Global Climate Change Analysis 2018

The demand for climate-related information is growing. Understanding that inadequate information can lead to the mispricing of assets and a misallocation of capital, more and more financial decision makers are demanding information on the business risks and opportunities associated with climate change.

In 2015, at the request of the G20 Finance Ministers and Central Bank Governors, the Financial Stability Board (FSB) and its chair Mark Carney established the industry-led Task Force on Climate-related Financial Disclosures (TCFD).

In recognition of the Task Force's vital work, CDP committed to align its information requests with the TCFD's recommendations and support the generation of decision-useful climate information. In 2018, 6,937 companies reported through CDP. Below we analyse two groups of companies: 1) all of those disclosing through CDP in 2018; and 2) a smaller subset of 500 of the world's largest companies by market cap.

Governance | Strategy | Risk management | Metrics and targets

Governance

You can't manage what you don't measure, and where responsibility for climate change sits within a company can be an indicator of just how seriously a company is taking this issue. At CDP we have seen a positive correlation between board-level oversight and management responsbility for addressing climate risks and opportunities, and a company's commitment to action.

Governance | Strategy | Risk management | Metrics and targets

Strategy

With climate change impacts already hitting companies across the globe, an increasing focus is being placed on both actual and potential climate-related risks and opportunities. Faced with growing scrutiny, companies need to show their stakeholders that they are integrating these potential changes into their business strategies and focusing on the long-term.

In 2018, over 6,000 companies reported to CDP's TCFD-aligned questionnaire, measuring their climate-related risks and opportunities, as well as the associated financial implications.

Governance | Strategy | Risk management | Metrics and targets

Risk management

Once a company has identified its risk it is also vital it examines just how it will manage these climate-related impacts on its business.

Governance | Strategy | Risk management | Metrics and targets

Metrics and targets

To meet growing investor and lender demands, a company also needs to disclose the metrics and targets it is using to assess and manage its climate-related risks and opportunities, including calculating its emissions and reporting progress against climate-targets in place.

Governance | Strategy | Risk management | Metrics and targets