New research reveals only a third of leadership statements address climate change
Less than half of FTSE 100 Chairmen or Chief Executives address climate change in the leadership statements of their latest annual report, despite the systemic impacts of climate change looming on the horizon. Black Sun’s upcoming TCFD research report shows a significant increase in companies referencing the TCFD but gaps remain between commitments and relevant and meaningful disclosures.
Our second TCFD research report in Black Sun’s Horizon Series finds that 67% of FTSE 100 companies reference the Task Force on Climate-related Financial Disclosures (TCFD) in their reporting, although an increase from 39% last year, still few companies are meeting all 11 disclosure recommendations.
This is against the backdrop of TCFD supporters passing the 1,000 mark, Larry Fink’s announcement that Blackrock will push companies to make TCFD aligned disclosures, the FRC’s upcoming review of climate disclosures, the Investment Association calling for listed firms to report on climate risks and FCA’s proposal to require premium listed companies disclose on a comply or explain basis from 1 January 2021.
Although companies will be affected differently by climate-related challenges, what will remain the same is the high level of expectation from investors and other stakeholders around the reporting of climate-related issues
According to Sallie Pilot, Director of Insight and Engagement at Black Sun, “We are facing tremendous challenges – socially, environmentally and economically, and amidst a terrible situation we need to use it as an opportunity to drive change. As Mark Carney recently commented ‘we have a situation with climate change which will involve every country in the world and from which we can’t self-isolate.’ Climate-related reporting is important for helping companies prepare for the future, specifically in assessing their long-term viability and integrating climate-related issues into their decision-making processes.
One of the key goals of the TCFD is to elevate climate-related issues to board level, and although it focuses on climate, we believe that approaching disclosure in line with recommendations should be extended to other material sustainability-related issues. This will help companies differentiate themselves in the eyes of investors and wider stakeholders and manage their business for resilience.”
Other findings from the report include:
- Challenges remain in embedding into strategy – 46% (from 32%) of FTSE 100 companies disclose climate issues among principal risks, but only 7% discuss the resilience of their strategy.
- Greater integration into risk required - 48% (from 26%) disclose board oversight of climate-related risks and opportunities, while only 26% discuss how climate risks are integrated into overall risk management.
- Significant increase in companies setting ambitious targets to reduce emissions, with 46% of companies setting net zero or science based targets (from 25%) but few discuss how prepared they are for a zero carbon economy.
- Only 29% report on both climate-related risks and opportunities as per the TCFD recommendations – and then additionally 17% report on risks only.
The research report outlines the status of the TCFD reporting around the five thematic areas – Leadership, Governance, Strategy, Risk Management and Performance Metrics and Targets – drilling down further to the 11 recommendations.
About Black Sun
Black Sun is a global stakeholder communications company with offices in London and Singapore. We are united by a common purpose of making businesses more valued by their stakeholders. We are powered by a unique mix of strategic insight, creative inspiration and technology advantage, and help businesses communicate authentically how they deliver value to their stakeholders. We believe that inspiring strategic communications can spark positive change and drive long-term, sustainable performance.