Research finds gaps between net-zero pledges, transition plans and climate disclosures
There is a lack of coherence between companies’ net-zero pledges, transition plans and disclosures, according to two reports published this week.
As part of wider analysis of disclosures under the Corporate Sustainability Reporting Directive (CSRD), the EU’s reporting advisory body, EFRAG, evaluated the way 50 firms approached climate transition planning.
It found a third didn’t have clear near-term Scope 1 and 2 targets, while 16% had not set 1.5°C aligned targets at all, which EFRAG said suggested “a shift towards targets greater than 1.5°C”.
Nearly three quarters of companies in the Netherlands had transition plans, followed by 69% in both Sweden and Denmark.
Just 21% of Italian firms published plans, making it the Member State with the lowest take-up.
There was a lack of “highly detailed and standardised” plans across the pack, EFRAG said.
“Only few preparers observed fully explain the climate transition plans components outlined in draft IG410, indicating a gap between formal declaration and meaningful disclosure,” it wrote.
Elsewhere, EY found nearly a third of large companies with net-zero targets in Singapore did not have transition plans to accompany them.
The consultancy assessed more than 300 corporate sustainability reports from the jurisdiction, including all those produced by firms listed on the SGX.
It noted that the number of companies to have published climate transition plans grew from 27% in 2023 to 47% in 2024, with industrials and real estate companies driving the trend.
EY’s findings come as listed Singaporean companies prepare for new listing rules that will require them to disclose in alignment with the International Sustainability Standards Board (ISSB).
Despite the looming requirements, just 14% of the firms assessed were found to have considered the ISSB standards when preparing their 2024 climate-related disclosures.
Meanwhile, the number of companies disclosing the financial implications of climate change has nearly doubled, according to EY, from 43% in 2023 to 81% in 2024.
Most only express in qualitative terms “how key financial figures, such as revenue or operating expenses, may fluctuate” noted EY.