All UK premium listed companies are required to state, in their Annual Report, whether their disclosures are consistent with the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations, or to explain why not.

The TCFD recommendations address governance, strategy, risk management, and metrics and targets, and are supported by 11 recommended disclosures. In order to make these statements, management will need to ensure it is embedding the recommendations of TCFD across the organisation and describe the activities the organisation is undertaking.
 

What questions should audit committees ask?

1. Has management undertaken a gap analysis of current disclosures against the TCFD requirements and is there a plan in place to remediate any gaps?
2. Are we satisfied with the quality of reporting from management on the effectiveness of systems of internal control and risk management for climate-related risks and how climate change issues are considered when reviewing the company’s financial performance, strategy and business plans?
3. Has management appropriately defined and considered any material climate-related risks in preparing the financial statements?
4. Is non-financial information used in the TCFD disclosures reliable and fit for purpose, and is it produced with the same rigour as financial information?
5. What assurance do we require to support TCFD disclosures and/or the adequacy of systems and controls to comply with the TCFD recommendations? Is this assurance sufficiently robust and independent?
    

How can Deloitte help?

We have designed a framework for the provision of assurance over your TCFD disclosures and can support audit committees in their journey towards compliance with TCFD disclosure requirements. The framework is made up of three key areas:

1. Benchmarking and gap analysis
2. Assurance over selected ESG metrics
3. Assurance over TCFD disclosures

Find out more here.

Read our latest Taskforce on Climate-Related Financial Disclosures (TCFD) article on the common challenges other preparers are facing and some illustrative examples of how to address them.