More than 630 financial institutions boasting over $130tr in assets will call on companies to provide climate and environmental disclosures this year
CDP has today announced that almost 10,400 major companies worldwide collectively worth $105tr in market capitalisation are facing direct calls from some of the world’s biggest investors to disclose their environmental data this year, as climate and nature risk becomes an increasing priority for boardrooms and investors.
The environmental disclosure non-profit this morning revealed that more than 680 financial institutions worth over $130tr in assets – including Allianz, Amundi, Vanguard, AXA, BNP Paribas, and many more – are backing its calls for data disclosure from companies on their exposure to a raft of climate and environment-related risks and opportunities.
Letters are expected to start going out from today from investors to company board members requesting that firms disclose their data on a range of issues, including climate change, deforestation, and water security, CDP said.
Corporate questionnaires in 2022 are also set to incorporate specific questions on company climate transition plans, according to the non-profit, which it said would be “vital” in assessing the quality of decarbonisation plans, progress over time, and the pace and scale of the net zero transition in the real economy.
Information on biodiversity impacts is also being requested for the first time by the CDP questionnaire, and the group signalled that in future the scope of its information requests is expected to expand to cover issues such as land, oceans, food, and waste.
Compared to last year, almost 100 more financial institutions including asset managers, banks, and insurance companies are also putting their names to the disclosure request this year, CDP said, signalling growing demand for corporate environmental information in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).
Moreover, of the near-10,400 firms worldwide being called upon to disclose their environmental data this year nearly 3,300 are set to receive a request for the first time, marking a 46 per cent increase on last year, according to CDP.
“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,” said CDP’s CEO Paul Simpson.
“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.”
Since its launch two decades ago, CDP has grown to become the world’s largest repository of environmental data, although the organisation has set an ambition for such disclosures to cover 90 per cent of the world’s highest impact firms by 2025.
Last year, requests for data were lodged at over 7,100 firms via CDP, with almost 3,200 firms acquiescing to their investor’s demands and providing responses to CDP’s detailed questionnaires.
That came in addition to over 10,000 other companies that disclosed last year, either at the request of their business customers through CDP’s Supply Chain program, or of their own volition, the non-profit said. That means in total over 13,000 companies representing some 64 per cent of global market capitalisation disclosed data through CDP’s platform in 2021, it said.
That number is expected to grow significantly in 2022, particularly in the UK, Japan, New Zealand, India, and the EU where climate risk disclosure and/or TCFD regulations are being introduced. The UK is also poised to bring in a legal requirement for listed companies to provide net zero transition plans for the first time, further ratcheting up pressure on top firms to develop credible climate strategies.
As such, firms which fail to disclose or address their environmental risk data are likely to face increasing pressure from financial institutions, and could well be targeted as part of CDP’s ‘non-disclosure campaign’, through which investors directly engage with firms to push for greater transparency.
Jean-Jacques Barbéris, head of institutional and corporate clients coverage and ESG supervisor at Amundi, said the financial giant had been requesting data from CDP’s disclosure framework for the past 12 years, and urged others to do the same.
“We need this comparable, consistent and clear data for our investment decision making, our research, our product development, our corporate engagement and our regulatory compliance,” he explained. “It is also vital for us to meet our own climate goals. But crucially, we don’t just need data on climate, we also need more information on other areas of natural capital, and we must ensure that this is incorporated in what companies disclose and take action on going forward.”
Want to find out more about how the net zero transition will impact your business? You can now sign up to attend the virtual Net Zero Finance Summit, which will take place live and interactive on Tuesday 29 March and will be available on demand for delegates after the event.