On 6 April 2022, the UK became the first G20 country to make mandatory the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD framework). Edward de la Billiere outlines the types of organisations which are legally bound by the recommendations, and what is required of them with regard to reporting and disclosures.

What is the TCFD?

The TCFD is a task force created by the Financial Stability Board in 2015, designed to help organisations disclose climate-related risks and opportunities. It is made up of a global group of 32 members, selected by the Financial Stability Board, who come from various organisations including large banks, insurance companies, asset managers, pension funds, large non-financial companies, accounting and consulting firms, and credit rating agencies.

The task force created a framework: Recommendations of the Task Force on Climate-related Financial Disclosures for organisations to disclose their governance, strategy, metrics and targets and risk management practices.

The framework is aimed at companies looking to reassure investors of their commitment to meeting the Paris Climate Agreement’s target of staying well under 2⁰C.

To help identify the information needed by investors, lenders, and insurance underwriters to appropriately assess and price climate-related risks and opportunities, the Financial Stability Board established an industry-led task force: the Task Force on Climate-related Financial Disclosures (Task Force).
The TCFD

How did the recommendations become compulsory?

The recommendations became mandatory for companies in the UK under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/31) (CFD Regulations) and for LLP’s under the Limited Liability Partnerships (Climate-related Financial Disclosures) Regulations 2022 (SI 2022/46) (LLP CFD Regulations) (SI 2022/46) (LLP CFD Regulations).

What dates will companies need to report from?

The requirements apply to the accounting periods beginning on or after 6 April 2022. The first Non-Financial and Sustainability Information (NFSI) statements complying with the CFD Regulations will therefore be in respect of the period 1 May 2022 to 30 April 2023.

Who do the regulations apply to?

The CFD regulations apply to:

Any company that during the financial year to which the report relates is one of the following:

  • A traded company (including those with securities admitted to or trading on AIM).
  • A banking company (as defined in section 1164(2) and (3), CA 2006).
  • Insurance companies as defined in section 1165(2), CA 2006, and a company carrying on insurance market activity.
  • A high turnover company where:
    • a) the company was not a parent company, a company with turnover for that year of more than £500 million; or
    • b) Where the company was a parent company at any time within that financial year, if in that year, a group headed by the company had an aggregate (net) turnover of more than £500 million.

The LLP CFD regulations apply to:

  • Traded LLP and banking LLPs with more than 500 employees.
  • LLPs that are not traded or banking LLPs and have more than 500 employees and a turnover of more than £500 million.

What do those affected by the regulations have to do?

It varies slightly between the different entities that fall within the regulations but broadly all in-scope entities must include climate-related financial disclosures (CRFD) in their non-financial and sustainability information statement (NFSI statement) (or the LLP equivalent).

Some entities must also include certain other information necessary for an understanding of the company's development, performance and position and impact of its activities.

The BEIS guidance sets out the information that is required as being the following:

Both companies and LLPs are required to disclose the following information:

  • A description of the governance arrangements of the company or LLP in relation to assessing and managing climate-related risks and opportunities;
  • A description of how the company or LLP identifies, assesses, and manages climate related risks and opportunities;
  • A description of how processes for identifying, assessing, and managing climate-related risks are integrated into the overall risk management process in the company or LLP;
  • A description of:
    • a) the principal climate-related risks and opportunities arising in connection with the operations of the company or LLP, and
    • b) the time periods by reference to which those risks and opportunities are assessed;
  • A description of the actual and potential impacts of the principal climate-related risks and opportunities on the business model and strategy of the company or LLP;
  • An analysis of the resilience of the business model and strategy of the company or LLP, taking into consideration of different climate-related scenarios;
  • A description of the targets used by the company or LLPs to manage climate-related risks and to realise climate-related opportunities and of performance against those targets; and
  • The key performance indicators used to assess progress against targets used to manage climate-related risks and realise climate-related opportunities and a description of the calculations on which those key performance indicators are based.
There is increasing scrutiny of companies, especially those with a significant carbon footprint or other environmentally damaging operations. A complete, fact-based TCFD disclosure is a first step in transparency and decreasing the likelihood of climate-change related lawsuits.
Dr Jacqueline Faridani, Head of ESG, Prospect Law

Is there any recommended guidance?

Yes. BEIS has published guidance on the NFSI statement requirements in the form of a non-binding Q&A.

See: Mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs

Tailored Guidance

For company-specific assistance with the disclosure process, our ESG team of financial and legal specialists is able to advise. Please contact a specialist to arrange your introductory call.

Voluntary Disclosure

For smaller companies interested in voluntary disclosure against the Recommendations of the TCFD, please see our blog on The Benefits of ESG Reporting. Our team are available to talk you through how we can develop and create your ESG strategy.


Edward de la Billiere

Edward de la Billiere is a solicitor and co-founder of Prospect Law. He trained at the leading Middle East firm Trowers and Hamlins, working in both their London and Dubai offices, predominantly in the oil sector. On qualification, Edward moved to Magnox Electric as a commercial solicitor, which was taken over by the nuclear operator BNFL.


Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

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  2. Environmental Governance
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