Energy Advice Hub’s Guide to

Task Force on Climate-Related Financial Disclosures

TCFD reporting: a guide for UK businesses

Over 1,300 UK-registered large companies and financial institutions are required by law to carry out climate-related reporting. For these businesses, annual reporting should include disclosures in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).

Businesses in scope have been doing TCFD-aligned reporting since either 2021 or 2022. Now they need to be aware that change is coming and we can expect new reporting requirements in 2026. The UK Sustainability Reporting Standards (SRS) 1 and 2, currently being finalised, will form the basis of future climate reporting regulations in this country.

This guide explains what TCFD reporting is, why it matters and the new measures that will eventually replace it.

What is TCFD reporting?

We are used to thinking of climate reporting in terms of a company’s carbon footprint. Whether it is in the context of mandatory carbon reporting schemes like SECR or under a broader ESG umbrella, the focus until now has been on how the company affects the climate. TCFD flips the focus: it is all about how the climate affects (or could affect) the business.

Climate change has a potentially huge impact on most businesses, affecting everything from supply chains to recruitment to customer demand and investment. Mandatory TCFD reporting forces businesses to consider this potential impact and think about how it could affect the value of the company’s assets as part of its wider Environmental, Social and Governance (ESG) strategy.

TCFD flips the focus: it is all about how the climate affects (or could affect) the business

What do we mean by climate-related risk?

The changing climate brings a multitude of different risks to businesses, on a spectrum from entirely predictable to completely unexpected. But they come in two broad categories.

Physical risks

Physical risks are connected to the tangible effects, or potential effects, of climate change. This could be anything from transport problems caused by railways buckling in a heatwave, to damaged goods caused by a factory flooding. Physical risks also include the effects of climate change on human beings connected to the business; for example, if the workforce in a particular part of the world is affected by heat-related illness.

Transition risks

Transition risks are connected to our response to climate change and our attempt to transition to a net zero economy. This might mean falling foul of new emissions-related legislation, or customers turning away from a business perceived as slow to act on the climate threat.

Why is TCFD reporting needed?

All business planning should take climate change into account. Investors can’t accurately assess a company’s future profitability without knowing how the changing climate could potentially affect that business.

The problem until fairly recently was that most businesses either didn’t take global warming into consideration when modelling outcomes, or considered it but kept that information private. This lack of transparency puts investors and other stakeholders at a serious disadvantage. The UK Government’s Green Finance Strategy aims to change all that by making climate considerations mainstream. This means requiring businesses to think about how climate change could affect operations and share this information publicly.

TCFD-aligned reporting requires businesses to follow best practice around reporting climate-related risks, which creates market signals that encourage spending on decarbonisation.

“Sustainability is no longer something that can be addressed after strategic investment decisions have been made; it is indispensable to making investment decisions.”

BlackRock, the world’s biggest asset manager

What is the Task Force on Climate-Related Financial Disclosures (TCFD)?

The TCFD was created by the Financial Stability Board (FSB) in 2015. The FSB is tasked with spotting weak points in the global financial system that could cause instability – and climate change is one of the biggest vulnerabilities on its radar.

International financial systems need to price in the risks of climate change, and they can’t do that if the risks are unknown. So the FSB set up a task force, the TCFD, to establish the types of climate-related information that companies should disclose to investors and lenders.

The TCFD published a set of recommendations which became the global standard, endorsed by over a hundred countries. In 2021, New Zealand became the first country in the world to make it mandatory for certain businesses to follow the TCFD’s guidelines. In 2022, the UK became the first G20 country to do the same.

Which companies have to do TCFD reporting?

TCFD reporting rules apply to certain types of organisation. Whether or not your specific organisation is actually in scope depends on whether or not it meets the criteria.

Listed companies

All commercial companies that are publicly listed.

Companies with previous NFIS obligations

Any businesses that previously had to produce a non-financial information statement (NFIS) with their strategic report are now in scope of TCFD-aligned reporting. (It’s now known as the non-financial and sustainability information statement, or NFSI.) This includes:

UK public interest entities (PIEs)
UK-registered companies listed on the AIM (formerly Alternative Investment Market) with more than 500 employees
‘High turnover’ UK companies with turnover above £500 million and over 500 employees

Central government departments

Since 2024, both ministerial and non-ministerial central government departments have to follow the guidance on TCFD-aligned reporting. It also applies to arm’s-length bodies (ALBs) if they have:

Over 500 employees; or
Total operating income of over £500m; or
Been told to follow the TCFD guidance by the department that sponsors them

So, for example, both the Department for Culture, Media and Sport and the Food Standards Agency will have to do TCFD-aligned climate reporting.

The government guidance on TCFD reporting has a flowchart to help you work out whether or not a public sector organisation is in scope. It was last updated in July 2025 and warns that the information may not stay current for long because of the “rapid pace of change across frameworks and requirements”.

Asset managers

For TCFD purposes, the category of asset managers covers:

Investment portfolio managers (including certain private equity and private market business as well as discretionary investment management)
Managers of UK funds in the category of Undertakings for Collective Investment in Transferable Securities (UCITS)
Managers of Alternative Investment Funds (AIFs)

The assets under management need to be £5 billion or more.

Pension providers

The types of pension providers in scope of TCFD are:

FCA-regulated pension providers operating self-invested personal pensions (SIPPs)
FCA-regulated operators of personal or stakeholder pension schemes that aren’t SIPPs.

Will TCFD reporting become mandatory for other companies too?

The government is definitely pushing forwards on climate reporting. But the next step probably won’t have “TCFD” in the name.

The government policy behind mandatory TCFD reporting is the 2019 Green Finance Strategy, which aims for a stronger alignment between the low-carbon transition and the flow of capital. The number of organisations in scope has already increased, as set out in the 2020 Roadmap towards mandatory climate-related disclosures.

But the TCFD itself no longer exists. After achieving its purpose of creating the recommendations and seeing them adopted around the world, it was disbanded in 2023. The responsibility of setting international guidelines has shifted to the International Sustainability Standards Board (ISSB). In the UK, we’re working on developing our own standards based on the ISSB’s.

From 2026 we can expect new reporting rules in line with the coming standards. They won’t be labelled “TCFD” but they will be based on the TCFD’s work. Although we can’t say exactly what’s coming, the regulatory direction of travel is for climate reporting to get more extensive and for the scope of these requirements to widen.

November 2020’s A Roadmap towards mandatory climate-related disclosures also makes it clear that the government is still pushing forwards on climate reporting. The roadmap sets out the expectation that other categories of business will gradually be brought into scope in the coming years, although the exact details are subject to consultation.

TCFD and beyond: a timeline

2015	Task Force on Climate-Related Financial Disclosures (TCFD) formed
2017	TCFD publishes its recommendations on disclosing climate-related risks
2021	TCFD-aligned reporting comes in for ‘premium listed commercial companies’
2022	TCFD-aligned reporting comes in for ‘standard listed commercial companies, asset managers and FCA-regulated asset owners’
June 2023	Building on the work of the TCFD, the ISSB issues two global sustainability standards: IFRS 1 and IFRS 2. Countries, including the UK, begin work on adopting these standards into their own jurisdictions
July 2023	The Financial Stability Board announces that the TCFD’s work is done
October 2023	TCFD officially disbanded
By the end of 2025	Final UK versions of IFRS 1 and IFRS 2 to be published, named UK SRS 1 and UK SRS 2
2026 and beyond	New reporting rules to be created in line with these standards

When and how do I need to report on TCFD?

If your business produces a non-financial and sustainability information (NFSI) statement as part of its Strategic Report, your TCFD-aligned reporting should be part of this. NFSI statements are mandatory for large companies (over 500 employees) that are either traded on a stock exchange, banking companies, insurance companies, listed on the AIM or high turnover (over £500 million).

For other companies and LLPs, it depends on whether or not you already prepare a Strategic Report.

If the company or LLP prepares a Strategic Report, its TCFD reporting should be included in this.
If not, the TCFD reporting should be in the Energy and Carbon Report section of the Directors’ Report.

What do I need to report?

The TCFD says that climate reporting should cover four areas, or “pillars”.

1. Governance

Climate shouldn’t be the responsibility of a single department – it should be part of an organisation’s top-level governance. TCFD-aligned reporting should show that the board, board-level committees and non-executive directors are aware of how climate issues could affect the organisation. Your report should make clear:

how the organisation’s governing body is kept aware of climate risks
how climate is considered when making board decisions
how the organisation enables the board to keep track of progress on climate goals

2. Strategy

This should cover how your business strategy is informed by climate considerations. This means not just the risks, but also the potential opportunities linked to climate action. (For example, taking decisive and public action on emissions may help your business to position itself as a green leader and attract new customers.)

Your business strategy should model how you will respond operationally to different warming scenarios. How will the running of your business change in a 1.5°C warmer world, and how do you plan to respond to that? What about 2°C and beyond?

3. Risk management

Is your organisation taking climate risk as seriously as any other kind of business risk? What is your process for identifying potential climate risks and assessing their severity? Your organisation will have to choose which potential risks to prioritise when allocating resources for managing them. What are your criteria for these kinds of decisions?

Remember that “climate risk” does not just mean physical risks such as a drought affecting agricultural production or a flood causing havoc with supply chains. It could also mean reputational risk, legal risk and more.

4. Metrics and targets

Reporting in the other three categories needs to be backed up with hard numbers. When you model climate risk at different degrees of warming, what figures are you using? What numerical targets are you setting to measure success?

‘Metrics’ should also include:

Emissions data in Scopes 1 and 2 at a minimum
Scope 3 emissions where appropriate
The methodology used to calculate those emissions

Some organisations also publish intensity ratios, to put their emissions reductions in the context of the business. For example, kg of carbon dioxide equivalent per hundred pints poured, per £100 profit or per thousand customers served.

Does my company need a net zero transition plan?

We give a quick introduction to the concept in our guide to net zero transition plans. Essentially, it is about how your organisation handles the shift towards a low-carbon economy. This includes targets for reducing emissions and progress towards those targets.

The TCFD views transition plans as part of an organisation’s strategy to address the climate-related risks and opportunities facing it. As such, sharing a net zero transition plan is an essential part of your TCFD-aligned reporting. To be credible and useful, the transition plan should:

Include detailed numbers
Be realistic for your organisation’s size, resources and sector
Share information about setbacks and barriers to progress as well as wins
Have realistic interim targets, not just one big “by 2050” target
Outline the actions towards each target and the timelines for doing them
Report on progress to date

A transition plan is not the same thing as an adaptation plan, although many organisations will have both.

On the horizon:

Sustainability Disclosure Requirements (SDR)

As you’ve read, TCFD-aligned reporting is part of a broader push towards greater transparency on the climate for businesses. We now have the Sustainability Disclosure Requirements (SDR) from the Financial Conduct Authority. This contains anti-greenwashing measures for all FCA-authorised firms. The intention is for the SDR to expand to all investment products in due course.

The UK’s Sustainability Reporting Standards, SRS 1 and SRS 2, are coming soon. Any future regulatory requirements will have to be in line with SRS 1 and SRS 2.

Three steps to getting TCFD-ready

Step 1 Identify and gather what information you already have that covers the requirements of the four key areas: governance, strategy, risk management and metrics & targets. For many companies, this will involve engaging with multiple different departments, such as regulatory compliance, site management, sustainability or PR.

Step 2 One of the purposes of TCFD is to make climate a board-level issue. Senior management should take overall responsibility for the data that will be used in TCFD reporting, even if the collection of that data continues to be done by the relevant department. It is a good idea to set up a taskforce for this.

Step 3 Once you have all the data in one place, it is time to scrutinise it and look for the gaps. Think about it from the perspective of an investor trying to assess your firm’s viability. What information do you still need? And how should it be collected?