Companies need investor pressure to disclose climate risks

London — Companies are more than twice as likely to report climate risk data when investors actively pressure them to do so, according to a leading climate-disclosure platform.

More than 1,000 companies were asked by investors to disclose their impact on forests, climate change and water security in 2020, as part of an annual campaign by non-profit CDP. The response rate rose to 20%  in 2020 after lingering around 15% for the previous three years, it said in a report released on Tuesday.

The 206 companies that disclosed new information to CDP after investor pressure include Enbridge, Pernod Ricard and Nestlé. They produce a combined 670-million tonnes of direct CO₂ emissions, almost the same as Germany’s entire national fossil-fuel emissions.

“With business resilience and adaptation to systemic risks exposed by the global public health crisis, the tide is rapidly turning against companies not taking note of investor demand for disclosure,” said Emily Kreps, global director of capital markets at CDP.

Investors need companies to report data that show how vulnerable they are to climate change, and what they are doing to address it, to help them understand the financial risks they are undertaking. In 2020, 108 institutional investors with a combined $12-trillion in assets asked companies to disclose data to CDP, which saw a particularly strong response from those based in Latin America and the Caribbean, Europe and Japan.

The campaign struggled to succeed in Oceania, where just 8% of companies engaged by investors ended up disclosing. The report cited failures by the Australian government — which had to deal with some of the worst wildfires and droughts in the nation’s history in 2020 — to create a political and business environment that incentivises companies to act on climate.

On a global level, many of the biggest names continue to resist demands to disclose their information to CDP. Amazon, BP, Facebook and Royal Dutch Shell have all faced calls from the campaign for four years in a row, and they still don’t disclose to the platform.

Bloomberg