In this article, we’ll explore what biochar is, how it’s made, its many applications, and why it holds such promise for a greener future.

What is biochar (or green coal)?

Biochar, often called "green coal", is gaining attention as a powerful tool in the fight against climate change and soil degradation. By transforming organic waste into a stable form of carbon, biochar offers benefits that range from enhancing soil fertility to locking carbon away for centuries.

But what exactly is biochar, and why is it being hailed as a game-changer in sustainable agriculture and carbon management? 

👉 In this article, we’ll explore what biochar is, how it’s made, its many applications, and why it holds such promise for a greener future.

Biochar is a carbon-rich material produced by heating organic matter - such as agricultural waste, wood chips, or manure - in a low-oxygen environment through a process called pyrolysis. Unlike regular charcoal, which is primarily used as a fuel source, biochar is designed to deliver environmental and agricultural benefits. Its unique structure allows it to retain nutrients, improve soil health, and sequester carbon, making it a valuable tool in sustainable farming and climate change mitigation.

Often referred to as "green coal", biochar has earned this nickname due to its eco-friendly properties. It mimics the natural carbon cycle by stabilizing carbon that would otherwise return to the atmosphere as carbon dioxide. When applied to soil, biochar can remain there for hundreds or even thousands of years, acting as a long-term carbon sink.

Biochar’s versatility goes beyond agriculture. Its porous structure makes it useful in water filtration systems, while its carbon content lends itself to applications in renewable energy and construction. 

👉 As we face growing challenges from climate change and resource depletion, biochar may offer a sustainable way to recycle organic waste while benefiting the environment.

ANZBIG along with its Australian Biochar Industry 2030 Roadmap Silver Sponsor and Canberra Launch Event partner, Regenerative Ag Alliance | ‪@farmingtogether4563‬ | Southern Cross University, presents this short video about Biochar, its role in Climate Change, its uses and the potential it has to become a billion dollar industry.

What is Biochar?

Biochar is created through a process called pyrolysis, which involves heating organic material in a low-oxygen environment. The absence of oxygen prevents the material from burning, instead breaking it down into solid carbon (biochar), gases, and liquids. This process not only locks carbon into a stable form but also produces by-products like syngas and bio-oil, which can be harnessed as renewable energy sources.

The raw materials used to produce biochar - called feedstocks - are typically waste products from agriculture, forestry, or food production. Think of crop residues, wood chips, or even animal manure. By converting these materials into biochar, we’re giving new life to waste that might otherwise decompose in landfills, releasing methane (a potent greenhouse gas) in the process.

The sustainability of biochar production largely depends on the feedstocks and energy inputs used. When managed responsibly, the process can be a closed loop, where waste materials are repurposed, and the energy generated during pyrolysis powers the production itself. It’s a rare example of a technology that addresses multiple environmental problems at once - waste management, carbon sequestration, and soil degradation - without creating significant trade-offs.

However, the process isn’t without its challenges. Scaling production to meet global demand requires investment and infrastructure, and ensuring the quality of biochar across different feedstocks can be complex. Even so, as research and innovation in pyrolysis technology advance, biochar is emerging as a scalable solution with the potential to make a real impact. 

Biochar’s appeal lies in its wide-ranging benefits, from improving soil health to fighting climate change. Its unique properties make it a versatile tool that can be applied across agriculture, waste management, and even energy systems. Let’s explore some of its most significant advantages.

One of the standout benefits of biochar is its ability to improve soil fertility. Its porous structure acts like a sponge, retaining water and nutrients that might otherwise leach away. This can be a game-changer for farmers in regions prone to drought or poor soil quality. Biochar also supports beneficial microorganisms, creating a healthier and more resilient soil ecosystem. The result? Higher crop yields and reduced dependency on chemical fertilizers.

Biochar is often celebrated for its role in carbon sequestration. By locking carbon into a stable form that can remain in the soil for centuries, it prevents carbon dioxide from being released back into the atmosphere. In fact, biochar production has been recognized as a method for achieving negative emissions, a critical component in global efforts to combat climate change.

In addition to its environmental benefits, biochar offers a sustainable solution to managing organic waste. By converting agricultural residues, forestry by-products, or even food waste into biochar, we can divert significant amounts of material from landfills. This not only reduces methane emissions but also turns waste into something valuable.

While its agricultural and climate benefits often take center stage, biochar has several other practical uses. Its ability to filter contaminants makes it an effective material for water purification, while its lightweight and durable nature has sparked interest in its use in construction materials. Biochar can also be used as a renewable energy source, with its by-products - bio-oil, and syngas - powering a range of industrial processes.

These benefits make biochar a potential solution to some of our environmental and agricultural challenges. However, its potential impact depends on how widely and responsibly it is adopted. When integrated thoughtfully, biochar could play a pivotal role in building a more sustainable future.

A UAE-based research center is experimenting with limiting carbon emissions and improving soil quality by using a technology that transforms green waste into a charcoal-like material called biochar. 

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Transcript
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Could biochar help limit carbon emissions?

How does biochar contribute to climate change mitigation?

Biochar’s potential to combat climate change lies in its dual role: reducing greenhouse gas emissions and acting as a long-term carbon sink. These two mechanisms work together to address the growing levels of carbon dioxide and other greenhouse gases in the atmosphere.

When organic waste breaks down in landfills, it releases methane - one of the most harmful greenhouse gases. Turning that waste into biochar stops this process in its tracks, offering a practical way to cut methane emissions. On top of that, adding biochar to soil can help reduce nitrous oxide emissions, which are often linked to farming. By tackling two of the biggest sources of greenhouse gases, biochar shows how simple changes can make a big difference for the planet.

One of biochar’s most important features is its ability to store carbon for centuries. The pyrolysis process converts organic carbon into a stable form that resists decomposition. When biochar is added to soil, it effectively locks this carbon away, preventing it from re-entering the atmosphere. 

Biochar production also supports a circular economy. By using agricultural and forestry by-products, it not only addresses waste but also produces renewable energy in the form of syngas and bio-oil. This energy can offset fossil fuel use, further reducing carbon emissions.

The global potential of biochar has been increasingly recognized. Some studies suggest that widespread adoption could offset 12% of global GHG emissions by 2030 (the equivalent of removing over a billion petrol cars from the road), making it one of the most effective negative emissions technologies available. Initiatives like carbon credits for biochar applications are helping incentivize its use, paving the way for large-scale implementation.

While biochar is no silver bullet, its ability to address both the causes and effects of climate change makes it an extremely exciting prospect in the fight against climate change. By integrating biochar into climate strategies, we can take a significant step toward reducing greenhouse gas levels and building a more sustainable future.

While biochar holds incredible potential, it’s not without its limitations: 

<table>
  <thead>
    <tr>
      <th>Challenge</th>
      <th>Details</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td><strong>Cost and accessibility</strong></td>
      <td>Producing biochar at scale can be expensive, particularly when it comes to building the infrastructure needed for pyrolysis. For small farmers or businesses, the upfront costs might outweigh the perceived benefits, especially in regions where resources are limited. While larger-scale projects are making biochar more accessible, financial and technical barriers remain a challenge.</td>
    </tr>
    <tr>
      <td><strong>Variation in quality</strong></td>
      <td>Not all biochar is created equal. The properties of biochar—such as its ability to retain water or store carbon—depend heavily on the type of feedstock used and the specific pyrolysis process. This variability can make it difficult to ensure consistent results, particularly for applications in agriculture or large-scale carbon sequestration.</td>
    </tr>
    <tr>
      <td><strong>Environmental trade-offs</strong></td>
      <td>Though biochar production can be sustainable, it requires careful management. Pyrolysis consumes energy, and if fossil fuels are used to power the process, it could offset some of the environmental benefits. Additionally, large-scale biochar production could lead to unintended consequences, such as increased demand for feedstocks like wood, potentially encouraging deforestation if not carefully regulated.</td>
    </tr>
    <tr>
      <td><strong>Awareness and adoption</strong></td>
      <td>Despite its many benefits, biochar is still relatively unknown outside environmental and agricultural circles. Widespread adoption will require greater education and incentives for farmers, businesses, and policymakers to integrate it into their practices. Without this, biochar risks remaining a niche solution rather than achieving the global impact it promises.</td>
    </tr>
    <tr>
      <td><strong>Balancing expectations</strong></td>
      <td>It’s also important to be realistic about what biochar can achieve. While it’s an excellent tool for carbon storage and soil health, it’s not a standalone solution to climate change or agricultural challenges. Its effectiveness depends on being part of a broader strategy that includes emissions reductions, reforestation, and sustainable farming practices.</td>
    </tr>
  </tbody>
</table>


As awareness of biochar grows, so does its potential to reshape how we approach sustainability. Its ability to address multiple environmental challenges makes it a promising tool for the future, particularly when paired with advancements in technology and policy support.

The key to unlocking biochar’s potential lies in scaling up production and adoption. Governments and organisations are beginning to recognise biochar’s value, with initiatives that offer carbon credits or subsidies for its use. These incentives are crucial for encouraging widespread adoption, particularly in regions where the upfront costs of biochar production might be prohibitive. Additionally, as pyrolysis technology advances, production could become more efficient and affordable, paving the way for biochar to become a mainstream solution.

While biochar’s role in agriculture and carbon sequestration is well established, its applications continue to expand. For example, biochar is being integrated into green infrastructure projects, such as improving urban soil quality or capturing stormwater runoff. It’s also being explored in new industries, including its use in construction materials, where it can reduce the carbon footprint of concrete and insulation.

Biochar is increasingly recognized as a critical part of global climate strategies. By turning organic waste into a long-term carbon sink, biochar provides a practical pathway toward achieving negative emissions, which are essential for meeting the Paris Agreement’s climate goals.

Ongoing research is shedding light on how to optimize biochar production and application. Scientists are exploring ways to tailor biochar for specific uses - whether that’s enhancing its water retention properties for drought-prone areas or improving its efficiency as a carbon sink. These innovations could make biochar an even more versatile and impactful tool in the fight against climate change.

The future of biochar is full of promise. By combining innovation, policy support, and responsible implementation, biochar has the potential to make a significant contribution to a more sustainable and resilient world. The question is no longer whether biochar can help - it’s how quickly we can scale its use to meet the challenges ahead.

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Transcript
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Achieve science-based targets: We assist companies in setting and meeting science-based targets, providing support for initiatives like the Science-Based Targets Initiative (SBTi).

Our solutions not only help reduce emissions but also enhance your brand’s reputation and investor confidence. By identifying high-impact areas and providing practical, actionable steps, we make it easier for companies to integrate sustainability into their core strategy.

Ready to take the next step toward a more sustainable future? Let Greenly guide you on your journey. Reach out today to learn how we can help.

In this article, we’ll explore the legacy of TCFD, the benefits of its recommendations, and how its principles have been seamlessly integrated into the ISSB’s standards.

TCFD standards: everything you need to know

Climate change continues to pose significant risks to global financial stability, underscoring the need for robust and transparent climate reporting frameworks. For years, the Task Force on Climate-related Financial Disclosures (TCFD) served as a cornerstone, helping businesses disclose climate-related financial risks while aligning environmental responsibility with financial transparency.

In October 2023, the TCFD was officially disbanded, with its responsibilities fully integrated into the International Sustainability Standards Board (ISSB). All TCFD recommendations have been incorporated into the ISSB's IFRS S2 Climate-related Disclosures Standard, alongside IFRS S1 General Requirements for Sustainability-related Disclosures. While businesses can still use TCFD guidelines during a transition period if required by regulations, the long-term goal is a unified global standard through the ISSB.

This marks a transformative step in corporate climate responsibility, simplifying the process for companies and investors while fostering greater consistency in sustainability reporting. 

👉 In this article, we’ll explore the legacy of TCFD, the benefits of its recommendations, and how its principles have been seamlessly integrated into the ISSB’s standards.

The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board (FSB) in 2015 as a strategic response to the growing recognition of climate change as a critical financial risk. Its purpose was to provide a structured framework for companies and financial institutions to disclose climate-related financial information transparently.

The TCFD had a twofold aim: to inform investors and stakeholders about the climate-related risks and opportunities companies face, and to foster a more sustainable, low-carbon global economy through informed investment decisions. By addressing the gap in reliable climate-related financial information, the TCFD played a pivotal role in elevating climate considerations in financial decision-making. 

The objective of the TCFD was to facilitate consistent climate-related financial disclosures that could be used by companies, banks, and investors to provide information to stakeholders.  

💡 The TCFD framework places significant importance on assessing the financial impacts of climate-related risks and opportunities. This involves quantifying how these factors might influence key financial metrics, such as operating costs, revenue streams, asset valuations, and access to capital. By linking risks (eg, transition risks from policy changes or acute risks from extreme weather) to potential financial outcomes, organisations can provide stakeholders with a clear picture of their financial resilience and strategic priorities. Similarly, opportunities such as efficiency improvements or low-carbon product development can be evaluated for their potential to drive cost savings and revenue growth.

Having fulfilled its remit, the TCFD succeeded in driving significant improvements in corporate climate disclosure practices globally. Its recommendations set the foundation for standardized, comparable climate-related reporting, paving the way for the development of the International Sustainability Standards Board (ISSB) framework, which now incorporates all the TCFD’s principles. Additionally, the TCFD’s influence is evident in the European Union’s Corporate Sustainability Reporting Directive (CSRD), which mandates detailed sustainability disclosures for in-scope companies. Together, these frameworks reflect a unified push toward greater transparency and accountability in corporate sustainability reporting, ensuring consistency across jurisdictions and sectors.  

Confused about the TCFD? We’ll, you’re not alone. In this video, we explain what it is, when it is used, why it is helpful, and how it helps small and medium sized businesses like yours position themselves for risk migration and opportunity gain. Watch and learn. 
Special thanks to Michael Milewski for his knowledge sharing, script writing and overall support.

What is the Task Force on Climate-Related Financial Disclosures (TCFD)?

The Task Force issued its ‘Final Report’ in 2017, laying out 11 voluntary recommendations collectively known as the TCFD framework. While this report established the foundation of the TCFD’s work, the Task Force continued to release supplementary reports and updates in subsequent years, reflecting ongoing developments and best practices in climate risk reporting. These recommendations quickly gained global recognition, reflecting the urgent need for greater transparency in climate risk reporting. 

👉 Since its inception, the TCFD has garnered support from over 4,900 organizations across 103 jurisdictions, underscoring a growing global consensus on the importance of climate-related disclosures in financial decision-making. 

💡 The TCFD's influence extended well beyond voluntary adoption. Its principles served as the foundation for regulatory frameworks in many jurisdictions, including the European Union, Singapore, Japan, New Zealand, and the United Kingdom, where climate risk disclosures are progressively becoming mandatory. In the United States, California enacted Senate Bill 261 in 2023, mandating that companies with annual revenues over $500 million doing business in the state disclose climate-related financial risks in alignment with the TCFD framework. This shift from voluntary guidelines to regulatory requirements reflects the global financial sector's commitment to integrating climate accountability into decision-making processes.

This shift from voluntary guidelines to regulatory requirements reflects the global financial sector's commitment to integrating climate accountability into decision-making processes.

The 2023 TCFD Status Report, released in October 2023, highlights the significant progress made in climate-related financial disclosures while also identifying areas where further work is needed. The report reflects a substantial increase in the adoption of TCFD recommendations across industries and geographies, driven by growing regulatory support and investor demand for transparent climate-related information.

Increased disclosure: 58% of companies disclosed information aligned with at least five of the eleven recommended disclosures for fiscal year 2022, up significantly from just 18% in 2020. This increase reflects the growing adoption of TCFD recommendations as companies respond to regulatory pressures and market expectations.

Full alignment remains low: Despite improvements, only 4% of companies fully aligned with all eleven TCFD recommendations. This highlights ongoing challenges in achieving comprehensive climate disclosures, particularly in areas such as scenario analysis and the financial quantification of climate-related risks and opportunities.

Enhanced reporting practices: The report observed notable progress in key areas such as reporting on climate-related risks and opportunities, board oversight of climate issues, and setting climate-related targets. Between 2020 and 2022, there were significant strides in integrating these elements into corporate disclosures, particularly among leading firms in regulated jurisdictions.

Geographical and sectoral disparities: While adoption rates are increasing globally, the report highlights variations in progress between regions and industries. Developed markets, particularly in jurisdictions with mandatory reporting requirements, show higher alignment compared to emerging markets where such mandates are less common.

The TCFD successfully laid the groundwork for standardized, comparable climate-related disclosures. Its principles have now been fully incorporated into the ISSB's IFRS S2 Climate-related Disclosures Standard, ensuring that its legacy continues through a unified global framework.

The TCFD standards were built around four core areas: governance, strategy, risk management, and metrics and targets - designed to provide a structured and transparent approach to climate-related financial disclosures. These standards formed the foundation for how companies reported on climate risks and opportunities, enabling consistent and comparable information for investors and stakeholders. 

One of the TCFD's core principles is its focus on financial materiality, which examines how climate-related risks and opportunities impact a company's financial performance, such as revenues, cash flows, and asset valuations. This focus contrasts with the double materiality approach adopted by the European Union's Corporate Sustainability Reporting Directive (CSRD), which considers not only how sustainability issues affect financial performance but also how a company's activities impact the environment and society. This difference underscores the complementary but distinct objectives of the TCFD and CSRD, reflecting varying global approaches to sustainability reporting.

With the disbandment of the TCFD in 2024, these principles have been fully incorporated into the International Sustainability Standards Board’s (ISSB) IFRS S2 Climate-related Disclosures Standard. This ensures that the TCFD’s recommendations remain central to the global framework for sustainability reporting.

How climate risks and opportunities were defined

The TCFD emphasized the importance of translating climate change impacts into measurable financial risks and opportunities. To foster a shared understanding between companies and investors, the task force developed a taxonomy that organisations were encouraged to reference in their disclosures.

The TCFD categorized climate-related risks into two main types:

Transition risks: Risks stemming from the shift to a low-carbon economy, including changes in policy, legal frameworks, market conditions, and technological advancements.

Physical risks: Risks directly linked to the physical impacts of climate change, which can be categorized as chronic or acute. Chronic risks refer to long-term changes such as rising sea levels and increasing average temperatures, while acute risks involve short-term, extreme events like hurricanes, floods, and heatwaves.

By addressing these risks, companies provided transparency on how climate change could disrupt operations or create financial vulnerabilities.

The TCFD also highlighted opportunities that organisations could leverage to address climate change while deriving financial benefits. Key areas included:

Improving resource efficiency to lower costs and emissions.

Transitioning to low-emission energy sources to mitigate environmental impact.

Developing and distributing climate-friendly products and services to meet evolving market demands.

Organizations adhering to the TCFD framework were encouraged to disclose the potential current and future financial impacts of these risks and opportunities. This critical element helps stakeholders better understand how climate change might affect revenues, cash flows, and balance sheets over time.

❗  Recognising the uncertainty surrounding global warming's full scope, the TCFD emphasized the critical role of forward-looking scenario analyses in refining sustainability strategies and financial assessments over time. These scenarios allow organizations to evaluate how different climate futures - such as a 1.5°C or 2°C warming scenario - might impact their operations, financial performance, and resilience. By incorporating forward-looking scenario analyses, companies can: 

Assess vulnerabilities in their business models under various climate pathways.

Identify strategic opportunities to adapt to or mitigate potential risks.

Strengthen long-term decision-making by aligning with climate goals and stakeholder expectations. 

Forward-looking scenario analyses are now a cornerstone of the ISSB's IFRS S2 Climate-related Disclosures Standard, ensuring that this vital practice continues to shape corporate climate strategies in a rapidly changing world.

Climate risk is fundamental to today’s decisions. The Financial Stability Board formed TCFD to detect what insight is needed.

Are You Aligned with TCFD Reporting?

The TCFD framework consists of four key pillars (governance, strategy, risk management, and metrics and targets) which are further broken down into 11 specific recommendations. These recommendations provided a detailed roadmap for companies to structure their climate-related disclosures effectively. 

The TCFD also distinguished between those relevant for all sectors and those tailored to specific sectors. This approach ensured that disclosures remained both comprehensive and adaptable to the unique challenges and opportunities faced by different industries.

Governance focuses on how a company’s board and management oversee and manage climate-related risks and opportunities. The TCFD emphasized transparency in leadership structures. For example, companies are encouraged to disclose how the board integrates climate considerations into overall governance practices, such as through dedicated committees or oversight mechanisms.

Strategy addresses the actual and potential impacts of climate-related risks and opportunities on a company's business, strategy, and financial planning. This includes scenario analysis to assess resilience under different climate futures, such as a 2°C or lower scenario. Today, IFRS S2 builds on this by requiring companies to disclose how climate-related risks and opportunities influence their strategic and financial planning.

Risk management is centered on how companies identify, assess, and manage climate-related risks. The TCFD emphasized integrating these processes into broader risk management frameworks. Under IFRS S2, these principles are expanded to ensure companies articulate how climate risks are embedded in overall enterprise risk management practices.

Metrics and targets detail the specific indicators and goals companies use to manage climate risks and opportunities. This includes mandatory reporting of greenhouse gas (GHG) emissions for Scope 1 (direct emissions) and Scope 2 (indirect emissions from energy use), while Scope 3 (indirect emissions across the value chain) is required only when deemed material to the organization's operations and impact. Under the ISSB standards, these metrics remain crucial, with IFRS S2 mandating the disclosure of emissions data and the targets used to address climate-related risks.

By incorporating the TCFD framework into the ISSB’s IFRS standards, the principles of governance, strategy, risk management, and metrics and targets now serve as the backbone of a unified global approach to climate-related financial disclosures. This ensures that the TCFD’s legacy continues to shape how companies navigate and disclose climate risks and opportunities, aligning with global sustainability goals.

<table>
  <thead>
    <tr>
      <th>Core element</th>
      <th>Recommendation</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Governance</td>
      <td>Describe the board’s oversight of climate-related risks and opportunities.</td>
    </tr>
    <tr>
      <td></td>
      <td>Describe management’s role in assessing and managing climate-related risks and opportunities.</td>
    </tr>
    <tr>
      <td>Strategy</td>
      <td>Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.</td>
    </tr>
    <tr>
      <td></td>
      <td>Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.</td>
    </tr>
    <tr>
      <td></td>
      <td>Describe the resilience of the organization’s strategy, considering different climate-related scenarios, including a 2°C or lower scenario.</td>
    </tr>
    <tr>
      <td>Risk management</td>
      <td>Describe the organization’s processes for identifying and assessing climate-related risks.</td>
    </tr>
    <tr>
      <td></td>
      <td>Describe the organization’s processes for managing climate-related risks.</td>
    </tr>
    <tr>
      <td></td>
      <td>Explain how these processes are integrated into the organization’s overall risk management framework.</td>
    </tr>
    <tr>
      <td>Metrics and targets</td>
      <td>Disclose the metrics used to assess climate-related risks and opportunities in line with the organization’s strategy and risk management process.</td>
    </tr>
    <tr>
      <td></td>
      <td>Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and associated risks.</td>
    </tr>
    <tr>
      <td></td>
      <td>Describe the targets used by the organization to manage climate-related risks and opportunities, and provide performance against these targets.</td>
    </tr>
  </tbody>
</table>


TCFD’s Fundamental Principles for Effective Disclosure

While the four key pillars of the TCFD framework (governance, strategy, risk management, and metrics and targets) and the 11 specific recommendations provided a detailed roadmap for climate-related disclosures, the Fundamental Principles for Effective Disclosure ensured these disclosures were actionable, reliable, and aligned with stakeholder needs. These principles served as a guide to help companies implement the recommendations effectively and produce high-quality, decision-useful information. 

The TCFD outlined these principles to enhance the usefulness and reliability of climate-related financial information. They include:

Relevance: Disclosures should provide insights that are important to investors, lenders, and other stakeholders for decision-making.

Specificity and Consistency: Information must be specific enough to be actionable and consistent over time to allow for comparability.

Completeness: Disclosures should comprehensively address all relevant climate-related risks and opportunities.

Clarity and Understandability: Reports must avoid technical jargon and be accessible to a wide range of stakeholders.

Forward-looking Orientation: Include projections and scenario analyses that demonstrate how the organization plans to address future risks and opportunities.

Alignment with Existing Standards: Leverage existing financial reporting standards to ensure disclosures align with broader financial statements.

By adhering to these principles, companies can enhance transparency and ensure their climate disclosures meet the needs of stakeholders while aligning with global reporting frameworks.

The Task Force on Climate-related Financial Disclosures (TCFD) has officially concluded its work, following the successful integration of its recommendations into the International Sustainability Standards Board (ISSB) framework. This marked the end of the TCFD as an active task force but solidified its legacy as the foundation for global climate-related financial disclosures.

The TCFD was disbanded to streamline and simplify sustainability reporting standards for companies and investors. With the ISSB established to oversee global sustainability disclosure standards, the TCFD’s recommendations were fully incorporated into the ISSB’s IFRS S2 Climate-related Disclosures Standard. This transition ensures a single, unified framework for climate-related financial disclosures, reducing complexity and enhancing comparability across jurisdictions and industries.

The ISSB’s IFRS S2 Climate-related Disclosures Standard, along with IFRS S1 General Requirements for Sustainability-related Disclosures, has effectively replaced the TCFD framework. These standards incorporate all 11 recommendations of the TCFD and expand upon them, providing a comprehensive and globally accepted structure for sustainability reporting.

Transition period: Companies that previously reported under the TCFD framework can continue to do so during a transition period if required by specific jurisdictions or regulations. However, organizations are encouraged to adopt the ISSB’s IFRS S2 and IFRS S1 standards for their sustainability disclosures.

Unified standards: By aligning with the ISSB standards, companies can meet the requirements of the original TCFD recommendations while benefiting from the enhanced clarity and consistency provided by the new global framework.

Legacy of the TCFD: The principles established by the TCFD remain central to climate-related disclosures, ensuring that its work continues to shape sustainability reporting and decision-making worldwide.

Companies and investors alike will benefit from this new streamlined framework, which is designed to meet the growing demand for transparency and accountability in the face of climate change.

The ISSB standards - IFRS S2 Climate-related Disclosures and IFRS S1 General Requirements for Sustainability-related Disclosures - fully integrate the TCFD’s foundational principles while addressing areas where the original recommendations could be enhanced. This new framework is designed to deliver greater specificity, clarity, and global consistency in sustainability and climate-related financial reporting.  


IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information

IFRS S1 mandates that companies disclose material information about sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance, or cost of capital over the short, medium, or long term. This includes details on governance, strategy, risk management, and metrics and targets related to sustainability.

<h3>IFRS S1: General requirements for disclosure of sustainability-related financial information</h3>
<table>
  <thead>
    <tr>
      <th>Requirement</th>
      <th>Details</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Materiality assessment</td>
      <td>Identify and disclose sustainability-related risks and opportunities that could reasonably influence investor decisions.</td>
    </tr>
    <tr>
      <td>Integration with financial statements</td>
      <td>Explain how sustainability-related risks and opportunities impact financial performance, position, and cash flows.</td>
    </tr>
    <tr>
      <td>Interconnected disclosures</td>
      <td>Ensure sustainability information is consistent and connected with the financial statements for comparability.</td>
    </tr>
    <tr>
      <td>Comprehensive scope</td>
      <td>Cover all relevant environmental, social, and governance (ESG) factors, not limited to climate-related issues.</td>
    </tr>
    <tr>
      <td>Forward-looking focus</td>
      <td>Include forward-looking information, such as strategic responses and potential future financial impacts.</td>
    </tr>
    <tr>
      <td>Consistency and comparability</td>
      <td>Apply consistent metrics and methodologies to allow comparisons across reporting periods and with peers.</td>
    </tr>
  </tbody>
</table>


Building upon IFRS S1, IFRS S2 focuses specifically on climate-related risks and opportunities. It requires companies to provide information on governance, strategy, risk management, and metrics and targets concerning climate-related issues. This includes disclosures on greenhouse gas emissions and the potential financial impacts of climate change on the organization. 

The ISSB builds on the TCFD by expanding its scope and introducing new requirements aimed at addressing gaps and improving usability for investors and stakeholders: 

Linking sustainability and financial reporting: A notable addition is the requirement to connect sustainability disclosures with financial statements. Companies must explain how climate and other sustainability risks and opportunities impact their current and future financial performance, helping stakeholders see the financial implications more clearly.

Industry-specific guidance: The ISSB provides tailored guidance for different industries, offering specific disclosure requirements relevant to sectors such as energy, transportation, and agriculture. This improves comparability and ensures disclosures reflect sector-specific risks and opportunities.

Detailed financial impact quantification: The ISSB places greater emphasis on the quantification of climate-related risks and opportunities in monetary terms. Companies are required to explain how these factors impact revenues, costs, and overall financial performance, providing investors with more actionable insights.

Integrated reporting of broader sustainability issues: While TCFD focused solely on climate-related disclosures, IFRS S1 introduces a broader scope of sustainability risks and opportunities, encouraging companies to consider interconnected environmental, social, and governance (ESG) issues. For example, biodiversity loss, water scarcity, and workforce sustainability can now be included where relevant.

Strengthened forward-looking disclosures: The ISSB expands on TCFD’s scenario analysis by providing more structured requirements for forward-looking metrics. This includes a greater focus on climate-related targets, timelines for achieving them, and the strategies companies will use to ensure resilience in the face of future climate scenarios.

Mandatory alignment for listed companies: Unlike the voluntary nature of TCFD, the ISSB framework is expected to be widely adopted as a mandatory standard for listed companies in many jurisdictions. This shift ensures consistency and enforces accountability across global markets.

<table>
  <thead>
    <tr>
      <th>Requirement</th>
      <th>Details</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Climate risk and opportunity identification</td>
      <td>Disclose climate-related risks and opportunities relevant to the organisation’s business and financial planning.</td>
    </tr>
    <tr>
      <td>Financial impacts of climate change</td>
      <td>Quantify and disclose how identified climate risks and opportunities affect revenues, costs, and overall performance.</td>
    </tr>
    <tr>
      <td>Scenario analysis</td>
      <td>Provide resilience assessments under different climate scenarios, including those aligned with limiting warming to 2°C.</td>
    </tr>
    <tr>
      <td>GHG emissions reporting</td>
      <td>Report Scope 1, Scope 2, and, where relevant, Scope 3 greenhouse gas emissions.</td>
    </tr>
    <tr>
      <td>Climate-related targets</td>
      <td>Disclose climate targets, strategies to achieve them, and progress over time.</td>
    </tr>
    <tr>
      <td>Sector-specific guidance</td>
      <td>Include industry-specific disclosures where applicable, ensuring relevance and comparability.</td>
    </tr>
  </tbody>
</table>

 

The ISSB framework not only retains the core strengths of the TCFD, but also elevates its usability and relevance. These enhancements mean companies must now: 

Clearly articulate how climate and sustainability risks and opportunities influence their financial outlook.

Provide sector-specific data that enables more precise benchmarking by investors.

Adopt a holistic approach to sustainability reporting that extends beyond climate to other material ESG factors.

By addressing these areas, the ISSB creates a unified global standard that eliminates inconsistencies in sustainability reporting, ensuring disclosures are more comprehensive, comparable, and decision-useful.

👉 For a deeper dive into the specifics of IFRS S1 and IFRS S2, including detailed guidance on their application and implications, check out our comprehensive article on the ISSB standards.

The Task Force on Climate-related Financial Disclosures (TCFD) laid the groundwork for transparent and consistent climate-related financial disclosures worldwide. Its recommendations, structured around governance, strategy, risk management, and metrics and targets, were widely adopted and formed the backbone of climate disclosure standards in numerous jurisdictions, including the UK and the US. The TCFD's legacy continues as its recommendations are fully incorporated into the International Sustainability Standards Board’s (ISSB) IFRS S1 and S2 standards.

The ISSB’s IFRS S1 (General Requirements for Sustainability-related Disclosures) and IFRS S2 (Climate-related Disclosures) build on the TCFD framework by providing a more comprehensive and globally applicable approach to sustainability and climate reporting. These standards are effective for annual reporting periods beginning on or after January 1, 2024. However, their adoption is jurisdiction-specific, with national authorities determining whether companies must apply them.

The UK has formally endorsed the adoption of ISSB S1 and S2 standards, reinforcing its commitment to enhancing the quality and consistency of sustainability reporting. These standards will complement the UK’s Sustainability Disclosure Requirements (SDR), introduced in late 2023, and are expected to provide a comprehensive framework for sustainability reporting.

Planned adoption timeline: The ISSB standards will be incorporated into the UK’s regulatory framework by 2025, with sustainability reports expected for reporting periods beginning on or after January 1, 2026.

Government endorsement and integration: The UK government, alongside the Financial Reporting Council (FRC) and the Department for Business and Trade, is working to align ISSB standards with existing corporate reporting frameworks, ensuring a seamless transition for businesses.

Phased implementation: A phased approach will be adopted to give companies adequate time to adapt to the new requirements. The UK government is expected to provide detailed guidance and timelines by early 2025.

How ISSB standards support the UK’s framework:

The new UK Sustainability Reporting Standards (SRS) will incorporate ISSB S1 and S2 while aligning with SDR. This integration minimizes regulatory overlap and provides companies with a unified structure for sustainability disclosures.

The transition from TCFD to ISSB in the UK:

The UK was the first G20 country to mandate TCFD-aligned disclosures for large companies and financial institutions in April 2022. This mandate will transition to ISSB standards, preserving the TCFD’s foundational principles while expanding reporting to include broader sustainability-related financial information.

The EU adopted mandatory European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) on July 31, 2023. These standards require in-scope companies to disclose sustainability information aligned with ESRS, addressing environmental, social, and governance (ESG) issues.

To avoid duplicative reporting, the EU and ISSB are collaborating to ensure compatibility between ESRS and IFRS S1 and S2. This harmonization effort supports the global comparability of sustainability reports while meeting regional regulatory requirements.

Mandatory ESRS reporting: Companies under the scope of CSRD must comply with ESRS for reporting periods beginning on or after January 1, 2024.

Collaborative approach: The EU is working closely with the ISSB to integrate shared principles, such as the TCFD’s framework, into both ESRS and IFRS standards. This ensures that companies operating across jurisdictions can streamline their disclosures and avoid double reporting.

Impact on companies: Organisations operating within the EU must comply with CSRD requirements while ensuring consistency with IFRS standards for international reporting. This dual compliance necessitates robust reporting systems.

The US has not adopted IFRS standards, with domestic companies continuing to report under Generally Accepted Accounting Principles (GAAP). However, the Securities and Exchange Commission (SEC) is advancing its own climate disclosure rules, heavily influenced by the TCFD framework.

SEC proposals: The SEC’s proposed rules emphasize governance, strategy, risk management, and metrics and targets, closely mirroring the TCFD recommendations. These rules are not yet finalized, but they reflect a growing emphasis on standardized climate-related disclosures.

Voluntary IFRS adoption: While US domestic companies are not required to use IFRS, foreign private issuers may file financial statements prepared under IFRS.

Although the ISSB standards are not mandatory in the US, multinational corporations operating across jurisdictions may choose to adopt them voluntarily to align with global practices and meet investor expectations.

The UK is actively integrating ISSB standards into its regulatory framework, with mandatory reporting expected from 2026. 

The EU is aligning ESRS and CSRD with IFRS to ensure streamlined reporting across jurisdictions.

The US is advancing climate disclosure rules modeled after TCFD principles, while IFRS adoption remains voluntary.

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In this article, we'll explain what DEI is, why was it created, how HR can be helped by DEI policies, and why DEI is ultimately a beneficial practice for all companies.

Diversity, Equity and Inclusion (DEI): Why Environment Matters Too

Businesses and organizations realize that it isn’t just about the comfort of the CEO these days, but the comfort of their employees to ensure a job well done – and that’s why DEI was created.

DEI, or Diversity, Equity, and Inclusion, refers to the efforts made to make your workplace a safe and satisfying environment for everyone. 

In this article, we'll explain what DEI is, why was it created, how HR can be helped by DEI initiatives, and why DEI is ultimately a beneficial practice for all companies.  

DEI is short for “Diversity”, “Equity”, and “Inclusion” –  and it is a practice aimed to help people from different ethnic backgrounds to feel safe and supported in their contributions at the workplace. To break the definition of DEI down, it’s important to understand each component of DEI – Diversity, Equity, and Inclusion.

Diversity is when various backgrounds are present in a single setting – such as marginalized groups, incorporating a vast array of gender diversity, racial diversity, sexual orientation, gender identity, ages, and those with varying socioeconomic status working for the same company to embrace diversity. 

Equity refers to the effort to make sure that all programs and processes remain objective, and allow each individual the chance at finding success or receiving a promotion, scholarship, or an award. and provide equal possible outcomes for every individual. 

Inclusion is when an effort is made to make all people a part of a work team feel essential and valuable – so that everyone can feel like a compulsory piece to the puzzle of the company’s mission.

Implementing DEI into your workplace is one of the most surefire ways to ensure all employees receive fair treatment, are encouraged to participate, and to promote genuine productivity within your business – as DEI ultimately serves as an organizational framework to promote a diverse perspectives, diverse workforce, and ensure that marginalized groups with those with diverse backgrounds feel a part of an inclusive workplace.

On this edition of Cheat Sheet, what is DEI? DEI is short for diversity, equity, and inclusion. But what really is DEI and why is it necessary?

#dei #cheatsheet #diversity #inclusion 

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Cheat Sheet: What is DEI?

Think of a car: just because the outer body that everyone else sees, kind of like the face of the company of the CEO, is functioning – doesn’t mean the car could run without all of the moving parts inside. Think of the engine, connectors, and other parts of the car as the employees. DEI serves to make all the employees comfortable, because just like a car – it couldn’t function with just one person.

In a similar sense to the Civil Rights Act, which worked to prohibit discrimination, DEI initiatives work to ensure that no particular group feels left out of the labor force.

👉 When it comes to implementing DEI into a workplace, HR, or Human Resources – is responsible for ensuring a smooth and efficient DEI commitments and diversity training, and it has never been more important for HR to cultivate good DEI practices than now in the midst of climate change.

The main goal of DEI is to adhere to all three of the main principles of DEI – otherwise known as Diversity, Equity, and Inclusion. This means working to ensure that all employees have fair access to opportunities and resources in addition to making an effort to ensure that these three closely linked values work to promote diverse talent, employee well being, and promote overall inclusion efforts.

However, in order to fully understand the importance of DEI efforts, it’s essential to understand each individual component of DEI – Diversity, Equity, and Inclusion. 

Diversity has become increasingly pivotal over the last few years, as it’s imperative in any workplace seeking global success – as the wide variety of perspectives offered by companies with diversity is indispensable.

💡 Diversity refers to implementing a DEI strategy to ensure that underrepresented groups receive equal access to various resources, such as higher education or training programs at educational institutions, and working to create an inclusive environment and embracing diversity. 

For instance, if a company is trying to sell a product or service globally – it would be hard to carefully craft that product or service with various viewpoints in mind if the staff wasn’t diverse to begin with. Some may think that the internet could serve as a quick fix here, but the truth is – nothing can replace real-life experience from real people. This is precisely what diversity amongst the work force accomplishes. 

Diversity also allows for the creation of innovative products or services that might otherwise never be created without a diverse team. Overall, diversity is imperative as it allows for a more well-rounded, suitable product that can be specifically tailored according to the appropriate audience. 

💡 Think of diversity as a musical band: in order to establish a unique sound, each band member should have a different background in music. If the guitar player is into pop and the drummer has settled roots in reggae, the band members may be able to create a new sound they wouldn’t have otherwise if all of the band members were strictly based in pop music. The same goes for diversity in the workplace. 

Equity helps to ensure that all individuals are given an equal sense of purpose in the workforce. While it’s common for people to group “equity” and “equality” under the same meaning, the two are very different.  

Equality is when each person or group is provided with the same opportunities regardless of ethnicity, gender, or socioeconomic class – whereas equity is when the place in question understands that each person or ground involved enters the situation with different circumstances, and strives to provide the specific opportunities necessary for each individual based on their background.

A great example of this is when American college students apply for financial aid through FAFSA. If a future student with two working parents applies for financial aid, and meets the threshold of being able to pay the tuition – they’re unlikely to get financial aid. However, if the student comes from a single-parented household and is the first in their family to attend college – it is likely that they will receive more financial aid. This is an example of equity as it depicts allocating the resources to those who need it the most, while still providing the same end goal to both parties – a college education.

💡 Equity helps to support diversity amongst the workforce, by ensuring that all the opportunities and resources are equally divided amongst the team – which can help to boost employee engagement, encourage diverse leaders, and make all feel welcome despite a person's unique circumstances.

Have you ever felt like you were sitting through a meeting, with a million great ideas on the tip of your tongue – but no one ever let you get a word in?

This is exactly what inclusion DEI strives to avoid from happening, by promoting that all employees have valuable ideas worth listening to, despite their backgrounds in diversity and equity.  If people feel like the belong in the team they are in, they are more likely to produce high quality work. Whereas if someone does not feel included in the workplace will feel silenced, and will be less likely to share their ideas over time. 

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