Retailers need to be ready to act on the requirements of the Taskforce on Climate related Financial Disclosure (TCFD) or potentially risk a number of financial and reputational penalties, according to Segura, the leading platform for next-generation supply chain transparency.
Peter Needle, Founder and President at Segura, said: “The time for procrastination is over as this legislation requires urgent action. Retailers must fully understand and asses their supply chain risks. TCFD is already advisable and reporting becomes mandatory for the financial year following April 2022. Non-compliance will immediately affect the cost of capital, create negative publicity, threaten board room incentives and will gradually attract sanctions.”
TCFD was set up by the Financial Stability Board (FSB) in 2015, to develop recommendations for climate-related disclosures. From 6 April 2022, over 1,300 of the largest UK-registered companies and financial institutions will have to disclose climate-related information on a mandatory basis. This will include many of the UK’s largest traded companies, retailers, banks and insurers, as well as private companies with over 500 employees and £500 million in turnover.
With less than 6 weeks to go companies will need to be ready to disclose their governance around climate-related risks and opportunities; the actual and potential impacts of climate-related risks and opportunities on the organisation’s operations, strategy, and financial planning; how the organisation identifies, assesses, and manages their climate-related risks; together with what metrics and targets they will use as part of their assessment.
Needle comments: “Although initially the legislation will focus on climate-related information for the 1,300 largest UK-registered companies, others shouldn’t be complacent. If it follows previous legislation, this could be rolled out across a much broader number of companies, and encompass other environmental considerations. At Segura we are already working with some of the UK’s leading retailers, helping them to achieve ethical, sustainable and compliant multi-tiered supply chains through automatic supplier onboarding, mapping and reporting.”
Needle strongly advises that failure to comply with TCFD will put companies at risk of audit non-compliance and strategic risk to business continuity. “In the next financial year, larger UK retailers must fully understand all parts of their supply chain, in order to provide TCFD reporting. This requirement goes beyond Tier 1 and Tier 2 and reaches through the whole multi-tier supply chain. Typically, this is where 96% of a retailer’s carbon footprint exists and 100% of their exposure around safe and ethical working practices.”