Content Category: ESG
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Developed by Clarity AI, the Financial Stability Board Task Force on Climate-Related Financial Disclosures (TCFD) score measures organization alignment with TCFD recommendations.
This data feed encompasses approximately 2,500 companies with data as of September 2020. The disclosures are structured around four main thematic areas (i.e., Governance, Strategy, Risk Management, and Metrics & Targets) that represent core elements of how organizations operate. These thematic areas are then divided into several recommended disclosures.
Asset Class: Public Companies
Data Frequency: Monthly
Delivery Frequency: Monthly
History: Data available back to September 2020
Clarity AI structures TCFDs around the following main thematic areas. Those areas are then divided into 11 recommended disclosures shown below.
Recommended Disclosure |
Description |
Board Oversight |
Describe the board's oversight of climate-related risks and opportunities. |
Management's Role |
Describe management's role in assessing and managing climate-related risks and opportunities. |
Recommended Disclosure |
Description |
Risks and Opportunities |
Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. |
Impact on Organization |
Describe the impact of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning. |
Resilience of Strategy |
Describe the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. |
Recommended Disclosure |
Description |
Risk ID and Assessment |
Describe the organization's processes for identifying and assessing climate-related risks. |
Risk Management Processes |
Describe the organization's processes for managing climate-related risks. |
Integration Into Overall Risk Management |
Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization's overall risk management. |
Recommended Disclosure |
Description |
Climate-Related Metrics |
Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. |
Scope 1, 2, 3 GHG Emissions |
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and related risks. |
Climate-Related Targets |
Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. |
The underlying data is collected once a year and delivered to clients following that TCFD questionnaire distribution and collection, which occurs in April. TCFD changes their questions annually to keep feedback relevant.
Clarity AI's scores cater to CIOs/portfolio managers as well as sustainability and compliance officers. This data feed helps investors understand how a company is integrating climate risks and opportunities in its strategy and forward planning, in contrast to just backward reporting. It also supports engagement strategies by identifying areas where companies can improve their practices and disclosures related to climate risks and opportunities.
TCFD alignment scores can be used within the following investment strategies. Price sentiment and fundamental analysis indicators can be leveraged to create a factor used to identify undervalued stocks.
Screening
Relative Value
Secular Growth
Shareholder Activism
The details provided above are as of October 2020.
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