Four pillars of the TCFD recommendations
Businesses have a lot to consider when accounting for climate impacts. The TCFD addresses this with a package of 11 recommendations structured into four core pillars to guide users in their analysis and disclosures.
The pillars, as stated in the Recommendations of the Task Force on Climate-Related Financial Disclosures report, include:
- Governance: The organization’s governance around climate-related risks and opportunities.
- Strategy: The actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.
- Risk management: The process used by the organization to identify, assess, and manage climate-related risks.
- Metrics and targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities.
Notably, the four pillars do not operate in isolation. Interdependence between them is evident throughout the guidance provided, as are the common themes and challenges that can occur, and the overarching value each can bring.