Survey: Even With Better Reporting, Businesses Fall Short on Climate Strategy and Action

EY's 2023 Global Climate Risk Barometer Survey shows incremental developments in the quality of climate reporting, but rate of improvement is not enough to support climate commitments.

• 74% of surveyed companies do not include the quantitative impacts of climate risk in their disclosures, as climate impact remains separate from corporate strategy
• Nearly half of surveyed organizations (47%) fail to disclose any form of transition plan alongside climate commitments

This year's EY Global Climate Risk Barometer suggests a deep disconnect between organizations' climate and corporate strategy. Despite agreeing to climate commitments, nearly half (47%) of those surveyed don't disclose a transition plan to back these. Supporting this, 74% of respondent companies do not include the quantitative impacts of climate risk in their disclosures, implying that climate change is not being considered in the same way as other material impacts and reflective of a broader trend for climate strategy to remain separate from corporate reporting. Despite improvement in the coverage of (+6% year-on-year (YoY)) and quality of disclosures (+ 6% YoY), notably in the developing economies, the pace of corporate change remains too slow as we reach a point of no return where improvements in disclosures are not enough, and transformative corporate action is required at scale.

The report, now in its fifth year, is an established benchmark that scores the progress being made in both coverage and quality of climate-related disclosures. It examines more than 1,500 businesses in 51 countries to assess performance disclosure against standards set by the Task Force on Climate-Related Financial Disclosures (TCFD). The Barometer measures companies on the number of recommended disclosures that they make (coverage) and the extent and detail of each disclosure (quality).

According to the Barometer coverage, disclosures continue to move in the right direction, increasing from 84% in 2022 to 90% in 2023. Yet, quality in climate disclosures remains low at 50% with incremental improvement (+6% YoY) driven only by the need to prepare for increasing requirements for the new International Sustainability Standards Board (ISSB) regulation. The Barometer revealed a continued lack of granularity in reporting and the effectiveness of regulation surrounding them. Top markets for climate-related disclosure quality included the UK (66%), Germany (62%), France (59%), Spain (59%), the U.S. (52%). However, India (36%), China and the Philippines (both 30%), Indonesia (22%) were cited as needing marked improvement.