TISFD stands for Taskforce on Inequality and Social-Related Financial Disclosures. The initiative launched on September 23, 2024 to address financial risks that inequality and social-related issues present to companies and financial institutions. The taskforce was created to build a disclosure framework with global relevance that complements existing standards and is grounded in an integrated way of identifying and assessing people-related impacts, dependencies, risks and opportunities.
The founding partners developed a scoping paper titled “People in Scope” in 2024. Input from more than 1,000 stakeholders on the market need for a taskforce on social-related issues informed this paper. This consultative approach shaped the framework’s scope, approach, governance structure and proposed work plan.
The TISFD conceptual foundations establish key terms, definitions and concepts. These enable different stakeholders to speak the same language when discussing social and inequality-related issues. Released as a discussion paper, the conceptual foundations bring together and build on existing frameworks. They clarify the relationships between business, finance, people and inequality. This also covers how these interact with climate and nature.
The foundations provide potential definitions of key stakeholders and draft definitions of concepts to understand social issues and inequalities. They also outline draft concepts to assess and report on dependencies, entity-level risks and opportunities, impacts and system-level risks. Stakeholders provided input through a series of outreach events. The finalized version is expected to be the foundation for disclosure recommendations.
The TISFD framework follows a four-pillar structure that lines up with TCFD, TNFD and ISSB disclosure frameworks. These pillars are governance, strategy, impact and risk management, and metrics and targets. The framework has general requirements and disclosures that line up with this structure. A curated set of metrics and targets recommended for disclosure by businesses and financial institutions supports them.
TCFD focuses on climate-related disclosures and TNFD addresses nature-related financial disclosures. TISFD completes the sustainability trilogy by covering people-related issues. The framework covers different dimensions of inequalities. These are horizontal inequalities such as gender and race, and vertical inequalities such as wages and life expectancy. Location-based inequalities are also covered.
TISFD adopts a framework compatible with both financial materiality and impact materiality. Financial materiality concerns information that investors and lenders require. Impact materiality concerns information relating to stakeholders interested in assessing potential impacts. This dual approach will give the framework a way to address how inequality affects companies and how companies affect social outcomes.
Inequality drains resources from economies in ways most businesses fail to account for. Corporate tax dodging costs poor countries at least £79.42 billion every year. Africa alone loses £11.12 billion in tax revenues due to tax haven exploitation. These hidden costs force governments to either cut public services or collect higher taxes from everyone else. Both options widen the inequality gap.
The macroeconomic effect cuts deeper. A 1 percent increase in inequality lowers GDP by as much as 1.1 percent, but this figure increases to 4.5 percent over time. Inequality has become a source of systemic risk that threatens the political and economic fundamentals business depends on to operate, invent and grow.
Social inequality limits productivity and constrains consumer spending. It destabilizes supply chains and triggers political instability. Companies face mounting pressure from financial institutions at the same time. Banks integrate sustainability criteria into lending decisions, with 62 percent doing so and another 20 percent planning to follow suit. Eighty-four percent of banks expect sustainability to be a critical factor in future financing decisions.
Supply chain disruptions present quantifiable risks. Companies in sectors of all types face a supply chain disruption lasting one month or more every 3.7 years. Such disruptions result in average losses of 7 percent of annual revenue over a decade.
Social risks materialize with measurable financial consequences. Chile’s metro fare protests in 2019 resulted in 20 deaths and more than 86 metro stations burned at a financial cost of $555.91 million. Freeport McMoRan lost between £31.77 and £47.65 million as a result of a social risk incident in Papua when local communities shut down mining operations. Reporting trends reflect this growing awareness: 74 percent of 5,800 companies worldwide report on social risks, representing a 66 percent increase compared to 2022.
Material social impacts require assessment through both financial and impact lenses. The concept of double materiality provides clarity that companies should report on matters that influence enterprise value and matters that affect the economy, environment and people. Impact materiality determines material issues based not on whether they are of interest to stakeholders, but whether they affect the economy, environment and people.
Companies identify and prioritize positive and negative impacts based on the scale of the effect, the scope in populations and ecosystems, the remediable character of negative impacts and the likelihood of occurrence. This approach uses all recognized human rights as a reference point since companies may affect any of these rights.
Businesses depend on healthy and skilled workers, customer relationships and trust, as well as the rule of law. Some businesses depend heavily on resources that local communities also use. They are therefore dependent on a good relationship with these communities. Understanding impacts and dependencies on social and human capital can highlight internalization risks and chances.
Social capital dependency represents a less established concept within measurement but proves useful. Every business dependency constitutes a risk or chance.
Affected stakeholders refers to all those who may be affected by a lot by a company’s operations, products, services and supply chains. Companies should seek to understand the concerns of affected stakeholders by consulting them directly in a manner that takes into account language and other barriers to engagement that works.
Participation should reach people from groups or populations that may be at heightened risk of becoming vulnerable or marginalized, such as human rights defenders, political dissidents, women, young people and minorities.
The framework supports alignment with the International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI) and European Sustainability Reporting Standards (ESRS). It wants to promote greater harmonization in global disclosure standards and reduce fragmentation. This approach helps make reporting on people-related issues more consistent and comparable globally.
TISFD positions itself as a knowledge partner to standard setting bodies such as the ISSB and the GRI. It expects these bodies will think about it in their future work. The framework’s broader scope of social and inequality topics may influence the ISSB’s current narrower scope on human capital. Businesses can expect this interoperability will minimize duplication in reporting efforts.
The TISFD Alliance is a global multi-stakeholder group of organizations who support TISFD’s mission and help shape its work. The Alliance invites members to input into the development of the TISFD Framework. This ensures its recommendations and guidance are practical, decision-useful and relevant to different contexts. Membership remains free with no formal time commitments.
The TISFD Framework (Beta Version 0.1) has been released and is now open for public consultation. The deadline for feedback is 31 July. A period of piloting, technical collaboration and further consultation will follow. The final version of the framework is due for delivery in 2027.
TISFD represents a fundamental change in how businesses measure and report social impacts. Companies that begin preparing now will gain a competitive advantage as investors just need transparency on inequality and human capital risks. The framework offers businesses a structured approach to address social issues that already affect their financial performance. The final version arrives in 2027, and organizations have time to assess their material social impacts and participate with stakeholders while arranging reporting systems. Early adoption positions businesses to turn social responsibility into measurable value.
