What is TCFD and ISSB S2?
TCFD and ISSB S2 refers to two linked climate disclosure frameworks. The Task Force on Climate-related Financial Disclosures set out recommendations on governance, strategy, risk management, and metrics and targets. IFRS S2 Climate-related Disclosures, issued by the International Sustainability Standards Board, builds on them and now carries them forward.
What it is
TCFD recommendations were published in 2017 and adopted widely by companies and regulators. They ask organizations to disclose how climate risks and opportunities affect the business, organized in four pillars. After ISSB issued IFRS S1 and IFRS S2 in 2023, the TCFD was disbanded and the IFRS Foundation took over monitoring of climate disclosure progress.
IFRS S2 requires disclosure of climate-related physical and transition risks, scenario analysis, Scope 1, 2 and 3 emissions, and industry-based metrics. Jurisdictions are adopting ISSB standards on their own timelines, so check the current local rule.
Who it applies to / where it is used
These frameworks apply to listed companies, financial institutions and large private companies in jurisdictions that adopt them. Real estate, infrastructure, manufacturing and utilities are especially exposed to climate risk and face detailed metric expectations.
How it is measured / what evidence it needs
Investors expect metrics that are consistent year to year and traceable to source data.
- Scope 1 and 2 emissions from measured energy use
- Energy and water intensity metrics
- Asset-level exposure to physical risks such as heat and water stress
- Targets and progress against them
- Governance and risk management descriptions
How Aqueduct helps
Aqueduct supplies physical and transition metrics from measured performance. The company and its advisers prepare the disclosure.
- Metered energy and water by site as inputs to emissions and intensity metrics
- Weather-normalized trends through aQ EnergySmart that show performance under heat
- Water balance through aQ WaterGuard for sites exposed to water stress
- Exports through aQ Assurance for the reporting team