Are you ready for the Task Force on Climate-related Financial Disclosures (TCFD)?

Why is it relevant now?

Climate change is a complex and evolving threat which poses a financial risk to the bottom line. There is an increasing need for businesses to understand their exposure, to consider climate change risks and opportunities in their strategy and decision making, and to transition towards the low carbon economy. 

Regulations require further adoption of TCFD

On 15 December 2021, SGX has mandated listed companies to provide climate-related disclosures based on recommendations of the TCFD on a ‘comply or explain’ basis in their sustainability reports from the financial year commencing 2022.

These disclosures will become mandatory in key sectors namely (i)financial, (ii)agriculture, food and forest products, and (iii) energy sectors for financial years commencing 2023 and for additional sectors in the financial year 2024.

How can applying the TCFD recommendations benefit your business?

Businesses need to understand their own short and long term climate related risks and opportunities in order to align their strategic planning, business processes and wider risk management with the new, inevitable, low carbon economy.

One of the greatest challenges of transitioning to a low carbon economy is that the world; governments, investors, businesses and even consumers are so invested in the traditional economy. Moving away from it means expense and uncertainty. However, whilst this may be true, the earlier a business starts its transition, the less abrupt and expensive the change may be. No one knows how quickly the transitionary pressures will mount and/or whether it will be government, the financial system, suppliers, or consumers that are the ultimate tipping point. However, one thing is certain, the transition is coming and aside from compliance, early adoption of TCFD provides a business framework to plan an orderly transition and to highlight possible opportunities.

How are the TCFD recommendations structured?

There are 4 components to the TCFD disclosures: Governance, Strategy, Risk Management & Metrics and Targets. 

At Mazars, we have structured our TCFD service into 3 stages:

1. Gap Analysis
2. Implementation
3. Reporting

We will walk you through each step of the journey including the more complex required areas such as:

Running scenarios to understand your businesses sensitivity to climate change - each scenario will assess the resilience of your business strategy against a different climate scenario. 

Calculating your company’s Scope 1, 2 and 3 Greenhouse Gas (GHG) using market leading software - understanding your GHG emissions is a key milestone in the journey towards net zero and will help you identify where in your value chain to focus your initial efforts. 

Do you have any questions for us about implementing the TCFD recommendations?