Two in three major UK companies to report climate risks in 2019
Two-thirds of the UK’s top 500 companies will disclose climate-related risks and opportunities in their annual reporting this year, a survey by Carbon Trust has revealed.
Boosting reputations is the main driver, with seven in ten firms saying they could increase their brand’s value by reporting in line with the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations.
However, it was also found that less than a quarter plan to report their climate risks and opportunities fully in line with the TCFD, despite very few envisaging any negative consequences in doing so.
Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, said there is “still a way to go” before all the UK’s largest firms fully understand the importance of thorough disclosures.
She continued: “Reporting on climate-related risks is an essential step to identifying challenges and grasping opportunities to be found in the transition to a low-carbon economy.
“Many business leaders already recognise this, understanding the financial and reputational benefit it can help unlock. It’s incumbent on others to follow suit and investors to play a key role in ensuring this happens.”
The survey findings also show that almost one-third of the UK’s largest companies see financial benefits in reporting in line with the TCFD recommendations.
This is composed of 12% that predict improved access to capital, 10% that believe the cost of capital will be less, and 9% that anticipate a strengthened credit rating.
One-fifth of business leaders think disclosures will directly result in an increased company valuation, with 37% foreseeing reduced shareholder pressure, and 29% expecting a growing diversity of investors.
Moreover, three-fifths said they could 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.
Carbon Trust’s business services managing director, Hugh Jones said: “We are now able to see how our changing climate is moving markets more quickly than many had anticipated.
“For corporate leaders, going through the process of assessing their company’s climate change opportunities and risks is a vital strategic tool for navigating the necessary transition to a sustainable, low-carbon economy.”
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Chris Seekings is a reporter for TRANSFORM