TCFD standards: what companies need to know

We’re in a new climate era. Companies and CFOs are now expected to report their carbon emissions with the same rigor they bring to their financial results.

But what exactly needs to be disclosed? And to whom? And how?

To promote consistency, the Financial Stability Board—a UN-style body for global financial policy—created the Task Force on Climate-related Financial Disclosures (TCFD), which in 2017 released their first draft of what’s now the world’s baseline for climate reporting.

In this guide we explain what companies need to know about those TCFD standards, while also locating them within the alphabet soup of other global climate protocols. Watershed helps companies navigate all of this; reach out if we can help.

The scaffolding of climate governance

The last few years have seen an initial explosion of frameworks narrowed down to a clear set of high-impact standards across three categories:

Illustration: setting the standard for account, disclosure, & goals
  • How should companies count emissions? Virtually all accounting now follows the Greenhouse Gas Protocol’s standards, which have become to carbon accounting what GAAP is to traditional finance: their rules make it clear what needs to be counted and which buckets to put which items in.
  • What information should companies share publicly? Most global disclosure frameworks are now built atop TCFD, which asks companies 11 core questions about their emissions and climate planning. Many companies then file those answers through the non-profit CDP (more on their relationship at the end).
  • How much should companies reduce emissions? The gold standard for targets is now the Science Based Targets initiative (SBTi), which works backward on a planetary scale to translate total required carbon reductions into 2025-2035 targets for industries and individual companies.

One disclosure standard to rule them all

While TCFD is fairly new, their core principles were designed with existing protocols in mind, with an eye to becoming the single global standard. They’ve now been adopted by the G7 along with a coalition of corporations worth over $25 trillion. This is great news for companies: there’s now a common language for reporting on carbon, just as there is for financial reporting.

A “group of five” representing other standards (CDP, CDSB, GRI, IR, and SASB) are also now officially working to harmonize around TCFD’s core, as are the IFRS and IOSCO. While companies may still be required to report through one or more of those other acronyms, the work they do in preparing TCFD responses will largely be reusable across the board.

What TCFD asks for

The core of TCFD is a set of 11 questions about what you’re disclosing, each designed to provoke answers that meet 10 essential criteria.

These questions are grouped into four major categories:

Illustration of governance, strategy, risk management, metrics & targets


  1. Does your disclosure describe board-level oversight over climate?
  2. What about management-level oversight?

The point here: how is climate being prioritized? What is leadership doing concretely to drive reductions? Where does climate sit in your org chart? Who owns it? How empowered are they?


  1. Does your disclosure describe your climate-related risks?
  2. What about the likely impacts of those risks?
  3. What about expected resilience in likely climate scenarios?

Climate change is well enough understood now for many implications to be obvious. What are you doing about them? Are you prepared? Have increased compliance and insurance costs been budgeted for? What about losses from climate-affected assets and suppliers?

Risk management

  1. Does your disclosure describe how you identify and assess new climate risks?
  2. What about processes for managing those risks?
  3. Are those processes integrated into your normal risk management structures?

Who’s on the watchtower? What are they looking for? How will they report what they find? Who’s responsible to listen? How quickly will they act? Is this happening in a holistic way?

Metrics and targets

  1. Does your disclosure describe the metrics you use to assess climate risks?
  2. Does it list out all your current emissions?
  3. What about your climate targets?

What concrete goals are being worked towards? Are they science-based? Is reliable measurement happening? How are climate numbers being shared across the org?

How to write your answers

Good disclosures don’t just tick a box: they shed useful light.

TCFD thus asks that all answers be written to be relevant, specific, complete, clear, balanced, consistent, comparable, reliable, verifiable, and objective.

Where to disclose

TCFD is itself neutral on where reporting should be published, as those requirements tend to be set by local regulators. Their default best practices are for companies to include their answers along with their annual financial reports and to publish them on their website.

The emerging gold standard is to file via CDP—a non-profit global disclosures library—as this meets most local requirements and helps aggregate useful information on the climate fight. CDP’s questionnaire extends a bit beyond TCFD’s core, while including all of it.

How and why to get started

While originally voluntary, several major economies are now mandating TCFD for their largest companies and institutions: New Zealand’s “comply or explain” policy takes force in 2022, the UK is phasing in new requirements, and Canada has already tied TCFD to COVID bailouts.

This will become the norm as we get deeper into this critical decade. The days of emissions going unreported are effectively over. Though filing isn’t just about compliance: orgs that have adopted TCFD have overwhelmingly found tackling its questions beneficial.

The default approach for climate-concerned companies is now:

  1. Measure emissions across all scopes as outlined by the GHG Protocol
  2. Report results to CDP (which counts as fulfilling TCFD!)
  3. Set a science-based reductions target
  4. Cut emissions, fast


Watershed helps customers with all these steps. Our software is used by companies like Stripe, Shopify, and Square. Measure your footprint with us and be ready for steps 2-4.

Get to net zero with Watershed.

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