“When looking at this research, it would be easy to conclude that the world’s largest companies are underperforming when it comes to reporting their climate risks and decarbonization activities. Less than half of these companies currently satisfy the bulk of KPMG’s quality criteria for good reporting. Yet we, as KPMG professionals, prefer to take a more positive ‘glass half full’ view of these research findings.
It is important to view this data in its context. Corporate disclosure of climate-related risks, as we currently understand it, simply did not exist 5 years ago. It was at the UN Climate Conference of 2015 (known as COP21 and which spawned the Paris Agreement) that Mark Carney, then Chair of the Financial Stability Board and Michael Bloomberg launched the TCFD. The reason they did so was precisely because they saw the lack of corporate disclosure of climate-related risk as a threat, not only to individual investors, lenders and insurers, but also to the stability of the global financial system in its entirety.
When we consider this, we can see how swift and significant the progress has been. Less than 5 years later, more than half of the world’s 250 largest companies publicly acknowledge climate change as a financial risk. Almost half have assigned board level responsibility for the company’s response to climate change; and these rates are considerably higher in some countries and industry sectors.”
“In only 5 short years, attitudes towards the financial risks of climate change in the financial and corporate sectors have changed beyond recognition. I predict that climate change is only the first of a series of sustainability or ESG issues which will come to be perceived as financial risks or, indeed, opportunities.
KPMG’s survey suggests, that reporting on biodiversity should also be a key priority for any business, particularly those operating in high risk sectors. The speed with which the world is losing its biodiversity is alarming to say the least. Any business that believes it will remain entirely unaffected is, in my opinion, not facing up to reality. Furthermore, the biodiversity crisis will only be exacerbated in years to come by the climate crisis and will have pervasive impacts that affect all mankind.
My advice to business leaders therefore is to get your heads around biodiversity. Understand how your company is contributing to biodiversity loss and what risks it faces from it. You will be asked about this very soon by your investors, lenders, insurers, customers and consumers. You will also likely to be expected to make public disclosures on it sooner than you may think. Get ready by starting now.”