Investors want better reporting on climate-related issues than companies are providing, according to a report issued Tuesday by the Financial Reporting Council's Financial Reporting Lab in the U.K.
The report, Climate-related corporate reporting: where to next?, highlights the gap between what companies are reporting now as economies increasingly transition towards low-carbon and climate-resilient futures, and how they can better meet investor expectations.
The report covers investors' priorities, recommended disclosures and reporting examples. One recommendation is that companies use the well-supported Task Force on Climate-related Financial Disclosures framework to report on climate-related issues.
In the U.K., all listed companies and large asset owners are expected to disclose according to TCFD recommendations by 2022.The U.K. government has set a target to bring all greenhouse gas emissions to net zero by 2050, and other governments are beginning to as well, the report noted.
"This target provides a unique 30-year signal for the future for which both companies and investors can aim. Given this direction, there is an increasing demand for companies to respond, and report on what the business model looks like in the future and how it intends to get there," the report said.
Earlier this year, the Financial Reporting Council outlined the responsibility of U.K. corporate boards to consider their impacts on the environment and the likely consequences of long-term business decisions.
"Investors are rightly demanding more information and greater transparency from companies on the challenges posed by climate change," Financial Reporting Council CEO Sir Jon Thompson said in a statement. "As societal and investor expectations evolve, alongside the regulatory environment, it is clear companies need to rapidly increase their transparency and improve their reporting to meet this demand."
