TCFD: Definition

The Task Force on Climate-related Financial Disclosures (TCFD) was set up by the Financial Stability Board in 2015 to help companies explain how climate change affects their finances. Its 2017 recommendations organised climate disclosure into four pillars:

1. Governance: who oversees climate-related risks and opportunities, at board and management level.
2. Strategy: the actual and potential effects on the business, including scenario analysis.
3. Risk management: how climate risks are identified, assessed and managed.
4. Metrics and targets: the numbers used to track performance, including Scope 1, 2 and 3 emissions.

Where TCFD stands now

The TCFD completed its work and disbanded in October 2023, handing monitoring to the IFRS Foundation. Its four pillars live on in IFRS S2, issued by the ISSB, and Australia’s AASB S2 is built on IFRS S2. In practice, if you have reported against TCFD before, you already know the structure of an AASB S2 report.

What changes going from TCFD to AASB S2

TCFD was voluntary and largely principles-based. AASB S2 is mandatory for in-scope Australian entities, phased in from 2025 by group, and adds specific requirements TCFD only encouraged, such as industry-based metrics, detailed transition plan disclosures, and assurance over the numbers. The biggest practical jump is usually Scope 3 and the evidence trail auditors will ask for.