Climate change disclosures – what should I do now?

If you’re a large UK-based public organisation with more than 500 employees, or a private organisation with over 500 employees and £500m or more in turnover, you are now required to report your emissions, climate change risks and governance in line with the TCFD framework. This is to allow investors to have more of a handle on climate-related risk and prompt firms to identify opportunities for environmental improvements.

Future expansion – If you fall outside of this criteria, however, it would still be pertinent to get up to speed with TCFD and its requirements, as it’s expected the UK government will expand the scheme to apply to more organisations in 2025. On top of this, if you have customers that are already covered by the requirements, they may well reach out to you for emissions information if they are calculating their Scope 3 emissions (those in their supply chain). Investors and asset managers, under pressure to improve disclosure themselves, are also looking for climate information from their holdings.

If you do not have the in-house capabilities to produce a robust TCFD analysis and report, expertise is out there to help. Energise, for example, provides bespoke TCFD services for firms, as well as broader advice for disclosure under CDP alongside net-zero decarbonisation pathway and strategy assistance.

There are also guides available, from TCFD itself, edie and Inspired Energy, and the London Stock Exchange. When it comes to built assets, the UK Green Building Council has released a framework to measure and report physical climate risks related to buildings, which supports TCFD disclosures.

Different emissions scopes – As the above illustrates, getting to know TCFD is a good investment in what is likely to become the globally accepted methodology for assessing emissions and climate change risk. It is the building block of many other disclosure methodologies and can be used by any firm to help with strategic planning and better decision making when it comes to navigating the transition to net zero.

CDP disclosure questionnaires are designed to be in line with the TCFD framework, and so help businesses prepare and align for the future, and the organisation offers workshops and webinars to help firms through the process.

Part of what’s increasingly expected from stakeholders and as part of net-zero plans is information on Scope 3 emissions. While Scope 1 and Scope 2 emissions (those from your direct business operations and those from purchased electricity respectively) are relatively easy to estimate, Scope 3 – those from your supply chain – can be harder to obtain information on.

Even if you’re a smaller firm, it’s good to start thinking about Scope 3, given these emissions are the most challenging to estimate but also often make up the majority of a company’s emissions footprint. If you want to develop a net-zero plan that’s in line with climate science, the Science Based Targets initiative’s Corporate Net Zero Standard sets a requirement to measure and then reduce Scope 3 emissions.

SME-specific advice – As well as the information above, signing up to the SME Climate Hub will provide access to tools to help calculate emissions footprints and then reduce them, along with information on engaging others on climate action. The organisation’s tools include a business carbon calculator to estimate emissions.

finnCap’s ESG scorecard and guidebook also offers a simple framework to get started on your disclosure journey – not just on carbon and climate change but other environmental and broader ESG-related areas.