TCFD reporting for UK SMEs: what your buyers will ask for
The Task Force on Climate-related Financial Disclosures framework is now mandatory for large UK companies. If you supply them, they will ask you for climate data. Here is what TCFD covers and how to prepare a credible response.
The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board in 2015 to develop consistent, comparable, and decision-useful climate-related financial disclosures. In the UK, TCFD-aligned reporting is now mandatory for premium-listed companies, large UK-registered companies, large LLPs, and certain financial services firms.
As a UK SME, you are unlikely to be directly subject to TCFD reporting requirements. However, your large UK customers are — and they are required to disclose climate-related risks and opportunities across their entire value chain, including Scope 3 emissions from their supply chain. That means they will ask you for climate data, even if you have never produced a climate report.
The four TCFD pillars
TCFD organises climate-related disclosures around four interconnected themes. Understanding them helps you anticipate what your buyers will ask:
Governance
What buyers ask: How does your board oversee climate-related risks and opportunities? Who is responsible for climate risk management?
For SMEs: document who in your leadership team is responsible for climate and sustainability decisions. Even a brief statement that the Managing Director reviews climate risk annually is a start.
Strategy
What buyers ask: What are the actual and potential impacts of climate-related risks and opportunities on your business, strategy, and financial planning?
For SMEs: identify the physical risks (flooding, extreme heat) and transition risks (carbon pricing, changing customer preferences) that could affect your operations and revenue.
Risk Management
What buyers ask: How do you identify, assess, and manage climate-related risks? How does this integrate with your overall risk management?
For SMEs: describe how climate risk is considered in your business continuity planning, supplier selection, and capital expenditure decisions.
Metrics and Targets
What buyers ask: What metrics do you use to assess climate-related risks and opportunities? What are your greenhouse gas emissions? What targets have you set?
For SMEs: calculate and disclose your Scope 1 and Scope 2 emissions as a minimum. Set a target — even a modest one — to reduce energy consumption or emissions intensity.
UK mandatory TCFD reporting: who is in scope?
| Entity type | Threshold | In scope from |
|---|---|---|
| UK premium-listed companies | All | April 2022 |
| Large UK-registered companies | > 500 employees and £500m turnover | April 2022 |
| Large LLPs | > 500 employees and £500m turnover | April 2022 |
| Asset managers and owners | AUM > £5bn | January 2022 |
| UK standard-listed companies | All | January 2023 |
SMEs below these thresholds are not directly required to report — but their large customers are, and supply chain data is essential for Scope 3 disclosures.
What buyers typically ask their SME suppliers
What are your Scope 1 and Scope 2 greenhouse gas emissions?
The most common request. Calculate using the GHG Protocol methodology. Express in tonnes of CO₂ equivalent (tCO₂e).
Do you have a net zero or emissions reduction target?
Even a modest target — 'reduce Scope 1 and 2 emissions by 20% by 2030' — demonstrates commitment. Science-based targets (SBTi) carry more weight but are not required at SME level.
What climate-related risks could affect your ability to supply us?
Physical risks (flooding, heat stress on operations) and transition risks (energy cost increases, carbon pricing, changing regulations) are both relevant.
Do you have a climate or sustainability policy?
A one-page policy stating your commitment to reducing emissions and managing climate risk is sufficient for most SME supplier questionnaires.
What actions are you taking to reduce your emissions?
Examples: switching to renewable electricity, improving energy efficiency, electrifying your vehicle fleet, reducing business travel.
Step-by-step: preparing your TCFD response
Calculate your Scope 1 and Scope 2 emissions
This is the foundation of any climate disclosure. Scope 1 covers direct emissions from your own operations (combustion, company vehicles). Scope 2 covers emissions from purchased electricity. Use the GHG Protocol methodology and express results in tCO₂e.
Identify your climate risks
Consider both physical risks (flooding, extreme heat, water stress affecting your operations or suppliers) and transition risks (rising energy costs, carbon taxes, changing regulations, shifts in customer demand). A simple risk register is sufficient.
Write a climate or sustainability policy
Document your commitment to managing climate risk and reducing emissions. Include who is responsible, what your targets are, and how you will measure progress. One to two pages is appropriate for most SMEs.
Set an emissions reduction target
Even a modest, credible target demonstrates intent. Consider aligning with the Science Based Targets initiative (SBTi) SME route, which provides a simplified pathway for smaller businesses.
Document your governance
Record who in your leadership team is responsible for climate risk. This can be as simple as a board minute or a statement in your annual report noting that the Managing Director reviews climate risk annually.
Prepare your TCFD response with ESG Stress Free
ESG Stress Free guides you through emissions calculation, climate risk identification, and policy documentation — producing a structured TCFD-aligned report you can share directly with your buyers, without needing a climate consultant.
Start your TCFD readiness assessment →Further reading
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Free TCFD readiness checklist
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