TCFD — Climate Risk Disclosure for Indian BFSI

TCFD was constituted by the FSB in 2015 to develop voluntary, consistent climate-related financial disclosures. Its recommendations were issued in 2017, refreshed in 2021, and officially absorbed into IFRS S2 — the IFRS Sustainability Disclosure Standard — in 2024. The framework rests on four pillars: • Governance — board oversight of climate-related risks and opportunities; management's role • Strategy — actual and potential impacts of climate on the business model, strategy and financial planning, under 1.5°C/2°C/3°C scenarios • Risk Management — how the company identifies, assesses and manages climate risk, and integration with enterprise-wide risk management • Metrics & Targets — GHG emissions (Scope 1, 2, 3), portfolio-level metrics for FIs, alignment with science-based targets India applicability: TCFD itself is not yet mandatory for any class of entity. However, RBI's 2022 Discussion Paper on Climate Risk + 2024 consultations explicitly converge on the TCFD/IFRS-S2 structure. SEBI BRSR principle 6 already requires GHG emissions and climate-physical-risk narrative — effectively a TCFD-lite. The trajectory is toward formal IFRS-S2 convergence by 2027-28. Physical vs Transition risk scenarios for Indian banks: • Physical (acute) — Mumbai floods damaging mortgage collateral; Cyclone Amphan disrupting Eastern India loan books; heatwave-driven productivity loss • Physical (chronic) — sea-level rise affecting coastal real-estate lending; declining agricultural yields stressing PSL loans • Transition (policy) — carbon tax raising input costs for cement, steel and oil borrowers • Transition (tech) — EV mandate stranding ICE-vehicle dealership and auto-loan books

• Four-pillar structure forces both qualitative narrative + quantitative metrics
• Voluntary global adoption (4,500+ supporters) → de-facto investor expectation already
• IFRS S2 absorption (2024) gives accounting-standard rigour and audit-grade defensibility
• Scenario-based forward look surfaces risks that backward-looking metrics miss
• BFSI portfolio-level metrics (financed emissions, weighted-average carbon intensity) translate climate to balance-sheet

• Not yet mandatory in India — voluntary adoption uneven across Indian banks
• Scenario-analysis modelling capacity inside Indian banks still nascent — third-party reliance high
• Scope-3 (financed) emissions data quality is weak; PCAF methodology adoption uneven
• BFSI portfolio-level metrics not standardised across PSBs and PVTs

• HDFC Bank's TCFD-aligned climate disclosure FY 2023-24 — first major Indian bank voluntary report
• RBI 2023 systemic stress-test included an early physical-climate scenario for SCBs
• Indian Renewable Energy Development Agency (IREDA) used TCFD framework in its 2024 IPO prospectus

• Mandate IFRS S2 (TCFD-incorporated) for top-50 banks and insurers from FY 2027-28
• Issue a banking-portfolio scenario-analysis playbook aligned with NGFS scenarios
• Build a national climate-data utility for BFSI scenario-analysis inputs