90% of largest UK companies make no reference to climate change in their accounts

The majority of top listed companies in the UK are ‘woefully inadequate’ at disclosing how climate change will affect their business, which many potentially breaching the law, according to lawyers at ClientEarth. 

Current UK laws require all large companies to disclose information about their climate change-related risks and impacts.

Investor demand means that companies must provide a detailed picture of how their business is positioned as the global economy shifts towards ‘net-zero,’ including how this will impact their strategy, long term viability and balance sheet.

To see how firms and auditors are meeting this demand, the lawyers reviewed the entire FTSE 100 and the largest 150 companies on the FTSE 250, they then studied each company’s most recent annual report and developed a quantitative assessment of how company disclosures match up against existing disclosure requirements.

This revealed that more than 90% of the UK’s 250 largest listed companies make no reference to climate-related factors in their financial accounts.

40% of companies do not refer to climate change-related risk in the ‘principal risks and uncertainties’ section of their annual report and fewer than 25% of companies clearly reference the impact that climate change will have on their business model.

The research revealed that around 50% of companies mention some form of ‘Paris-alignment’ or ‘net-zero’ target, but many provide companies limited details, ClientEarth have said that this raises concerns of greenwashing.

ClientEarth Lawyer Daniel Wiseman said: ‘It’s crystal clear that urgent action is needed to address the existing accountability gap for climate-related corporate reporting – continued failures to disclose material information to the market must have consequences.

‘A handful of firms are doing the right thing, but the vast majority still have their head in the sand.

‘Current disclosure practices indicate that many firms appear to be either ignoring or denying the systemic impact climate change and the zero-carbon transition will have on their business. Regulators, auditors and investors are all letting them get away with it.’

Photo Credit – Pixabay

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Pippa Neill

Pippa Neill

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