Financial institutions call on over 10,000 global companies to disclose environmental impact

As Annual General Meeting (AGM) season begins, firms across the world are asked for transparent reporting on green credentials. 

On Monday 14th March more than 680 financial institutions began issuing letters to around 10,400 businesses – worth a combined $105tn in market capital – calling for environmental data to be publicly disclosed. 

In particular, records relating to climate change, deforestation, and water security have been requested, with major names including BNP Paribas, CalPERS, Capital Group, State Street and Vanguard asking for information to be presented to the non-profit CDP. The organisation manages worldwide environmental disclosure for private firms, local, regional, and national authorities, producing an annual questionnaire to track progress on climate-related issues. 

Almost 100 more asset managers and owners, banks, and insurers are backing the push for greater disclosure compared with 2021, indicative of rapidly rising demand for corporate environmental information aligned with the UN’s Task Force on Climate-Related Financial Disclosures (TCFD). 

The list of companies being asked to publicise their environmental records has also grown, with 3,600 new businesses added this year, representing a 46% increase compared with the previous 12 months. Those that have complied reported benefits including reputational gains and recoveries, identifying new business risks and opportunities, greater ability to track and benchmark progress, and improved access to lower cost capital.

The number of firms that refuse requests for information remains significant, with almost 4,000 companies failing to disclose records at the last request. These included Berkshire Hathaway, Exxon Mobil, Chevron, and Glencore. However, with nations and blocs including the EU, Japan, New Zealand and India rolling out mandatory environmental disclosure requirements this year, in line with the TFCD, and the UK introducing its own from April, non-disclosure will no longer be possible for businesses active in a number of major economic regions. 

‘Since we sent out our first disclosure request to companies two decades ago, CDP has played a critical role in transforming environmental reporting from a niche side issue to the top of boardroom agendas, with disclosure now being mandated in regulation worldwide,’ said CDP CEO Paul Simpson. ‘While many companies are disclosing, setting targets and taking action across their own business operations and value chains, there is a surprisingly large part of the market still to take the vital first step of disclosure.

‘These companies are becoming increasingly out of touch with reality, investor and public opinion, not just because of the regulatory stick that is approaching, but also because there are so many proven benefits to transparency. We hope that this request, backed by such an influential group of financial institutions worldwide, will hit home and drive transparency and action even further,’ he added. 

In related news, a skills shortage poses a major threat to meeting the climate targets set out in the last month’s landmark IPCC report. 

Image credit: NOAA