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5 October 2022

The TCFD Consortium announces the release of "Guidance on Climate-related Financial Disclosures 3.0 (TCFD Guidance 3.0)"

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. The TCFD Consortium, established in May 2019, served as a place to accumulate relevant knowledge through discussions between companies and investors. Based on the discussions at the Consortium, the TCFD Consortium revised the "TCFD Guidance" and made public the "Guidance on Climate-related Financial Disclosure 2.0" (TCFD Guidance 2.0).

The subsequent events such as the announcement of the carbon neutrality target (October 2020) and revision of the Corporate Governance Code (June 2021) led to increased calls for disclosure based on TCFD Recommendations in both quality and quantity. This gave rise to a need to revise the guidance to reflect the state-of-the-art in climate-related disclosure. At the same time, a series of guidance documents were published by TCFD which describes the cutting edge in disclosure. Therefore, the TCFD Guidance is revised to focus on companies that are in the process of expanding their disclosure efforts based on TCFD Recommendations. The volume is made compact to improve readability, the volumes on sector-specific recommended disclosures are provided separately.

Structure of Guidance on Climate-related Financial Disclosures 3.0 (TCFD Guidance 3.0)

Chapter 1 (Introduction)
Explains the background to TCFD, the purpose of developing and revision of the guidance, as well as the positioning of this guidance.

Chapter 2 (Commentaries on Disclosure in Accordance with TCFD Recommendations)
In addition to the four themes TCFD themes ie, Governance, Strategy, Risk Management, and Metrics and Targets, guidance is provided on medium of disclosure, disclosure for companies with diverse business models, and by mid-cap and SMEs.

Chapter 3 (Increasing Corporate Value through TCFD Disclosure)
Summarization of the volume, including “Increasing Corporate Value through TCFD Disclosure" “Importance of Getting Started in Disclosure," and “Refining for Better Disclosure"

Chapter 4 (Addendums)
The following six topics are covered:
(A) Overview of related guidance,
(B) Institutional background on climate-related disclosure in Japan,
(C) Measures related to TCFD Recommendations in other frameworks and standards,
(D) IFRS Sustainability Disclosure Standards,
(E) Overview of discussion on transition, and
(F) Recent publications from TCFD.