TCFD consults on guidance on climate metrics, targets and transition plans

The Task Force on Climate-related Financial Disclosures (TCFD) is consulting on: 

• Proposed Guidance on Climate-related Metrics, Targets, and Transition Plans; and 
• Measuring Portfolio Alignment: Technical Supplement. 

The consultation closes on 7 July. The final guidance is expected to be published in the fall of 2021.  The TCFD is asking respondents to fill in this questionnaire when responding to the consultation. 

The Proposed Guidance provides general guidance for organisations seeking to establish relevant metrics, targets, and transition plans around their climate-related risks and opportunities, similar to the TCFD’s 2020 guidance documents on scenario analysis and risk management. It also proposes specific changes to the Guidance for All Sectors and Supplemental Guidance (the 2017 TCFD annex).

Responses to a consultation in 2019-21 carried out on potential forward-looking metrics for financial institutions suggested that, although some financial organisations are actively using forward-looking metrics, many need more clarity on methodology and standardisation. The TCFD is therefore developing technical guidance on emerging best practice on building portfolio alignment tools and producing forward-looking measurements of financial portfolio alignment with the goals of the Paris Agreement. The Technical Supplement being consulted on explains what portfolio alignment tools are, how they can be used and what makes a good portfolio alignment tool. However, it is not meant to be a definitive guide to the optimal technical approach to portfolio alignment tool design. The recommendations in that document should be viewed as a first step toward promoting the widespread adoption of more consistent, robust, and decision-useful portfolio alignment approaches that will continue to evolve.

The guidance comes at a very apt time as several companies, banks and asset managers look to review their climate targets and plans in light of the recent decision in the Shell climate court case and various climate-related shareholder votes at this year's AGMs.