The legal reporting requirements for companies affected by the Task Force on Climate-related Financial Disclosures (TCFD)

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).


How did the recommendations become compulsory?

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:

The LLP CFD regulations apply to:

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:

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.


Is there any recommended guidance?

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

SeeMandatory 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.