Corporate reporting bodies launch project championing TCFD alignment

A coalition of corporate reporting bodies including CDP and the Global Reporting Initiative (GRI) has launched a new scheme aimed at unifying the business community's approach to sustainability reporting.

Developed by the Corporate Reporting Dialogue, which consists of eight corporate reporting organisations and is overseen by the International Integrated Reporting Council (IIRC), the scheme has been designed to foster alignment within the sustainability reporting landscape by promoting integration between non-financial and financial reporting.

Through the scheme, the bodies have committed to support the Taskforce on Climate Related Disclosures (TCFD) recommendations, adhere to a common statement on materiality and prepare “effective and coherent disclosures”.

For the next two years, the Corporate Reporting Dialogue will be urging the businesses its members serve to follow suit, providing them with support to map their sustainability frameworks and alter them in order to achieve better alignment.

Launching the project today (7 November) at Bloomberg’s Sustainable Business Summit in London, Corporate Reporting Dialogue chairman Ian Mackintosh said: “The different elements of the corporate reporting system are not working as harmoniously as possible, with the result being that corporate reporting can be seen to pursue conflicting objectives, under disjointed definitions with unclear aims.

“There is a renewed urgency to drive better alignment that can combat reporting fatigue, reduce burden and enable more effective corporate reporting.”

Research suggests that an integrated approach to reporting can showcase how sustainability can act as a holistic driver for growth and value across a business, resulting in higher market valuation, increased stock liquidity and a longer-term investor base. A recent survey of  158 corporates across 17 sectors found that one-third are now producing integrated reports.

TCFD shifts

There are more than 200 TCFD signatories across all sectors, accounting for $44bn in average market capitalisation. An additional 300 firms have expressed support for the recommendations without moving to adopt them yet.

By signing up to the recommendations, these businesses commit to exploring whether they should adopt scenario analysis and report the impact of different scenarios – including the 2C pathway of the Paris Agreement – would have on their operations. The concept of this model is that it encourages businesses to explore uncertainty and create a “well-established method for developing strategic plans that are more flexible or robust to a range of future states”. 

TCFD’s latest status report, which was released in September following analysis of the disclosure practices of nearly 1,800 companies, claimed that the recommendations have helped push climate reporting into the mainstream. However, the report also noted that many businesses are failing to translate climate impacts into business risk.

The TCFD’s recommendations were recently discussed in-depth by a group of sustainability experts outlining what the future holds for reporting. You can read a comprehensive round-up of that debate here.

Sarah George

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