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Emma Wu

Emma Wu

Senior Associate, MSCI Research

Zohir Uddin

Zohir Uddin

Senior Associate, MSCI Research

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As TCFD Comes of Age, Regulators Take a Varied Approach

  • As regulators around the world continue to align with Task Force on Climate-related Financial Disclosures (TCFD) standards, 2022 marks a step change, with national-level disclosure requirements for firms set to go live.
  • Our analysis indicates that national regulators are taking different approaches in their implementation of TCFD-aligned climate disclosure rules.
  • One commonality is that companies will be increasingly required to disclose forward-looking metrics so investors can assess their capacity to transition. Overall, however, national disclosure rules may continue to diverge.

The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) have become a landmark reference for investors trying to integrate climate risks into asset-allocation and portfolio-management decisions. More than 2,600 organizations — including 1,069 financial institutions, with a total of USD 194 trillion of assets under management — have signed statements of support for the TCFD recommendations.1

Investors now face the challenge of making sense of how various jurisdictions will implement their versions of the TCFD’s standards. To help, we assessed the existing and proposed national TCFD frameworks on their comprehensiveness, consistency and stringency. We also assessed how closely each follows the TCFD’s blueprint.


TCFD’s evolving recommendations

Last year’s updated TCFD guidance put forward a set of cross-industry core metrics and a forward-looking assessment framework to guide net-zero-aligned capital allocation. This development was timely, as the pace for more climate-related disclosures has picked up around the world: The G-7 last year committed to making TCFD reporting mandatory, and the G-20 is calling for consistent disclosure requirements across countries.2

The effect of regulators’ push for a more standardized reporting mechanism can be seen in the increase of net-zero pledges by companies. While more disclosure will be needed to meet the TCFD’s requirements, the increase in company-set targets shown in the chart below can be linked to TCFD adoption.3 As of March 2022, 1,330 of the more than 2,900 constituents of the MSCI ACWI Index had set emission-reduction targets; and of those 1,330, 31% had introduced a self-declared net-zero target.


Steady rise in companies setting decarbonization and net-zero targets

Data on companies in the MSCI ACWI Index, as of March 2022. When target announcement dates were not disclosed, we assumed the targets were set in 2021. Source: MSCI ESG Research LLC


National regulators are mandating TCFD-aligned rules

Over the next 12 months, at least 10 major economies will start introducing TCFD-aligned disclosure rules for listed companies, large firms, financial institutions or firms that fall in some combination of these categories. In March, the U.S. joined the list of markets aiming to mandate TCFD-aligned rules, after the Securities and Exchange Commission (SEC) published its proposals for climate-risk disclosures.4 As these rules come into effect, investors will get access to clearer climate-related information from companies.


TCFD-aligned rules coming online in 2022


Jan-Feb Mar-Apr May-Jun Jul-Aug Sep-Oct Nov-Dec
Financial Conduct Authority rules on TCFD come into force


Requirements for issuers to adopt climate reporting by the SGX comes into force
Securities and Exchange Commission publishes its climate disclosure rule for public comment


initiates consultation on ordinance on climate reporting by large companies


Financial Services Agency will require prime-segment listed companies to disclose against TCFD
Requirement for largest listed issuers to disclose their business-sustainability reports become mandatory for fiscal year 2022-2023
Hong Kong
The Securities and Futures Commission requires all large fund managers to disclose their climate-related risks
First set of reporting standards for the Corporate Sustainability Reporting Directive will be adopted
New Zealand
The External Reporting Board will publish first set of climate reporting standards


The Central Bank of Brazil’s regulation on climate-risk disclosures will come into force


TCFD adoption has been a mixed bag

While regulators increasingly use the TCFD framework as a model, our assessment across six criteria suggests that they are taking different approaches to implementing reporting requirements.

  • Regulators differ in their requirements for forward-looking metrics, transition plans and scenario analysis. For example, France and New Zealand set a higher standard than Canada and India, which don’t include scenario analysis in their climate disclosure proposals.
  • There is inconsistency in the scope of firms captured by national climate disclosure rules. Whereas the U.K. includes all listed firms, financial institutions and large private companies,5 other jurisdictions such as Brazil and Hong Kong currently plan to require only financial firms to disclose their climate risks.
  • There is regional divergence regarding the concept of materiality.6 The EU is adopting a double-materiality approach, including both financial and impact materiality, as part of its disclosure requirements, with China taking a similar approach.7 In the U.S., however, there is a strict focus on financial materiality, consistent with the recent draft climate-related disclosure requirements from the International Sustainability Standards Board, which are closely tailored to the TCFD framework.8


TCFD-aligned regulations around the world measured against six criteria

Our analysis also suggests that national regulators are stopping short of requiring full disclosure of a common set of cross-industry climate metrics aligned with the TCFD. The only exceptions to this are the EU and New Zealand, as the exhibit below shows.

For example, large G-20 economies such as China, Australia and Canada have significant gaps in their inclusion of TCFD metrics. Even in the U.K., which positions itself as a TCFD leader, there is only partial coverage of these metrics in climate disclosure requirements. As a result, despite efforts toward convergence, investors will not readily have access to comparable data across markets or sectors.


Adoption of TCFD core cross-industry metrics by jurisdictions

Source: TCFD


Toward fragmentation?

All indications suggest we will continue to see a rise in TCFD-aligned rules around the world. Wider adoption may be seen as a trend toward greater convergence across markets; but based on a closer examination of how regulators are translating TCFD standards in their respective jurisdictions, our research suggests that national disclosure rules may continue to diverge.



1“2021 Status Report.” Task Force on Climate-related Financial Disclosures, Oct. 14, 2021.

2“G7 Finance Ministers and Central Bank Governors’ Communiqué.” Finance Ministers and Central Bank Governors of the G7, June 5, 2021.
“Reports to the G20: Report on promoting climate-related disclosures.” Financial Stability Board, July 7, 2021

3“2021 Status Report,” TCFD.

4“Proposed Rule: The Enhancement and Standardization of Climate-Related Disclosures for Investors.” Securities and Exchange Commission, March 21, 2022.

5In the U.K., the Financial Conduct Authority is introducing TCFD-aligned climate disclosure rules in a phased approach that depends on the type of firm or issuer.

6In the world of reporting, particular information is considered financially material, or relevant, if it could influence the decision-making of investors in the reporting entity — in other words, if it could impact enterprise value.

7A double-materiality approach requires firms to report not only how sustainability factors affect their financial position, but the impact of their own business activities on the planet and society. “Corporate Sustainability Reporting Directive proposal” European Commission, April 21, 2021.

8“Exposure Draft: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.” International Sustainability Standards Board, March 31, 2022.
“Exposure Draft: IFRS S2 Climate-related Disclosures.” ISSB, March 31, 2022.



Further Reading

Companies May Not Be Ready for SEC Climate-Disclosure Rules

2022 ESG Trends to Watch

Regulation at a Crossroads: Convergence or Fragmentation?

TCFD-Based Reporting: A Practical Guide for Institutional Investors