From TCFD to ISSB: Unravelling the complexities of sustainability standards in FinTech


Sustainability reporting can often be complex and daunting. In a recent post by Position Green, the firm attempted to simplify the understanding of it. 

If you’ve ever felt daunted by the veritable “alphabet soup” of sustainability reporting, you’re not alone. The good news is that these confusing acronyms are starting to fit together like pieces of a puzzle. Over the past few years, the industry has seen the emergence of numerous frameworks, and the benefits of collaboration and open dialogue among key organisations are now coming to fruition.

For US-based companies, the most commonly adopted frameworks and standards are TCFD (Task Force for Climate Related Financial Disclosures), CDP (formerly known as the Carbon Disclosure Project), and the ISSB (International Sustainability Standards Board) in tandem with the SASB (Sustainability Accounting and Standards Board), Position Green claimed.

Established in 2017, TCFD provides companies with a way to disclose financial risks associated with climate change. Its framework covers governance, strategy, risk management, and metrics and targets. This not only helps companies understand and manage climate-related risks, but also enables investors to make informed decisions. Within TCFD, there is a detailed analysis of transition risks, physical risks, and opportunities, often overlooked by companies but vital in uncovering real impacts.

Position Green said it supports clients in modelling potential climate scenarios that are likely to occur in a world experiencing temperature rises of 1.5°, 2°, and 3° C. Using robust methodologies and research from reliable sources like the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC), we provide meaningful inputs based on company interests, summarise findings, and make recommendations. The result is a comprehensive report that provides insights into potential financial impacts and enables informed decision-making during periods of volatility.

Increasingly, companies that have integrated ESG into their business strategies are proving to be more resilient during volatile periods. A 2022 Wiley report highlighted the resilience of firms that had already incorporated ESG into their operations during uncertain times.

On the other hand, CDP, through its annual questionnaire, allows companies to report on their business strategy concerning nature-related disclosures. This data helps companies identify areas for improvement and benchmark performance. Companies that disclose through CDP can protect and enhance their brand reputation, discover risks and opportunities, and strengthen their competitive advantage.

Getting a high CDP score can boost a company’s reputation and secure the sought-after social license to operate. Solution providers like Position Green can help enhance a company’s chances of achieving a good score. CDP has integrated TCFD considerations into its questionnaires over the past several years, which means conducting a TCFD assessment is crucial to receiving a good score.

Finally, the ISSB, which now houses SASB, streamlines sustainability reporting. The ISSB, governed by the International Financial Reporting Standards (IFRS) Foundation, provides guidance for companies to disclose financial material sustainability information in a standardised, decision-useful format. The ISSB announced in 2023 that its S2 disclosure guidelines would align with the CDP questionnaire, thereby reducing disclosure fatigue.

As these various frameworks evolve and collaborate, the sustainability reporting process is becoming more streamlined. This will give companies the confidence that their approach to reporting and integrating sustainability risks and opportunities into their business strategies is in line with industry best practices.

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