Climate-related financial disclosures: a meta-theoretical synthesis for accounting research and practice

The number of companies publicly reporting in line with the Task Force on Climate-Related Financial Disclosures (TCFD), a framework introduced in 2015 aiming to improve and increase the reporting regarding climate-related financial information, is still relatively low. In 2019, 42% of corporations with a market capitalization greater than $10 billion disclosed information in line with the TCFD to some extend (TCFD, 2020c). Previous research has shown that economic, political, and institutional factors impact the disclosure of climate-related information. This paper explores the determinants influencing the level of disclosure in line with the TCFD recommendations, across different sectors with a major focus on publicly listed companies in the global North. The study contributes to a better understanding of the approach needed to increase the number of companies reporting in line with TCFD. The research was executed in both quantitative and qualitative methods. The empirical research methods are based on a throughout literature review on climate-related risk disclosure, which is based on scientific literature, reports, and websites of official institutions. An online survey was published to be filled in by professionals with insights into environmental, social, and corporate governance-related topics within their company. Also, eight interviews were conducted with sustainability experts from companies, consultants, policy makers, and investors with a background in climate-related risk disclosure. The interviewees were chosen based on their work experience regarding TCFD disclosure. The research aim was to answer the following question: What are substantial factors that influence whether a company is disclosing information in line with the Task Force on Climate-related Financial Disclosures? Overall, ten determinants have been identified, as they have occurred repeatedly throughout the empirical data collection. They can be divided into factors that derive out of intrinsic and extrinsic motivation. The others emerge from the given characteristics of corporations. Policy and legal reforms, the aim for strategy adaption, the availability of data, and the alignment of other sustainability initiatives with the recommendations of TCFD, were mentioned the most as determinants on the level of disclosure in both the survey and the interviews. Further research might investigate how the identified factors differ in importance across diverse industries.

Facilitating Climate-Smart Investments

The task force on climate-related financial disclosures (TCFD) published its recommendations for disclosing climate-related risks in June 2017. The TCFD report represents a framework for companies to disclose climate-related information consistently in their mainstream financial filings. Reporting financial activity using the lens of climate-related risk would, according to the TCFD, help more appropriately price risks and allocate capital in the context of climate change. The initiative, while voluntary, would help speed the transition to a low-carbon economy, and help shift the corporate perspective beyond immediate concerns. The oil and gas industry can play a leading role in the transition to a low carbon economy through: carbon capture and storage, use of natural gas as a transition fuel and the implementation of large-scale renewable energy projects. Given the oil and gas industry’s global leadership in petroleum geology, resource extraction and pipeline transmission, the industry has a vital role in testing the feasibility of large-scale carbon capture and storage. Fossil fuels and renewable energy technologies have obvious complementary synergies and fossil fuels like natural gas are necessary for the reliable, affordable and low-cost transition to a low carbon transition pathway. The oil and gas industry may be the only sector with the requisite expertise and global scale of operations to test and implement large-scale renewable technology initiatives within a public-private partnership framework. Moreover, oil and gas companies are well positioned to be leaders in the effort to adapt and strengthen resilience to the effects and risks of climate change and reduce impacts.

<p>The Financial Stability Board (FSB) published “Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)” in 2017 to assist companies in assessing climate-related risks and opportunities and financial disclosure. However, the integration between climate scenarios and the corporate risk management system and the financial quantification of climate-related risks are still the challenges for corporate practice. To collect the climate scenarios mentioned in TCFD and integrate the relevant factors in corporate operations, the study will use the framework of TCFD: Governance, Strategy, Risk management, Metrics and Targets, introduce the first three steps of the Climate Change Adaptation (CCA Steps): "identifying problems and establishing objectives", "assessing and analyzing current risk", "assessing and analyzing future risk", and use climate risk template which use  Hazard, Exposure and Vulnerability as risk assessment factors to establish a framework for the evaluation and analysis of risk. After establishing a complete method for climate risk and opportunity assessment, in response to the "financial disclosure", the study will link to the financial statement items, referring to related concepts such as “Value at Risk” and “stranded assets”, to strengthen the integrity and transparency of corporate financial disclosure. At last, the study will select a specific climate physical risk in a industry for case study by the analysis of literature, international reports and historical events and introduce a climate risk assessment framework to verify the practicality of this framework. The study's results will be applied to the risk management of business operations. At the same time, the framework of climate risk can assist companies to put climate change factors into their decisions, maintaining the sustainable competitiveness in a low-carbon economy.</p><p>Key words: climate risk assessment, TCFD, enterprise risk management</p>

U sing lenders who become members of the Task Force on Climate-Related Financial Disclosures (TCFD) as an exogenous shock, we examine whether and how lenders’ commitment to transparent climate-related disclosures affects borrowers’ environmental performance. We find that borrowers of TCFD-member lenders, relative to control firms, significantly improve their environmental performance after the TCFD launch. Lenders’ disclosure commitments influence borrowers through credit rationing and monitoring. Specifically, polluting borrowers face higher borrowing costs, reduced access to credit, and greater incorporation of environmental action covenants in loan agreements. Additionally, polluting borrowers of TCFD-member lenders experience heightened financial constraints. Finally, borrowers of TCFD-member lenders are more likely to adopt the TCFD framework for climate-related disclosure after the TCFD establishment. Together, these findings illuminate the role of lenders in driving corporate environmental performance improvement through their commitment to transparent climate-related disclosures.

Since climate change affects all aspects of our economy, our society and our environment, it can be seen as the most significant challenge of current and future generations. In response to this challenge, we have witnessed changes in institutional pressures applying to corporate practices. An interesting relatively new development in this field is the Task force on Climate-related Financial Disclosures (TCFD). The TCFD aims to help identify the information needed by financial stakeholders to appropriately assess and price climate change related risks and opportunities. In its first Report (2016, 2017), the TCFD recommends that companies provide climate change related disclosures specifying the impact thereof on their financial performance through mainstream (i.e. public) financial filings. In this paper, we look at the financial accounting standards as an institutional framework, and in particular pose the question to what extent this framework supports companies in truthfully disclosing how climate change impacts their operations and the value of their production assets. To test to what extent companies make disclosures in relation to climate change, we selected four energy companies and conducted a comparative case study analysis. Two of the selected companies produce non-renewable energy and the other two are in the business of renewable energy generation. In the case study approach, we followed the normative framework proposed by Evangelinos et al. (2015), supplemented with the TCFD’s recommendations, in order to examine in which way the selected companies include climate change issues in (1) their Balance Sheet, (2) their Profit and Loss Statement and/or (3) their Balance Sheet Notes (Annex). Our focus is on the valuation of production assets, more specifically, drilling platforms, windmill platforms, heavy equipment and transport means used to support the production, pipes and cables to transport the energy units produced. Additionally, we looked into the reasoning offered by the companies for the ways in which they valued their production assets and whether they applied impairment, and to what extent climate change played a role in their reasoning for valuation and for applying impairment or not. As we decided to examine the reasoning provided by companies for explaining their choices, we pursued a qualitative methodology of exploratory case study research. We assessed the case study companies’ financial statements, published in 2017. The case studies showed that the application of the financial accounting standards is executed in a similar way by the non-renewable and renewable energy companies. Interesting findings were: (i) in all four cases, potential future changes (caused by climate change) concerning the valuation of the production assets are not (yet) accounted for in their Balance Sheet Notes (Annex). This is remarkable because climate change is likely to have an effect on the future value of the production assets employed in the two types of industries, inter alia caused by the development that renewable energy demand increases at the expense of non-renewable energy demand (ii) the case studies reveal that the current financial reporting system does not facilitate renewable energy companies to provide financial stakeholders with meaningful and quantitative insights in expected increases of their future cash inflows and their financial and innovation potential. This impedes financiers and investors in accurately and meaningfully assessing the value of a renewable energy company’s business compared with a non-renewable company’s business.

The paradigm of corporate environmental disclosures aimed at investors developed in 2017 with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Existing literature on social responsibility disclosures points to gender diversity on the board of directors as an influencing factor. This study aims to assess the influence of gender diversity in climate-related financial disclosures, as recommended by the TCFD based on a sample of 27 companies operating within the sectors of electricity, oil, coal and gas, water, and alternative energy that have announced their adherence to the recommendations from 2017 to 2021. By applying a linear regression model, the results indicate the presence of a positive association between the level of TCFD disclosures and board gender diversity, as well as other factors, such as company size, CEO duality, and general liquidity. However, the influence of board gender diversity on corporate reporting based on the TCFD recommendations suggests that the commitment of boards to the reporting of climate change risks and opportunities is not significantly dependent on gender diversity, as the presence of women in the Boards is favorable for the reporting but without a significant impact on the level of disclosures. This research offers insights into sustainability reporting practices, focusing on a relatively new perspective of reporting climate-related financial topics and their determinants. The findings hold implications for organizational leaders and stakeholders, mainly investors, as these recent sustainable reporting practices are challenging but also bring new opportunities related to transparency towards climate-related issues.

Purpose This study aims to analyse the reporting practices of a sample of companies listed in Italy and Spain that prepare a Task Force on Climate-related Financial Disclosures (TCFD) report. The main purpose is to analyse the reporting’s compliance with the TCFD framework and the extent of climate-related information disclosed. Design/methodology/approach This study performs a content and comparative analysis of climate-related information disclosed by Italian and Spanish companies listed on the FTSE MIB and IBEX-35, following the consolidated narrative interrogation (CONI) model. The analysis is carried out on 31 TCFD reports published in 2020, 2021, 2022 and 2023, using NVivo software for content analysis and information coding. Findings Overall, the study shows that Italian and Spanish companies comply with the TCFD framework. However, some topics, such as governance-related aspects and risk management, are disclosed differently and may merit more in-depth reporting. Practical implications The findings of this study are valuable for companies and their stakeholders, in particular investors. The increasing focus on mandatory climate reporting and the adoption of new climate standards are increasing the pressure on companies to manage these issues, and the results of this work already indicate which aspects of the reporting process need to be improved to meet the new information requirement. Originality/value This study strengthens the theoretical and empirical literature on climate change information by conducting a cross-country content analysis of TCFD reports. The results provide a basis for future analysis of climate disclosure according to the latest developments in standards and frameworks.

We conducted a type of “field experiment” to evaluate how difficult it will be for companies to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) published in June of 2017. These recommendations are based on the four categories of governance, strategy, risk management, and targets and metrics. Beneath these are 11 more detailed recommendations. We selected an industry that will be especially challenged by these recommendations — oil & gas. We examined the disclosures of 15 of the largest oil & gas companies by market cap that had filed a 10-K or 20-F in 2016, so before the TCFD’s recommendations were published. We also examined their sustainability reports. Our reasoning was that if companies were already doing a reasonable amount of disclosure before these recommendations were published, then it would be more feasible to implement the TCFD’s recommendations than if virtually no related disclosures were being made. In general, we found reporting for that year uneven, with some TCFD categories fairly well covered and others not. We also found variation across companies, with most making fairly modest disclosures but some being fairly progressive in this regard. Significantly, we also found that most of the disclosures were in voluntary sustainability reports, not the financial filings required by statute and as recommended by the TCFD. Taken in the aggregate, at least one company was reporting on each of the 11 recommendations with one exception. This suggests that it is feasible for companies in this sector to follow the TCFD’s recommendations if they are interested in doing so.

We examine the extent of firm-level disclosures of climate-related financial information in response to recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Specifically, we examine the level of climate-related financial disclosures after the release of the TCFD framework in 2017. We find that the level of climate-related financial disclosures increased after the issuance of the TCFD framework based on 3,887 firm-year observations from 57 countries that responded to the CDP (previously, Carbon Disclosure Project) climate change questionnaire from CDP2019 to CDP2020. The study’s findings offer an insight into companies’ climate-related financial disclosure practices to regulators, policymakers and standard setters. This insight facilitates the creation of a comprehensive disclosure policy to shape companies’ climate-related financial disclosure practices for their long-term financial stability, amidst a background in which companies worldwide are voluntarily supporting the TCFD and its recommendations.

This study examines the relationship between climate change financial disclosure (CCFD) and firm performance (FP), and the moderating role of firms’ adoption of the Task Force on Climate-related Financial Disclosures (TCFD) framework and Sustainable Development Goals (SDGs), focusing on top-emitting countries—China, the USA, India and Japan. The study analyzes a sample of 200 non-financial firms from these countries over the period 2019–2023. CCFD is measured using a manual content analysis technique, with a four-point scale ranging from 0 to 3 based on sustainability report disclosures aligned with the TCFD framework. Fixed effects (FE), random effects (RE) and instrumental variable (IV) two-stage least squares (2SLS) models are employed to ensure robustness. The study reveals a significant positive impact of CCFD on FP, with corporate governance (CG) efficiency enhancing this relationship. Firms adopting the TCFD framework and integrating SDGs into their corporate strategies show improved performance, supporting the legitimacy and stakeholder theories. The findings suggest that firms in top-emitting countries should adopt TCFD, SDGs and stronger CG mechanisms to improve climate-related disclosures and build stakeholder trust. Policymakers should focus on implementing harmonized regulations to enhance transparency, manage climate risks effectively and reduce information asymmetry. This study also emphasizes the importance of embedding sustainability into corporate practices, highlighting how CCFD can align business objectives with societal well-being, thereby enhancing corporate accountability and contributing to social benefits. This is the first study to explore the relationship between CCFD and FP in top-emitting countries, examining the moderating effects of TCFD and SDGs adoption and incorporating CG as a novel variable.

This study investigates voluntary compliance with the Task Force on Climate-Related Financial Disclosures (TCFD) framework in 64 financial, Environmental, Social, and Governance (ESG) reports from six Spanish IBEX-35 energy firms (2020–2023) and explores the implications for intangible assets and corporate reputation, employing empirical quantitative text mining and Natural Language Processing (NLP) in Python. A validated scale-based taxonomy within the TCFD framework applies query-driven rules to extract relevant text. This enables an evaluation of aspects of the reports, facilitating the development of a compliance index measuring each company’s adherence to TCFD recommendations. All companies showed year-on-year improvements (2023 was the most comprehensive), yet none fully adhered due to information gaps. Disparities in the disclosures of Scope 1,2 and 3, persisted, suggesting reputational risks. A replicable methodological model generating a compliance index that assesses the ‘being’ (‘true performance’) versus ‘seeming’ (‘external perception’) dichotomy within sustainability reports and acts as a potential reputational barometer for stakeholders. By providing unprecedented evidence of TCFD reporting in the Spanish energy sector, this study closes a significant academic gap. Future research may analyze ESG reports using AI agents, study the impact of ESG on energy-intensive companies from AI data centers, supporting services like Copilot, ChatGPT, Claude, Gemini, and extend this methodology to other industrial sectors.

Climate change poses significant risks to economic systems and corporate financial performance, yet a critical gap remains in understanding how these risks evolve into economic disruptions and financial stability challenges. This study investigates the pathways through which physical risks, such as extreme weather events and rising global temperatures, and transition risks, including policy shifts, regulatory changes, and technological advancements, disrupt key economic elements like supply chains, resource availability, and market dynamics. It also examines how these disruptions propagate into financial risks increasingly reflected in corporate financial statements and disclosures. A central focus is the integration of standardized frameworks, particularly the Task Force on Climate-related Financial Disclosures (TCFD) and the International Financial Reporting Standards (IFRS) S2, to assess their role in addressing climate-related risks. The TCFD framework provides a structured approach for companies to disclose climate risks and opportunities, focusing on governance, strategy, risk management, and metrics. At the same time, IFRS S2 builds on these principles to establish a global baseline for sustainability-related financial disclosures, enhancing transparency and comparability across industries and regions. By mapping how climate risks impact economic and financial systems, the study evaluates the effectiveness of these frameworks in helping organizations identify vulnerabilities, improve corporate reporting consistency, and enhance resilience against disruptions. The findings provide actionable insights into how climate-related risks challenge economic stability and corporate performance while offering strategies for policymakers, businesses, and investors to mitigate risks, promote sustainability, and safeguard financial stability in an increasingly climate-vulnerable world.

We conducted a type of “field experiment” in September 2017 to evaluate how difficult it will be for companies to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We examined the disclosures of 15 of the largest oil & gas companies by market cap that had filed a 10‑K or 20‑F in 2016, so before the TCFD’s recommendations were published. In general, we found reporting for that year uneven, with some TCFD categories fairly well covered and others not. We also found variation across companies, with most making fairly modest disclosures but some being fairly progressive in this regard. Significantly, we also found that most of the disclosures were in voluntary sustainability reports, not the financial filings required by statute and as recommended by the TCFD. Taken in the aggregate, at least one company was reporting on each of the 11 recommendations with one exception. This suggests that it is feasible for companies in this sector to follow the TCFD’s recommendations if they are interested in doing so.

Climate change disclosure is gaining increasing global attention, driven by political momentum from the 2015 Paris Agreement and the efforts of environmental activists. Previous research suggests that the green experience, management skills, and gender of directors can influence corporate disclosure on climate change. This research evaluates how corporate climate change disclosure, aligned with Task Force on Climate-related Financial Disclosures (TCFD) guidelines, is impacted by three board characteristics: a critical mass of women, generalist abilities, and green experience. The research population comprises companies operating in four key sectors – energy, basic materials, primary consumer, and property and real estate – that are listed on the Indonesian Stock Exchange (IDX). The research period spans from 2019 to 2023. This five-year period encompasses significant regulatory developments, notably the enactment of OJK Regulation No. 51/POJK.03/2017 regarding Sustainable Finance, which serves as a critical foundation for promoting sustainability reporting in Indonesia, and the introduction of OJK's Sustainable Finance Roadmap Phase II (2021-2025), which promotes TCFD implementation. This research uses a quantitative analytical approach, testing theories through secondary data analysis and panel data regression analysis. The secondary data source is corporate sustainability reports. The content analysis is conducted by the framework and guidelines established by the TCFD. The study results show that the presence of a woman's critical mass, generalist abilities, and green experience among directors is insufficient to enhance climate change disclosure without the support of external factors. Factors such as a patriarchal culture, short-term economic interest dominance, weak regulatory enforcement, and insufficient stakeholder pressure are key barriers to enhancing climate change disclosure in Indonesia. These findings underscore that the effectiveness of the Critical Mass Theory and Upper Echelons Theory is highly dependent on the socio-cultural context and institutional environment. This study also has practical implications, encouraging companies to disclose climate-related information according to the TCFD guidelines.