IFAC publishes a report on climate-related disclosure

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15 Nov, 2022

The International Federation of Accountants (IFAC) has published a report providing insight into climate-related disclosure.

The report analyses disclosure trends in emissions reduction targets and transition plans of the 40 largest exchange-listed companies in 15 jurisdictions, for a total of 600 companies.  The jurisdictions include G7 countries and 8 non-G7 countries for the 2020 reporting year.

Key findings include:

  • 66% of the large, exchange-traded companies reviewed included some type of emissions reduction target in their corporate disclosures. These emissions targets used a variety of terminology (such as 'carbon neutral' and 'net zero') and only 39% incorporated Scope 3 emissions.
  • Of the 397 companies with an emissions reduction target 5% had clearly provided both “absolute” and “intensity” targets.  The International Sustainability Standard Board’s (ISSB's) draft standard includes the disclosure of historic emissions on an absolute and intensity basis.
  • Whilst other dates are being used, 129 of the companies set 2050 as the date for achieving their stated value chain or operationally neutral reduction target, consistent with the Paris Agreement.  Targets earlier than 2050 were common in finance or industries such as technology, cosmetics, pharmaceuticals, or beverages.
  • Most companies set their targets in alignment with the Paris Agreement (28%) or Science-based Targets Initiative (SBTi) (43%) protocols.
  • 322 companies reported on climate with reference to the Task Force on Climate-related Financial Disclosures (TCFD) framework. 86% of those disclosed a target while only 44% of companies that did not use the TCFD framework provided a target. 
  • Most companies (90%) who disclosed emissions targets also provided a disclosure about how they plan to reach their target.
  • In transition plans, reduction strategies were significantly more prevalent than disclosures of offset strategies
  • Only 24% of companies with a plan included some past expenditure or future estimate of expenditures to implement plan actions.

Further information and the full report is available on the IFAC Website.

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