Businesses struggle to align climate commitments with strategic action

Almost half of companies fail to disclose transition plans despite committing to climate goals

Big Zero Report 2023

There is a substantial misalignment between corporate climate aspirations and strategic implementation.

That’s according to the EY Global Climate Risk Barometer, a survey encompassing over 1,500 businesses across 51 countries, which shows that nearly half (47%) of the surveyed organisations refrain from disclosing a transition plan to support these commitments.

This year’s EY report, now in its fifth iteration, evaluates the progress in both coverage and quality of climate-related disclosures.

Analysts note that while there is a positive trajectory in coverage, increasing from 84% in 2022 to 90% in 2023, the quality of climate disclosures remains a concern, standing at 50%.

This lack of granularity in reporting, coupled with insufficient regulatory effectiveness, highlights the slow pace of corporate change in addressing climate risks.

Examining the relationship between climate-related impacts and financial performance reveals that only one in three companies discloses links between climate impact and their financial statements.

This suggests that climate risk is not being equally considered within financial performance assessments.

Additionally, 42% of companies fail to conduct scenario analysis within the context of their value chain and wider market dynamics, indicating a limited view of climate change’s impact on business growth.

Transition planning emerges as a key area requiring attention, with 47% of companies neglecting to disclose plans on how they intend to align their business model and operations with the latest climate recommendations.

According to the report, sectors more exposed to climate risk, such as energy and mining, exhibit more detailed transition plans compared to others like agriculture.

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