The annual report shows a considerable uptake in the adoption of climate-centred financial disclosures.

By Paul A. Davies and Michael D. Green

The Task Force on Climate-related Financial Disclosures (TCFD) published its Annual Report on TCFD-aligned disclosures by firms (Annual Report), on 29 October 2020. The TCFD was established by the Financial Stability Board (FSB) in 2015 as a mechanism to develop an approach for companies to disclose climate change matters. The TCFD offers companies guidelines and disclosure recommendations for providing information to investors, so that companies can provide more consistent, comparable data. The TCFD also promotes climate-related scenario analysis and the integration of climate-related risks into risk-management processes.


As the Annual Report shows, private organisations are increasingly choosing to disclose in accordance with the TCFD, whose recommendations and guidelines are said to increase a company’s transparency and also help actors present data that is comparable against industry peers. Of note, governments and public institutions around the world are also increasingly endorsing the TCFD. For example:

Annual Report Findings

Using artificial intelligence, the TCFD reviewed the disclosures of 1,700 large companies in multiple sectors and regions over a three-year period. The TCFD also consulted with a small group of experts to gain insight into the type of information users find most useful when making investments. The Annual Report contains key findings on the state of the recommendations of the TCFD, addressing implementation issues, case studies on implementation, and information on other initiatives supporting the TCFD. The most important findings are as follows:

  • Nearly 60% of the world’s largest public companies support the TCFD or report in line with the recommendations of the TCFD.
  • More than 1,500 organisations have expressed their support for the recommendations of the TCFD, an increase of over 85% compared with the 2019 annual report.
  • Forty-two percent of companies with a market capitalisation greater than US$10 billion disclosed at least some information in line with TCFD recommendations in 2019.
  • For the fiscal year 2019, the average level of disclosure was 40% for energy companies and 30% for materials and buildings companies.

Next Steps

“The work that governments and businesses are doing to address the devastation caused by the coronavirus is also an opportunity to build a stronger, more resilient, and more sustainable economy — and transparency and disclosure have an important role to play,” said Michael R. Bloomberg, Chair of the TCFD. Given the momentum behind the idea of “building back better”, companies will likely either continue to disclose in accordance with the recommendations of the TCFD or commence providing such disclosures.

Latham & Watkins will continue to monitor developments in this area.

This post was written with the assistance of Sabina Aionesei in the London office of Latham & Watkins.