A coalition of 105 investors spanning 23 countries has contacted businesses that either aren’t disclosing, or have stopped disclosing, data to CDP. The group of investors include the likes of Legal & General and the New York State Common Retirement Fund.
Companies such as Nintendo, Facebook, Domino’s Pizza and Exxon Mobil have been contacted to either start or improve environmental disclosure to the CDP platform. The 1,051 companies contacted account for $8trn in market capitalisation and are estimated to emit more than 4,800 megatonnes of carbon – equal to the entire 2017 emissions levels of the US – each year.
CDP’s global director of capital markets Emily Kreps said: “The importance of investor engagement to drive disclosure cannot be overstated. Climate change, water security and deforestation present material risks to investments, and companies that are failing to disclose their impact risk trailing behind their competitors in their access to capital.”
The call to action forms part of CDP’s 2020 Non-Disclosure Campaign (NDC), which aims to increase engagement among companies that aren’t interacting with the organisation.
Of the 1,000+ companies contacted, 58% were selected by investors to improve disclosure on climate change impacts, while 30% – including Chevron – were asked to disclose on at least two key themes across CDP’s climate, forests and water data requests.
CDP has welcomed a major increase in the number of companies engaging across those key themes. In 2019, for example, 88 investors focused on 707 companies. The number of companies calling on their suppliers to disclose environmental data, for example, has increased by 24% in a year, with more than 150 organisations now taking proactive steps to gain more understanding of the environmental impacts of their supply chains.
Disclosure decisions
In the UK, climate disclosure is shaping up to be a key legislative tool on the road to net-zero emissions.
The Financial Conduct Authority (FCA) has proposed that the UK’s largest companies should disclose climate-related risks as part of a net-zero transition. The UK’s financial watchdog has unveiled proposals that would lead to 480 UK companies, worth a combined market capitalisation of £2.3trn, having to disclose relevant data to outline how they are assisting or are failing to assist with the UK’s net-zero transition.
Additionally, the Financial Reporting Council (FRC) has launched a major review into the quality of how companies and auditors are reporting on climate change impacts and risks, including the pace at which the Taskforce on Climate-related Financial Disclosures (TCFD) framework has been adopted.
It is the latest in a string of framework introductions that suggest that climate disclosure could become mandatory in the 2020s.
The Green Finance Strategy, for example, includes expectations for publicly listed companies and asset owners to disclose climate risk and impact data by 2022 and to work with regulators as to whether this becomes a mandatory requirement.
“As the growth of this campaign shows, investors require decisive data that is consistent, comparable and comprehensive,” Kreps added. “To make this possible, they expect companies to wholeheartedly engage with TCFD-aligned standards on environmental disclosure and reporting. With business resilience and adaptation to unexpected, systemic risks exposed by the recent public health crisis, the tide is rapidly turning against companies not taking note of investor demands.”
edie’s Sustainable Investment Digital Conference
edie’s Sustainable Investment Digital Conference takes place on 7-8 September 2020 and unites corporates, asset managers and asset owners for frank discussion around disclosure priorities, roadblocks and innovations. Featuring green finance experts from the likes of ING, BlackRock and BNP Paribas, the event explores how corporates and financiers can move beyond ESG in a post-COVID world.
For more information or to register, click here: https://event.edie.net/investor/
Matt Mace