Abstract
The number of companies publicly reporting in line with the Task Force on Climate-Related Financial Disclosures (TCFD), a framework introduced in 2015 aiming to improve and increase the reporting regarding climate-related financial information, is still relatively low. In 2019, 42% of corporations with a market capitalization greater than $10 billion disclosed information in line with the TCFD to some extend (TCFD, 2020c). Previous research has shown that economic, political, and institutional factors impact the disclosure of climate-related information. This paper explores the determinants influencing the level of disclosure in line with the TCFD recommendations, across different sectors with a major focus on publicly listed companies in the global North. The study contributes to a better understanding of the approach needed to increase the number of companies reporting in line with TCFD. The research was executed in both quantitative and qualitative methods. The empirical research methods are based on a throughout literature review on climate-related risk disclosure, which is based on scientific literature, reports, and websites of official institutions. An online survey was published to be filled in by professionals with insights into environmental, social, and corporate governance-related topics within their company. Also, eight interviews were conducted with sustainability experts from companies, consultants, policy makers, and investors with a background in climate-related risk disclosure. The interviewees were chosen based on their work experience regarding TCFD disclosure. The research aim was to answer the following question: What are substantial factors that influence whether a company is disclosing information in line with the Task Force on Climate-related Financial Disclosures? Overall, ten determinants have been identified, as they have occurred repeatedly throughout the empirical data collection. They can be divided into factors that derive out of intrinsic and extrinsic motivation. The others emerge from the given characteristics of corporations. Policy and legal reforms, the aim for strategy adaption, the availability of data, and the alignment of other sustainability initiatives with the recommendations of TCFD, were mentioned the most as determinants on the level of disclosure in both the survey and the interviews. Further research might investigate how the identified factors differ in importance across diverse industries.
Highlights
Achenbach GlocalityThe effects of climate change around the world are increasing in frequency and scope
His text affirms the significance of climate risk disclosure to the company, the belief that sustainability should be a new standard for investing and calls BlackRock’s clients for action
This study investigated the factors that influence the level of climate-related financial disclosure in line with Task Force on ClimateRelated Financial Disclosures (TCFD)
Summary
Achenbach GlocalityThe effects of climate change around the world are increasing in frequency and scope. Companies must increasingly incorporate climate-related risks into their overall risk management to oversee and mitigate potential impacts and to achieve climate targets (European Commission, 2019; European Central Bank, 2020). In the Global Risk report of 2020 published by the World Economic Forum, the potential failure of climate action and extreme weather have been identified as the risks that are most likely to occur and that will have the largest impact in 2020. Recently published by the World Economic Forum on challenges and opportunities in the Post-COVID-19 world it states, that the COVID-19 crisis should sharpen our thinking about climate change, in the sense that “early intervention is vastly more effective and less costly than waiting until the crisis hits” His text affirms the significance of climate risk disclosure to the company, the belief that sustainability should be a new standard for investing and calls BlackRock’s clients for action
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