TCFD disclosures — practical drafting guide
How to draft each of the eleven TCFD recommended disclosures— what regulators and investors expect, where to place each one in the annual report, common pitfalls, and how to position your TCFD content for the UK SRS S2 transition from 1 January 2027.
The disclosure process — six steps
A typical UK TCFD report takes six to twelve months from kick-off to sign-off. The same governance, data and analytical foundations support UK SRS S2 from 2027.
Drafting the Governance disclosures (Gov-a, Gov-b)
Two core disclosures. The board oversight description and the management role description — both required regardless of materiality.
- Gov-a — Board oversight What to cover
- Name the board committee responsible (audit, risk, ESG, or full board). State how often climate is considered. List the climate matters within that committee's terms of reference. Describe the information flow from management to the board. Show how the board integrates climate into strategy decisions, capital allocation, and major capex/M&A.
- Gov-b — Management's role What to cover
- Identify the executive role(s) with climate responsibility (CSO, CFO, COO). Describe the governance structure below board (sustainability committee, climate steering group). Show information flows to management. Describe monitoring frequency and the cadence of climate decision-making.
- Common pitfall Drafting trap
- Vague governance statements that don't name the committee, don't quantify frequency of consideration, and don't tie climate decisions to specific outcomes. The FRC's thematic reviews repeatedly flag governance as the most under-disclosed pillar in UK practice.
Drafting the Strategy disclosures (Strat-a, Strat-b, Strat-c)
Three disclosures, subject to materiality. Strat-c — scenario analysis — is the most technically demanding TCFD disclosure and the area where UK SRS S2 demands the biggest uplift.
- Strat-a — Risks and opportunities by time horizon What to cover
- State the time horizons used (e.g., short 1–3 years, medium 3–10 years, long 10–30 years) and the rationale. List the specific climate risks and opportunities identified at each horizon, distinguishing transition risks (policy, technology, market, reputation) from physical risks (acute, chronic).
- Strat-b — Business and financial impact What to cover
- Show impact on products and services, supply chain, adaptation/mitigation, R&D investment, operations, and M&A. Quantify where possible — investors increasingly expect financial impact figures even where not strictly required under TCFD.
- Strat-c — Scenario analysis What to cover
- Describe the resilience of strategy under different climate-related scenarios, including a 2°C or lower scenario. UK practice typically uses 3–4 scenarios: a 1.5°C Paris-aligned pathway (NGFS Net Zero 2050 or similar), a 2°C disorderly transition, a 3°C delayed transition, and a 4°C hot-house world. For physical risk modelling, IPCC AR6 SSPs and RCPs are the standard reference 2.
- Scenario sources Reference frameworks
- Authoritative scenario references include: NGFS climate scenarios (used by central banks and increasingly by listed corporates); IEA World Energy Outlook (Net Zero by 2050, Stated Policies, Announced Pledges); IPCC AR6 SSPs (for physical risk); UK Met Office UK Climate Projections (UKCP18) for UK-specific physical risk modelling.
Scenario analysis is a process for identifying and assessing the potential implications of a range of plausible future states under conditions of uncertainty. Scenarios are hypothetical constructs and not designed to deliver precise outcomes or forecasts.
TCFD
Drafting the Risk Management disclosures (RM-a, RM-b, RM-c)
Three core disclosures. The key to credibility is showing genuine integration with enterprise risk management — not a standalone climate risk register.
- RM-a — Identifying and assessing risks What to cover
- Describe the process used to identify climate-related risks: workshops, horizon scanning, scenario analysis, peer review. Explain how the organisation determines significance relative to other risks. Show how it considers existing and emerging regulatory requirements. Define the climate risk terminology used.
- RM-b — Managing risks What to cover
- Describe the four-stage decision tree: mitigate (reduce probability), transfer (insurance, financial instruments), accept (where risk-reward justifies it), or control (operational controls). Show how the organisation prioritises climate risks within the broader risk universe.
- RM-c — Integration with overall risk management What to cover
- Demonstrate that climate is not a standalone exercise. Show the same risk taxonomy, same risk appetite framework, same risk committees. Identify where climate has been embedded into existing risk processes (principal risk register, risk appetite statement, business resilience reviews).
Drafting the Metrics & Targets disclosures (M&T-a, M&T-b, M&T-c)
Three disclosures with mixed materiality treatment. M&T-a (climate metrics) and M&T-c (targets) are material-only; M&T-b is split — Scope 1 and 2 are always disclosed, Scope 3 where appropriate.
- M&T-a — Climate metrics What to cover
- Disclose metrics across the seven cross-industry categories: GHG emissions, transition risks, physical risks, climate-related opportunities, capital deployment, internal carbon prices, and remuneration. State methodology, boundary, base year and any restatements.
- M&T-b — Scope 1, 2 and 3 emissions What to cover
- Disclose Scope 1 and Scope 2 emissions always, using GHG Protocol Corporate Standard 3. For Scope 2, use both location-based and market-based methods. Disclose Scope 3 where material across the 15 GHG Protocol categories — many UK listed companies disclose at least Cat 1 (purchased goods and services), Cat 11 (use of sold products) and Cat 6/7 (travel/commuting).
- M&T-c — Targets and performance What to cover
- State whether the target is absolute or intensity-based, the base year, the target year and the time path. State the key performance indicators tracked. Compare actual performance to target and explain variance. Increasingly, UK practice cites SBTi validation as evidence of robustness.
- Common pitfall Drafting trap
- Targets disclosed without progress tracking against base year. Scope 2 disclosed without specifying location-based vs market-based. Scope 3 categories disclosed without explaining materiality assessment. Internal carbon price disclosed without showing application.
What the FRC and FCA repeatedly flag
The FRC’s thematic reviews of TCFD reporting have consistently flagged the same weaknesses since 2022. Avoiding these is the cheapest way to lift TCFD quality — and to be ready for UK SRS S2 scrutiny.
- Boilerplate language Most-flagged issue
- Generic statements about 'taking climate seriously' or 'embedding sustainability' without organisation-specific detail. The FRC has called this out in every thematic review since 2022 — preparers should test every sentence against the question 'is this specific to my business?'
- Weak scenario analysis Strat-c failure
- Scenarios presented without rationale for choice, without quantitative outputs, without explicit financial impact. Under TCFD this can pass; under UK SRS S2 it will not. Start now with quantification where you can.
- Disconnect from financial statements Cross-pillar failure
- Climate disclosures that don't reconcile with capital expenditure plans, impairment reviews, contingent liabilities or going-concern statements in the financial statements. Investors and auditors increasingly check both sides.
- Missing comply-or-explain rationale FCA LR failure
- Where a disclosure is not made under the FCA Listing Rules, the comply-or-explain rationale must identify the specific recommendation not met, the reasons, and the plan to disclose in future. Blanket statements like 'we comply with TCFD' without addressing the gaps fail the standard.
- Out-of-date scope or boundary Data quality
- Emissions reported for FY 2024 boundary when the company has since divested a major business. Restatement policy missing. Boundary definition opaque. The FRC's data-quality bar is rising and will rise further under UK SRS S2 assurance expectations.
TCFD disclosures — frequently asked
Disclosure location, scenario analysis depth, time horizons, Scope 3, and comply-or-explain mechanics.
Where should TCFD disclosures appear in the annual report?
For UK FCA-listed companies, in the Annual Financial Report — typically in a dedicated TCFD section within the strategic report or governance section.
For companies in scope of SI 2022/31, in the Non-Financial and Sustainability Information Statement (NFSIS) within the strategic report.
The TCFD recommended that disclosures be in mainstream financial filings to ensure investors can find them alongside other material financial information.
Do I need scenario analysis under TCFD?
Yes — recommended disclosure Strat-c requires describing the resilience of the organisation's strategy taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
For first-time preparers, the FCA accepts narrative scenario analysis.
UK SRS S2 will require quantitative scenario analysis with financial impact assessment from 2027.
What time horizons should I use for short, medium and long term?
The TCFD does not prescribe specific horizons — organisations should choose horizons appropriate to their business model.
Typical UK practice: short term 1–3 years (aligned with strategic planning), medium term 3–10 years (aligned with capital cycles), long term 10+ years (aligned with major asset lifecycles and net-zero pathways).
Disclose the rationale for the horizons chosen.
Do I need to disclose Scope 3 emissions under TCFD?
Under TCFD, Scope 3 is required where 'appropriate' — effectively where material.
Many UK companies disclose Scope 3 voluntarily because investors expect it.
Under UK SRS S2 from 2027, Scope 3 becomes mandatory with comply-or-explain transitional relief in year one.
Companies should start building Scope 3 capability now even if not yet disclosing.
Can I use comply-or-explain for some TCFD disclosures?
Under FCA Listing Rules (UKLR 6.6.6R(8)), yes — comply-or-explain is the entire basis of the regime.
Where a company does not make a disclosure, it must explain which TCFD recommendation it has not met, the reasons, and the steps and timeframe to make those disclosures in future.
Under SI 2022/31 the regime is mandatory, but with the same materiality nuances as TCFD itself.
The TCFD guide set
From drafting practice, continue to the framework architecture, UK-specific requirements, and the UK SRS S2 migration.
TCFD — the UK guide
Cluster anchor: history, four pillars, UK applicability and the path to UK SRS S2.
RequirementsTCFD reporting requirements
Who must report, where, and when — the legal framework around TCFD in the UK.
FrameworkTCFD framework — four pillars + 11 disclosures
The architecture in detail, with mapping to IFRS S2 and UK SRS S2.
UK-specificTCFD UK requirements
FCA Listing Rules, SI 2022/31, threshold tests and the UK SRS S2 replacement.
MigrationTCFD → UK SRS migration
How existing TCFD reporting maps to UK SRS S2 and the practical uplift required.
AssessmentUK SRS readiness assessment
Capability evaluation across governance, data, methodology and assurance.
Related guides & references
Primary references
TCFD recommendations, IPCC AR6, GHG Protocol — the sources behind every drafting recommendation on this page.