Are companies getting better at climate-related reporting?
The FSB Task Force on Climate-related Financial Disclosures (TCFD) analyses in its Overview report the potential financial implications of climate change.
They also develop recommendations for more effective climate-related reporting to promote more informed decisions and more understanding of climate-related issues in the financial sector.
The report provides a summary of the state of disclosure by investors and corporates worldwide for 2022:
- The levels of disclosure have significantly increased since 2019, from +11% in the Asia-Pacific region to +23% in Europe.
- The availability and quality of climate-related financial disclosure also improved a lot since 2017, with 95% of the surveyed entities declaring they noticed an increase in availability and 88% an increase in quality of disclosures.
- 80% of the reviewed corporates disclosed in line with at least one of the TCFD recommended disclosures, but only 4% disclosed in line with all of the 11.
- Asset managers reach respectively 50% and 10% for these levels of disclosures, and asset owners do the best job with 75% and 36%.
- Disclosures are widely used by 90% of investors in decision-making and by 66% of them in the pricing of financial assets.
These results are encouraging, but there is still much room for improvement. To further the adoption of their climate reporting rules, the TCFD will have to evolve from a voluntary industry-led framework to a government-backed global standard.