Managing the transition: TCFD roadmap for an energy business

The challenge

A large energy company wanted to continue growing its gas production business while at the same time becoming a leader in its commitment to the environment, communities, and corporate governance. A major step toward this goal was to ensure the comprehensive integration of the recommendations of the Task Force on Climate-Related Financial Disclosures into its enterprise risk management (ERM) system and publish its first TCFD report on managing climate-related financial risks.

The solution

Marsh’s Advisory team worked with the company to develop an approach with four critical components that included assessment of the current state, quantifying risk exposures, and developing the company’s first TCFD report:

TCFD gap analysis and roadmap development included a review of business and governance documentation and processes; stakeholder interviews; the launch of a climate-risk identification process; and a roadmap to achieving TCFD alignment.
Physical risk assessment included development of a climate risk register, with TCFD taxonomy built in; benchmarking of key risks and assessment of physical risks; and a shortlist of exposed sites.
Transition risk assessment included data review to prepare for modelling; sector-specific economic research; short- and long-term transition risk scenarios; and qualitative analysis of potential impacts.
TCFD report development included review of peer reports; production of a draft report for review; identification of suitable data and graphics to visualise key messages; refinement of the report based on stakeholder input; and data documentation for auditability.

The results

Working with Marsh Advisory, the company developed a roadmap to achieve TCFD alignment, including gap analysis with identification of improvement areas to progress TCFD readiness; a climate risk register with top physical and transitional risks identified; and its first TCFD report detailing their understanding and management of climate-related risks, and the integration of these into their governance and risk management processes.

This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. LCPA 23/377

“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”