Climate-related Financial Disclosures Research Articles

Sustainability reporting in corporations: A comparative review of practices in the USA and Europe

As global awareness of environmental, social, and governance (ESG) issues intensifies, corporations are increasingly recognizing the importance of sustainability reporting in demonstrating their commitment to responsible business practices. This Review provides a comparative review of sustainability reporting practices in corporations, focusing on the distinctions between the USA and Europe. The USA and Europe, as major economic regions, exhibit distinct approaches to sustainability reporting, reflecting diverse regulatory frameworks, cultural considerations, and stakeholder expectations. This review delves into the key elements characterizing sustainability reporting in both regions, highlighting the convergences and divergences that shape corporate disclosure practices. In the USA, sustainability reporting is predominantly driven by voluntary initiatives and market forces. Companies often engage in ESG reporting to meet the expectations of investors, consumers, and other stakeholders who increasingly prioritize sustainable business practices. The absence of a standardized regulatory framework has led to a heterogeneous landscape of reporting methodologies, with some corporations adhering to global standards like the Global Reporting Initiative (GRI) or adopting industry-specific frameworks. In contrast, Europe has witnessed a more structured and regulatory-driven approach to sustainability reporting. The European Union (EU) has been at the forefront of shaping sustainable finance policies, introducing frameworks such as the Non-Financial Reporting Directive (NFRD) that mandate certain companies to disclose non-financial information. European corporations, therefore, navigate a more standardized reporting landscape, aligning with established frameworks like the EU Taxonomy Regulation and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This comparative analysis explores the motivations behind sustainability reporting, the disclosure frameworks commonly employed, and the impact of regional regulatory contexts on corporate practices. By shedding light on the unique dynamics in the USA and Europe, this review contributes to a nuanced understanding of how corporations navigate the evolving landscape of sustainability reporting, ultimately fostering transparency, accountability, and responsible corporate citizenship.

Green banking laws and regulations in Mauritius: a comparative study with other countries’ policies

Purpose Financial institutions, including banks, have their responsibilities to contribute towards the preservation of the environment. Green banking is an emerging concept that involves eco-friendly initiatives by banks and although Mauritius lacks a comprehensive regulatory framework for green banking, there exists a few green regulations and guidelines. Accordingly, the purpose of this study is to critically analyse the existing legal and regulatory framework on green banking in Mauritius. It is expected that this study will showcase the need for some more robust and proper green banking legal and regulatory framework in Mauritius. Design/methodology/approach To achieve the research objective, a black-letter analysis is used to analyse the existing regulatory framework in Mauritius. Moreover, a comparative analysis of the current legal frameworks on green banking in countries like Bangladesh, Indonesia, Pakistan and the UK is carried out. Findings This study recommends the establishment of a guideline or legal framework for green banking, a Sustainable Finance Policy, a legal binding framework for issuance of bonds, adoption of a Task Force on Climate-related Financial Disclosure guideline, compulsory environmental reporting and disclosures and a green standard rating. Originality/value To the best of the authors’ knowledge, this research is among the first literature on green banking laws, especially in the context of a developing country being Mauritius, and it is anticipated that the findings are of use not only to academics but also to the wider community in general.

Improving climate risk preparedness - Railroads in Norway

Climate change affects all sectors of society due to changes in temperature and precipitation patterns and will continue to do so in the foreseeable future. Extreme weather events are already more frequent and intense, generating additional costs for businesses nationally and globally. Climate risk disclosure and management can be challenging due to the complexity of climate impacts and unpredictability of extreme events’ occurrence and location. To address the need for a systematic approach to manage physical climate change, this paper presents a ‘preparedness framework’ for a comprehensive physical climate risk assessment, which is inspired by the Task Force on Climate-related Financial Disclosures’ (TCFD) framework and based on interviews with representatives from the financial sector in Norway and Sweden on their management of climate risks. We analyze railroads in Norway as a case study due to the sector’s sensitivity to flooding events and heat stress. After assessing Bane NOR’s management of risk associated with flooding and heat stress, we discuss potential improvements regarding knowledge, strategy, management, and tools and metrics at a general level, emphasizing the benefits of improving capacity to handle climate change and the importance of contingency plans. The preparedness framework has helped identify strategies and actions that can reduce vulnerability to climate change impacts. We suggest that this checklist is sufficiently general to be applicable for other sectors and countries. Practical ImplicationsTransportation is one of the sectors that may be significantly affected by climate change, and this includes railroads and train travel. Heavy rain events, dry spells, extreme temperatures, and freeze–thaw events can cause problems for railroad operations. We have therefore chosen railroads in Norway, with Bane NOR as the state-owned organization responsible for the administration of the network, as an insightful case for examining the climate risk and vulnerability to climate change. We introduce a ‘preparedness framework’ as a tool for identifying and handling climate risk. The preparedness framework aims to combine science-based information with the user context and their needs according to their activity and vulnerability to climate change impacts. The framework can highlight Bane NOR’s general potential to reduce vulnerability and improve resilience to withstand negative impacts caused by climate change. Building resilience is paramount to business continuity, and involves climate stress-testing, precautionary action, better information carrying less uncertainty, capacity building, and contingency plans in the case of climate-related disturbances affecting train operations. This requires efficient monitoring, closer attention to weather forecasts, good maintenance, as well as implementing measures such as lowering the speed limit for trains in high-risk situations. Contingency plans include provision of alternative transportation when tracks are blocked. We envisage that the preparedness framework’ checklist can be applied to other sectors than railroads and other countries than Norway.

Disclosures of banks’ sustainability reports, climate change and central banks: An empirical analysis with unstructured data

Climate change will impact the economy in the long term but also in the medium run potentially affecting financial stability and the whole economic system (Nyambuu & Semmler, 2023). Some studies suggested that climate change may hit financial actors even if there are few studies related to the role of banks’ sustainability disclosure and central banks’ mandates. This paper examines the sustainability reports disclosures of the banks listed on the FTSE Italia All-Share Italian Stock Exchange for the year 2021–2020. It applies five kinds of multivariate techniques on unstructured data using Iramuteq (www.iramuteq.org) and SAS Viya (www.sas.com). The article tries to assess how and whether banks are disclosing transition and physical risk, and how and whether they conducted scenario analysis through the lens of the Task Force on Climate-related Financial Disclosures (TCFD) framework. Even though banks provided environmental, social, and governance (ESG) disclosure, they paid scant attention to furnishing climate change information to market and central banks, and to prioritize their complying with international frameworks. The article addresses the main research gap in the literature review and focuses on the role of disclosures and central banks’ mandates, sustainability data gap and solutions through machine learning, analysis of deep uncertainty for monetary policy, and the use of scenario analysis when it is impossible to apply deterministic or probabilistic approaches and text mining for central banks in the context of unstructured data.

The use of corporate external environmental reporting in the evaluation of the state environmental policy

The condition for carrying out an evaluation of the environmental policy is the availability of relevant information. One source of this information could be corporate external environmental reporting. The aim of the article is to determine to what extent the applicable UE legal regulations, Global Reporting Initiative (GRI) and Task Force on Climate-related Financial Disclosures (TCFD) guidelines for corporate environmental reporting enable the use of the disclosed information by enterprises in the assessment of the state environmental policy. The content analysis of legal acts and guidelines was used in the research. The applicable EU legal regulations, GRI and TCFD guidelines enable the use of corporate environmental reporting in evaluating environmental policy mainly in terms of environmental efficiency and, to a small extent, in terms of cost-effectiveness and implementation feasibility.

Sensitive intervention points: a strategic approach to climate action

Abstract While some countries are making progress reducing greenhouse gas emissions, few are progressing rapidly enough to be on track to reach net zero emissions by mid-century. The transition to net zero involves deep structural transformation of the global economy and its associated complex socio-technical systems. Here, we set out a conceptual framework to identify ‘sensitive intervention points’ (SIPs) in systems where a small or moderately-sized intervention could drive outsized impacts and transformational change. These points take three forms: (i) critical tipping points, such as a critical price threshold, (ii) critical nodes in networks, such as an influential actor in a social network, and (iii) critical points in time, where windows of opportunity for change open up. We also propose an assessment methodology for prioritizing interventions in terms of their potential impacts, risks, and ease of implementation. We apply our framework and assessment methodology to evaluate a list of proposed interventions for accelerating global decarbonization. Promising interventions include investing in key clean energy technologies with consistent cost declines, introducing central bank policies to reduce the value of polluting collateral, and enhancing climate-related financial risk disclosure.

Evaluating TCFD reporting-A new application of zero-shot analysis to climate-related financial disclosures.

We examine climate-related disclosures in a large sample of reports published by banks that officially endorsed the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD). In doing so, we introduce a new application of the zero-shot text classification. By developing a set of fine-grained TCFD labels, we show that zero-shot analysis is a useful tool for classifying climate-related disclosures without further model training. Overall, our findings indicate that corporate climate-related disclosures increased after the launch of the TCFD recommendations and following individual endorsements. However, there are marked differences in the extent of reporting by recommended disclosure topic, suggesting that some recommendations have not yet been fully met. Our findings yield important conclusions for the design of climate-related disclosure frameworks.

Credible transition plans for coal power sector: current disclosure framework and considerations for transition finance

The zero-carbon transition of the coal power industry comes with substantial economic costs, both in terms of the cost of stranded assets and the innovation and application of carbon reduction, zero-carbon, and decarbonization technologies. Mobilizing social capital through transition finance is crucial to support companies in their efforts to reduce carbon emissions. The lack of high-quality data and consistent, comparable disclosure frameworks hinders proper due diligence and strategic planning, presenting a major obstacle to financing the transition. To identify the mismatches between existing disclosure frameworks for transition plans and the needs of transition finance, we conducted a systematic review of various transition disclosure frameworks, such as TCFD (Task Force on Climate-Related Financial Disclosures), CA100+ (Climate Action 100+) and TPT (Transition Plan Taskforce), and compared them with the information requirements of financial institutions for assessing coal phase-out plans of production entities. The results indicate that the ex-ante assessment of transition finance requires disclosure frameworks to be further expanded and aligned in areas such as technological distinctions and data quality to meet the demands of pricing, risk management, new product innovation, and disclosure of financial institutions’ carbon footprints in their asset portfolios. Moreover, the implementation of the current disclosure standards by coal power enterprises may encounter dual constraints from soft regulatory practices and the external business environment, resulting in the emergence of the “green silence” phenomenon. The inconsistency between disclosure frameworks may also give rise to regulatory arbitrage, leading to a distorted evaluation of the transition process of coal power enterprises by the capital market, resulting in potential price distortions and credit risks.

НАПРЯМИ КООРДИНАЦІЇ НОРМАТИВНОГО РЕГУЛЮВАННЯ ВІДПОВІДАЛЬНОГО (ESG) ІНВЕСТУВАННЯ У СВІТІ: ФРАГМЕНТАЦІЯ ЧИ УНІФІКАЦІЯ?

To date, processes of regulatory coordination of responsible or ESG (Environmental, Social, and Corporate Governance) investing are characterized by a combination of fragmentation and unification efforts. On the one hand, there is a noticeable degree of fragmentation of the regulatory landscape for responsible investing. At the level of different regions and countries, their own regulatory frameworks, standards and guidelines for disclosure of ESG information and sustainability reporting are being actively developed and improved. In particular, the European Union (EU), Great Britain, the USA and Canada, some countries of the Asia-Pacific region (Australia, China, Hong Kong, New Zealand, Singapore, etc.) have made special progress. For example, the EU has taken a significant step with the introduction of the so-called triad of regulatory instruments: the Sustainability Taxonomy, the Corporate Sustainability Reporting Directive (CSRD) and the Sustainable Finance Disclosure Regulation (SFDR), aimed at standardizing ESG reporting and classifying investments in sustainable development in member countries. This fragmentation creates difficulties for investors and companies operating in different jurisdictions as they must navigate and comply with different requirements. On the other hand, efforts to unify and harmonize ESG disclosure and regulatory rules are increasing. Recognizing the global nature of ESG challenges, international organizations are working to establish common principles and standards. Initiatives such as the Global Reporting Initiative (GRI), the International Sustainability Standards Board (ISSB), the Task Force on Climate-related Financial Disclosures (TCFD) have gained prominence worldwide, promoting transparency and consistency ESG reporting. While the trend toward unification is promising, achieving full regulatory coordination of responsible investing remains challenging. Different political priorities, cultural and economic differences between countries prevent the creation of a universally recognized regulatory framework. However, the growing recognition of the importance of ESG and the collective efforts of stakeholders around the world indicate a gradual convergence towards more coherent ESG regulations.

Sustainability Reporting and Financial Performance of Quoted Oil and Gas Companies in Nigeria

This study empirically investigated the relationship between sustainability reporting and financial performance of quoted manufacturing companies in Nigeria. To achieve this objective, theoretical, conceptual, and empirical literature on sustainability reporting on financial performance were exhaustively reviewed. The population of the study consists of twelve quoted oil and gas companies on the Nigerian stock exchange. The study adopts purposive sampling techniques to select ten quoted oil and gas companie s as the sample size. Secondary data were obtained from audited financial reports and sustainability reports of quoted oil and gas companies in Nigeria from 2013-2022. Hypotheses formulated were tested using ordinary least square regression with the aid of Eview 10 econometrics statistical software. The findings show that sustainability reporting had a significant impact on financial performance of quoted oil and gas companies in Nigeria. Empirical evidence suggests that environmental sustainability reporting had a significant relationship with return on equity and return on asset of quoted oil and gas companies in Nigeria. Empirical evidence indicates that social sustainability reporting had a significant relationship with return on equity and return on asset of quoted oil and gas companies in Nigeria. Empirical evidence reveals that economic sustainability reporting had a significant relationship with return on equity and return on assets of quoted oil and gas companies in Nigeria. The study concludes that sustainable reporting promotes value creation, brand reputation, attracts investors, lowers operational costs, and improves risk management, leading to superior financial performance. The study recommends, among others that corporate organizations should adopt widely recognized international sustainability reporting standards, such as the global reporting initiative, the task force on climate-related financial disclosures, and the sustai

A Review of Environmental, Social and Governance (ESG) Regulatory Frameworks: Their Implications on Malaysia

The increasing emphasis on sustainability has led many nations to introduce ESG-related regulatory frameworks. These frameworks aim to regulate and guide financial investments based on the ESG performance of companies while ensuring transparency to prevent the manipulation of sustainability-related information concerning investment products. This article reviews the regulatory and disclosure frameworks implemented in different nations and regions to identify their key components. The review reveals that these regulatory frameworks capture the environmental aspects encompassing climate change adaptation and mitigation, identification, evaluation and management of climate risks, circular economy practices, and pollution prevention. They also cover the social aspects, which include community development, employee welfare, and human rights. Additionally, governance aspects comprising anti-corruption measures, diversity within company boards and management, and the implementation of due diligence were included. The increased emphasis on transparency underscores the importance of disclosure. In this regard, the disclosure frameworks largely align with the recommendations of the Task Force on Climate-related Financial Disclosures, which cover governance, strategies for identifying and assessing risks and opportunities, their impacts on a company's finances and operations, resilience-building through scenario analyses, risk management integration with the overall organizational risk management, and the use of metrics and targets to measure performance. Malaysia could benefit from adopting comprehensive regulatory and disclosure frameworks that address ESG holistically, with elements related to the circular economy and dual materiality included in the frameworks. Future studies could focus on standardizing the development of metrics and targets to facilitate performance comparisons.

Legal Underpinnings Drive ESG Amidst Global Flux

The paper studies the complex global dynamics governing Environmental, Social, and Governance (ESG), including the evolving scope and structures of ESG frameworks. The impact of the significant expansion in the scope and spread of legal underpinnings over the last decade studied along with the increase in strategic applications of ESG like risk management. There is specific focus on developments the European Union, and an assessment of the impact of the changing ESG and regulatory scenario on India. The accelerated alignment of reporting standards, post the release of Task Force on Climate-Related Financial Disclosures (TCFD) guidelines has been complemented by legal and regulatory progress globally. The gradual development of legal underpinnings has put ESG or business sustainability on a stronger footing, by providing binding mandates to transition towards sustainability, albeit in varying in strength and forms across jurisdictions. The paper studies the development of these legal underpinnings and analyses how it has been critical in ensuring progress on the ESG front. These were critical in ensuring progress continued despite significant headwinds emerging of the Ukraine War and COVID-19, albeit in a slower but sustained manner. This contrasted with the scenario over the last four decades wherein vested interests could easily derail progress on climate change fronts in the absence of the legal underpinnings and binding mandates. This analysis is based on study of recent sustainability mechanisms, including a study of the architecture of the Paris Agreement, the TCFD guidelines, the compliance-based European Union (EU) Sustainability Action Plan in EU, and other international regulatory developments, including India’s BRSR and the recent regulatory proposals by RBI and SEBI etc. Global financial investors’ strong push for ESG based risk-assessment and investments is analysed along with the introduction of mandated ESG compliances for businesses and trade is pushing companies and countries with older ESG standards to respond, which has important implication for India and Indian businesses.

Seeing sustainability reporting through a lens of value creation

With a global push towards achieving the Paris Agreement as an imperative, there is a growing focus on how this will be achieved, and the role of organisations in supporting the transition to a net-zero economy and broader sustainability action. Investment decision-making is increasingly being informed by sustainability information, with stakeholders demanding greater transparency and comparability of disclosures, especially climate-related disclosures from organisations typically categorised as heavy emitters. This has ramifications for the oil and gas industry. Today, the sustainability reporting landscape is complicated, with a proliferation of sustainability disclosure frameworks developed by various standard setters. In an effort to standardise disclosures, the International Financial Reporting Standards (IFRS) Foundation launched the International Sustainability Standards Board (ISSB) in November 2021 to develop baseline global sustainability reporting standards including for climate disclosure (based on Taskforce on Climate-Related Financial Disclosures). We have also seen proposals from The US Securities Exchange Commission on climate-related disclosures, which have sparked extensive public comment. Locally, the Government has committed to introducing standardised internationally aligned reporting requirements, including climate-related disclosures, which will be mandatory for certain entities. Regardless of exactly where each jurisdiction lands, it is clear that the sustainability reporting requirements will be significant, leading to increased costs for reporters, resulting in a business imperative to leverage value creation from this compliance transformation. Indeed, organisations putting sustainability at the heart of their business strategy will be the game changer in the new sustainable and equitable energy transition. And just as there will be leaders, there will also be laggards who risk value erosion.

Improving the benchmarking of ESG in real estate investment

Purpose Environment, social, governance (ESG) has taken on increased importance in real estate investment in recent years, with benchmarking ESG being critically important for more informed real estate investment decision-making. Using 60 stakeholder interviews with senior real estate executives, this paper examines the strategic issues regarding benchmarking ESG in real estate investment; specifically, identifying areas going forward where ESG benchmarks need to be improved. This includes the issues of granularity, climate resilience and climate risk, as well as an increased focus on outcomes and performance, and using best practice procedures in delivering ESG in real estate investment.Design/methodology/approachIn total, 60 stakeholder interviews were conducted with key real estate players globally to assess the use of ESG benchmarking in real estate investment at various levels (asset/fund-level, listed real estate, delivery, reporting and internal benchmarking), across regions and across different types of real estate investment players (real estate fund manager, real estate investment trust (REIT), institutional investor and real estate advisor). This enabled key strategic insights to be identified for improved ESG benchmarking practices in real estate investment going forward.FindingsThere was clear evidence of the need for improved benchmarks for ESG in real estate investment. More focus was needed on performance, outcomes and impacts, with a stronger focus on granularity around the issues of climate resilience and climate risk. Improvements in Global Real Estate Sustainability Benchmark (GRESB), as well as increased attention to Task Force for Climate-Related Financial Disclosures (TCFD) were seen as important initiatives. Clear differences were also seen in the use of these ESG benchmarks on a regional basis; with Australia and Europe seen as the world leaders. These strategic stakeholder insights regarding ESG saw the development of best practice guidelines for the more effective delivery of ESG benchmarks for more informed real estate investment decision-making, as well as a series of recommendations for improving ESG benchmarking in real estate investment.Practical implicationsESG benchmarking is a critical area of real estate investment decision-making today. By utilising stakeholder interviews, the strategic insights from key players in the real estate investment space are identified. In particular, this paper identifies how the current ESG benchmarks used in real estate investment need to be improved for a more critical assessment of climate resilience and climate risk issues at a more granular level. This enables the identification and delivery of more effective ESG best practice procedures and recommendations for improving ESG benchmarking in real estate investment going forward. These issues have clear impacts on ongoing capital raisings by investors, where benchmarking ESG is an increasingly important factor for real estate investors, tenants and real estate asset managers.Originality/valueBased on the stakeholder interview responses, this paper has identified key areas for improvement in the current benchmarks for ESG in real estate investment. It is anticipated that an increased focus on technology and the availability of more granular data, coupled with user demand, will see more focus on assessing performance, outcomes and impacts at a real estate asset-specific level and produce a fuller range of ESG metrics, more focused on climate resilience and climate risk. This will see a more effective range of ESG benchmarks for more informed real estate investment decision-making.

Climate-Related Financial Disclosure in Supporting SDGs

This paper focused on the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD) on the key information that must be disclosed in the climate-related financial report in order for the report to be useful and the organization’s environmental, social, and economic impacts to be appropriately governed. To support and implement the United Nations 2030 Sustainable Development Goals (SDGs) Agenda, the TCFD listed governance, strategy, risk management, and metrics and targets as the primary topics that must be presented in the climate-related financial report. Various TCFDs, United Nations and significant research on SDGs, sustainable reporting, and climate-related financial disclosures were referenced to critically review the TCFD’s recommendations, as well as the benefits and implementation issues of the recommendations. It was decided that the TCFD’s guidelines are vital and useful for monitoring organisations’ climate-related operations. The TCFD recommendations guidelines must be tightened to avoid the dangers of information inaccuracies and needless lawsuits; only then can the proposal to adopt it as reporting rules benefit diverse impacted parties

Climate change and climate-related financial disclosures in the banking sector

The aim of the paper is to analyze sustainability report disclosures (Task Force on Climate-related Financial Disclosures [TCFD], 2017a, 2017b, 2019, 2020a, 2020b, 2021, 2022; AlHares & Al-Hares, 2020; Lagasio, 2019; Lucchese, 2020; International Sustainability Standards Board [ISSB], 2022) of the listed banks on FTSE Italia All-Share index of Borsa Italiana through text analytics (Giuliano, 2004). The research questions tend to verify: how and whether physical risk (acute and chronic) is reported; how and whether transition risk (legal, technology, market, and reputational) is reported; how and whether scenario analysis (The Bank of England, 2022; Rogelj et al., 2018) is conducted. Using Iramuteq (www.iramuteq.org) and SAS Viya (www.sas.com), the research combines unsupervised learning (Reinert, 1990) and supervised techniques (SAS, 2019) pointing out the inadequacy, the lack of transparency, and the lack of comparability of the sustainability reports that may increase the potential for uncertainty and financial instability. Disclosing climate information on a mandatory basis allows an increase in the quantity and quality of climate-related reporting, an increase in transparency, and comparability accountability, and provides clearer disclosures to investors and regulators.

Climate risk and financial disclosure in salmon aquaculture

The growth of the salmon aquaculture industry has attracted an increasing number of investors. Investors are conscious of economic consequences of climate change for the salmon farming companies, hence their demand for climate-related financial disclosure has increased. This study discusses potential climate-related financial impacts imposed on the salmon aquaculture production as identified by the Task Force on Climate-related Financial Disclosure (TCFD). We use data from 2016 to 2021 available on the Carbon Disclosure Project (CDP) platform, and we show to what extent salmon aquaculture companies disclose their climate-related risks. We find that when the demand of investors for climate-related financial disclosure increases, more firms tend to comply with their requests, while based on the CDP’s evaluation system, the firms perform better in minimizing their carbon impact. We argue that when salmon aquaculture companies publish their climate-related financial disclosure, they ensure transparency for their investors and secure a smooth transition into a low carbon economy.

Why Is the Australian Health Sector So Far behind in Practising Climate-Related Disclosures?

The health sector in Australia and the ASX100 is lagging far behind in the implementation of carbon management and climate risk analysis. This case study highlights the low quantity and quality of the sector compared to its market weight. The analysis of CDP disclosures for Australian healthcare companies shows this delay and a general lack of interest in the Task Force on Climate-Related Financial Disclosures’ (TCFD) recommendations. Yet, the physical and transitory risks for these companies do exist. The reasons for this inaction represent a knowledge gap in the literature, but several hypotheses are formulated, such as the lack of pressure from public authorities. At the level of the ten largest healthcare companies in the world, this failure to act is not systemic, so the scope of analysis must be broadened to see a pattern emerging.

Orchestration and consolidation in corporate sustainability reporting. The legacy of the Corporate Reporting Dialogue

PurposeThe paper uses theoretical conceptions of power and orchestration to analyse the role of the Corporate Reporting Dialogue on the global standardisation of sustainability reporting.Design/methodology/approachThe paper adopts an interpretive approach and draws on a qualitative dataset derived from interviews, documentary analysis and observation.FindingsThe paper traces how the Corporate Reporting Dialogue was orchestrated by the International Integrated Reporting Council, with the objective of aligning sustainability reporting standards, but moved to become a vehicle for orchestrating standards consistent with the recommendations of the Task Force for Climate-Related Financial Disclosure. Collaboration between the Dialogue's five most active bodies forged the blueprint adopted by the International Sustainability Standards Board's vision of sustainability reporting that prioritised reporting only on those socio-ecological issues deemed to materially affect future enterprise value.Originality/valueThe paper explicates the role of collaborative initiatives in the standardisation of sustainability reporting and shows how these initiatives act as vehicles to subtly undermine the GRI position (presented as one standardiser amongst many whose vision appears as an outlier, despite its position as the dominant sustainability reporting standardiser), and establish the prioritisation of a sustainability reporting worldview based on investor-oriented enterprise value creation. The case also draws attention to the specific orchestrators involved in establishing this prioritisation, and reveals the influence of philanthropic foundations. In doing so, it extends our understanding of legitimacy generation in standard-setting by showing how collaborative initiatives offer private standardisers another means to generate input legitimacy for what, in this case, represented a vision of reporting at odds with most sustainability reporting practice. Finally, the paper extends the sites of power to collaborative initiatives and details the mechanisms through which covert power is exercised but also masked where orchestrators use convening power, funding and membership choices to define the boundaries of discussion by influencing who participates, what is on the agenda and what activity is undertaken. Rather than viewing standardisation as a simple pursuit of conquest between individual standardisers, the paper considers how collaboration provides the opportunity for assimilation.

Understanding, mapping and reporting of climate-related risks among listed firms in Sweden

ABSTRACT We study the mapping and reporting of climate-related risks among firms listed on the NasdaqOMX stock exchange in Stockholm in four goods-producing industries. Our study contains two parts: (i) a study of the firms’ external communication through their annual reports, sustainability reports and webpages, and (ii) a follow-up survey of the top management team. The survey contains quantitative questions and free text answers, which provide additional insights into the mapping and risk-handling of climate-related risks among the firms. We find that firms are likely to engage in some form of mapping and reporting of climate-related risks, but there are variations among the firms. Furthermore, the management of climate-related risks appears to be a residual issue for most firms with little active engagement from the management team or board of directors. Key policy insights Public policies and private initiatives, such as the EU’s Non-Financial Reporting Directive/Corporate Sustainability Reporting Directive (NFRD/CSRD), the EU Taxonomy for Sustainable Activities, and Task Force on Climate-related Financial Disclosure (TCFD), may redirect and accelerate investments promoting a low-carbon and climate-resilient economy. Although most firms map and report climate-related risks, the understanding of the nature of these risks, of underlying problems, and of what a climate transition implies, varies across firms and industries. The success of the EU’s NFRD/CSRD, the EU Taxonomy for Sustainable Activities, and TCFD requires an improved understanding of climate-related risks among the firms and a more proactive engagement of the management team. Policymakers must provide firms with additional guidance aimed at improving their understanding of climate-related risks and thus their capacity to manage these risks. Firms need to, individually and jointly, revise their theoretical and empirical understandings of climate-risk management and especially the role climate-related risks play in the new policy setting. The TCFD has an important role to play, but as a voluntary initiative, it is insufficient to generate change among all firms.