Climate risk disclosure
Also called climate-related financial disclosure, TCFD reporting
Climate risk disclosure is the public reporting of how climate change affects a firm's finances. It covers physical risks such as floods, transition risks from policy and market shifts, and the firm's governance, strategy, metrics and targets. Banks and insurers also disclose the emissions and climate exposure in their lending and investments.
How it works
Firms report against a framework, most often IFRS S2 or a local version of it. Disclosures cover governance, strategy, risk management, and metrics and targets. Banks add financed emissions and exposures to carbon-intensive sectors and to regions at physical risk. Finance, risk and sustainability teams collect the data, run scenario analysis and feed results into the annual report.
Investors and supervisors use the disclosures to compare how exposed firms are to climate risk. For banks, the PRA and ECB link disclosure to how climate risk is managed internally. Weak data or inconsistent figures draw supervisory attention and can raise questions about greenwashing. Rules differ by country, so global groups often report under several regimes at once.
The rules
Requires disclosure of climate-related risks and opportunities across governance, strategy, risk management, and metrics and targets, including Scope 1, 2 and 3 emissions.
Companies in jurisdictions that adopt ISSB standardsSets voluntary Pillar 3 tables and templates for banks covering governance, exposures, financed emissions and physical risk.
Internationally active banks, where jurisdictions choose to adopt itReplaces SS3/19 and sets detailed expectations on climate risk governance, scenario analysis, data and disclosure.
UK banks and insurersUK version of IFRS S2 with limited amendments, published by the government for use in UK sustainability reporting.
Any UK entity, for voluntary useCommon questions
What is the difference between physical and transition risk?
Physical risk comes from climate events such as floods, storms and heat that damage assets or disrupt operations. Transition risk comes from the move to a low-carbon economy, including new laws, carbon pricing, technology change and shifts in customer demand.
What replaced TCFD?
The ISSB took over monitoring of company climate disclosures from the TCFD in 2024. IFRS S2 builds on the four TCFD pillars, so firms that already reported under TCFD use a similar structure with more detailed requirements.
Do banks have extra climate disclosure duties?
Yes. Banks report the climate exposure of their loans and investments, including financed emissions. The Basel Committee published a voluntary Pillar 3 framework in June 2025, and EU banks already report ESG risks under Pillar 3 rules.
Is UK SRS mandatory?
Not yet. The UK government published the final UK SRS S1 and S2 on 25 February 2026 for voluntary use by any entity. The FCA has consulted on Listing Rules changes that would require listed companies to report under UK SRS.
