UNEP FI responds to the TCFD’s consultation on its proposed guidance on climate-related metrics, targets, and transition plans and measuring portfolio alignment: technical supplement

Since the issuance of the initial TCFD disclosure guidance in 2017, UNEP FI has led pilot programmes for over 100 banks, insurers and institutional investors on climate risk and TCFD disclosures. These programmes have convened financial institutions, supervisors, and climate experts with a view to improving climate disclosure practices across the financial sector. They have produced numerous tools and thought papers that provide financial institutions with the means to make TCFD disclosures and assess climate risks and opportunities.

UNEP FI has responded to the TCFD’s consultation on its Proposed Guidance on Climate-related Metrics, Targets, and Transition Plans and Measuring Portfolio Alignment: Technical Supplement (‘PAT Supplement’). In summary, we welcome these proposals and believe that they can make a meaningful contribution to enhancing both the clarity and comparability of climate disclosures. We welcome in particular:

  • More explicit guidance on the types of metrics to be disclosed
  • Sound principles for selecting, calculating and communicating metrics
  • The updated guidance on calculating scope 3/financed emissions
  • The increased emphasis on forward-looking metrics
  • The introduction of portfolio alignment disclosure and an initial framework for developing a common understanding of portfolio alignment metrics
  • The introduction of transition plans as a component of strategy disclosures

We also offer some recommendations for further enhancement of the guidance:

  • Expressly integrating 1.5 degree/net zero temperature pathways into the provisions on portfolio alignment disclosure and disclosed transition plans
  • Expanding the scope of the provisions on disclosure of transition plans
  • Clarifying that disclosure of scope 1-3 emissions (particularly scope 3 emissions) should be based on relevance to the sector/activity in question.
  • Developing target setting templates to facilitate comparability
  • Using more neutral language in relation to implied temperature rise metrics
  • Adopting greater nuance to aggregating company-level scores for portfolio alignment
  • Distinguishing the different use cases of the portfolio alignment options and recognizing the need for further development of the implied temperature rise metric
  • Distinguishing decarbonizing portfolios from alignment

A copy of our response can be downloaded here.