TCFD implementation – Are Financial Services companies rallying behind the recommendations?

By Loukas Metaxas

By Loukas Metaxas


Last week, I was honored to attend a lecture on “Pricing Uncertainty Induced by Climate Change” by the esteemed Nobel prize winner in Economics, Lars Peter Hansen. The lecture was held at the Bank of Greece HQ and attended by the Bank’s Governor Mr. Stournaras, as well as by the Bank’s Chief Financial Officers and Economists. At the end, I asked Mr. Hansen his opinion on the Taskforce on Climate-related Financial Disclosures (TCFD) framework and what he thought its implications were for the Financial Services sector. As it turned out - he hadn’t thought much about it, so I set out to understand more about how the financial community are engaging with TCFD, and if his viewpoint was reflective of the wider industry.

Firstly, what is TCFD?

TCFD is a voluntary, market-driven initiative which outlines a set of key recommendations that aim to enhance companies’ climate-related disclosure information in their existing financial and non-financial filings. You can find out more in our recent KKS blog. It is chaired by Michael Bloomberg and has received endorsement from several other influential figures, including the Governor of the Bank of England, Mark Carney.

What has engagement with TCFD been to date?

Following the publishing of the TCFD’s climate-related disclosures’ in 2017, the Financial Stability Board (FSB) has focused on promoting and monitoring the adoption of its recommendations. In September 2018, the FSB took a major step and published its first status report, with its second one published in June 2019. The reports review the disclosure’s and the level of adoption of the TCFD recommendations by companies and their respective industry and sector peers. Some key findings from the report are:

  • Overall, the majority of companies disclosed information aligned with at least one of the recommended disclosures.

  • There was an increase in the disclosure of the TCFD’s recommendations by 25% from 2018 to 2019.

  • Most of the recommendations are addressed by only half of the ~ 800 signatories and only 20% have disclosed that they have integrated climate change into their risk management process and their corporate strategy.

  • The highest maturity in disclosures was exhibited by European companies.

TCFD and Financial Services

Many financial service companies reviewed in the report exhibited strong alignment with the framework’s recommendations, with their financial disclosures covering the TCFD clauses.


  • The level of disclosure among financial services companies was higher than the average across the entire universe of companies reviewed. A recent survey from the Prudential Regulation Authority (PRA) showed that 70% of the surveyed banks recognize the financial risks posed by climate change. 

  • There was found to be strong oversight of climate-related issues by the Boards of financial service companies.

  • The processes for identifying, assessing and managing climate risks were generally found to be strong.

Areas for improvement

  • Many companies refrained from disclosing how their strategies adapt to the unpredictable nature of climate change.

  • Very few companies had conducted scenario analysis that evaluated the physical and transition risks associated with a 2°C degree scenario. 

What support is available for companies to improve their TCFD-aligned disclosure?

In the future, disclosure will move into the mainstream, and it is reasonable to expect that more authorities will mandate it.
— Mark Carney, Governor of the Bank of England

The United Nations Environment Program Finance Initiative (UNEP FI), in collaboration with 16 of the world’s leading banks, has set out to establish a guiding framework to help companies prepare for a transition to a low carbon economy. Their latest report outlines best practices for companies to implement scenario-based analysis and to evaluate their transition risks.  

Additionally, the Principles for Responsible Investment (PRI) is supporting companies to fulfil the recommendations of the TCFD. It has made it mandatory for its signatories to report on the strategy and governance indicators of the PRI’s climate risk indicators from 2020 onwards and has published commercially available climate scenario tools to help signatories achieve this goal.

Lastly, as part of the European Commission’s Sustainable Finance Action Plan, a new set of reporting frameworks on sustainable finance were published, including a publication on EU climate benchmarks.

Third-party consultancies, including us at KKS Advisors are also establishing guidance frameworks to assist companies in addressing climate change risks and opportunities and support their transition to a carbon neutral economy. If you want to discuss more about how we can support your company in this way, please get in touch.