Companies failing to address climate-related financial risks
Just one in 10 companies globally provide incentives for board members to manage climate-related risks and opportunities, reveals a new report from CDP..
This is despite 83% recognising the physical threats of climate change, with 88% identifying policy changes and regulations as the biggest challenges posed by transitioning to a low-carbon economy.
The research involved analysing the risk management strategies of 1,681 firms worldwide, and comes more than two years after the Task Force on Climate-related Financial Disclosures was launched in December 2015.
“Overall, we see there is a surface level of preparedness from companies globally to have board level oversight of climate risk and opportunity” CDP task force engagement director, Jane Stevensen, said.
“What we are not seeing is increased governance translating into climate change mitigation. 2018 is the year when companies need to step up climate action as we approach a tipping point.”
Approximately 96% of UK companies have board oversight of climate change – the highest proportion of any country studied – while it also has the most firms disclosing scope 1 and 2 emissions with 97%.
China has the lowest percentage disclosing these emissions, while the US has the least amount of companies preparing to use carbon pricing and the lowest proportion with board oversight.
Germany has the highest amount of firms providing incentives for board members to manage the threats of climate change with 29%, although France is not far behind on 25%.
CDP said there has been significant regulatory, investor and corporate activity in developing climate-related financial disclosures, but that the challenge now is to embed this into corporate strategies and cultures “from board to the front line”.
“Management of environmental issues can no longer be the sole responsibility of sustainability teams: it needs to be a priority area for companies boards,” Climate Disclosure Standards Board managing director, Simon Messenger, said.
“We are more than ever at a crunch point between systemically embedding a market failure or embracing a major opportunity to innovate and grow.”
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Chris Seekings is a reporter for TRANSFORM