More than half the world’s 250 largest companies surveyed — at 56% — now acknowledge climate change as a financial risk to their businesses in corporate reporting, said KPMG recently.
Companies based in France (94%), Japan (71%) and the US (54%) are the most likely to report financial risk from climate change, according to the KPMG International survey titled Towards Net Zero: How the world’s largest companies report on climate risk and net zero transition.
Conversely, less than half the largest German (47%) and Chinese (23%) companies do so, survey results indicate.
Among the major industry sectors, the oil and gas industry leads with 81% of the largest companies reporting climate-related financial risk followed by the retail (70%); technology, media and telecommunications (60%); and financial services industries (57%), KPMG said.
Quality of climate-related risk disclosures needs to improve
However, the survey found that the quality of climate-related risk disclosures among these companies needs to improve, KPMG pointed out.
Less than one third (31%) include a section on climate-related risk in their primary financial report or publish a separate climate risk report; and only one in five (22 %) provides scenario analysis of climate risks in line with the recommendations of Task Force on Climate-related Financial Disclosures (TCFD), according to the survey report.
“As for those companies who are not yet focused on climate risk, they need to step up – the world has only 10 years to halve greenhouse gas emissions and recognising the issue as a business risk is the first step to playing an active role in addressing this shared, existential challenge,” said Richard Threlfall, Global Head of KPMG IMPACT.
Survey highlights: Net zero target
- 19% of the G250 have reported a target to achieve net zero emissions of greenhouse gases (GHGs).
- German companies lead when it comes to setting net zero targets (76 %) followed by French (44 %) and Japanese (25 %) companies.
- Net zero targets are most common among large companies in the technology, media and telecommunications (30 %), and automotive (29 %) industries.
- It’s possible for companies to adopt a net zero target now and continue with business-as usual on the assumption that in 30 years’ time we’ll have the technology to capture and store all emissions,” said Adrian King, Partner at KPMG in Australia and Chair of KPMG’s global Climate Change & Sustainability network.
“That’ll only continue to drive global warming,” King warned. “Businesses that’re serious about net zero transition will develop and implement decarbonisation strategies that reduce emissions immediately and continue to do so in a sustained manner until the net zero goal is met.”
Other major findings
- 33 % of G250 Chairs or CEOs mention climate change or climate-related risks in their annual report message. German companies (59%) and oil and gas firms (57%) are most likely to do so
- Less than one in five of the G250 (17%) sets out a decarbonisation strategy in their corporate reporting. German companies (88 %) and automotive makers (38%) are most likely to do so.
- Less than one quarter of the G250 clearly communicate in their reporting whether the company is on track to meet their carbon reduction or net zero goals, although there is wide variation between countries and sectors.
- French (67%) and US (38%) companies are most likely to be transparent about progress on decarbonisation along with companies in the technology, media and telecommunications (45%), and automotive (33%) industries.