A report by think tank Carbon Tracker shows that only 2% of the world’s biggest polluters adequately disclose climate risks in their financial statements
Only 2% of the world’s biggest polluters adequately disclose climate risks in their financial statements. That’s according to a report by think tank Carbon Tracker.
The absence of climate risk in financial reporting “leaves investors in the dark as to whether and how financial statements already include the impacts of such matters”, Carbon Tracker said in its second annual report on corporate disclosures.
Carbon Tracker looked at the financial statements of 134 companies, which it said are collectively responsible for as much as 80% of global greenhouse gas emissions. It found 98% of them didn’t give sufficient evidence that their financial statements included the impacts of material climate-related matters.
Without this information, markets “are unable to function efficiently ensuring that risks are properly priced, and capital allocated accordingly”. The current state of affairs “benefits neither investors nor the global effort to decarbonise the global economy”, Carbon Tracker said in its report “Still flying blind. The absence of climate risk in financial reporting”.
Funded by dozens of foundations, including Bloomberg Philanthropies, the Rockefeller Foundation and the Grantham Foundation, Carbon Tracker is an independent financial think tank that carries out in-depth analysis on the impact of the energy transition on capital markets and the potential investment in high-cost, carbon-intensive fossil fuels, according to its website.
“While many recognised that climate-related risks are material and indicated that they are taking steps to set and meet emissions targets, they failed to reveal the relevance in the financial statements,” Carbon Tracker said. It concludes these differences “could be evidence of greenwashing”.
Although a “significant majority” of the companies said that they had targets, goals, or ambitions to achieve net zero/carbon neutrality by 2050 or sooner, “when it came to preparing financial statements, none appeared to align the information that they used to prepare their financial statements with achieving these reductions”, Carbon Tracker said.
In fact, only three companies had disclosed adequate information linked to its goal to reach net zero emissions by 2050. One of those was Anglo-Swiss commodities trader Glencore, which said it would have to write down almost all its thermal-coal related assets if the world is to reach net zero emissions by 2050.