Full disclosure: Improving Corporate Reporting on Climate Risk

Since the Task Force on Climate-related Financial Disclosure (TCFD) released its recommendations in 2017, there has been a rapid uptake and evolution in corporate reporting on climate-related risks and opportunities. However, a significant gap remains between the information provided by companies and that required by investors. This report addresses that gap.

For the first time, the views of multiple major Australian and New Zealand investors have been brought together to define investor priorities for climate-related reporting. By giving reporting companies a better sense of what investors believe constitutes “decision-useful” or “investable” information, this report aims to improve the quality of corporate disclosures and thereby improve companies’ approaches to managing climate-related risks.

Some key messages include:

• Investors want companies to provide more evidence for their claims. Supporting detail should be included for key aspects such as emissions footprints, senior figures’ expertise and the assumptions underpinning a company’s current business model.
• More detail should be provided on the analytical methodology and inputs used, the financial impacts at both company and project or asset levels, and the strategic responses to results.
• The links between risk and opportunity analysis, targets, strategy and remuneration should be articulated and their mutual support for an overarching approach demonstrated.
• Disclosures need to move beyond articulating their climate-related structures and analysis to explain how these inform decision-making and performance management.
• Investors will continue to encourage companies to make each disclosure more decision-useful than the last, and will advocate for regulatory guidance to provide a rising minimum standard for climate-related reporting.