Beyond the Horizon: Corporate Reporting on Climate Change
2 minute read
This brief reviews the types of climate-related risks and opportunities that may impact companies and explores how and where companies currently disclose information about climate risks and opportunities, including some of the challenges associated with reporting. While many companies across a variety of sectors recognize and disclose their climate risks and opportunities, reporting is not consistent and often not included in financial reporting. Some investors and stakeholders have called for increased disclosure of material information in financial filings and others are focused on the opportunity to improve the quality and consistency of voluntary reporting. Recommendations from an industry-led task force are a promising first step that may lead to greater transparency and consistency in all forms of climate-related disclosures.
Key takeaways:
Task force recommendations strike a balance between the need for greater transparency for stakeholders and investors and the need for companies to have flexibility in how they report on these issues.
Even in the absence of action by U.S. regulators, companies are likely to expand and enhance their climate-related disclosures.
Greater transparency will have several benefits, including improved corporate governance practices, reduced company costs related to shareholder proposals, and a smoother transition to a lower-carbon economy.
More work will be needed to help companies implement the recommendations.
