The International Financial Reporting Standards (IFRS) Foundation has released a comparison between the requirements in its S2 Climate-related Disclosures and the TCFD recommendations, in response to the Financial Stability Board’s announcement of the completion of the Task Force on Climate-related Financial Disclosures (TCFD) work, culminating in the ISSB Standards.
The comparison confirms that the IFRS S2 aligns with the existing four core TCFD recommendations and eleven recommended disclosures. This means companies adopting the ISSB Standards will automatically meet the TCFD recommendations without the need for additional compliance.
In addition to this alignment, IFRS S2 will introduce some supplementary requirements, including:
- Industry-based metrics disclosure
- Information about the use of carbon credits to achieve emissions targets
- Further details on financed emissions
Although the TCFD’s work is officially completed, the recommendations it produced remain available for companies to use if they wish. According to the IFRS, implementing the TCFD recommendations can still serve as a valuable starting point for companies who are looking to transition to the ISSB Standards.
The integration of TCFD recommendations into the ISSB Standards contributes to simplifying the complexity of disclosure initiatives for companies and investors, streamlining the landscape of sustainability reporting.
Moving forwards, The Financial Stability Board (FSB) has chosen the IFRS Foundation to monitor companies’ progress on climate-related disclosures as of 2024, taking over this responsibility from the TCFD.
With the finalisation of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2, efforts to reduce fragmentation have been advanced, but the previous standards and frameworks remain relevant.
