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. 

👉 Inclusion amongst the workforce should feel very similar to how employees feel with their friends outside of work. With real friends, you don’t feel like you need to change anything about yourself: you simply show up as you are. If the same environment is created amongst the workplace, employees will feel comfortable and included in the conversation. 

HR can implement DEI in several different ways, such as via team building events to allow employees to bond with one another or to remind everyone within the workplace that they can approach HR with any potential issue with ease.

In order for the HR department of a company to build a successful DEI program, four important steps are required: to build trust, have a clear motive for implementing the DEI, getting comfortable with uncomfortable situations that DEI will strive to handle, and always be open to learning more about diversity, equity, and inclusion. 

Having a DEI program means that employees and HR need to get used to uncomfortable challenges: which will include trying to understand why certain things are not viable in a work environment striving to promote diversity, equity, and inclusion. A DEI program will require everyone to be committed to continuous learning in order to keep creating the inclusive and respectful environment a DEI program needs to thrive. 

They say that without trust, a relationship has nothing – and the same goes for any DEI program. If colleagues can trust their bosses and co-workers, DEI is bound to be more successful. 

👉 Therefore, trust serves as a prerequisite before implementing a DEI program. Also, a DEI program needs to serve a clear purpose – is the company trying to diversify the company for the sake of diversity, or do they genuinely want to promote the ideals of DEI? Having honest intentions is crucial to a successful DEI program. 

Has DEI helped improve fairness amongst the workforce?

DEI used to be an added luxury until recently, as more companies are striving for corporate social responsibility and sustainability. However, given DEI is a relatively new program amongst many companies – it begs the question if DEI has been successful or not. 

💡 In fact, the entire state of Texas banned DEI policies from being implemented moving forward – with lawmakers in the state citing that DEI programs sway students politically and has an effect on how people are hired for positions, such as at universities where some schools may be "peer pressured" into hiring people based off of diversity instead of their qualifications.

Evidently, DEI aims to accomplish the exact opposite of this – as DEI policies should actually encourage students, employees, and everyone affected to be themselves and to embrace the freedom and ability to think and exist independently. As a result, this should motivate students and employees alike to produce better quality work – not deter them.

While it’s hard to determine the overall success of DEI so far, big companies in tech like Netflix and Amazon have already demonstrated successful DEI programs. The two companies have different approaches to their DEI programs, but ultimately exhibit how a good DEI program can help lead a company to greater success. 

👉 For instance, Netflix prides itself on the fact that only 45% of their company is white – with the rest of the corporation consisting of Asians, Hispanics, African-Americans, and other ethnicities. Great T.V. shows and movies that are specifically tailored to certain demographics such as Crazy Rich Stupid Asians or Never Have I Ever can’t be created without a diverse team. 

DEI is related to the environment as one of the main goals of DEI is to create a safe atmosphere in the workplace, which as a result – can help boost the productivity and longevity of your employees, and help to keep your business model and practices sustainable.

Despite the fact that there isn't an instant connection between the environment and DEI, they both have one massive thing in common that’s growing in popularity amongst the business world: sustainability.  

It’s no secret these days that businesses are striving to become more sustainable for investment opportunities, build better customer relationships, and help the world to reduce emissions. Sustainability isn’t just about reducing carbon emissions anymore, but about creating a viable workforce and efficient management systems to ensure a smooth and effective business.

👉 Therefore, DEI and the many environmental measures companies take these days have begun to serve the same purpose. If the two were to work together, it could help both a company’s DEI program and their environmental goals to be more successful. 

Could implementing DEI help to improve the environment?

There are several reasons why implementing DEI policies coud help the environment, as it can help to facilitate better communication between your employees and stakeholders or by inspiring new sustainable practices in the office.

For instance, inclusivity in the DEI requires team managers to acquire the intelligence to deal with diversity issues amongst the workplace. The same goes for leaders who must engage with third-party entities such as their company’s suppliers, meaning that the same skills used to maintain DEI can be used to implement environmental goals within a company.    

Both DEI and environmental targets work towards implementing stronger and stricter corporate policies. Therefore, incorporating the environment into DEI could help a company to ultimately improve upon their environmental goals – by demanding the same stringent efforts as required by DEI. 

Diversity can help lead to creative ideas to reduce emissions, equity can help a company to recognize where they currently stand in terms of resources to reduce their emissions, and inclusion in DEI leads to more careful decision making, which is needed when implementing new environmental plans. In short, the values depicted in DEI can help influence better environmental choices within the company. 

👉 Overall business strategy is key to a successful enterprise – and investors and stakeholders evaluate fair working conditions and environmental efforts equally prior to committing to an investment. The more financial resources a company has, the more change they are able to make – meaning that making the environment to be just as important as DEI can help a company to recruit the best possible employees and resources to improve their overall business performance. 

A solid DEI program is contingent on the HR department that is implementing the DEI policies. However, it is clear that keeping the environment in mind throughout any DEI program could help accentuate the success of both a companies goals towards staff consistency, fairness, and environmental targets – ultimately creating the most sustainable work environment possible. 

They say two is better than one, and when it comes to DEI and the environment – that is most certainly the case. 

If reading this article about diversity, equity, and inclusion – otherwise known as DEI,  has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!

At Greenly we can help you to assess your company’s carbon footprint, and then give you the tools you need to cut down on emissions. We offer a free demo for you to better understand our platform and all that it has to offer – including assistance with boosting supplier engagement, personalized assistance, and new ways to involve your employees.

Click here to learn more about Greenly and how we can help you reduce your carbon footprint. 

In this article, we’ll discuss what supply chain sustainability software is, the benefits, and some of our favorite software to choose from.

Top Supply Chain Sustainability Software

Starting a business today often means more than feeding supply and demand with unique products and services, but developing innovative solutions to ensure that your business model remains sustainable in the midst of consumerism success – and supply chain sustainability software can help with that.

Supply chain management is a crucial component for any company looking to effectively reduce their emissions and become more sustainable long-term, and often times – there is too much to monitor and manage alone. This is where supply chain sustainability software comes into play. 

In this article, we’ll discuss what supply chain sustainability software is, the benefits, and some of our favorite supply chain sustainability software to choose from.

What is supply chain chain sustainability software?

Supply chain sustainability software is a platform that can help companies to monitor and manage their supplier’s efforts to instill greater sustainability.

💡Oftentimes, supply chain sustainability software can help companies to decipher which of their suppliers are adhering to company-wide environmental protocols and overall efforts to reduce emissions. 

Ultimately, supply chain sustainability software can shed light on which scope emissions in your business still need greater attention to effectively reduce.

Utilizing supply chain sustainability software can also help companies to publish progress reports for their stakeholders and customers alike – which can help to demonstrate transparency and cultivate a more sustainable business.

Learn about supply chain sustainability, how to achieve it and why having a sustainable supply chain is important not only for the environment, but for a company's bottom line. Get tips on sustainable supply chain management and a few supply chain sustainability best practices that will help your business go green and reduce its carbon footprint.

For more on sustainable supply chains, visit https://blog.intekfreight-logistics.c...

What Is Supply Chain Sustainability?

Key features of supply chain sustainability software

Here are some of the hallmark qualities of supply chain sustainability software:

Use of a Secure Network – Almost all supply chain sustainability software operates on a secure platform to ensure encrypted data and safe sharing of files between stakeholders, suppliers, and any other third-party actor involved in the company’s efforts to reduce emissions.

Data Collection – Supply chain sustainability software is able to collect and integrate data from multiple suppliers and providers, which can help to share continuous updates for your company to gauge its current ESG impact.

Encourage Transparency – As one of the most important parts of sustainability is demonstrating transparency, supply chain sustainability software can help companies to understand their supplier’s activity in real-time – which can help to pinpoint sources of excessive emissions across the supply chain.

Environmental Impact Record-Logs in Real-Time – Think of the health app on your phone that counts how many steps, flights of stairs, or calories you have already burned that day. As a result of the app tracking your data in real-time, you are then able to gauge if you should increase your movement that day or if you’ve already met your fitness goals. Supply chain sustainability software does the same thing, as it can help companies to better understand their energy consumption, water usage, and life-cycle assessments and act accordingly. 

Assistance in Risk Management & Compliance – Supply chain sustainability software can help companies to identify new business risks, such as the consequences of failing to comply with new environmental regulations or continuing to use already-scarce resources. 

New Opportunities for Collaboration & Communication – Supply chain sustainability software can boost communication as these platforms often allow for easier data, file, and resource sharing – all in the same place for suppliers to easily access. 

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