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Most companies are missing out on the big picture when it comes to reporting their climate risks and dependencies. Despite the increasing understanding of the connection between the global biodiversity and climate crises, there is a significant lack of reporting on nature impacts.
The latest findings from CDP indicate a substantial disparity between the amount of climate risk data disclosed by companies and the information provided on nature impacts.
Last year, environmental disclosures to CDP’s platform saw a significant surge of almost 24 percent. This involved 23,000 companies, which make up two-thirds of global market capitalization, submitting crucial information.
Despite this increase in submitted data, the study reveals that most companies remain fixated on climate risk, neglecting to measure and publicly disclose the impacts and dependencies of their business on water, forests, and nature. Only 38 percent of companies provided data beyond climate, indicating a significant gap in environmental reporting.
It’s noteworthy that environmental risk reporting presents substantial business benefits. Companies disclosing climate data, forest data, and water data have reported promising opportunities that could have a significant financial and strategic impact.
Despite lower costs to manage risks related to climate, forest, and water, the study reveals that the potential financial impact of risks turning into reality is higher, emphasizing the urgency for comprehensive environmental disclosure.
CDP’s director of thought leadership and impact, Sue Armstrong-Brown, stressed the importance of a more comprehensive approach, highlighting the need for robust disclosure on nature. With upcoming regulations expanding to include nature-related disclosure, companies not prepared for this shift are likely to lose out on essential opportunities.
On a separate note, CDP’s latest insights indicate a positive trend in companies reporting on their energy use. However, a significant percentage of companies are still not reporting on their energy use, missing out on crucial information for investors to understand corporate environmental impact and risk exposure. Additionally, there is a concerning lack of renewable energy targets among the companies that did disclose energy data.
The data also reveals that half of the financial institutions that disclosed through CDP in 2023 reported an estimated $9 trillion in their financial portfolios linked to fossil fuels, signaling a pressing need to accelerate the shift to renewable energy consumption.
The insights from CDP underline the urgency for companies to adopt a more comprehensive approach to environmental disclosure, emphasizing the need to address not only climate but also nature-related impacts.