No more slacking environmental incentives, it is now climate action time. Read here about the TCFD mandatory climate disclosure law implemented in April (and soon in the EU).
On the 6th of April 2022, the UK is becoming the first G20 country to adopt a law that forces companies meeting certain criteria to report in accordance with the framework from the Taskforce on Climate-related Financial Disclosures (TCFD). The new legislation drawn, on the past TCFD recommendations, requires firms to disclose climate-related financial information in four main reporting areas, namely; Risk assessment, Governance, Strategy and Metrics and Goals. Although it may sound like another acronym and green pledge, making the TCFD reporting requirements mandatory is a pivotal stepping stone for companies to take informed and indispensable actions, and be accountable for their activities and related climate impact in line with the UK’s Net Zero strategy.
To abide by the TCFD reporting framework, corporations have to calculate, monitor and communicate their GHG emission in accordance with the GHG Protocol. Soon to catch up, the EU is finalising and planning to introduce their own climate reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) by October 2022. The EU proposal currently relies on the TCFD recommendations, and it is likely this framework will be mandatory for EU companies as well.
But why should you care about the TCFD law? The TCFD is a framework used by governments to align businesses’ activities with overall national climate goals and strategies. However, the TCFD is also a tool for businesses to ensure that resources are protected, valued and that companies remain resilient to climate risks. These aforementioned efforts from corporations are especially timely as the latest IPCC report highlights in no uncertain terms the need for information to help unlock capital to support mitigation and adaptation to climate change. This is particularly important for the food industry, as food security is heavily affected by droughts and extreme weather.
Implications for YOUR company? Under the TCFD, companies with a revenue of more than £500m or over 500 employees will have to disclose climate-related financial information in their Strategic Report or Energy and Carbon Report, in line with TCFD recommendations. An estimated 1,300 companies meet this criteria in the UK and will therefore be covered by the TCFD. The EU has a bit more stringent criteria, where some 50,000 companies are estimated to be covered by the TCFD recommendations incorporated in the CSRD in the EU.
Can I be affected by the TCFD despite not falling under the criteria? Due to the high threshold, it is likely that a limited number of companies within the foodservice sector fall under these regulations. We at Klimato have estimated that around 120 hospitality companies will fall into this remit in the UK, and about 3,000 in the EU. However, the ripple effect of the introduction of these regulations will lead to more businesses starting to look over their supply chains in order to reduce their GHG emissions. Indeed, accountability and mandatory regulations are happening NOW. It is only a question of time before smaller companies will be covered by similar laws and forced to take actions to ensure their business contributes to a resilient and symbiotic relationship between people and the planet.
How can Klimato help you? Under the TCFD focus areas covering Metrics and Goals, it is recommended for companies to report in accordance with the GHG Protocol. The GHG Protocol includes Scope 1, 2 and 3 emissions (if you are not familiar with the different Scopes, you can read more about them here). The Klimato tool is developed and designed specifically to assist hospitality companies with data reporting for those metrics. As Scope 3 emissions tend to have the largest climate burden for hospitality businesses, our software is specifically designed to calculate this.
At Klimato we help you:
The key thing to remember is that being informed and knowing where your company stands and its impact is the best way to care for the planet and keep on top of the coming climate laws.
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