Harish joined the Business Development team at Integrum ESG after having previously overseen BD for the investment network Venture Giants, and also worked within the Customer Experience Program Team at Amazon. He has a BSc in Philosophy, Logic and Scientific Method from the London School of Economics and Political Science.
A practical guide to TCFD aligned reporting, the metrics investors must disclose and what to prepare ahead of the FCA's 30 June deadline.
TCFD reporting has become one of the most visible expressions of climate accountability in the investment industry.
For asset managers, asset owners and wealth managers in scope, the annual TCFD product report is no longer a one-off exercise. It is a recurring process that combines climate data, scenario analysis and portfolio-level calculations, all produced to a regulatory standard and under a fixed deadline.
This article explains what TCFD reporting involves, what the FCA requires, where else TCFD aligned reporting is mandatory, the practical challenges investors tend to encounter and how to approach the process whether you are reporting for the first time or looking to streamline your existing approach.
Short on time? Speak to our team to see how Integrum ESG can support the preparation of your TCFD report.
The Task Force on Climate-related Financial Disclosures (TCFD) was established in 2015 by the Financial Stability Board to develop consistent climate-related financial risk disclosures for companies, banks and investors.
Its recommendations are structured around four pillars: governance, strategy, risk management and metrics and targets.
Although the TCFD itself was formally disbanded in October 2023, with its monitoring role transferred to the IFRS Foundation, its recommendations continue to underpin mandatory climate reporting regimes globally. In several jurisdictions, including the UK, the framework remains the basis for regulated disclosure requirements.
For investors, TCFD reporting translates into producing a structured disclosure at both entity level (covering the firm itself) and product level (covering each in-scope fund or portfolio).
Under mandatory TCFD regimes such as the FCA's, in-scope firms must produce two separate reports each year.
A firm-wide disclosure covering how the organisation itself governs, manages and reports on climate-related risks and opportunities.
It sits across all four TCFD pillars (governance, strategy, risk management and metrics and targets) and explains how climate considerations are embedded into the business as a whole.
Entity reports are typically published on the firm's website and referenced in its annual sustainability reporting.
A fund or portfolio specific disclosure covering the climate-related metrics and scenario analysis of each in-scope product. This is the quantitative, data-heavy report that contains the five core metrics, additional metrics and scenario analysis for each fund.
The two reports serve different audiences. The entity report speaks to how a firm approaches climate risk at an organisational level and is often used by clients, consultants and regulators assessing the firm's overall climate governance.
The product report speaks to the climate characteristics of specific funds and is typically used by end-investors, allocators and due diligence teams evaluating individual mandates.
A TCFD product report brings together three components.
These are the mandatory quantitative climate disclosures that must be included for every in-scope fund.
Where reasonably practicable, firms must also include forward-looking climate risk metrics such as:
Where a fund has exposure to carbon-intensive sectors, a quantitative scenario analysis is required across three transition pathways defined by the Network for Greening the Financial System (NGFS):
For funds with lower exposure to carbon-intensive sectors, a qualitative scenario analysis is generally sufficient.
Every TCFD product report is only as reliable as the climate data behind it. Integrum ESG's climate risk data covers Scope 1, 2 and 3 emissions, carbon footprint and climate scenario outputs at both company and fund level, with every datapoint traceable to source.
The UK was among the first jurisdictions to introduce mandatory TCFD aligned disclosures for the investment industry. The Financial Conduct Authority's ESG Sourcebook rules (ESG 1 to ESG 3) require asset managers and asset owners to produce both entity-level and product-level TCFD reports.
Implementation was phased, with the largest firms in scope from 30 June 2023 and the broader set of firms from 30 June 2024 onwards.
In the UK, FCA regulated asset managers and asset owners with more than £5bn in AUM or administration must publish annual entity-level and product-level TCFD reports by 30 June each year.
In practice this includes:
Within an in-scope firm, the rules apply to specific "TCFD products".
For asset managers this covers authorised funds, unauthorised AIFs managed by UK AIFMs and portfolio management services.
For asset owners it covers insurance-based DC pension schemes, personal pensions and workplace pension schemes.
Each in-scope product requires its own annual product-level TCFD report.
Annual TCFD reports must be published by 30 June each year, covering the 12-month period to 31 December of the prior year.
The FCA specifies the metrics that must be included (the five core metrics set out above) and requires additional metrics and scenario analysis where reasonably practicable.
Firms must also explain their methodology, any proxies used and any limitations in the underlying data.
For firms in scope, this means the process of TCFD reporting is now annual and structural.
It needs to be repeatable, defensible and aligned with the firm's broader sustainability strategy, including any Net Zero commitments.
For funds with lower exposure to carbon-intensive sectors, a qualitative scenario analysis is generally sufficient.
Regulatory expectations around climate and sustainability disclosure are evolving quickly, both in the UK and globally. Integrum ESG's Regulatory Intelligence solution helps investors track requirements and deadlines across jurisdictions in a single view.
Although the UK's framework is among the most developed, TCFD aligned disclosure is now mandatory in several other jurisdictions, including:
Large financial institutions, including licensed investment managers, are required to make TCFD aligned climate disclosures under the Climate-related Disclosures regime.
Large Swiss companies and financial institutions are subject to mandatory climate disclosures aligned to TCFD.
Listed companies on the Tokyo Stock Exchange Prime Market are required to disclose in line with the TCFD framework.
The SFC requires fund managers managing collective investment schemes to disclose climate-related risks in line with TCFD.
Listed issuers in certain industries are required to make climate-related disclosures aligned to TCFD.
Beyond mandatory regimes, TCFD aligned reporting is also a growing expectation among allocators, consultants and asset owners conducting due diligence on investment managers.
Many firms now publish TCFD reports voluntarily as part of their ESG integration and stewardship disclosures, even where no regulator requires it.
Looking further ahead, the TCFD framework is being absorbed into the IFRS Sustainability Disclosure Standards (IFRS S1 and S2), which are being adopted or considered in more than 35 jurisdictions globally.
IFRS S2 retains the core TCFD structure of governance, strategy, risk management and metrics and targets, but adds more prescriptive disclosure requirements around emissions, transition plans and scenario analysis.
For UK firms, the transition is happening through the UK Sustainability Reporting Standards (UK SRS), which integrate IFRS S1 and S2 into the UK reporting framework.
TCFD remains the basis for FCA product-level reporting in the interim, but firms building their TCFD processes today should design them with the IFRS S2 transition in mind, so that methodologies, data sources and scenario outputs can be carried forward rather than rebuilt.
TCFD reporting sounds procedural. In practice, firms producing these reports encounter a consistent set of operational and data challenges.
Not every holding in every fund discloses Scope 1, 2 and 3 emissions to a consistent standard.
Gaps are particularly common for smaller holdings, emerging market exposures, private company allocations and the underlying holdings within third-party funds used in multi-asset or fund of funds mandates.
Where disclosed data is not available, firms must rely on estimates, proxies or sector averages.
The quality and defensibility of those estimates often determines the credibility of the overall report, and any estimated datapoints must be clearly flagged within the output.
Companies disclose annual emissions data at different points across the year, depending on their reporting cycle and jurisdiction.
A firm preparing a 30 June TCFD report will often be working with prior-year disclosures for some holdings and current-year disclosures for others.
This creates a consistency challenge, both in aggregating fund-level metrics and in explaining which reporting period each datapoint relates to.
Keeping the underlying data as current as possible, and documenting disclosure dates clearly, is central to producing a credible report.
Where a fund has material exposure to sectors such as energy, materials or utilities, a quantitative scenario analysis is required.
Running three transition scenarios (orderly, disorderly, hot house) across hundreds of holdings requires both methodology decisions and computational capacity that many firms do not have in-house.
Companies occasionally misreport their own emissions, and investor methodologies sometimes produce outputs that do not reflect internal knowledge.
A good TCFD process allows for defensible overrides of incorrect datapoints, documented and auditable within the report output.
TCFD reporting is not a single exercise, it is a recurring one.
Firms often struggle with ensuring methodologies, data sources and assumptions remain consistent year-on-year, particularly when team members change or data providers are switched.
If you are producing a TCFD product report for the first time or looking to improve an existing process, the starting points differ.
- Confirm which of your funds are in scope under the FCA threshold or equivalent local regulation.
- Identify your data sources for Scope 1, 2 and 3 emissions and understand where coverage gaps exist.
- Decide whether your funds have material exposure to carbon-intensive sectors, which determines whether quantitative scenario analysis is required.
- Choose a reporting template that allows for consistent year-on-year comparison.
- Build time into your process for internal review, methodology documentation and sign-off ahead of the deadline.
If you are unsure where to start, even a short conversation with a data provider or consultant experienced in TCFD reporting can save weeks of internal scoping.
- Review where manual effort sat in last year's process and identify where it can be automated or streamlined.
- Assess whether your data provider is giving you consistent, traceable outputs that can be defended to clients and regulators.
- Check whether your scenario analysis methodology has kept pace with NGFS updates and evolving market practice.
- Consider whether your outputs can be re-used across other disclosure regimes (IFRS S2, UK SRS, client reporting).
- Build a repeatable workflow that reduces year-on-year production time without compromising rigour.
Most firms find that the first TCFD report takes substantially longer than subsequent ones. The value sits in building a process that compounds in efficiency each cycle.
Integrum ESG provides a structured TCFD reporting feature that consolidates a fund's TCFD relevant data and scenario analysis in a single workflow.
The platform takes a fund's holdings and generates:
Outputs can be exported directly into a firm's existing TCFD report template, or the platform can generate a pre-populated template ready for internal review and sign-off.
Every underlying datapoint is traceable to source, consistent with Integrum ESG's glass-box approach to ESG data.
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