Climate Related Disclosures

Climate-related disclosures refer to the information that organisations provide to stakeholders about their climate-related risks, impacts, and strategies for managing them. These disclosures help investors, regulators, customers, and other stakeholders understand a company's approach to addressing climate change and related environmental issues.

Scope and Categories

Disclosures typically cover a wide range of topics, including a company's carbon footprint, energy use, water consumption, waste management, and other environmental factors. They may also include information on risks related to climate change, such as physical risks (e.g., extreme weather events) and transition risks (e.g., regulatory changes or market shifts).

Reporting Frameworks

Several frameworks and standards guide climate-related disclosures. Some of the most commonly used include the Task Force on Climate-related Financial Disclosures (TCFD), the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), European Sustainability Reporting  Standards (ESRSs), and the Sustainability Accounting Standards Board (SASB). Each framework has its focus, but they all aim to increase transparency and consistency in climate-related reporting.

Key Components

• Governance: The role of the board and management in overseeing climate-related risks and opportunities.

• Strategy: The company's approach to integrating climate considerations into its business model, including its plans to transition to a low-carbon economy.

• Risk Management: How the company identifies, assesses, and manages climate-related risks.

• Metrics and Targets: The specific indicators the company uses to measure climate performance and the targets it has set for reducing emissions or achieving other environmental goals.

Stakeholder Importance

Climate-related disclosures are crucial for investors who increasingly consider environmental, social, and governance (ESG) factors in their decision-making. They also matter to regulators who are imposing stricter disclosure requirements, and to customers and employees who want to align with companies that share their values.

Challenges

Companies may face challenges in gathering accurate data, ensuring compliance with different reporting standards, and addressing the complexity of climate risks. Despite these challenges, climate-related disclosures are becoming essential for businesses seeking to demonstrate transparency, build stakeholder trust, and comply with evolving regulations.

As climate change continues to impact economies and societies, climate-related disclosures will play a critical role in fostering a more sustainable and resilient business environment.