Companies lagging on useful climate disclosures, report says
Less than half of companies produce climate-related disclosures that include decision-useful information, according to a Manifest Climate report.
The firm collected data from public filings of more than 3,000 companies in 65 countries and looked at how closely those aligns with the TCFD’s recommendations.
The report finds that despite more companies producing climate-related disclosures, most are yet to include decision-useful information. Just under two thirds (66 percent) of surveyed companies disclosed some TCFD-aligned information.
The finds are similar to those in a recent status report published by the TCFD, which found that the number of companies disclosing information compliant with the task force’s framework has increased but their disclosure levels still fail to meet its recommendations.
DIFFERENCES BY SECTOR
Disclosures vary by sector when looking at companies’ alignment with at least one TCFD recommendation. For example, the report shows that 96 percent of utilities’ disclosures recorded between 2018 and 2021 include TCFD alignment with at least one recommendation.
Manifest Climate also reports that 72 percent of banks’ disclosures, 16 percent of pharmaceuticals companies’ disclosures and 29 percent of mining companies’ disclosures feature TCFD alignment with at least one recommendation.
Meanwhile, from 2018 to 2021, 43 percent of companies produced disclosures that feature at least one of the TCFD strategy recommendations yet only 12 percent include information aligned with the TCFD governance recommendations.
Decision-useful information on metrics and targets was present in 41 percent of financial services companies’ disclosures.
‘Climate risk disclosure is now an expected part of every company’s financial statement so it’s vital IR professionals are prepared to meet the growing investor appetite for this information,’ says Laura Zizzo, CEO and co-founder of Manifest Climate.
‘The Disclosure Benchmark Review can be used by IR teams to get a snapshot of which industries are most aligned to TCFD disclosure and also to understand how to make disclosure decision-useful for investors.’