Investors, creditors, regulators and other market participants use standardized financial disclosures to obtain important information about a corporation's performance and future prospects. However, financial disclosures do not sufficiently integrate climate-related risks and opportunities.
The industry-led Task Force on Climate-Related Financial Disclosures (TCFD) provides the most widely adopted framework for incorporating climate-related risks and opportunities into financial and non-financial corporate reporting. However, it is only a high-level framework.
Regulators in the United States and Europe are designing robust and detailed mandatory climate reporting regimes that align with the TCFD framework. In the interim, voluntary sustainability standard-setters and reporting platforms like the Sustainability Accounting Standards Board (SASB), CDP and the International Sustainability Standards Board (ISSB) are providing more specific standards aligned with TCFD’s recommendations.
Measuring corporate reporting against available voluntary standards that align with the TCFD framework provides a consistent and comparable way to determine the uptake of the disclosure of climate risks and their management across markets while mandatory regimes are being implemented.
Of the Forbes Global 2000 list, about 52% reported using SASB standards in 2023, up from about 47% in 2022. This puts this indicator on track to reach the 2030 target of 100% coverage as long as reporting continues at the current pace. The number of corporations reporting under ISSB’s International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, or any forthcoming mandatory reporting regimes, will be tracked as data becomes available.