TCFD vs CSRD: What UK Companies Need to Know About Climate Disclosure Alignment

By Sai Shankar, Guest Author

For UK companies, climate disclosure now sits at the intersection of two frameworks. TCFD-aligned reporting has been mandatory for large UK companies since April 2022. CSRD, with its European Sustainability Reporting Standards, applies to UK subsidiaries of EU-headquartered groups and to UK-listed companies within the FCA’s aligned disclosure requirements.

The two frameworks are related, but they are not the same. Treating them interchangeably creates gaps that surface during assurance. Understanding where they align and where they diverge is the starting point for a disclosure programme that satisfies both without duplicating work.

What TCFD Actually Is

The Task Force on Climate-related Financial Disclosures published its final recommendations in 2017, structured around four thematic pillars:

• Governance: the board’s oversight of climate-related risks and opportunities, and management’s role in assessing and managing them
• Strategy: the actual and potential impact of climate-related risks and opportunities on the business, strategy, and financial planning
• Risk Management: the processes for identifying, assessing, and managing climate-related risks
• Metrics and Targets: the metrics and targets used to assess and manage relevant climate-related risks and opportunities, including Scope 1, 2, and where relevant Scope 3 emissions

The TCFD itself was dissolved in 2023, with its monitoring role transferred to the IFRS Foundation. TCFD’s four-pillar structure was carried directly into IFRS S2 Climate-related Disclosures, which now serves as the international successor standard.

In the UK, TCFD-aligned reporting has been mandatory since 6 April 2022 for certain categories of large companies, including UK-listed companies, large private companies, and large limited liability partnerships. The requirement sits within the Companies Act framework and forms part of the Strategic Report.

What CSRD Requires on Climate

CSRD requires reporting against the European Sustainability Reporting Standards. The climate-related requirements are concentrated in ESRS E1, which is one of the ten topical ESRS and one of the most detailed.

ESRS E1 covers disclosures across:

• Transition plan for climate change mitigation
• Material impacts, risks, and opportunities and their interaction with strategy and business model
• Policies related to climate change mitigation and adaptation
• Actions and resources in relation to climate policies
• Targets related to climate change mitigation and adaptation
• Energy consumption and mix
• Gross Scope 1, 2, and 3 emissions and total GHG emissions
• GHG removals and mitigation projects financed through carbon credits
• Internal carbon pricing
• Anticipated financial effects from material physical and transition risks and potential climate-related opportunities

The structural similarity to TCFD is intentional. The four TCFD pillars are recognisable throughout ESRS E1, and the European Commission has confirmed that CSRD reporting is designed to satisfy TCFD-aligned expectations.

Where the Two Frameworks Overlap

The overlap between TCFD and ESRS E1 is substantial. Both require:

• Board and management oversight of climate matters
• Description of climate-related risks and opportunities
• Scenario analysis to assess resilience
• Metrics and targets, including Scope 1, 2, and material Scope 3 emissions
• Transition plan disclosure

For a UK company already producing a TCFD-aligned disclosure, the underlying data and analysis will feed directly into most of the ESRS E1 requirements. The governance narrative, risk identification process, scenario assumptions, and emissions figures are all reusable.

Where They Diverge

The differences matter and are the source of most reporting gaps. Four are particularly worth understanding:

1. Materiality Approach

TCFD is grounded in financial materiality. It asks how climate-related risks and opportunities affect the business.

CSRD requires double materiality, which combines financial materiality with impact materiality. The company must disclose not only how climate change affects it, but also how it affects climate change and the wider environment. This significantly expands the scope of what must be reported.

2. Level of Prescription

TCFD provides principles-based recommendations. Companies have flexibility in how they interpret and structure their disclosures.

ESRS E1 is prescriptive. It sets specific datapoints, defined disclosure requirements, and mandatory structures. A TCFD-aligned narrative is a starting point but rarely sufficient to satisfy ESRS E1 datapoint requirements without supplementation.

3. Assurance

TCFD disclosures are not subject to a specific assurance requirement in the UK, although they sit within the Strategic Report and are subject to normal audit expectations.

CSRD requires limited assurance from the outset, moving to reasonable assurance over time. This changes the standard of evidence, documentation, and control that must sit behind the reported numbers.

4. Scope 3 Treatment

TCFD recommends Scope 3 disclosure where material. In practice, many UK TCFD disclosures have deferred detailed Scope 3 reporting or have limited it to a small number of categories.

ESRS E1 requires disclosure of gross Scope 3 emissions across the relevant GHG Protocol categories, with a clear explanation of any category excluded on materiality grounds. The bar for Scope 3 completeness is meaningfully higher.

The Practical Implication for UK Companies

For UK companies within scope of both frameworks, the practical question is how to structure the reporting programme to satisfy both without duplication.

Three principles are useful:

• Build the data once: structure the underlying data collection to satisfy the more demanding framework (ESRS E1), and derive the TCFD-aligned narrative from the same source
• Design for assurance from the start: the CSRD assurance requirement effectively sets a documentation standard that TCFD did not require, but that will improve the quality of the TCFD disclosure as a by-product
• Treat double materiality as the anchoring assessment: conducting the double materiality exercise properly generates the strategic input needed for both frameworks

A well-designed CSRD programme will produce a defensible TCFD disclosure with limited additional effort. The reverse is rarely true.

What About IFRS S2?

IFRS S2, published by the ISSB in 2023, is the international successor to TCFD and forms the basis of the UK’s proposed Sustainability Reporting Standards. The UK Government is expected to endorse UK versions of IFRS S1 and S2, which would in due course replace the current TCFD-aligned disclosure regime.

For companies currently reporting under TCFD, the transition to UK-endorsed IFRS S2 will be an incremental change rather than a wholesale one. For companies also within CSRD scope, the picture is that both frameworks will continue to apply in parallel, with different materiality approaches and different levels of prescription.

How Horizon ESG Supports Dual-Track Climate Reporting

Horizon ESG allows organisations to manage climate disclosure across TCFD, ESRS E1, and IFRS S2 from a single underlying dataset. Teams can:

• Capture Scope 1, 2, and 3 emissions once and map them to each framework’s specific structure
• Document governance, strategy, risk management, and metrics narratives with framework tagging
• Run and store scenario analyses that satisfy both TCFD and ESRS E1 requirements
• Maintain the double materiality assessment as a live document rather than an annual exercise
• Generate framework-specific outputs from the same underlying source

The result is a climate disclosure process that reuses data rather than duplicating it, and that is designed for the assurance standard CSRD demands.

Getting Started

If your organisation is producing TCFD disclosures today and preparing for CSRD, this is the right moment to review whether the current data foundation will scale. The answer is often that the underlying methodology is sound but that the documentation and control environment needs strengthening before it will satisfy assurance requirements.

Book a free demo at horizonesg.global/esg-reporting-demo to see how Horizon ESG helps teams manage TCFD and CSRD climate disclosure from a single, audit-ready platform.