The era of laissez-faire approaches to climate change is over. As climate risks accelerate, regulatory bodies worldwide are starting to see sustainability as integral to the financial stability of businesses.
One such regulation that has come to the forefront is the Task Force on Climate-Related Financial Disclosures (TCFD).
But, what is TCFD, and why does it matter? How does it influence procurement, CEOs, and CMOs? And more importantly, why should you, as a small business owner, care about it?
Keep reading for a super simple overview of what you need to know...
What is TCFD?
The Task Force on Climate-Related Financial Disclosures, or TCFD, was established to develop a set of recommendations for consistent and clear climate-related financial disclosures by companies.
These recommendations provide information about the risks and opportunities that climate change presents to businesses, enabling stakeholders to make more informed decisions.
Why TCFD Matters to Procurement Leaders
As a small business owner, you need to understand how the TCFD can affect people in various roles. Let's start with procurement.
Procurement leaders are instrumental in a company's sustainability efforts, as they can influence supply chain practices and decisions.
If your company serves larger UK businesses that have to comply with TCFD regulations, your procurement practices will likely come under scrutiny.
You will need to account for TCFD recommendations in your procurement policies, particularly in areas like risk management and the use of metrics and targets.
With recent research showing that 53% of CFOs consider sustainability crucial to their role, sustainability will undeniably become an essential consideration in procurement strategies.
Implications for CEOs
Next, let's consider CEOs. CEOs are the ones steering the ship; their decisions can significantly impact a company's climate-related financial risks.
They are also the ones who are responsible for ensuring the company's alignment with TCFD recommendations. The TCFD regulations place the onus on CEOs to integrate climate considerations across their organisations.
This includes governance, strategy, risk management, and deciding on metrics and targets. These strategic moves enhance stakeholder confidence, differentiate the company from competitors, and even provide more viable finance options.
How CMOs Are Affected
CMOs, who are responsible for a company's brand image, also have a role to play in this.
They have to manage public perception, articulate the company's climate-related initiatives effectively and keep an eye on the market trends and competitors' responses to these changes. Understanding the risks of greenwashing is also high on their agenda.
However, with challenges come opportunities. For instance, CMOs can leverage the TCFD regulations to enhance their brand's reputation and competitive advantage.
What Small Business Owners Should Know
As a small business owner, you are at the heart of this change. If you provide services to larger UK companies, these new regulations may not directly apply to you, but they certainly can impact your business relationships with these companies.
Greater emphasis on sustainability might mean increased scrutiny of your business practices. At the same time, this change also offers opportunities to differentiate yourself and align with your clients' sustainability goals.
In light of this, as a small business owner, audit your climate-related risks, learn the "lingua franca" of the green economy and stay informed about these regulations.
Small is Mighty
To make a positive impact on the climate crisis, we all need to play our part. As a small business owner, you are in a unique position to contribute to this global effort.
Remember, sustainable business is not just about reducing carbon emissions; it's also a commercial opportunity. The TCFD isn't just about compliance—it's about preparing for the future.
By understanding its implications on procurement, CEOs, and CMOs, you can navigate these changes effectively and play a crucial role in the sustainability value chain. So, embrace this opportunity, and become a part of the solution.