More than half of the world's 250 largest companies now consider climate change to be a financial risk in their corporate reporting, new research by KPMG has uncovered.
A whopping 94% of companies based in France were found to report financial climate risks, which was more than in any other country, with Japan second on 71%, and the US third with 54%.
Conversely, less than half of the largest German and Chinese companies report financial risks from climate change, on 47% and 23% respectively.
The research also found that the quality of climate-related risk disclosures among the 250 companies needs to improve, with just 31% including these in their primary financial report or publishing a separate climate risk report.
Moreover, only 22% of firms provide scenario analysis of climate risks in line with the recommendations of Task Force on Climate-related Financial Disclosures (TCFD).
Despite this, Richard Threlfall, global head of KPMG IMPACT, said that we should take a “glass half full“ view of the findings since corporate disclosure of climate-related risks, as we currently understand it, “simply did not exist five years ago“.
“It is encouraging that, in a relatively short time, over half the largest companies now publicly recognise the risk and almost half have made their board responsible for managing it,“ he continued.
“That said, progress has not been uniform and there are significant variations in the quality of disclosures between different jurisdictions and industry sectors.“
Among the major industry sectors, oil and gas leads with 81% of the largest firms reporting climate-related financial risks, followed by retail on 70%, technology, media and telecommunications on 60%, and financial services on 57%.
The research also found that 19% of the companies studied have reported a target to achieve net-zero emissions, with German firms leading on 76%, followed by French on 44% and Japanese on 25%.
Among industry sectors, net-zero targets are most common among large companies in technology, media and telecommunications, with 30%, and automotive, on 29%.
“It is heartening to see growing numbers of major companies setting net-zero goals, although the devil is in the detail,“ said Adrian King, chair of KPMG's global Climate Change & Sustainability network.
“Businesses that are serious about net-zero transition will develop and implement decarbonisation strategies that reduce emissions immediately and continue to do so in a sustained manner until the net-zero goal is met.“
Image credit: iStock
