Corporate Disclosure On Financial Risks Related To Climate Change Are Still Missing In 72% Global CSR Reporting
Dailycsr.com – 30 October 2017 – On a global scale nearly 72% of the companies from large to mid-cap range still don’t “acknowledge the financial risks of climate change in their annual financial reports”, revealed the “KPMG Survey of Corporate Responsibility Reporting 2017”.
On the other hand, only 4% of the minority who recognise the “climate-related risk” provides the “analysis of the potential business value at risk” to their investors. The survey of KPMG looked into “annual financial reports” as well as CSR reports of the “top 100 companies” in the order of revenue across “49 countries and regions”, whereby including “4,900 companies” into this study.
According to the study, only “five countries in the world” have its “majority of the 100 companies” declaring “climate-related financial risks in their financial reports”. Here are the percentages of the top hundred companies found in the five countries who are transparent in mentioning their risks, as mentioned in the Ethical Performance:
“Taiwan (88 percent), France (76 percent), South Africa (61 percent), US (53 percent) and Canada (52 percent)”.
However, in most these countries the “climate-related risk” declaration is “either mandated or encouraged” by the “government, stock exchange or financial regulator”. Here is an industry wise figures in their order from “the highest rates of acknowledging climate-related risk in their reporting”, as mentioned by Ethical Performance:
“Forestry & Paper (44 percent), Chemicals (43 percent), Mining (40 percent) and Oil & Gas sectors (39 percent)”, “Automotive (38 percent) and Utilities (38 percent) sectors”, “Healthcare (14 percent), Transport & Leisure (20 percent) and Retail (23 percent)”.
In the words of the Sustainability Services’ Global Head at KPMG, José Luis Blasco:
“Our survey shows that, even among the world’s largest companies, very few are yet providing investors with adequate indications of value at risk from climate change. Our findings support the need for initiatives like the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) that aim to improve corporate disclosure of climate-related risk.
“Pressure on firms to up their game on disclosure is growing by the day. Some investors are already taking a hard line approach to demanding disclosure; some countries are considering regulation to mandate it; and some financial regulators have warned that failure to identify and manage climate risk is a breach of a Board’s fiduciary duty. In this context, we encourage firms to move quickly. Those that don’t could very soon start to lose investors and find the cost of capital and insurance cover escalates quickly.”
Here is a glance at the key findings of the study, as mentioned by Ethical Performance:
• The UN SDGs – a set of 17 global goals to end poverty, protect the planet, and ensure prosperity for all - have resonated strongly with businesses worldwide in less than two years since their launch at the end of 2015. More than one third (39 percent) of the 4,900 reports studied in KPMG’s survey connect companies’ corporate responsibility activities to the SDGs. That proportion rises to over 40 percent (43 percent of reports) when looking specifically at the world’s 250 largest companies (G250).
• Around three quarters of company reports (73 percent) across the 49 countries recognize human rights as a corporate responsibility issue the company needs to address. This rises to nine out of ten reports (90 percent) in the G250 group of companies. Companies based in India, the UK and Japan are the most likely to acknowledge the issue of human rights, as are companies in the Mining sector.
• Two thirds of reports (67 percent) from the world’s 250 largest companies disclose targets to reduce the company’s carbon emissions. However, the majority of these reports (69 percent) do not align the company’s targets to the climate targets being set by governments, regional authorities (such as the EU) or the UN.
Furthermore, José Luis Blasco added:
“It is not only employees, communities and NGOs who take an interest in corporate responsibility and sustainability issues. Investors are also increasingly aware that topics previously considered “non-financial” can have a material impact on a business’s ability to build and protect value both in the short-term and the long-term. Companies therefore need to understand the latest trends in reporting and ensure their own reports meet the expectations of a wide range of stakeholders.”
References:
ethicalperformance.com
On the other hand, only 4% of the minority who recognise the “climate-related risk” provides the “analysis of the potential business value at risk” to their investors. The survey of KPMG looked into “annual financial reports” as well as CSR reports of the “top 100 companies” in the order of revenue across “49 countries and regions”, whereby including “4,900 companies” into this study.
According to the study, only “five countries in the world” have its “majority of the 100 companies” declaring “climate-related financial risks in their financial reports”. Here are the percentages of the top hundred companies found in the five countries who are transparent in mentioning their risks, as mentioned in the Ethical Performance:
“Taiwan (88 percent), France (76 percent), South Africa (61 percent), US (53 percent) and Canada (52 percent)”.
However, in most these countries the “climate-related risk” declaration is “either mandated or encouraged” by the “government, stock exchange or financial regulator”. Here is an industry wise figures in their order from “the highest rates of acknowledging climate-related risk in their reporting”, as mentioned by Ethical Performance:
“Forestry & Paper (44 percent), Chemicals (43 percent), Mining (40 percent) and Oil & Gas sectors (39 percent)”, “Automotive (38 percent) and Utilities (38 percent) sectors”, “Healthcare (14 percent), Transport & Leisure (20 percent) and Retail (23 percent)”.
In the words of the Sustainability Services’ Global Head at KPMG, José Luis Blasco:
“Our survey shows that, even among the world’s largest companies, very few are yet providing investors with adequate indications of value at risk from climate change. Our findings support the need for initiatives like the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) that aim to improve corporate disclosure of climate-related risk.
“Pressure on firms to up their game on disclosure is growing by the day. Some investors are already taking a hard line approach to demanding disclosure; some countries are considering regulation to mandate it; and some financial regulators have warned that failure to identify and manage climate risk is a breach of a Board’s fiduciary duty. In this context, we encourage firms to move quickly. Those that don’t could very soon start to lose investors and find the cost of capital and insurance cover escalates quickly.”
Here is a glance at the key findings of the study, as mentioned by Ethical Performance:
• The UN SDGs – a set of 17 global goals to end poverty, protect the planet, and ensure prosperity for all - have resonated strongly with businesses worldwide in less than two years since their launch at the end of 2015. More than one third (39 percent) of the 4,900 reports studied in KPMG’s survey connect companies’ corporate responsibility activities to the SDGs. That proportion rises to over 40 percent (43 percent of reports) when looking specifically at the world’s 250 largest companies (G250).
• Around three quarters of company reports (73 percent) across the 49 countries recognize human rights as a corporate responsibility issue the company needs to address. This rises to nine out of ten reports (90 percent) in the G250 group of companies. Companies based in India, the UK and Japan are the most likely to acknowledge the issue of human rights, as are companies in the Mining sector.
• Two thirds of reports (67 percent) from the world’s 250 largest companies disclose targets to reduce the company’s carbon emissions. However, the majority of these reports (69 percent) do not align the company’s targets to the climate targets being set by governments, regional authorities (such as the EU) or the UN.
Furthermore, José Luis Blasco added:
“It is not only employees, communities and NGOs who take an interest in corporate responsibility and sustainability issues. Investors are also increasingly aware that topics previously considered “non-financial” can have a material impact on a business’s ability to build and protect value both in the short-term and the long-term. Companies therefore need to understand the latest trends in reporting and ensure their own reports meet the expectations of a wide range of stakeholders.”
References:
ethicalperformance.com
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