Majority of UK firms see TCFD climate reporting as 'box-ticking exercise'

The majority of high-turnover UK companies believe that the new mandatory Task Force on Climate-Related Financial Disclosures (TCFD) reports will likely be seen as greenwashing, revealed data from RSK.

The environmental consultancy firm commissioned Censuswide to carry out a survey of 100 C-Level Executives at UK companies with more than 500 employees and £500m annual turnover in order to identify firms’ views on the new TCFD regulation.

From today (6th April), more than 1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related financial information on a mandatory basis, in line with recommendations from the TCFD.

According to the RSK survey, 73% of respondents view the overall TCFD report process as a box-ticking exercise.

In addition, as there are no set guidelines from the TCFD regarding how much detail companies will have to report, 77% of those surveyed said they were likely to reduce what they will disclose in their reporting to avoid giving away commercially sensitive information.

Despite the concerns over reporting, 82% of respondents agree that the TCFD will make it easier to compare how companies are preparing their businesses for climate change.

In addition, 59% of survey participants believe that the TCFD is better for encouraging senior-level discussions on climate change than other climate standards.

According to RSK, this could potentially lead to positive change, as only 7% of respondents said climate change risk is currently discussed at every monthly board meeting. 

The survey also revealed that 73% of those surveyed are ready to comply with the TCFD requirements.

When discussing the challenges in preparing their company’s TCFD reports, the top three obstacles quoted by respondents were:

  • the cost of internal resources required to comply with the TCFD (46%)
  • the cost of having to buy in external consultancy input and support (38%)
  • avoiding disclosing commercially sensitive information (37%)

According to RSK, companies expect to spend an average of £80,000 on external support for their first TCFD analysis and disclosure.

Alan Ryder, CEO at RSK, said: “The new TCFD regulations will encourage companies to devote more attention to climate risks and opportunities, which is vital if we are to successfully transition to a net zero economy. 

“It is encouraging to see the majority of businesses are ready to report in line with the TCFD when it becomes mandatory from this April, despite many feeling it may not provide the transparency it’s intended to.

“Hopefully the government will review the first year of TCFD and consider setting minimum standards or a framework for reporting for future years, so there is greater uniformity across all company reports. 

“In the meantime, companies can leverage specialist technical knowledge and advice to help them complete their disclosures to ensure they are as transparent as possible.” 

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