TCFD (Task Force on Climate-related Financial Disclosures) established the global standard for climate risk reporting through its four pillars - Governance, Strategy, Risk Management, and Metrics & Targets. In 2023, the ISSB (International Sustainability Standards Board) took over TCFD monitoring and codified these recommendations into mandatory standards IFRS S1 and S2, now adopted by over 20 jurisdictions worldwide. Indian companies face growing pressure to align with these frameworks as investors, regulators, and EU trade partners demand consistent climate-related financial disclosures.
Climate disclosure is no longer optional for Indian businesses operating in global markets. Whether you export to the EU, raise capital from international investors, or report under SEBI's BRSR framework, understanding TCFD and ISSB is essential to staying compliant and competitive.
Over 4,000 organizations across 100 countries endorsed the TCFD recommendations before the framework's responsibilities were transferred to the ISSB. That transfer was not an ending - it was a consolidation. The same disclosure principles now sit inside globally enforceable standards. This guide explains what that means for Indian companies and how to act on it.
What Is TCFD?
The Task Force on Climate-related Financial Disclosures was established in 2015 by the Financial Stability Board (FSB) under the leadership of Michael Bloomberg and Mark Carney. Its purpose was straightforward: create a consistent framework for companies to disclose climate-related risks and opportunities to investors, lenders, and insurers.
The TCFD recommendations, published in 2017, are organized around four pillars:
1. Governance: How does the board and management oversee climate-related risks and opportunities? What committees exist? How often is climate discussed at the board level?
2. Strategy: What climate-related risks and opportunities has the organization identified over the short, medium, and long term? How do these affect business strategy and financial planning?
3. Risk Management: What processes does the organization use to identify, assess, and manage climate-related risks? How are these integrated into overall risk management?
4. Metrics & Targets: What metrics does the organization use to assess climate risks and opportunities? What are the Scope 1, 2, and 3 emissions? What targets have been set, and how is progress tracked?
These four pillars became the common language of climate disclosure globally. By 2023, over 4,000 organizations - including 1,500 financial institutions managing USD 220 trillion in assets - had formally expressed support for TCFD. It became the de facto standard referenced by regulators from Tokyo to Toronto.
The Shift from TCFD to ISSB
In October 2023, the TCFD formally disbanded, and monitoring of climate-related disclosures was transferred to the ISSB (International Sustainability Standards Board), housed within the IFRS Foundation. This was not a replacement but an evolution - the ISSB took the voluntary TCFD recommendations and built them into two mandatory disclosure standards:
- IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
- IFRS S2: Climate-related Disclosures
Both standards became effective for annual reporting periods beginning on or after 1 January 2024. The ISSB has stated explicitly that companies applying IFRS S2 will meet the TCFD recommendations in full.
"The ISSB standards complete the work of the TCFD. A company applying IFRS S2 effectively meets the TCFD recommendations." - Emmanuel Faber, Chair of the ISSB, IFRS Foundation
This consolidation matters for Indian companies because it signals a shift from voluntary frameworks to regulatory standards. Over 20 jurisdictions - including the UK, Japan, Singapore, Australia, Nigeria, and Brazil - have adopted or announced plans to adopt ISSB standards into their regulatory frameworks.
IFRS S1 and S2 Explained
Understanding the two ISSB standards is essential for any Indian company preparing for global climate disclosure requirements.
| Aspect | IFRS S1 (General) | IFRS S2 (Climate) |
|---|---|---|
| Scope | All sustainability-related risks and opportunities | Climate-specific risks and opportunities |
| Core requirement | Disclose material sustainability information useful to investors | Disclose climate risks, opportunities, GHG emissions, and transition plans |
| Governance | Board and management oversight of sustainability matters | Board and management oversight of climate matters specifically |
| Strategy | Sustainability risks/opportunities affecting business model | Climate scenario analysis (1.5C, 2C, 3C+), transition plans |
| Metrics | Industry-specific metrics based on SASB standards | Scope 1, 2, 3 GHG emissions (GHG Protocol), climate targets |
| Key addition over TCFD | Connected to financial statements, industry-specific guidance | Mandatory Scope 3 reporting, asset-level physical risk assessment |
| Effective date | 1 January 2024 (reporting periods) | 1 January 2024 (with Scope 3 relief period) |
A critical distinction: IFRS S2 makes Scope 3 emissions reporting mandatory, though jurisdictions can grant a one-year transition relief. For Indian companies with complex value chains - in manufacturing, chemicals, or textiles - this requirement means building data collection systems across suppliers and distributors.
Why Indian Companies Need Climate Disclosure
Even though India has not yet formally adopted ISSB standards, multiple forces are pushing Indian companies toward TCFD/ISSB-aligned disclosure:
1. RBI Climate Risk Framework
The Reserve Bank of India issued a framework on climate risk and sustainable finance for regulated entities (banks, NBFCs, and AIFIs) in 2024. The framework explicitly references TCFD's four pillars - Governance, Strategy, Risk Management, and Metrics & Targets - and requires banks to assess climate-related financial risks in their lending portfolios. This means Indian banks will increasingly require climate disclosures from corporate borrowers.
2. BRSR and BRSR Core
SEBI's Business Responsibility and Sustainability Reporting (BRSR) framework, mandatory for the top 1,000 listed companies, already covers significant ground on emissions reporting, energy consumption, and governance. BRSR Core - with reasonable assurance requirements - moves India closer to the verification standards that ISSB demands. However, gaps remain in scenario analysis and forward-looking risk assessment.
3. Investor Expectations
Global institutional investors managing over USD 130 trillion in assets have signed on to the Principles for Responsible Investment (PRI). These investors actively seek TCFD/ISSB-aligned disclosures when evaluating Indian companies for investment. Without adequate climate disclosure, Indian companies risk higher cost of capital and reduced access to international funding.
4. EU CSRD and Trade Alignment
Indian exporters serving EU customers are already feeling the pull of the EU Corporate Sustainability Reporting Directive (CSRD). CSRD's European Sustainability Reporting Standards (ESRS) are built on the same TCFD foundation as ISSB. Companies that align with ISSB can more easily respond to CSRD value chain data requests from EU buyers - and meet CBAM reporting requirements simultaneously.
TCFD vs BRSR vs CSRD Comparison
Indian companies often face confusion about how these frameworks overlap. This comparison clarifies the key differences:
| Feature | TCFD / ISSB | BRSR (India) | CSRD (EU) |
|---|---|---|---|
| Issuing body | FSB / IFRS Foundation | SEBI | European Commission |
| Status | Adopted by 20+ jurisdictions | Mandatory for top 1,000 listed cos | Mandatory for EU + value chain |
| Climate focus | Primary focus (IFRS S2) | Included but not sole focus | Strong (ESRS E1) |
| Scenario analysis | Required | Not required | Required |
| Scope 3 emissions | Mandatory | Encouraged, not mandatory | Mandatory |
| Assurance | Expected (jurisdiction-dependent) | BRSR Core - reasonable assurance | Limited moving to reasonable |
| Financial connectivity | Required - linked to financial statements | Separate from financials | Connected to management report |
| Double materiality | No (financial materiality only) | No (impact-focused) | Yes (impact + financial) |
The takeaway: a company that builds its disclosure system to meet ISSB requirements can satisfy roughly 70-80% of BRSR and CSRD requirements with additional adjustments. Starting with ISSB alignment is the most efficient path.
How to Start Climate Disclosure
For Indian companies beginning their TCFD/ISSB journey, here is a practical roadmap:
1. Establish governance structures. Assign board-level responsibility for climate oversight. Create a sustainability committee or designate a board member with climate expertise. Document how climate risks are discussed, escalated, and acted upon at the board level.
2. Conduct a climate risk assessment. Identify the climate-related risks (physical and transition) and opportunities most relevant to your business. Map these to your value chain, geographic operations, and financial planning horizons. Use the glossary to understand key terms.
3. Measure your GHG emissions. Calculate Scope 1, 2, and 3 emissions using the GHG Protocol. This forms the quantitative backbone of any TCFD or ISSB disclosure. Our GHG calculation service can help you build this baseline.
4. Perform scenario analysis. Assess your business under at least two climate scenarios (see section below). Quantify the potential financial impacts - revenue changes, asset impairments, capital expenditure needs - under each scenario.
5. Set targets and transition plans. Define measurable climate targets - whether net zero or carbon neutral - with clear timelines. Outline the capital allocation, technology adoption, and operational changes needed to achieve them.
6. Report and iterate. Start disclosing, even if imperfect. The first year of climate disclosure is always the hardest. Each subsequent year, you refine data quality, expand Scope 3 coverage, and improve scenario analysis depth.
Scenario Analysis for Indian Companies
Scenario analysis is the area where most Indian companies have the least experience - and where TCFD/ISSB standards are most demanding. Here is how to approach it:
The Three Core Scenarios
| Scenario | Temperature Outcome | Key Assumptions | Implications for Indian Companies |
|---|---|---|---|
| 1.5C (Paris-aligned) | Aggressive transition | Rapid policy shifts, carbon pricing at USD 100-250/tCO2 by 2030, fossil fuel phase-down | High transition risk: stranded assets, carbon costs, technology disruption. Lower physical risk long-term. |
| 2C (Moderate) | Gradual transition | Moderate policy action, carbon pricing at USD 50-100/tCO2, slower technology adoption | Moderate transition and physical risks. Most companies in this range today. Balanced preparation needed. |
| 3C+ (Limited action) | Severe physical impacts | Current policies trajectory, limited new regulation, continued fossil fuel dependence | High physical risk: extreme heat, flooding, water stress, supply chain disruption across India. Lower transition risk. |
For Indian companies specifically, the physical risk dimension is critical. India is among the most climate-vulnerable nations, with risks including:
- Extreme heat: Productivity losses in manufacturing and agriculture, rising cooling costs
- Water stress: Groundwater depletion affecting water-intensive industries (textiles, chemicals, food processing)
- Flooding and cyclones: Asset damage and supply chain disruption in coastal regions (Gujarat, Tamil Nadu, Maharashtra)
- Sea-level rise: Long-term risk to port infrastructure critical for export-oriented industries
Start with qualitative scenario analysis in year one, identifying which risks are most material. Move to quantitative analysis - with financial impact estimates - in subsequent years. The IFRS S2 implementation guidance provides detailed instructions on scenario analysis methodology.
Common Mistakes in Climate Disclosure
- Treating disclosure as a compliance exercise only. The real value of TCFD/ISSB disclosure is strategic - it forces you to understand how climate change affects your business model, revenue, and capital allocation. Companies that treat it as a box-ticking exercise miss the strategic insight.
- Ignoring Scope 3 emissions. For most Indian companies, Scope 3 represents 60-80% of total emissions. ISSB makes Scope 3 mandatory. Start building supplier data collection systems now, even if initial estimates are rough.
- Skipping scenario analysis. This is the most valuable and most neglected element of TCFD reporting. Without scenario analysis, your disclosure lacks forward-looking substance and fails to meet ISSB requirements.
- Disconnecting climate data from financial reporting. ISSB explicitly requires that sustainability disclosures connect to financial statements. Climate risks should translate into quantified financial impacts - impairments, provisions, capex requirements - not sit in a standalone sustainability report.
- Not starting because data is imperfect. Every company's first climate disclosure is incomplete. The ISSB provides transition reliefs for exactly this reason. Start with what you have, disclose your methodology gaps, and improve iteratively.
Frequently Asked Questions
TCFD (Task Force on Climate-related Financial Disclosures) was a voluntary framework with 4 pillars - Governance, Strategy, Risk Management, and Metrics & Targets - that guided climate disclosure from 2017 to 2023. The ISSB (International Sustainability Standards Board) took over TCFD monitoring responsibilities in 2024 and codified climate disclosure into mandatory standards IFRS S1 and S2. ISSB builds directly on TCFD but adds more prescriptive requirements and is designed for regulatory adoption.
ISSB standards (IFRS S1 and S2) are not yet mandatory in India. However, SEBI's BRSR framework already incorporates many TCFD-aligned elements. India is expected to progressively align with ISSB through updates to BRSR and through the Indian Sustainability Standards Board under the ICAI. Companies reporting under BRSR Core are already covering significant ground toward ISSB compliance.
BRSR (Business Responsibility and Sustainability Reporting) mandated by SEBI shares significant overlap with TCFD recommendations. BRSR covers greenhouse gas emissions, energy consumption, and environmental governance - core TCFD areas. However, TCFD and ISSB go further by requiring scenario analysis, climate risk quantification, and forward-looking financial impact assessment, which BRSR does not explicitly mandate.
Climate scenario analysis is a TCFD-recommended practice where companies assess the potential impact of different climate futures on their business. Typical scenarios include 1.5 degrees Celsius (Paris-aligned, aggressive transition), 2 degrees Celsius (moderate transition), and 3 degrees Celsius or higher (limited action, severe physical risks). Companies evaluate both transition risks (policy, technology, market shifts) and physical risks (extreme weather, sea-level rise) under each scenario.
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