Less than eight per cent of UK banks reports on TCFD, study shows

At present, only nine UK banks report on climate risks in line with the recommendations set out by the Task Force on Climate-related Financial Disclosures.

Just nine out of 130 banks headquartered in the UK report their climate-related risks and opportunities conforming to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, according to research by consultancy firm Accenture. These include the five largest banks in the country, while smaller financial firms are lagging behind.

The TCFD framework is currently endorsed by 257 banks globally, accounting for 60 per cent of total banking assets. The framework, created in 2015, provides a structure to disclose climate-change impacts on business models by encouraging reporting on four thematic areas: governance, strategy, risk management, metrics and targets.

The study reveals that the financial services industry in the UK has both increased and improved disclosures over the last two years, but that greater progress is required.

This is particularly noticeable in TCFD’s strategy reporting theme, the analysis shows. Challenges are evident in the disclosure of how climate issues have been integrated into strategic planning and the quantitative evidence used to assess the potential impact of the risks and opportunities identified over different time horizons.

In 2022, all nine UK banks reporting on TCFD had an average two-thirds of their disclosures (66 per cent) categorised as ‘advanced’, 27 per cent as ‘intermediate’ and just 5 per cent and 2.8 per cent as ‘beginner’ and ‘not started’, respectively.

“Setting net-zero targets is a first step, but a more concrete, established transition plan to a low-carbon economy needs to be matured and developed into tangible portfolio alignment plans,” said Peter Beardshaw, Accenture’s financial services sustainability lead in the UK and Europe. He urged challenger banks and smaller financial institutions to match the uptake of their larger peers as the UK accelerates its transition to net zero.

In April this year, TCFD reporting became mandatory for UK listed companies, banks or insurers with more than 500 employees, as well as private UK companies with over 500 employees and £500mn in turnover. The TCFD reporting mandate in the UK is likely to expand to more industries and segments of the economy over time. 

This article was updated on December 12 to correct the percentage of global banking assets held by lenders endorsing TCFD, which should be 60 per cent instead of 63 per percent.