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Article tcfd 2

Step-by-step guide to drafting a TCFD report

Lim Wei Wei Feb 5, 2024

Since financial year 2022, all companies listed on the Singapore Stock Exchange are required to provide climate reporting on a “comply or explain” basis in their sustainability reports.

There is also a requirement for mandatory reporting for issuers in financial, agriculture, food and products, energy, materials and buildings, and transportation industries progressively from FY2023 and FY2024 onwards.

Drafting a Task Force on Climate-related Financial Disclosures (TCFD) report involves a systematic process to ensure comprehensive and transparent disclosure of climate-related risks and opportunities.

With year-end reporting season around the corner, we have come up with this step-by-step guide to help you draft your TCFD report.

1. Start off by understanding the TCFD Recommendations & establishing a TCFD workgroup

First, familiarise yourself with the TCFD recommendations by understanding the 4 core elements:

  • Governance
  • Strategy
  • Risk Management
  • Metrics & Targets

Form a cross-functional team that includes representatives from various departments involved.

2. Identify and engage stakeholders

Identify key stakeholders such as investors, regulators, customers and employees to understand their expectations regarding climate-related disclosures, engaging in dialogue and gathering feedback.

3. Assess climate risks and opportunities

Conduct a thorough assessment of climate-related risks and opportunities by giving consideration to both physical risks (e.g. extreme weather events) and transitional risks (e.g. policy changes and market shifts).

Scenario analysis can also be used to understand potential impacts on the organisation.

4. Disclose governance structure and align strategy with climate goals

Describe the roles and responsibilities of the board, executive management and relevant committees in overseeing and managing climate-related risks and opportunities.

Detail how climate-related risks and opportunities are integrated into the organisation’s overall strategy, providing insights into how the strategy aligns with a 2°C or lower scenario, describing how the company intends to address the resulting potential financial impacts.

5. Describe risk management processes

Explain how the company identifies, assesses and manages climate-related risks. Highlight the processes to integrate climate risk considerations into the overall enterprise-wide risk management framework.

6. Establish metrics and targets

Disclose key performance indicators (KPI), metrics and targets used to assess and manage climate-related risks and opportunities.

Do include both qualitative and quantitative disclosures where relevant.

7. Scenario Analysis

On a scenario analysis approach, describe the resilience of the Company’s strategy under different climate-related scenarios.

Where possible, provide insights on the organisation’s plan for various climate-related scenarios.

8. Reporting

Organise the information in a clear and structured manner, with a focus on ensuring consistency and comparability.

Last, but not least, consider obtaining external assurance for your TCFD report to enhance credibility.

We hope that these pointers will help guide you in preparing your TCFD report.

Our sustainability specialists are also a short call away should you require our team’s assistance.

Step-by-step guide to drafting a TCFD report

View the full infographic here

Photo of Lim Wei Wei
Lim Wei Wei
Partner & Practice Leader | CA (Singapore), MBA

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