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31 July 2020

The TCFD Consortium announces the release of "Guidance on Climate-related Financial Disclosures 2.0 (TCFD Guidance 2.0)"

With the adoption of the Paris Agreement, there has been a worldwide movement to assess the impact of climate change on the business activities of investee/borrower companies. Against this backdrop, the Task Force on Climate-related Financial Disclosures (TCFD) released its final report in June 2017 (referred to as the “TCFD recommendations”). Following this, the Ministry of Economy, Trade and Industry(METI) released the "Guidance on Climate-Related Financial Disclosures (TCFD Guidance)" in December 2018 as a handbook for implementing the TCFD recommendations.

More than a year after the release of the TCFD Guidance, there has been a significant increase in support for TCFD, as well as an improvement in disclosure. In, Japan, who leads the world in the number of organizations supporting TCFD, the TCFD Consortium was established in May 2019, serving as a place to accumulate relevant knowledge through discussions between companies and investors. Based on the discussions held by the consortium, the TCFD Consortium revised the "TCFD Guidance" created by METI, and announced it as the "Guidance on Climate-related Financial Disclosure 2.0" (TCFD Guidance 2.0).

This guidance is intended to enhance disclosure by companies in line with TCFD recommendations, with revisions of the first edition focusing on the (1) expansion of explanations based on recent knowledge and data on TCFD implementation in Japan and overseas, (2) addition of sector-specific guidance (food, banking, life insurance and non-life insurance sectors), and (3) expansion of case examples of TCFD disclosure by Japanese companies in particular.

The structure of TCFD Guidance 2.0 is as follows.

Chapter 1 (Introduction)
Includes explanations on the background and purpose behind the development and evision of this Guidance, the relationship between TCFD recommendations and this Guidance, etc.

Chapter 2 (Commentaries on disclosure in accordance with TCFD recommendations)
This section provides explanations based on the opinions of financial institutions, case examples of disclosure, and discussions at the time of formulating the TCFD recommendations in order to resolve questions about TCFD recommendations from companies and financial institutions.

Chapter 3 (Sector-specific recommended disclosures)
Since the risks and opportunities for climate change vary from industry to industry, this section explains how to present desirable strategies and recommended ideas and perspectives concerning disclosure in 6 non-financial industries (automobiles, steel, chemistry, electrical and electronics, energy, and food) and 3 financial sectors (banking, life insurance and non-life insurance).

Chapter 4 (Conclusion)
This section explains how to proceed with information disclosure based on the content of this guidance as well as on efforts to further enhance the content of the guidance.

In response to the release of TCFD Guidance 2.0, Ms. Janine Guillot, CEO of the Sustainability Accounting Standards Board (SASB) Foundation, one of the "Knowledge Partners" of the Consortium, commented as follows:

“SASB is truly honored to be a knowledge partner of the TCFD Consortium. Furthermore, we’re impressed by the extraordinary commitment among Japanese companies and government agencies to support the recommendations of the TCFD. As the global transition to a more resilient, low-carbon economy accelerates, we are gratified to see our work referenced by TCFD and the TCFD Consortium as a helpful tool for reporting climate-related risks to investors. We believe improved disclosure will help ensure allocation of capital toward outcomes that mutually benefit companies, shareholders, and the world at large.”

Mr. Peter Bakker, President and CEO of the World Business Council for Sustainable Development (WBCSD) commented as follows:

“COVID-19 has accelerated the need to build resilience against all the interconnected systemic risks we face, one of the biggest of which is climate change. To enable and accelerate positive change for our economies, people and planet, financial markets need robust, comparable and complete data about climate-related risks. Corporate implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) is one of the main levers to help meet this need, supporting investor action that rewards sustainable companies and drives transition towards a low carbon economy.”

In addition, in light of various international discussions currently underway to promote TCFD disclosure, the TCFD Consortium released a message today entitled "Towards a More Decision-Useful TCFD Disclosure" to further promote TCFD disclosure.

The consortium also announced the results of a survey on the status of responses to TCFD recommendations by the consortium members.

Related Materials

※ 31 March 2022 The TCFD Consortium has published a revised version of "Guidance on Climate-related Financial Disclosures 2.0 (TCFD Guidance 2.0)" with additional guidance on international shipping.