- 400 companies (80%) from the S&P 500, worth over US$28.2 trillion in market capitalization, disclosed data to CDP on their response to the climate crisis in 2021.
- Results show financial benefits of climate action at least 15 times higher than cost of risks.
- 97% of responding companies claim board now has oversight on climate risks.
- Only 14% of disclosing companies provided information on all questions related to the Taskforce on Climate-related Financial Disclosures (TCFD).
20th September 2022
New data released by CDP, a global non-profit, reveals how the world’s largest companies are assessing their exposure to climate risks and opportunities.
CDP's latest report evaluates the level of TCFD alignment for 80% of companies listed on the S&P 500 stock market index that responded to the 2021 CDP climate change questionnaire.
An encouraging 55% (220) of these companies were 90-99% aligned with the TCFD’s key recommendations, however this dropped to only 14% to all relevant questions in the CDP questionnaire.
400 companies, worth over US$28.2 trillion in market capitalization, disclosed data, including household names such as Microsoft, Starbucks and Walmart.
The questionnaire asked how businesses were responding to the climate crisis, including topics such as: setting emissions targets, identifying risks and opportunities, financial planning and levels of governance.
The TCFD initiative, chaired by Michael Bloomberg, aims to improve the reporting of climate-related financial information from companies. Most existing and impending mandatory disclosure regulation, including in the US and the European Union, is based on these recommendations.
A growing number of regulators have adopted the TCFD’s recommendations as the basis for accountable disclosure, which are also the foundations of leading international standards such as the ISSB. CDP has aligned its questionnaire with the TCFD since 2018.
CDP’s analysis has also seen a marked increase in the adoption of many of the TCFD principles from disclosing companies. However, there is room for improvement as only 14% (56) of disclosing companies provided information on all questions covering the key areas needed to address the climate crisis: strategy, governance, risk management, and metrics and targets.
Further, while more than 80% of the disclosing companies identified both climate-related risks and opportunities, only 63% covered their entire supply chain in risk assessments.
"Since the launch of the TCFD recommendations five years ago, CDP is pleased to have played a role in bringing the TCFD Framework into real-world practice," stated Simon Fischweicher, CDP North America’s Head of Corporations and Supply Chains. "It is encouraging to see that the majority of S&P 500 companies are providing TCFD-aligned disclosures, which is significant as it puts them in a strong position to comply with current and future reporting requirements from the Securities and Exchange Commission."
CDP’s analysis also highlights that, overall, the possible financial benefits of opportunities from tackling climate change far outweigh the costs to materialize them.
60% of the sample (238 companies) in this analysis provided data on the potential financial value of opportunities related to climate transition. This figure aggregates to US$4.8 trillion, with companies seeing the biggest financial opportunities in products and services, followed by new markets in the transition to a low-carbon economy.
The aggregate financial benefits of the opportunities are almost 15 times higher than the potential financial impact of the risks, which ranged from US$272 billion to US$334 billion. 65% of this total came from transition risks, such as new regulations or changing customer behavior.
“This new data clearly illustrates that not only are major corporations taking the climate crisis seriously, but that in doing so, they are putting themselves in a strong position for aligning with global best practice and recognizing how to benefit from the transition to a net zero economy,” said Amir Sokolowski, CDP’s Global Director, Climate Change.
“But there is much room for improvement. Many big brands have set targets and have boardroom oversight over climate issues, but far fewer have a strategy to achieving their net-zero goals and targets, or an understanding of how climate risks play out across their entire business. Disclosure must also go beyond the impacts captured by the TCFD recommendations. Rather than focusing only on financial and risk-based data, it is crucial that companies strive to measure their impacts on people and planet more widely.”
This report is part of a series analyzing the alignment of the G7 stock indexes with the TCFD recommendations. CDP will be releasing further analysis in the coming months.
For more information, or interviews, please contact:
- Adam Wentworth, CDP, email: [email protected]; Tel : +44 7542485357
- Conrad Jarzebowski, CDP North America: [email protected]
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 680 financial institutions with over $130 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 14,000 organizations around the world disclosed data through CDP in 2021, including more than 13,000 companies worth over 64% of global market capitalization, and over 1,200 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net or follow us @CDP to find out more.