#NewReport: Three-quarters of Companies Worldwide yet to Acknowledge Climate Change as a Financial Risk

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Rendering a recent KPMG Survey of Corporate Responsibility Reporting 2017, there are only five countries in the world where a majority of the top 100 companies mention climate-related financial risks in their financial reports.

According to KPMG’s Global Head of Sustainability Services, José Luis Blasco, the survey revealed that, even among the world’s largest companies, very few are yet providing investors with adequate indications of value at risk from climate change.

Highlights of the survey include:

  1. Almost three-quarters (72%) of large and mid-cap companies worldwide do not acknowledge the financial risks of climate change in their annual financial reports.
  2. Of the minority that do acknowledge climate-related risk, less than one in 20 (4%) provides investors with analysis of the potential business value at risk.
  3. Whilst five countries in the world are a majority of the top 100 companies mention climate-related financial risks in their financial reports-Taiwan (88%), France (76%), South Africa (61%), US (53%) and Canada (52%); in most cases, disclosure of climate-related risk is either mandated or encouraged in these countries by the government, stock exchange or financial regulator.
  4. In terms of industries, companies in the Forestry & Paper (44%), Chemicals (43%), Mining (40%) and Oil & Gas sectors (39%) have the highest rates of acknowledging climate-related risk in their reporting.
  5. Healthcare (14%), Transport & Leisure (20%) and Retail (23%) are the sectors least likely to acknowledge climate risk.

Looking at the world’s 250 biggest organizations (G250), public acknowledgment of climate-related financial risk is more common but still far from universal.

KPMG’s survey also explored further trends in corporate responsibility reporting including reporting on the UN’s Sustainable Development Goals (SDGs), reporting on human rights and reporting on carbon reduction targets.

Key findings include:

  1. The UN SDGs – a set of 17 global goals to end poverty, protect the planet, and ensure prosperity for all – have resonated strongly with businesses worldwide in less than two years since their launch at the end of 2015. More than one third (39 percent) of the 4,900 reports studied in KPMG’s survey connect companies’ corporate responsibility activities to the SDGs. That proportion rises to over 40 percent (43 percent of reports) when looking specifically at the world’s 250 largest companies (G250).
  2. Around three-quarters of company reports (73%) across the 49 countries recognize human rights as a corporate responsibility issue the company needs to address. This rises to nine out of ten reports (90%) in the G250 group of companies. Companies based in India, the UK and Japan are the most likely to acknowledge the issue of human rights, as are companies in the Mining sector.
  3. Two-thirds of reports (67%) from the world’s 250 largest companies disclose targets to reduce the company’s carbon emissions. However, the majority of these reports (69%) do not align the company’s targets to the climate targets being set by governments, regional authorities (such as the EU) or the UN.

Download the KPMG Survey of Corporate Responsibility Reporting 2017 here

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