October 13, 2017
Ottawa: Almost three-quarters (72%) of large and mid-cap companies worldwide does not acknowledge the financial risks of climate change in their annual financial reports, according to the KPMG Survey of Corporate Responsibility Report2017.
KPMG’s survey studied annual financial reports and corporate responsibility reports from the top 100 companies by revenue in each of 49 countries: a total of 4,900 companies.
It found only five countries in the world where 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. Of the minority that does acknowledge climate-related risk, less than one in 20 (4%) provides investors with analysis of the potential business value at risk.
KPMG’s Global Head of Sustainability Services, José Luis Blasco, said:
“Our survey shows that, even among the world’s largest companies, very few are yet providing investors with adequate indications of value at risk from climate change. Our findings support the need for initiatives like the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) that aim to improve corporate disclosure of climate-related risk.
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:
• 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).
• 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.
• 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
KPMG has published The KPMG Survey of Corporate Responsibility Reporting since 1993. The 2017 survey is the 10th edition. Professionals reviewed annual financial and corporate responsibility reporting by the largest 100 companies, by revenue, in their own country.