TCFD-aligned disclosure Exposure Draft for Phase 3
Read the full outcome
Detail of outcome
Consultation feedback was evaluated and incorporated into the development of the final TCFD-aligned disclosure Application Guidance. The updated guidance was reviewed and approved by the Financial Reporting Advisory Board and its Sustainability Subcommittee in November 2024. The final Application Guidance was published on GOV.UK on 17 December 2024.
Feedback received
Detail of feedback received
Fourteen responses were received on the Exposure Draft consultation. Further informal feedback was received through separate sessions with preparers and policy teams.
The main themes/views were as follows:
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Support for broader considerations of impacts to be considered in scenario analysis, however, multiple respondents thought providing useful data would be challenging. One respondent was strongly opposed for this reason.
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Multiple respondents opposed the adaptation to Strategy recommended disclosure c) from ‘2°C and below’ to ‘2°C and above’, with most feeling this portrayed the wrong message for government.
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Multiple respondents reflected that there should be a stronger focus on transition risks. Some respondents incorrectly understood from the AG that these were not required under the scenario analysis using Global Warming Level (GWLs).
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Representatives from Scotland and DHSC/NHS bodies (where more ambitious net zero goals of 2045 have been set) noted that guidance was not clear on transition risks.
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Further guidance was requested on climate scenarios with requests for an illustrative example.
Formal responses have been published. Some submissions represent individual views from within organisations rather than official organisational positions. Where possible, relevant details have been included; however, these responses have not been published in full. Additionally, details of certain respondents have been withheld upon request to protect their anonymity. This approach aims to encourage open and candid feedback from affected parties while maintaining a level of transparency consistent with the objectives of the original consultation.
Original consultation
Consultation description
This Exposure Draft is to consult on new climate-related financial disclosures in entity-level annual reports that align with the TCFD’s recommendations.
Introduction
The Phase 3 Exposure Draft addresses the recommended disclosures for the Strategy pillars of the TCFD framework.
Preparers, experts, and other stakeholders from across central government and the wider public sector are asked to provide feedback on the proposed public sector adaptations, interpretations, and considerations – as well as the overall completeness and clarity of the guidance.
Structure
This application guidance is additive, with Phase 3 expanding on the TCFD-aligned disclosure application guidance for Phase 1 and Phase 2. The Phase 1 application guidance was published in July 2023 and addressed the recommended disclosures for the Governance pillar - applying to in-scope central government bodies’ annual reports and accounts from 2023-24. The Phase 2 update was published in March 2024, addressing the Risk Management and Metrics and Targets pillars - applying from 2024-25.
Remit
This Exposure Draft covers the whole UK public sector, which is the boundary for the Whole of Government Accounts. However, the relevant authority for each jurisdiction within that boundary will have their own due process for proposing and approving changes to their reporting regime. This consultation does not supplant those processes.
The proposed changes are published for comment only. The proposals may be modified before being formally presented to the Financial Reporting Advisory Board (FRAB) for their approval.
Effective date
The proposed effective date for central government bodies is 1 April 2025, with Phase 3 disclosures required in annual reports and accounts for 2025-26 on a comply or explain basis.
Other public sector bodies should follow the direction from their respective relevant authority. Public sector bodies may choose to voluntarily apply this guidance - in full or in part.
Documents
Updates to this page
Published 25 July 2024Last updated 17 December 2024 + show all updates
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Formal consultation responses and the overall evaluation and outcome have been added.
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The closing date for the consultation has been moved to 26 September 2024 (previously 19 September).
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First published.