The Financial Reporting Advisory Board (FRAB) recommends a three step approach to TCFD implementation in the public sector.
What is TCFD?
Created in 2015, the Taskforce on Climate-Related Financial Disclosures (TCFD) set out to develop a framework for public companies to productively disclose climate related risks, with the aim of using these to promote more informed and environmentally‑conscious decision making. These recommendations were published in 2017 and adopted by the UK Financial Conduct Authority (FCA) in the 2021 financial year, for UK Premium Listed Companies.
The recommended disclosures are across four areas, referred to as pillars:
- governance
- strategy
- risk management
- metrics and targets
For more information on TCFD legislation and FAQs, please click here.
What are the FRAB recommendations for TCFD implementation?
After establishing a sustainability sub-committee in June 2021, the Financial Reporting Advisory Board (FRAB) have now recommended the phasing in of TCFD reporting for public sector from this current financial year (2023/24). For NHS bodies, this will only apply to those with more than 500 employees or more than £500m operating income. The process of applying TCFD compliance to public sector financial reports is being implemented in three phases:
1 – from 2023/24
High-level narrative on TCFD reporting, as well as all the recommended disclosures for Governance
2 – from 2024/25
Qualitative focus on risk management, specifically on existing metrics and targets. This would comprise of all the recommended disclosures for Risk Management, as well as apply existing metrics and targets data collected to Metrics and Targets disclosures
3 – from 2025/26
Quantitative focus on strategy with potential to expand metrics and targets. This would comprise of all the recommended disclosures for Strategy, including both the qualitative and quantitative. For example scenario analysis and consideration of wider Scope 3 greenhouse gas emissions
As the public sectors adopts TCFD, the objective is that this will aid the public sector in each UK nation to meet their GHG reduction targets and eventually reach net zero.
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