Companies are disclosing incomplete information on how they are tackling climate change, leaving investors and stakeholders struggling to take meaningful decisions on their portfolios and spending, a study reveals.
Research by Canadian software company Manifest Climate looked at the public reports of more than 3,000 companies in 65 countries, to see whether they were in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the world’s premier climate reporting framework.
Its inaugural Disclosure Benchmark Review reveals that, while two-thirds of companies are “somewhat aligned” with TCFD recommendations, a deeper review of more than 100 found that only 49% included “decision-useful” information. Not one company made “decision-useful” disclosures across all of the recommendations for investors or stakeholders.
The review notes that disclosures varied significantly across sectors when considering alignment with at least one TCFD recommendation. A total of 96% of disclosures by utility companies between 2018 and 2021 were in line with at least one recommendation, as were 72% of those by banks; this is compared with 16% by pharmaceuticals and 29% by mining companies.
“The clarity, specificity, consistency and comparability to make the disclosure decision-useful just isn’t there, even within financial services, which is a relatively well-advanced sector for TCFD adoption,” said Manifest Climate chief executive Laura Zizzo.
- In the UK, pensions consultancy XPS Pensions Group has also analysed TCFD reports. Of 12 large UK pension schemes with £320bn in assets under management, 11 displayed strategies and targets linked to net zero, with the majority aiming for 2050, while nine had bespoke policies for responsible investment and climate change. However, there was limited disclosure on key areas, particularly secure income, real assets and private markets. Only three schemes made any disclosures about Scope 3 or value chain emissions.
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