The Task Force on Climate-related Financial Disclosures (TCFD) was an industry-led body set up by the Financial Stability Board (FSB) in December 2015 to design a consistent way for companies to tell investors, lenders and insurers about the financial effects of climate change on their business. Chaired by Michael Bloomberg, it published its final recommendations in June 2017. They became the most widely used climate reporting framework in the world and the basis for mandatory rules in several countries.
The TCFD completed its work and disbanded in 2023. Its final status report was published in October 2023, and at the FSB's request the IFRS Foundation took over monitoring of companies' climate disclosures from 2024. The recommendations live on inside IFRS S2, the climate standard of the International Sustainability Standards Board (ISSB), which also houses the standards of the Sustainability Accounting Standards Board (SASB).
The TCFD in plain terms
Imagine a landlord deciding whether to rent a shop to a café. The landlord does not need to know how to make coffee, but does want to know who is in charge, what the business plan is, what could go wrong and how the café measures whether it is doing well. A standard checklist of those four questions makes it easy to compare one café with another.
The TCFD did the same for climate. It gave companies a standard checklist of questions about how climate change could affect their money: who oversees it, how it changes the strategy, how the risks are managed, and which numbers are tracked. Because every company answered the same questions, investors could compare a utility in Germany with one in Japan more easily than before.
The four pillars and eleven disclosures
The recommendations are organised around four themes, broken down into eleven recommended disclosures:
- Governance. How the board oversees climate-related risks and opportunities, and management's role in assessing and managing them.
- Strategy. The climate-related risks and opportunities the company has identified over the short, medium and long term, their effect on the business and financial planning, and how resilient the strategy is under different climate scenarios, including one consistent with 2°C or lower.
- Risk management. How the company identifies and assesses climate risks, how it manages them, and how this fits into overall risk management.
- Metrics and targets. The metrics used, Scope 1, Scope 2 and, where appropriate, Scope 3 greenhouse gas emissions, and the targets the company has set.
The TCFD split climate risks into two families. Physical risks come from the weather itself, such as floods damaging factories. Transition risks come from the shift to a lower-carbon economy, such as new carbon taxes, technology change or changing customer demand. Both can affect asset values, credit risk and the cost of capital.
From voluntary framework to regulation
Initially voluntary, the recommendations were gradually written into law and listing rules. In the United Kingdom, the Financial Conduct Authority (FCA) required premium-listed companies to report on a "comply or explain" basis against the TCFD for accounting periods starting on or after 1 January 2021, and later extended the approach to asset managers and other firms. Japan, New Zealand, Switzerland, Singapore and others adopted TCFD-based requirements in various forms. Central banks and supervisors in the Network for Greening the Financial System also drew on the framework.
In June 2023 the ISSB issued IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures). IFRS S2 is built on the same four pillars, so a company applying it meets the TCFD recommendations. In the United States, the Securities and Exchange Commission (SEC) adopted a climate disclosure rule in March 2024 that drew on the TCFD structure; the rule was stayed during litigation, and in March 2025 the SEC voted to stop defending it.
Use by investors and lenders
TCFD-style reports are read by portfolio managers, credit analysts and stewardship teams. Investors use them in ESG integration to adjust valuations, in corporate engagement to press companies on targets, and in proxy voting decisions on directors. Asset owners such as pension funds publish their own TCFD-aligned reports on how their portfolios are exposed. Investor coalitions, including Climate Action 100+ and the Principles for Responsible Investment (PRI), built TCFD reporting into their expectations of companies and members, and the Net-Zero Asset Owner Alliance (NZAOA) asks members to report progress on a similar basis.
Scenario analysis linked to the Paris Agreement goals, introduced into mainstream reporting by the TCFD, is now a standard tool for banks and insurers stress-testing their exposure to carbon-intensive sectors and for analysts judging the financial materiality of climate issues.
Criticism and limitations
The TCFD's own status reports found that although most large companies disclosed against at least some recommendations, far fewer covered all eleven, and scenario analysis and Scope 3 emissions remained the weakest areas. Critics argued that a voluntary, principles-based framework produced reports that were hard to compare and easy to fill with general statements. Others questioned whether climate scenarios stretching decades ahead could be reliable inputs for valuation. Some business groups and US politicians opposed mandatory climate disclosure as costly and outside the remit of securities regulators. The move to IFRS S2 was intended to address the comparability problem by turning the recommendations into a formal standard.