disclosures https://www.pse.cz/userfiles/related_documents/cs/ESG-Guidelines.pdf.

Principles for Responsible Investment (PRI). “Investor Groups Call on Companies to Reflect Climate-
B.
Related Risks in Financial Reporting.” September 16, 2020. https://www.unpri.org/accounting-
Financial Statement
for-climate-change/investor-groups-call-on-companies-to-reflect-climate-related-risks-in-
Considerations
financial-reporting/6432.article.

C. PRI. “Meeting the TCFD Recommendations in the 2018 PRI Reporting Framework.” December 18,
Case Studies on Scope 3 2017. https://www.unpri.org/climate-change/meeting-the-tcfd-recommendations-in-the-2018-
GHG Emissions pri-reporting-framework/763.article.

D. PwC. Board Effectiveness: A Survey of the C-Suite. May 2023. https://www.pwc.com/us/en/services/

TCFD-Aligned Requirements governance-insights-center/library/assets/board-effectiveness-and-performance-
and Related Initiatives improvement.pdf.

E.
PwC. PwC’s Global Investor Survey 2022. February 2023.
Types of Financial Impact https://www.pwc.com/gx/en/global-investor-survey/PwC-Global-Investor-Survey-2022.pdf.
and Associated Drivers
Quantis. “Scope 3 Evaluation Tool.” Accessed July 1, 2023.
https://quantis-suite.com/Scope-3-Evaluator/.
F.
Insights Gained and View Railways Pension Scheme. Combined TCFD Report 2022. June 5, 2023. https://cdn.rpmi.co.uk/mp-
on Future Work sitefinity-prod/docs/default-source/tcfd-reports/tcfd-report.pdf.

Appendices Riahi, Keywan et al. RCP 8.5 — A Scenario of Comparatively High Greenhouse Gas Emissions. August 13,
2011. https://link.springer.com/content/pdf/10.1007/s10584-011-0149-y.pdf.

Rio Tinto. Annual Report. February 22, 2023. https://cdn-rio.dataweavers.io/-/media/content/

documents/invest/reports/annual-reports/2022/rt-annual-report-2022.pdf.

Rolls Royce. Annual Report and Audited Financial Statements. February 23, 2023.
https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/annual-report/2022/rr-plc-
annual-report-2022.pdf.

Sanlam. Climate Change Resilience Report 2021. August 10, 2022. https://www.sanlam.com/downloads/
reporting-suite/2021/Climate-Change-Resilience-Report-2021.pdf.

Sasol. Climate Change Report 2021. October 10, 2022. https://sasol.com/sites/default/files/2022-04/

Sasol%20Climate%20Change%20Report_2021_22Sep21_0_0.pdf.

Sasol. Climate Change Report 2022. January 28, 2023. https://www.sasol.com/sites/default/

files/2022-12/SASOL_CC%20Report%202022%20%202.pdf.

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Science Based Targets initiative (SBTi). Catalyzing Value Chain Decarbonization. February 2023.
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investment advice or recommendation of a security or financial instrument. The Task Force on Climate-related Financial
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2023 The Task Force on Climate-related Financial Disclosures.