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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Environment

Meera Power Ltd. is aligning its climate risk disclosure with the TCFD recommendations. The board lists items: (i) board oversight of climate risks, (ii) climate-related scenario analysis for resilience, (iii) metrics used to assess climate risks, (iv) identification process for climate risks. Which pairing of item to TCFD pillar is correct?

The correct pairing is board oversight under Governance, scenario analysis under Strategy, metrics used to assess risks under Metrics and Targets, and the risk identification process under Risk Management. TCFD's four pillars are Governance, Strategy, Risk Management, and Metrics and Targets.

  1. A(i) Governance, (ii) Strategy, (iii) Metrics and Targets, (iv) Risk ManagementCorrect
  2. B(i) Strategy, (ii) Governance, (iii) Risk Management, (iv) Metrics and Targets
  3. C(i) Governance, (ii) Risk Management, (iii) Strategy, (iv) Metrics and Targets
  4. D(i) Risk Management, (ii) Strategy, (iii) Governance, (iv) Metrics and Targets

Explanation

TCFD has four pillars: Governance (board oversight), Strategy (including scenario analysis for resilience), Risk Management (identifying and assessing risks) and Metrics and Targets. Other options swap at least two items into the wrong pillars.

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