That is a key conclusion of new research by CDP and the Climate Disclosure Standards Board (CDSB), which recently surveyed representatives from 80 large European firms to assess their progress towards full disclosure in how they track, measure and report on their social and environmental impact.

Published today (29 November) the report reveals that while 79% of respondents identified at least one climate change or environmental risk in their annual reports this year, 80% failed to prepare a specific climate change strategy to mitigate these risks.

The survey also found that only 81% of EU businesses are disclosing their current greenhouse gas emissions (GHG) in their reports – despite disclosure being an EU requirement. Differences between nations is marked, the report states, with all British and French companies disclosing GHG footprints in their reporting, compared to 56% of German firms.

As for emissions reductions, the report notes that less than half (41%) of survey respondents had published targets for reducing their carbon footprint – or strategies detailing how they will achieve any reduction.

CDP and CDSB conducted the research by measuring corporate action against the reporting demands outlined in the EU’s Non-Financial Reporting (NFR) Directive, which requires large companies to make information on their sustainability actions available to investors, consumers and policymakers.

“Climate and environmental information is material for an understanding of these large businesses and must be presented to investors in a consistent and comparable way,” CDSB’s managing director Mardi McBrien said.

“The way to help companies achieve this is to clarify and strengthen the NFR Directive by specifying its requirements.”

TCFD alignment

While the companies surveyed have not been named, the report highlights the fact that they collectively represent $3.7trn in market capital.

It additionally tracks progress on corporate alignment with the Task Force on Climate-related Financial Disclosures’ (TCFD) reporting recommendations, which have received the support of more than 500 firms since they were published in 2016. 

Of the 80 survey respondents, 30 were found to have referenced the TCFD in their latest annual report, with French and British firms again leading the trend towards TCFD alignment.

The report notes that while six in ten of the companies surveyed claim responsibility for environmental issues sits with a board member, only 15% mention climate change specifically, which is a key TCFD recommendation.

“To scale up the adoption of the TCFD at the pace and quality needed to bring a realistic picture of climate-related financial risk to the market, mandatory implementation of the 11 recommended disclosures is needed”, CDSB’s McBrien added.

“While we have seen progress by companies on such disclosures, all companies need to discuss the impact of climate change on their business, as outlined by the TCFD recommendations.”

TCFD’s own status report, which was released in September following analysis of the disclosure practices of nearly 1,800 companies, claimed that the recommendations have helped push climate reporting into the mainstream. However, the report also noted that many businesses are failing to translate climate impacts into business risk.

Sarah George

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