IFRS takes over monitoring climate-related disclosures from TCFD

December 8th, 2023

The International Financial Reporting Standards Foundation (IFRS) will oversee companies’ climate-related disclosures following the disbanding of the Task Force for Climate-related Financial Disclosures (TCFD).

The Financial Stability Board (FSB) has announced that the work of the TCFD has been completed, with the International Sustainability Standards Board’s (ISSB’s) Standards marking the ‘culmination of the work of the TCFD’.

The TCFD recommendations are fully incorporated into the ISSB’s standards, therefore any companies applying IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures will meet the TCFD recommendations.

There are additional requirements in IFRS S2, as these standards require companies to disclose industry-based metrics.

The rules also require firms to disclose information about their planned use of carbon credits to achieve their net emissions targets and to disclose additional information about their financed emissions.

Companies can continue to use the TCFD recommendations should they choose to do so, and some may still be required to use the TCFD recommendations.

In a meeting of the FSB Plenary in July, it said: “The Plenary thanked the TCFD for its work over the years and the major contribution it has made to the progress in improving climate-related financial disclosures around the world.

“It stressed the continued importance of monitoring and reporting on progress in companies’ climate-related disclosures.”

The TCFD was launched by the FSB in 2015 and published its recommendations in 2017 with its final requirements published in December 2021.

Since the publication of its recommendations in 2017, the TCFD has provided annual updates on progress in companies’ climate-related disclosures. The latest TCFD status report was published in October 2022.

The requirements were made mandatory in the UK in April 2022.