Introduction to the TCFD Toolkit

Climate change is a key material risk and opportunity in the markets in which British International Investment (BII) operates. At the same time, fund managers have a critical role to play in supporting the transition to low-carbon and climate-resilient economic pathways. We aim to support the fund managers in which we invest to better understand the climate-related financial risks and opportunities they might be facing, to help them factor these into their decision-making processes, investment and engagement strategies.

The Taskforce on Climate-related Financial Disclosures (TCFD) is a market-leading standard for the integration of climate-related risks and opportunities in the core elements of how financial and non-financial organisations operate and make decisions.

Although the TCFD has published guidance for asset managers, it does not consider the specific context of fund managers, particularly those in developing markets that are in the early stages of their journey in addressing climate change. Therefore, this TCFD Toolkit provides guidance and practical tools to address this gap. It includes a maturity matrix to help assess the level of maturity within a fund manager on climate change. Also, a range of stand-alone templates, step-by-step guidance notes and tools are included to help fund managers practically implement actions to embed climate change and in doing so to improve their level of climate change maturity over time.

This Toolkit is based on current guidance and practices, and we expect it to evolve as new requirements are brought into force and as the experience and capabilities of fund managers develops. As approaches to climate change vary, we have tailored the guide to assist the full spectrum of fund managers in developing markets, regardless of where they are on their climate journey.

The Toolkit’s structure mirrors the four pillars of TCFD: Governance, Strategy, Risk Management, and Metrics and Targets.

There are two tables that can help users to navigate the Toolkit.

  1. Table 1 below shows a high-level summary of each section and the related guidance notes, tools and templates that can be downloaded as individual documents.
  2. The resources section includes a table which includes guidance notes, tools and templates. Wherever feasible, the Toolkit and associated guidance notes, tools and templates are broken up for those starting out on their climate change journey and for those that are more advanced.
SectionSummary of ContentGuidance notes, tools and Templates
Introduction and background
  • Climate change drivers relevant to fund managers

    		• N/A
    TCFD structure and core elements
  • Summary of the science, highlighting the importance of action

    		• N/A
    Maturity matrix
  • What the TCFD maturity matrix self-assessment tool is, the levels of maturity and how the tool is used
  • TCFD maturity matrix

    		•
    Governance
  • How governance of climate change can operate within a fund manager, including an example of a governance structure and key responsibilities

  • Climate change policy

  • Board roles and responsibilities

  • Management roles and responsibilities

    		•
    Strategy
  • Considerations and recommended steps for integrating climate change risks and opportunities into an investment strategy

  • Climate change memorandum for investment committee

  • Climate change transition plan
    		•
    Risk Management
  • Integration of climate change risks – fundamentals, materiality and application within the investment process

  • Physical and transition climate risk assessment

    • Context, definitions, projections and tools

    • Addressing physical and transition risk in the investment process – step-by-step guidance

  • Physical risk assessment guide

  • ToR for climate change risk assessment

  • Climate change risk template

  • Transition risk assessment tool

  • Physical risk due diligence questions

  • List of physical and transition risk assessment tools

    		•
    Metrics and Targets
  • Background and characteristics of climate-related metrics

  • Categories:

    • Greenhouse gas (GHG) emissions metrics

    • Risk and opportunity metrics

  • Examples of recommended climate metrics tailored for different fund manager maturities

  • Targets – background, characteristics, net zero and science-based targets

  • Step-by-step process for developing targets

  • Examples of targets for different fund manager maturities

  • GHG accounting and reporting guide

  • Climate-related metrics table

    		•
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