How TCFD Is Integrated into the ISSB Framework?
- EcoVision
- Oct 30
- 2 min read
Updated: Nov 11
The Task Force on Climate-related Financial Disclosures (TCFD) has been a critical foundation for the development of global sustainability reporting standards.
Its principles and structure have been directly integrated into the International Sustainability Standards Board (ISSB) framework to ensure a unified approach to sustainability and climate-related disclosures.
The Task Force on Climate-related Financial Disclosures (TCFD) was officially disbanded on October 2023. This decision was made because the work of the TCFD had effectively been integrated into the International Sustainability Standards Board (ISSB) framework, particularly in the development of the IFRS S2: Climate-related Disclosures standard.
Key Integration Points
1. Alignment of Objectives
TCFD's Goal: To improve and increase the reporting of climate-related financial information to stakeholders.
ISSB's Goal: To create a comprehensive global baseline for sustainability disclosures, ensuring consistency and comparability across jurisdictions.
Integration: The ISSB embraced the TCFD as the backbone of its climate-related disclosure standard (IFRS S2: Climate-related Disclosures), aligning with TCFD's structure and objectives to create a unified global framework.
2. Adoption of TCFD Framework
The ISSB has fully adopted the four core pillars of the TCFD framework:
Governance: How an organization’s climate-related risks and opportunities are overseen at the board and management levels.
Strategy: How climate-related risks and opportunities affect the organization’s business model, strategy, and financial planning.
Risk Management: Processes for identifying, assessing, and managing climate-related risks.
Metrics and Targets: Metrics and targets used to assess and manage relevant climate-related risks and opportunities.
These pillars serve as the structural basis for IFRS S2, ensuring continuity for organizations already using TCFD guidelines.
3. Enhanced Disclosure Requirements
Broader Scope: The ISSB builds on TCFD by integrating additional ESG areas, such as biodiversity, water, and social impacts, under its IFRS S1: General Requirements for Sustainability-related Disclosures.
Granularity: ISSB standards provide more specific guidance on disclosure metrics, integrating TCFD's recommendations into a detailed framework for consistent reporting.
4. Consistency and Comparability
Global Applicability: By embedding TCFD principles in its standards, the ISSB ensures that disclosures are consistent across industries and regions, making it easier for investors to compare sustainability data.
Regulator Adoption: Many jurisdictions are incorporating ISSB standards into their regulatory frameworks, extending TCFD’s influence through a globally recognized standard.
5. Support for Transition Plans
The ISSB expands on TCFD’s focus on transition plans by requiring detailed disclosures on how companies aim to achieve net-zero targets or adapt to a low-carbon economy, ensuring accountability.
Benefits of TCFD-ISSB Integration
Harmonization: Reduces duplication and confusion caused by multiple sustainability frameworks.
Investor Confidence: Provides investors with reliable, decision-useful climate-related financial information.
Scalability: Offers a consistent standard that can evolve to address emerging sustainability challenges.
Conclusion
The ISSB has effectively integrated the TCFD framework into its sustainability standards, particularly IFRS S2 for climate-related disclosures.
This ensures a seamless transition for organizations familiar with TCFD, while expanding the scope of disclosure requirements to cover broader sustainability topics.
The adoption of TCFD principles within the ISSB framework represents a significant step toward global consistency and transparency in ESG reporting.
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