A new report from ESG research and investment manager Arabesque confirms that only 1.2 percent of 5,000 big companies globally are making substantial disclosures of their climate risks, while half aren’t reporting them at all.
Only 1.2 percent of the companies analyzed by Arabesque reported on all 11 recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) in 2019. Fifty-four percent of the top firms made no disclosures, the report added.
The TCFD was established by the Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system. The Task Force set out recommendations in 2017 on how companies could voluntarily disclose the risks and opportunities from climate change.
Investors are increasingly focusing on companies’ exposure to climate change, as UN climate talks ended with a deal that for the first time targeted fossil fuels as the key driver of global warming.
“We need to put action to the promises. TCFD is the framework everyone is looking at, the quality of disclosure has to improve quite significantly,” said Arabesque’s President Mr. Daniel Klier.
According to the report from Arabesque, the health and technology services companies were the worst offenders, with more than 70 percent making no disclosures, while energy companies were among those giving the most information.
“Industries facing most investor scrutiny are industries that are trying to do a better job,” Mr. Klier said. Regulators in markets such as Britain, the European Union, Brazil, Hong Kong, Japan, New Zealand, Singapore and Switzerland have begun using the TCFD recommendations as a basis for mandatory disclosures.
Last month, the TCFD also said only about half of companies disclosed climate-related risks and opportunities in some form, on average covering around a third of the 11 recommended disclosures. The TCFD’s 2021 review covered over 1,600 companies globally.
