Stakeholders, investors and regulators are now, more than ever, keen to understand how companies are addressing the impact of climate change (both transitional and physical). What risks and opportunities have been identified? What assumptions have been made in their analysis? How have strategies been flexed or redefined to minimise risks and maximise opportunities?
Australia’s top 100 companies are ahead of the world’s largest 250 firms (the G250) in multiple criteria for good climate risk reporting, our global and Australian analysis has found. However, Australia is falling behind the G250 in reporting on the transition to net zero.
Global survey
KPMG conducted a global report of the world’s largest 250 companies. Towards net zero: How the world’s biggest companies report on climate risk and decarbonisation which aims to help corporate reporting, investor relations and sustainability professionals shape their own company’s reporting on climate risk and net zero transition. It may also help investors, lenders, insurers, asset managers and ratings agencies understand the current reporting maturity of the world’s leading global companies and the gaps where improvement is needed.
It sets out 12 criteria for best practice climate risk disclosures, grouped under four themes: governance, identification, and impacts climate-related risks and reporting on a net zero transition. The Australian supplementary research then compares ASX100 performance against these criteria with the G250 and breaks the findings into industries.
Towards net zero: How the world’s largest companies report on climate risk and net zero transition
How the world’s largest companies report on climate risk and net zero transition.
Australian supplement – Top companies significantly improve their climate reporting
Towards net zero: How the top Australian companies report on climate risk and decarbonisation shows that while there has been progress since 2017, there is still room for improvement across select best practice reporting criteria. Assessing how, when and where climate risks and opportunities may impact your business model is a critical first step. The second is disclosure of these potential impacts and your strategic responses in your reporting suite.
Globally, the technology, media and telecommunications sectors are out in front with respect to reporting climate change as a financial risk. In Australia, the mining sector, financial services and construction and materials most frequently acknowledge that climate change is a financial risk to their business. While these industries acknowledge climate risk, only 62 percent of mining, 50 percent of financial services, and 57 percent of the construction sectors state that they report in line with the TCFD recommendations.
Towards Net Zero
How the top Australian companies report on climate risk and decarbonisation
Key Australian highlights
KPMG’s 12 quality criteria for climate risk and net zero reporting
Click on the wheel to discover how the world's largest companies perform for each of the 12 quality criteria.
KPMG has developed 12 quality criteria for good corporate reporting on climate risk and net zero transition.
The 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.
KPMG professionals used these criteria to analyse and compare the maturity of climate risk and net zero reporting by the world's 250 largest companies.
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44% of G250 companies report they have assigned board responsibility for overseeing the company's response to climate change
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33% of G250 companies mention climate change in the Chair or CEO's message in the annual financial or integrated report
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56% of G250 companies clearly acknowledge climate change as a potential risk to the business in the annual financial (or integrated) report
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31% of G250 companies include a section on climate-related risk in the company's annual financial (or integrated) report and/or publish a stand-alone climate risk or TCFD report
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47% of G250 companies report on both the physical and transitional risks the company faces from climate change
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22% of G250 companies include scenario analysis of climate-related risks in their reporting
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12% of G250 companies report scenario analysis under two or more global warming scenarios
17% of G250 companies report scenario analysis with clear timelines
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19% of G250 companies report climate-risk scenario analysis aligned with recognised scenarios developed by reputable sources
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46% of G250 companies report a net zero target OR science-based targets
19% report a net zero target
27% report science-based targets
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17% of G250 companies describe the company's strategy to achieve its decarbonisation targets
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24% of G250 companies clearly communicate whether the company is on track to meet its decarbonisation targets
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11% of G250 companies report using an internal carbon price or "shadow price"
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