Key Takeaways
- The TCFD disbanded in October 2023 and the IFRS Foundation assumed its monitoring responsibilities from 1 January 2024.
- All four TCFD pillars are fully incorporated into IFRS S1 and IFRS S2, so compliance with the ISSB standards satisfies the TCFD recommendations.
- By late 2025, 36 jurisdictions had adopted or were finalising adoption of the ISSB standards into their regulatory frameworks.
- Entities that previously reported under the TCFD framework should map existing disclosures to IFRS S2 rather than building new reporting from scratch.
What is TCFD?
The Financial Stability Board created the TCFD in 2015 and published its final recommendations in June 2017. The framework asked entities to disclose how climate-related risks and opportunities affected their governance arrangements, business strategy, risk management processes, and quantitative metrics (including Scope 1, Scope 2, and Scope 3 emissions). Adoption was voluntary but gained momentum quickly: more than 4,900 organisations endorsed the framework by the time it wound down.
The ISSB designed IFRS S2 to absorb the TCFD's content. IFRS S2.1–S2.4 map directly to the four pillars. IFRS S2.21 requires disclosure of climate-related risks and opportunities that could reasonably affect the entity's prospects, while IFRS S2.29 requires Scope 1 and Scope 2 greenhouse gas emissions measured in accordance with the GHG Protocol. The transfer was deliberate: the IFRS Foundation confirmed in July 2023 that IFRS S1 and IFRS S2 mark the "culmination of the TCFD's work."
In the EU, the CSRD and ESRS adopted a parallel approach. ESRS E1 covers climate disclosures with requirements that overlap substantially with the TCFD pillars, though the double materiality lens adds impact materiality on top of the financial materiality perspective that the TCFD framework used exclusively.
Worked example: Rossi Alimentari S.p.A.
Client: Italian food production company, FY2025, revenue EUR 67M, IFRS reporter. Rossi previously reported under the TCFD framework on a voluntary basis and now needs to transition its climate disclosures to IFRS S2 for the first time.
Step 1 — Map existing TCFD disclosures to IFRS S2
The sustainability team takes Rossi's FY2024 TCFD report and maps each disclosure to the corresponding IFRS S2 requirement. Governance disclosures (TCFD Pillar 1) map to IFRS S2.5–S2.6. Strategy disclosures (Pillar 2) map to IFRS S2.8–S2.22. Risk management disclosures (Pillar 3) map to IFRS S2.24–S2.26. Metrics and targets (Pillar 4) map to IFRS S2.27–S2.37. The team identifies four gaps: IFRS S2.22 requires disclosure of the financial effects of climate-related risks and opportunities on the entity's financial position, while Rossi's TCFD report addressed financial effects only qualitatively.
Documentation note: record the mapping between previous TCFD disclosures and IFRS S2 paragraphs. Flag each gap where the new standard requires quantitative or more granular information than the prior TCFD report provided.
Step 2 — Quantify climate-related financial effects
Rossi identifies two material climate risks: water scarcity affecting its tomato supply chain (estimated procurement cost increase of EUR 1.8M per year under a 2 °C scenario) and carbon pricing exposure on its two processing facilities (estimated compliance cost of EUR 620K per year from 2027 under the EU ETS). The team documents the assumptions behind each estimate.
Documentation note: record the scenario used (2 °C for physical risks, EU ETS price trajectory for transition risks), the financial effect calculations, the data sources (supplier contracts, energy invoices, ETS price forecasts), and the sensitivity of each estimate to key assumptions.
Step 3 — Prepare Scope 1, Scope 2, and Scope 3 emissions disclosures
Rossi's FY2025 emissions total 12,400 tonnes CO₂e (Scope 1: 4,100 from natural gas at processing facilities; Scope 2: 1,900 from purchased electricity; Scope 3 categories 1 and 4: 6,400 from agricultural inputs and upstream transport). IFRS S2.29 requires measurement in accordance with the GHG Protocol Corporate Standard. The team confirms Rossi already uses the GHG Protocol and that measurement methods remain consistent with prior years.
Documentation note: record the GHG measurement methodology, emission factors applied, organisational boundary (operational control), and any changes from the prior year. Cross-reference to IFRS S2.29(a).
Step 4 — Disclose transition plan status
Rossi adopted a climate transition plan in Q3 2025 targeting a 30% reduction in Scope 1 and Scope 2 emissions by 2032. IFRS S2.14 requires disclosure of transition plans, including targets and the actions planned to achieve them. The team incorporates the plan's summary into the climate-related disclosures.
Documentation note: record the link between the transition plan and IFRS S2.14. Cross-reference the emission reduction targets to IFRS S2.33 and the capital expenditure committed to decarbonisation (EUR 4.2M over five years) to the financial planning disclosures.
Conclusion: Rossi's transition from TCFD to IFRS S2 is defensible because each prior disclosure is mapped to the new standard, gaps are identified and addressed with quantified data, and the documentation trail links every figure to verifiable source evidence.
Why it matters in practice
The FRC's January 2025 thematic review of climate-related financial disclosures by AIM-listed and large private companies found that several entities failed to present one or more of the disclosures required by the UK's mandatory climate reporting regime (which adopted the TCFD framework). Some entities placed climate disclosures outside the annual report entirely, which does not comply with the reporting requirements. The finding applies equally to IFRS S2 adoption: relocating required disclosures to a standalone sustainability report without including them in the general purpose financial reports creates a compliance gap.
Teams that reported under the TCFD on a voluntary basis frequently carry forward qualitative-only descriptions of financial effects when transitioning to IFRS S2. IFRS S2.22 requires disclosure of the current and anticipated financial effects of climate-related risks and opportunities on the entity's financial position, financial performance, and cash flows. A narrative statement that climate risk "may affect future revenues" without quantification does not satisfy the standard.
TCFD vs. IFRS S2
| Dimension | TCFD recommendations | IFRS S2 |
|---|---|---|
| Status | Disbanded October 2023; voluntary framework | Active ISSB standard; 36 jurisdictions adopting or finalising adoption |
| Materiality lens | Financial materiality (investor-focused) | Financial materiality (same lens; IFRS S1.B13–B18) |
| Emissions disclosure | Encouraged Scope 1, 2, and 3 disclosure | Requires Scope 1 and 2 per GHG Protocol; Scope 3 required with first-year transition relief (IFRS S2.29) |
| Financial effects | Qualitative or quantitative at entity's discretion | Quantitative disclosure of current and anticipated financial effects required (IFRS S2.22) |
| Assurance | No assurance requirement specified | Subject to assurance where jurisdictions mandate it |
| Governance body | Financial Stability Board (disbanded) | IFRS Foundation / ISSB |
The distinction matters because entities transitioning from TCFD to IFRS S2 often underestimate the step-change in quantitative rigour. The TCFD accepted narrative descriptions of financial effects; IFRS S2 does not.
Related terms
Frequently asked questions
Is the TCFD still relevant now that the task force has disbanded?
The TCFD framework itself remains a valid reference point because IFRS S2 fully incorporates its four-pillar structure. Entities that already report under TCFD can map their existing disclosures directly to IFRS S2.1–S2.37. The ISSB assumed the TCFD's monitoring responsibilities from 1 January 2024 and publishes annual progress reports tracking adoption of the successor standards.
How do I map TCFD disclosures to IFRS S2?
The ISSB published a formal comparison showing how each TCFD recommendation maps to a specific IFRS S2 paragraph. Governance maps to IFRS S2.5–S2.6, strategy to IFRS S2.8–S2.22, risk management to IFRS S2.24–S2.26, and metrics and targets to IFRS S2.27–S2.37. Start with the mapping, identify gaps (IFRS S2 typically requires more granular quantitative disclosure), and fill them before the first reporting period.
Does TCFD apply to entities reporting under the EU's CSRD?
Not directly. EU entities in scope of the CSRD report under ESRS E1, which covers climate disclosures with requirements that overlap the TCFD pillars but apply a double materiality lens. ESRS E1 incorporates the substance of the TCFD recommendations while adding impact materiality criteria that the TCFD did not require.