TCFD UPDATE 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE - Deloitte
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TCFD UPDATE 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 10 Novembre 2021
Our Deloitte speakers
Laurence Rivat
Catherine Saire
Deloitte Partner
Deloitte Sustainability Partner
EU Corporate Reporting Policy Leader
TCFD Member
lrivat@deloitte.fr
csaire@deloitte.fr
Olivier Jan
Olivier Sautel
Deloitte Sustainability Partner
Deloitte Economic Advisory Partner
Climate & Energy Leader
osautel@deloitte.fr
ojan@deloitte.fr
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 2
Agenda
01
Introduction
02
TCFD Status Report
- Progress in implementing TCFD recommendations
- Sharing of good practices per TCFD pillar
- From theory to practice: Risk impact modelling- Example of tax carbon
03
Metrics TargeTs and Transition Plan
- TCFD climate metrics as per TCFD revised guidance
- Targets & Transition plan
- From theory to practice – Decarbonisation pathway and roadmap
- Financial impacts & Alignment with AMF / ESMA recommandations
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 3
Introduction
4
Overview of key TCFD Reports and Guidance © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 5
Core elements of the TCFD recommendation
Governance Strategy Risk Management Metrics and Targets
Disclose the organization’s governance Disclose the actual and potential Disclose how the organization Disclose the metrics and targets used
around climate-related risks and impacts of climate-related risks and identifies, assesses, and manages to assess and manage relevant climate-
opportunities. opportunities on the organization’s climate-related risks. related risks and opportunities where
businesses, strategy, and financial such information is material.
planning where such information is
material.
Recommended Disclosures Recommended Disclosures Recommended Disclosures Recommended Disclosures
a) Describe the board’s oversight of a) Describe the climate-related risks a) Describe the organization’s a) Disclose the metrics used by the
climate-related risks and and opportunities the organization processes for identifying and organization to assess climate-
opportunities. has identified over the short, assessing climate-related risks. related risks and opportunities in
medium, and long term. line with its strategy and risk
management process.
b) Describe management’s role in b) Describe the impact of climate- b) Describe the organization’s b) Disclose Scope 1, Scope 2, and, if
assessing and managing climate- related risks and opportunities on processes for managing climate- appropriate, Scope 3 greenhouse
related risks and opportunities. the organization’s businesses, related risks. gas (GHG) emissions, and the
strategy, and financial planning. related risks.
c) Describe the resilience of the c) Describe how processes for c) Describe the targets used by the
organization’s strategy, taking into identifying, assessing, and organization to manage climate-
consideration different climate- managing climate-related risks are related risks and opportunities and
related scenarios, including a 2°C or integrated into the organization’s performance against targets.
lower scenario. overall risk management.
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 6
2021 Status Report (Link here)
The TCFD Momentum
• Disclosure increased more last year than in any previous year
2600+ 50+ • Progress is still needed- only 50% of companies aligned with at least 3 recommended
disclosures
TCFD Supporters Central
globally Banks
(+73% in 1 year)
• More disclosure on climate-related risks and opportunities (over half of the companies)
USD25tn • Scenario disclosure still the least reported recommended disclosure but encouragingly increase
Combined company market from 5% in 2018 to 13% in 2020
capitalisation
(+92% in 1 year)
• Progress needed on the governance disclosure- recommended regardless of materiality
89
Countries and jurisdictions
represented • Materials and building companies now leading on dislosure
Top 5 : Japon, UK, US, Australia and France
8 • Significant progress in the insurance industry- leading disclosure on risk management processes
TCFD aligned officials
reporting requirements
(Brésil, HK, Japon, Singapore, Suisse, • Europe still the leading region for disclosure (16 percentage points more than the next closest
NZ, UE, UK)
region)
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 8
TCFD Aligned reporting © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 9
TCFD Disclosure example Climate governance (1/2) Source: Legal and General Group Plc, TCFD Report, 2020, p.10 © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 10
TCFD Disclosure example Climate governance (2/2) Source: EDF, Registration Document, 2021, p.141 © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 11
TCFD Disclosure example Scenario analysis (1/2) Source: Allianz Group, Sustainability Report, 2020, p. 86 © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 12
TCFD Disclosure example Scenario analysis (2/2) Source: Lendlease Annual Report 2021, p. 53 © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 13
TCFD Disclosure example
Risk Analysis (1/3)
Source: Orbia, TCFD Report, 2020, p. 2–3
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 14TCFD Disclosure example Risk Analysis (2/3) Source: Meridian Energy, Climate Change Disclosures Meridian Energy Limited FY20, p. 11 © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 15
TCFD Disclosure example Risk Analysis (3/3) Source: Meridian Energy, Climate Change Disclosures Meridian Energy Limited FY20, p. 11 © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 16
Moving from theory to practice
Risks impact modeling
Example of tax carbon
By Olivier Sautel
Deloitte Economic Advisory Partner
17Tarification du carbone
Quels enjeux ?
Illustration des mécanismes de
répercussion d’un surcoût carbone
De multiples dispositifs et des incertitudes sur les modalités
d’application, mais un consensus sur la nécessité d’internaliser le
coût social du carbone par une tarification de la tonne de CO2 Secteur D
Nécessité de passer à des estimations quantifiées appuyées sur Secteur A
des données opposables, sur un sujet qui concerne
nécessairement toutes les entreprises
Demande
Secteur B Secteur C
finale
Importance potentielle des comportements de répercussion le
long des chaînes de valeurs, au-delà des impacts directs pour
les secteurs émetteurs
Secteur E
Impact direct (taxe)
Difficulté pour une entreprise donnée d’appréhender Impact indirect négatif (répercussion subie)
l’ensemble de sa chaîne de valeur amont
Impact indirect positif (répercussion appliquée)
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 18Tarification du carbone
Proposition de méthodologie
Méthodologie de type Input-Output appuyée Développement par nos équipes d’un module
sur les matrices de relations sectorielles de simulation de surcoût et de sa répercussion
fournies par les données publiques
Outil de simulation des effets tout au long des
chaînes de valeurs, en fonction du
World Input-Output Database secteur/niveau de taxe/taux de répercussion
• Multisectoriel (54 secteurs), multi pays (Pays de la
zone ETS, USA, Chine, agrégat « reste du monde »)
Données d’émissions 2018 • Approche à technologie fixe, sans substitution
produit
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 19Tarification du carbone
Enjeux et défi d’application
Output de l’outil
▪ Estimation d’exposition au risque, en pourcentage du chiffre d’affaires
/ Ebitda, assortie de tests de sensibilité
▪ Travail en cours sur la traduction en termes de valorisation
d’entreprises
Personnalisation/
adaptation ▪ Calibration des émissions et du niveau de taxe directe
▪ Données d’achats et prise en compte de la spécificité de la spécificité
des consommations de l’entreprise par rapport à la moyenne sectorielle
▪ Ajustement du scope géographique
Approfondissement
▪ Prise en compte des plans de décarbonation sectorielle
▪ Approfondissement des comportements de réponse/substitution pour
les produits les plus affectés
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 202021 MTT Guidance (Link here)
Seven categories of metrics intended to support comparability
1. The Task Force believes all organizations should disclose absolute Scope 1 and Scope 2 GHG
emissions independent of a materiality assessment. The disclosure of Scope 3 GHG emissions is
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 subject to a materiality assessment; however, the Task Force encourages organizations to TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 22
disclose such emissionsThe importance of interim target © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 23
The transition plan © 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 24
Moving from theory to practice
Decarbonisation pathway and roadmap
By Olivier Jan
Deloitte Sustainability Partner
25Financial impacts & Alignment
with AMF / ESMA
recommandations
26Disclosure of financial impacts
TCFD RECOMMENDATIONS AMF & ESMA RECOMMENDATIONS
Impact on financial performance
• Increases in revenue from new products or services from
climate opportunities; Link here
• Increases in cost due to carbon prices, business
interruption, contingency, or repairs;
• Changes to operating cash flow from changes in upstream
costs;
• Impairment charges due to assets exposed to transition
risks; and
• Changes to total expected losses due to physical risks.
Impact on financial position Link here
• Changes to the carrying amount of assets due to exposure
to physical and transition risks;
• Changes to the expected portfolio value given climate
related risks and opportunities; and
• Changes in liability and equity due to increases or
decreases in assets (e.g., due to low-carbon capital
investments or to sale or write-offs of stranded assets).
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 27Enforcement priorities de l’ESMA 2021 – Eléments relatifs au reporting extra-financier
Informations liées au changement climatique
• Transparence des émetteurs sur leurs politiques liées aux enjeux climatiques (risques physiques et risque de transition) et les
résultats de ces politiques
‒ Mesures en place pour identifier les risques et/ou opportunités climatiques et leurs impacts
‒ Principaux risques et opportunités identifiés ayant un impact matériel sur les activités, leur gestion et les actions prises en
conséquence
• Suivi des risques
‒ Publication des indicateurs de suivis et analyse de ceux-ci par rapport aux objectifs fixés. Indicateurs à un niveau de
segmentation pertinent
exemple : indicateur de suivi de l’évolution des émissions de gaz à effet de serre (GES) par pays/région ou business
‒ Expliquer dans quelle mesure les trajectoires d’émissions sont alignées sur les objectifs de l’Accord de Paris (qualitativement et
quantitativement)
‒ Ces indicateurs comprennent les informations de scope 1, 2 et (si données fiables disponibles) de scope 3
‒ Expliquer qualitativement et quantitativement la progression de l’entreprise vers ces objectifs
• Contextualisation de la communication de l’entreprise sur les enjeux climatiques
‒ Intégration des enjeux climatiques dans la stratégie générale de l’activité, présentation des plans d’intégration des mesures
climatiques et objectifs liés
‒ Ne pas se limiter à des données historiques, présenter une information prospective
• Présenter les enjeux climatiques (stratégie, performance, objectifs, etc) dans la communication extra-financière ET dans les états
financiers avec cohérence. Si ces informations sont omises, expliquer pourquoi
© 2021 Deloitte SAS - Confidential Document – 10 Novembre 2021 TCFD UPDATE: 2021 STATUS REPORT AND METRICS, TARGETS AND TRANSITION PLANS GUIDANCE 28Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. In France, Deloitte SAS is the member firm of Deloitte Touche Tohmatsu Limited, and professional services are rendered by its subsidiaries and affiliates Deloitte is a leading global provider of audit & assurance, consulting, financial advisory, risk advisory and tax & legal services. With 312,000 professionals in 150 countries, Deloitte has gained the trust of its clients through its service quality for over 150 years, setting it apart from its competitors. Deloitte serves four out of five Fortune Global 500® companies. Deloitte France brings together diverse expertise to meet the challenges of clients of all sizes from all industries. Backed by the skills of its 6,900 employees and partners and a multidisciplinary offering, Deloitte France is a leading player. Committed to making an impact that matters on our society, Deloitte has set up an ambitious sustainable development and civic commitment action plan. © Deloitte SAS. Membre de Deloitte Touche Tohmatsu Limited
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