TCFD reporting means disclosing climate-related risks and opportunities using the framework of the Task Force on Climate-related Financial Disclosures: four recommendations and eleven recommended disclosures covering governance, strategy, risk management, and metrics and targets. In the UK it is required in two ways. Listed companies make a comply or explain statement under the FCA's listing rules, and large companies and LLPs with more than 500 employees make climate-related financial disclosures in the strategic report under the Companies Act. For listed companies, the TCFD rule is being replaced by UK SRS for accounting periods beginning on or after 1 January 2027.
The framework in brief
The FCA Handbook defines the "TCFD Recommendations and Recommended Disclosures" as the four recommendations and eleven recommended disclosures set out in the TCFD Final Report. The four pillars are:
- Governance. How the company's governance arrangements oversee and manage climate-related risks and opportunities;
- Strategy. The principal climate risks and opportunities, their impact on the business model and strategy, and how resilient that strategy is under different climate scenarios;
- Risk management. How climate risks are identified, assessed and managed, and how that process is integrated into overall risk management;
- Metrics and targets. The targets used to manage climate risks and opportunities, performance against them, and the indicators used to measure progress.
The TCFD itself was disbanded in October 2023 after the ISSB issued IFRS S1 and IFRS S2, which the FCA notes "incorporate the TCFD recommendations". The framework lives on in UK law and in the structure of the new standards.
Listed companies: the FCA comply or explain rule
The FCA introduced TCFD-aligned rules for premium listed commercial companies from 1 January 2021, and for standard listed companies, asset managers and FCA-regulated asset owners from 1 January 2022. For commercial companies the rule now sits in UKLR 6.6.6R(8), with equivalent rules for the other in-scope listing categories. The annual financial report must include a statement setting out:
- Consistency. Whether the company has included climate-related financial disclosures consistent with the TCFD recommendations and recommended disclosures;
- Location. Where those disclosures can be found and, if any are in a separate document, which ones, where that document is and why;
- Gaps. Any recommendations not met, the reasons, and the steps and timeframe for meeting them in future.
Comply or explain is not a free pass. FCA guidance at UKLR 6.6.11G says a listed company should ordinarily be able to disclose against the governance and risk management recommendations and the first two strategy disclosures. Transitional difficulty in getting data or building models is the expected reason for explaining rather than complying.
What changes in 2027. PS26/19, published on 30 September 2026, replaces the TCFD statement with a requirement to report under UK SRS S2 and S1 or explain why not, for accounting periods beginning on or after 1 January 2027. A December year-end company therefore makes its last TCFD statement in its 2026 annual report. Optional reliefs mean issuers need neither comply nor explain on Scope 3 for the first year or on the wider S1 disclosures for the first two years, although they must say which reliefs they use. Work done against the TCFD pillars carries straight across, because UK SRS uses the same four-part structure.
Companies and LLPs: climate-related financial disclosures
For financial years beginning on or after 6 April 2022, sections 414CA and 414CB of the Companies Act 2006 require a non-financial and sustainability information statement in the strategic report that contains climate-related financial disclosures (CFD). A company is in scope if it has more than 500 employees (on a group basis for a parent) and is one of the following:
- Listed or regulated. A traded company, a banking company, an authorised insurance company or a company carrying on insurance market activity;
- AIM-quoted. A company with securities admitted to trading on AIM;
- High turnover. Any other company with turnover above £500 million, or a parent whose group turnover is above £500 million net.
Small and medium-sized companies are excluded, as is a subsidiary included in a parent's group strategic report that contains the group statement. Parallel regulations apply to LLPs: traded and banking LLPs with more than 500 employees, and other LLPs with more than 500 employees and turnover above £500 million.
The Companies Act version is TCFD-based but not identical. It lists eight disclosures in section 414CB(2A): governance arrangements; how climate risks and opportunities are identified, assessed and managed; how that is integrated into overall risk management; the principal risks and opportunities and the time periods used; their impact on the business model and strategy; an analysis of resilience under different climate scenarios; targets and performance; and the KPIs used and how they are calculated. Under section 414CB(4A), directors may omit disclosures (e) to (h) if they reasonably believe them unnecessary for an understanding of the business, but they must give a "clear and reasoned explanation".
Worked example: who is in scope?
Consider three businesses, each with about 700 employees:
- Private group, £520 million turnover. In scope as a high-turnover parent. CFDs go in the group strategic report, and subsidiaries covered by that report are exempt;
- Private group, £480 million turnover. Not in scope for CFD, because it is neither listed nor a high-turnover company. Section 414CA(10) still allows it to include the statement voluntarily;
- AIM plc, £90 million turnover. In scope, because AIM companies with more than 500 employees are caught whatever their turnover. A public company cannot be treated as medium-sized, so the medium-sized exclusion does not help.
Asset managers and FCA-regulated asset owners
Asset managers, life insurers and FCA-regulated pension providers in scope of the FCA's 2021 rules must publish an annual TCFD entity report on their main website explaining how they take climate into account in managing investments. The product-level TCFD reports have been replaced by more targeted rules in Handbook Notice 144. These require climate risk information in existing retail communications where it is material, and Scope 1, 2 and 3 emissions data for eligible clients on request. The retail rules came into force on 25 September 2026 and the institutional rules apply from 30 June 2027.
Primary sources: FCA sustainability reporting requirements, UKLR 6.6, FCA PS26/19, Companies Act 2006 s414CA and s414CB, and the LLP climate disclosure regulations. For what replaces TCFD, read our guide to the UK Sustainability Reporting Standards, and for the wider picture, ESG reporting.
If you need to confirm whether your company is in scope, or to bring climate disclosures up to an auditable standard, our ESG assurance and financial reporting teams can help.