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Towards Net Zero Towards Net Zero

In the 2020 KPMG International survey ‘Towards Net Zero: How the world’s largest companies report on climate risk and net zero transition’, our member firm professionals analyzed the reporting of the world’s 250 largest companies (G250) against 12 quality criteria for good climate risk and net zero reporting. More than half (56 percent) of the G250 acknowledge climate change as a financial risk to their business in their corporate reporting.

Companies based in France (94 percent), Japan (71 percent) and the US (54 percent) are the most likely to report financial risk from climate change. Conversely, less than half of the largest German (47 percent) and Chinese (23 percent) companies do so. Among the major industry sectors, the oil and gas industry leads with 81 percent of the largest companies reporting climate-related financial risk followed by the retail (70 percent), technology, media and telecommunications (60 percent) and financial services industries (57 percent).

However, KPMG’s survey of the G250 group found that the quality of climate-related risk disclosures among these companies needs to improve further. Less than one third (31 percent) 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 percent) provide scenario analysis of climate risks in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Additional results from KPMG’s survey include:

  • Around one fifth (19 percent) 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 percent) followed by French (44 percent) and Japanese (25 percent) companies. Among industry sectors, net zero targets are most common among large companies in the technology, media and telecommunications (30 percent), and automotive (29 percent) industries;
  • 33 percent of G250 Chairs or CEOs mention climate change or climate risks in their annual report message. German companies (59 percent) and oil and gas firms (57 percent) are most likely to do so;
  • Less than one in five of the G250 (17 percent) set out a decarbonization strategy in their corporate reporting. German companies (88 percent) and automotive makers (38 percent) 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 a wide variation between countries and sectors. French (67 percent) and US (38 percent) companies are most likely to be transparent about progress on decarbonization along with companies in the technology, media and telecommunication (45 percent) and automotive (33 percent) industries.

About the survey

This research was conducted in 2020 by climate change and sustainability professionals at KPMG firms. They reviewed corporate reporting by the world’s 250 largest companies (G250) as defined by the Fortune Global 500 ranking for 2019. Reporting included annual financial or integrated reports, sustainability reports, stand-alone reports and company websites published between 1 July 2019 and 30 June 2020. The researchers assessed reporting by the G250 against 12 quality criteria for good climate risk and net zero reporting. These criteria are based on the insights of climate disclosure experts at KPMG firms combined with key elements of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, other reporting frameworks and evolving best practice.

This research has been conducted by KPMG IMPACT, an initiative of KPMG International that brings together professionals and subject matter experts from across KPMG’s global organization to support the delivery of the United Nations Sustainable Development Goals (SDGs).

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