More company boards oversee climate change measures in the UK than in any other country, a wide-ranging survey has revealed.
Altogether 96 per cent watch over the policies, says the report, and 97 per cent of UK companies, the highest proportion among the countries surveyed, disclose Scope 1 emissions, covering fuel combustion, vehicles and unintended gas release, and Scope 2 emissions, or purchased electricity, heat and steam.
However, only 17 per cent of financial companies were found to declare Scope 3 emissions – from all other sources – and only 35 per cent of companies will use carbon pricing from next year.
The research, into 1,681 companies in 14 countries and eleven sectors, was conducted by the London-based Carbon Disclosure Project, or CDP, which encourages large corporations to state their environmental impact, and the Climate Disclosure Standards Board, the CDSP, also with headquarters in London, which lobbies corporates to equate natural capital with financial capital.
One significant finding is that although a welcome majority of companies overall have board oversight of climate-related issues, only 10 per cent provide financial incentives for directors to manage the risks and opportunities.
The largest percentage of companies offering incentives was found in Germany.
Companies in the UK, France and Germany lead in giving information across three of the four areas of governance, risk management, metrics and targets stated by the Task Force on Climate-related Financial Disclosures, which was formed by Mark Carney, Governor of the Bank of England, and Michael Bloomberg, founder of New York’s Bloomberg global financial services group, to help investors to understand their financial exposure to climate risk and to guide businesses on disclosure.
In China the healthcare and financial sectors lagged behind in all four categories, and the country had the lowest percentage of companies disclosing greenhouse gas emissions.
Despite these shortcomings, the researchers advised the industry to expect improvements as new mandatory reporting policies come into effect in China this year and more businesses are thought likely to adopt carbon pricing next year.
In North America, the US had the lowest proportion using and preparing to use carbon pricing, 15 and 9 per cent respectively, and, at 66 per cent, the lowest percentage of companies with board oversight.
Canada had the lowest percentage offering the incentives, at 2 per cent, and the second lowest proportion providing low-carbon products or services enabling avoided emissions, at 54 per cent.
Jane Stevenson, the CDP’s task force engagement director, said: “Overall, we see there is a surface level of preparedness from companies globally to have board level oversight of climate risk and opportunity.
“Key drivers are investor action, company reputation and consumer reaction to climate risk.
“What we are not seeing is increased governance translating into climate change mitigation – 2018 is the year when companies need to step up climate action as we approach a tipping point.
“Fundamental to this is driving board level engagement with climate risk throughout the organisation.”
Simon Messenger, the CDSP managing director, observed: “This analysis shows that the financial implications of climate change are now firmly on companies’ doorsteps and should be integrated in company-wide processes.
“It is now time to set up clear strategies to tackle companies’ exposure to climate risks and seize new economic opportunities.
“It is also clear that the management of environmental issues can no longer be the sole responsibility of sustainability teams. It needs to be a priority area for companies’ boards to ensure it is truly embedded into their strategic priorities.
“We are more than ever at a crunch point between systemically embedding a market failure or embracing a major opportunity to innovate and grow.”