TCFD Gap Analysis for FM

The Taskforce for Climate-related Financial Disclosures (TCFD) was was established by the Financial Stability Board in 2015 to improve and increase the level of climate-related financial disclosure (for investor transparency).

Comprised of 11 recommendations structured around four thematic areas: Climate Governance, Climate Strategy, Risk and Performance Management, it helps organisations assess and measure climate related risks and opportunities (actual and potential) in their business strategies and financial planning. 

Why is it important to disclose under the TCFD

Within the FM industry, the climate related risk and opportunities is a rather new topic. FMs are in a unique position to understand the operational performance of the properties and capacity for risk management and mitigation, which is a critical part associated with TCFD disclosures.  Besides the necessity to report according to the regulations, FMs should see itself as a solution provider to climate related issues:

• Act on opportunities – understand climate related risks and opportunities arising from the organisation’s operations and the related impacts at a senior level and risk management level
• Sustainability as a business model – deliver against the growing client needs in the backdrop of climate change
• Drive financial benefits – use opportunities to get investment and improve buildings
• Overcome compliance – understand disclosure requirements and integrate a TCFD framework now to prepare the business for the future
• Prepare for future scenarios – build a resilient strategy in a range of different global warming scenarios (i.e. 1.5C and 2C warming)

Our TCFD Solution for the FM sector

The SFMI can deliver an initial TCFD gap analysis to help FM providers understand what they need to do, and how they should do it.

The four staged approach will begin with an upskilling session to outline the general approaches to the leadership team together with a desktop review of currently published materials. We will carry out a suite of interviews to dig into existing practices and importantly focus upon cross cutting areas and both strategic and enterprise risk activities.

This means that FM providers should be taking the initiative now even if the TCFD doesn’t at this moment apply to them. They should be understanding and integrating the framework now to prepare the business for the future.

TCFD application in UK based companies

The UK Government has introduced the first mandatory TCFD-aligned reporting requirements for the private sector from 6 April 2022. It will apply to all companies currently required to produce a non-financial information statement annually – listed and non-listed companies, banks or insurers with more than 500 employees.

Requirements

• Breakdown the TCFD requirements
• Assess the public information available surrounding the requirements

Interviews

• Set up interviews with stakeholders within the business to extract non-public knowledge and information for the requirements

Gap Report

• Deliver a gap report to highlight :
  • Public information available
  • Private information available
  • Plan to fill the gaps

Further opportunities

• Additional work to fill the gaps or allow the business to fill the work with The SFMI reviewing the outputs.

Benefits to the FM sector

• Upskilling of the TCFD recommendations for those accountable in the following areas (not exhaustive)
• Group Executive Boards and Senior Leadership teams,
  • Risk and Financial planning,
  • Asset management and,
  • Procurement and Logistics (Supply Chain, end-end)
• Longer term contract may affect work that has to be done.
• Capital projects and replacement of equipment
• Opportunities to invest and improve buildings  – TCFD can drive financial benefits

This means that FM providers should be taking the initiative now even if the TCFD doesn’t this moment apply to them. They should be understanding and integrating the framework now to prepare the business for the future.

Organisations in scope for TCFD 

• The UK Government has introduced the first mandatory TCFD-aligned reporting requirements for the private sector from 6 April 2022.
• All companies currently required to produce a non-financial information statement annually – listed and non-listed companies, banks or insurers with more than 500 employees.