If you’ve been keeping up with sustainability reporting, you’ve probably heard that TCFD is being phased out. Naturally, this has led many businesses to ask the same question: do we still need to care about TCFD?
The short answer is yes.
Whilst the Task Force on Climate-related Financial Disclosures (TCFD) was formally disbanded in 2023, climate-related reporting hasn’t gone anywhere. In fact, it’s evolving into a broader set of global sustainability reporting standards that are shaping the future of UK regulation.
For private equity firms, that means now isn’t the time to put climate reporting on the back burner. It’s the time to make sure your approach is fit for what’s coming next, to avoid the last minute scramble during reporting season.
TCFD was introduced to help organisations understand and disclose how climate-related risks and opportunities could impact their business.
Unlike traditional ESG reporting, TCFD focuses specifically on the financial implications of climate change and asks businesses to consider four key areas:
Governance: who is responsible for climate-related decisions?
Strategy: how climate-related risks and opportunities could affect the business.
Risk management: how climate risks are identified, assessed and managed.
Metrics and targets: how climate performance is measured and monitored.
For private equity firms, this can mean assessing climate-related risks across portfolio companies and understanding how these factors may impact investment decisions, valuations and exit strategies.
For example, if you’re invested in a manufacturing business, how might future carbon regulation affect operating costs? If one of your portfolio companies relies heavily on international supply chains, what happens if climate-related disruption becomes more frequent?
TCFD was designed to encourage businesses to ask these questions before investors do.
This is probably the biggest misconception surrounding climate reporting in 2026.
While TCFD no longer exists as an independent framework, its recommendations have been incorporated into the International Sustainability Standards Board’s (ISSB) reporting standards:
IFRS S1 – General Requirements for Sustainability-related Financial Information
IFRS S2 – Climate-related Disclosures
Essentially, TCFD hasn’t disappeared, it’s just evolved. Many of the concepts businesses are already familiar with (governance, strategy, risk management and metrics) remain central to the next generation of sustainability reporting.
So the good news is if you’ve already begun your TCFD journey, you’re not starting from scratch.
Climate-related financial disclosure requirements are still very much in force across the UK regulatory landscape. The FCA’s ESG Sourcebook remains structured around TCFD principles for many FCA-regulated firms, and UK Sustainability Reporting Standards (UK SRS) are expected to align closely with the ISSB’s global framework.
Whilst not all private equity firms are currently required to report under emerging UK standards, the direction of travel is clear: climate-related reporting expectations are increasing, not decreasing.
And investor expectations are changing too. We’re seeing increasing demand for businesses to demonstrate that they’ve considered:
Put simply, waiting for “the final version” of regulation isn’t a particularly effective strategy when sustainability reporting continues to evolve.
Wondering why the sudden change? It hasn’t exactly come out of nowhere. Around 60% of the NHS’s total carbon footprint comes from its suppliers, and with more detailed reporting requirements launching in 2027 and upcoming public targets and disclosures on the horizon (see our recent regulation update), the NHS is tightening requirements now to get ahead.
In 2026, we’re seeing private equity firms fall into three camps:
Firms that are already subject to climate-related disclosure requirements.
Firms responding to investor and LP requests for ESG and climate-related information.
Firms preparing for future reporting requirements across their portfolio companies.
Regardless of which category you fall into, there are a few practical steps worth taking now:
The goal shouldn’t be to become experts in every new acronym. It should be to build a reporting process that can adapt alongside them.
ESG reporting is increasingly moving beyond simple disclosures and towards meaningful climate risk assessments and more. Some of the areas we’re helping businesses consider include:
Climate scenario analysis
Understanding how different climate scenarios could impact investments and portfolio performance. For example, businesses may assess risks and opportunities under both a 1.5°C transition scenario and a “current policies” scenario (approximately 2.7°C warming). This helps demonstrate that climate-related risks have been considered strategically rather than retrospectively.
Financial impacts
Climate risk is ultimately a business risk. Forward-thinking firms are increasingly assessing the potential financial implications of climate-related issues across their portfolio, including looking at increased operating costs, supply chain disruption, transition risks and capital expenditure requirements.
Clear metrics and targets
Metrics don’t need to be overly complicated to be meaningful. Depending on the maturity of your sustainability strategy, disclosures may include:
Stronger narrative reporting
Investors don’t just want the numbers, they want to understand how climate considerations influence decision-making. Clear narratives around governance, strategy and risk management can often provide as much value as the metrics themselves.
At Flotilla, we don’t believe businesses should have to reinvent their climate reporting strategy every time regulation changes. Rather than asking private equity firms to rebuild their reporting processes every time a framework changes, our platform has been designed to adapt as requirements evolve.
That means if new reporting standards are introduced or existing frameworks are updated, we can seamlessly add, remove or amend pre-built questions within the platform without disrupting your reporting processes.
Whether that’s TCFD, ISSB, UK SRS or investor-led ESG questionnaires, the underlying data you’ve collected remains valuable.
Alongside the platform, our in-house sustainability experts are constantly monitoring regulatory developments and helping clients understand what changes mean in practice. You don’t need an internal team spending hours deciphering consultation papers or wondering whether new requirements apply to your business, that’s our job.
We help private equity firms build forward-looking climate reporting frameworks that align with both current TCFD principles and emerging global sustainability reporting requirements.
This includes:
The result is climate reporting that evolves as regulation evolves, helping firms avoid unnecessary duplication of work and remain prepared for whatever comes next.
If there’s one thing private equity firms should take away from the changes to TCFD, it’s this: climate-related reporting isn’t disappearing. The acronyms may change, and the regulations will continue to evolve, but understanding and communicating climate-related risks is becoming an increasingly important part of doing business. The firms that will be best placed over the coming years won’t necessarily be those chasing the latest reporting framework. They’ll be the ones building adaptable, investor-ready climate reporting strategies that are designed to stand the test of time.
