What is the TFCD?
The Task Force on Climate-related Financial Disclosures, or TCFD, was created with the aim of stabilizing financial markets over the medium to long term by encouraging companies to address climate change through carbon emission reductions. Businesses are required to analyze their sustainability credentials after considering the risks they face as a result of climate change.
The TCFD sets out 11 recommendations on financial disclosures structured around four areas: governance, strategy, risk management, and metrics and targets.
The Importance of TCFD
With revisions to Japan's Corporate Governance Code in 2021 and stock market restructuring in April 2022, TCFD recommended disclosures have become virtually mandatory for companies listed on the Tokyo Stock Exchange Prime Market. Moreover, disclosures are set to be compulsory in securities reports.
As such, companies listed on the Prime Market are required to endorse the TCFD recommendations and make disclosures.
Endorsement and Disclosure of the TCFD Recommendations
Support for the TCFD can be divided into two categories, that of endorsement and disclosure.
Endorsement shows an organization's willingness to follow the intentions of the TCFD. Disclosure is about disclosing information related to the TCFD recommendations on an organization's website and in reports.
The number of TCFD supporters is increasing year by year with the number of supporting organizations in Japan at 878 (as of June 1, 2022), the highest number of any country in the world.
While the number of supporters is increasing, very few companies disclose information on their websites or in reports.
This can be attributed to the low level of awareness surrounding the TCFD and the difficulty involved with preparing such disclosures.
VECTOR utilizes its expertise in public relations to effectively support companies with their information disclosure in line with the TCFD recommendations.
VECTOR provides an all-in-one consulting service from an examination of disclosure items, current situation surveys and strategy scenario analysis, to the formulation of strategy/response plans, the creation of an information disclosure plan and external communication. We also utilize our solutions as ESG/PR consultants to help companies communicate information on the TCFD recommendations in the most efficient way.
Please contact us from the following link for more information.