Two-thirds (67%) of UK corporates will be disclosing climate-related risks and opportunities in their 2019 annual reporting, but under a quarter will meet new disclosure guidelines according to figures from the Carbon Trust
A survey conducted by Ipsos MORI based on interviews with 100 board members from the UK’s top 500 companies found that only 23% are expecting to fully report in line with the recommendations of the G20 Financial Stability Board’s task force on climate-related financial disclosures (TCFD), released in June 2017.
Despite the slow take up, looking across a time frame of the next three years, the most commonly expected advantage from climate change disclosure in line with the TCFD recommendations is reputational, with 72% of respondents believing that this reporting would increase brand value.
At an aggregate level, one third (31%) of respondents see financial benefits, which is composed of improved access to capital (12%), lower cost of capital (10%), and strengthened credit rating (9%).
Other perceived benefits include reduced shareholder pressure or activism (37%), as well as attracting an increased diversity of investors (29%). And one-fifth (21%) of business leaders think that improved climate change reporting will directly result in an increased company valuation.
Conversely, very few respondents foresee negative impacts from revealing their climate change opportunities and risks, with only a handful predicting this would have any effect on investment or borrowing.
More than half (59%) do not identify a single disadvantage that would occur for their company in the short-to-medium term by providing disclosures in line with the TCFD recommendations.
The Carbon Trust points out that despite high profile media coverage of the TCFD recommendations, most (62%) corporate leaders say they have not been engaged by any of their important investors or other stakeholders over the past year around improving disclosures on climate-related opportunities and risks.
Hugh Jones, managing director – business services, at the Carbon Trust, said: ‘It's disheartening to see that so few large institutional investors are asking UK plc to come clean on their climate credentials. These data are essential to encourage companies to become climate-safe investments. Investors owe it to their clients and the millions of workers whose savings they are investing to protect us from loss that is greater than just financial.’
Report by Pat Sweet