#Insightbites: Do you know how TCFD aligns with the IFRS and ESRS standards?

The Task Force on Climate-related Financial Disclosures (TCFD) has 11 recommended disclosures that are structured around four thematic areas. The IFRS Sustainability Disclosure Standards and the European Sustainability Reporting Standards (ESRS) integrate the 11 TCFD recommended disclosures with additional requirements to ensure a more detailed view of the reporting organization.

1??Governance

?Both standards fully align with TCFD’s governance guidance.

2??Strategy

?Both standards require the use of climate-related scenario analysis to help companies develop a climate strategy and assess their resilience to climate-related risks

?ESRS integrates components of the EU Taxonomy Regulation

?IFRS references transition plans as a part of an entity’s strategy, and thus subject to the strategy disclosure requirements, with explicit requirements around disclosure of emission reduction targets and use of carbon offsets

3??Risk Management

?ESRS includes the concept of double materiality, which is the combination of financial and impact materiality

?IFRS includes processes used to identify and prioritize opportunities

4??Metrics & Targets

?Both standards use the greenhouse gas accounting standards and require all companies to disclose Scopes 1, 2 and 3 emissions.

?ESRS requires the distinction of three levels of targets: general climate-related targets, GHG emission reduction targets, and net zero targets?

?IFRS requires the disclosure of industry-based metrics relevant to an entity’s industry and activities.

In summary, both ESRS and IFRS introduce additional requirements, but overall they?align with TCFD.

ESG 101 #InsightBites

By Earth Academy