The Task Force on Climate-related Financial Disclosures Forms Advisory Group on Climate-related Scenario Guidance

The Task Force on Climate-related Financial Disclosures (TCFD) is forming an advisory group to assist the TCFD in developing practical guidance on climate-related scenario analysis. In its 2018 and 2019 status reports, the TCFD noted that many companies found scenario analysis to be challenging. Specifically, companies have faced challenges with constructing appropriate scenarios, understanding how scenario analysis informs strategy formulation, and determining and disclosing the resiliency of a company’s strategy under different climate-related scenarios.

In response to these challenges, the TCFD will provide guidance on implementing scenario analysis to better understand how climate-related issues could affect their business strategies. The TCFD’s goal is to provide some of the building blocks that support disclosure of companies’ strategy resilience. The guidance will target companies that are in the early stages of implementing scenario analysis, and will cover:

• Scenario concepts and processes
• How business-relevant scenarios can be constructed
• How scenarios can aid the identification of company-relevant climate-related risks and opportunities
• How scenarios can inform strategic planning regarding different potential impacts from climate change
• Disclosure considerations to demonstrate strategy resilience across scenarios, including financial implications

To assist in the development of this guidance, the TCFD advisory group of industry representatives will advise on guidance content and structure. The members of the advisory group are: