Getting to net zero: turning climate change disclosures into action

Contributors to this article include EY's: Stephanie Hamilton, Alexandre Dussault, and Maria Suarez Santana.

Climate disclosures continue to improve. But will that be enough to deliver on net-zero commitments and meet imminent regulatory obligations?

In brief

• More than three quarters (77%) of the companies featured disclosed a net zero strategy, transition plan or decarbonization plan.   
• Organizations that disclosed a specific net-zero strategy or decarbonization plan had quality scores 5% higher than Canadian average.
• Almost half of the companies featured (41%) engaged in qualitative scenario analysis, while almost all (94%) performed climate risk analysis.

Canadian organizations are making good progress on climate-related risk disclosures. But according to a new report by EY, if they don’t accelerate their efforts, they could be left out in the cold as regulatory requirements heat up in support of 2050 net-zero targets.

Climate change is on the agenda

This year’s global findings showed year-over-year increases across both scores, with coverage of climate disclosures up 14% over 2021 to 84%, and quality scores experiencing a modest hike from 42% to 44%. But while companies appear to be embracing the TCFD recommendations, we’re learning that disclosures are not as comprehensive as investors and regulators would like them to be. And with global energy-related carbon dioxide emissions up 6% in 2021, it’s clear that companies aren’t taking the holistic view of climate change risks and opportunities required to translate them into practical strategies and advance the decarbonization agenda as originally anticipated.

Only 29% of the companies assessed reported the impact of climate change in their financial statements, and the data shared was mostly qualitative. With many around the world implementing mandatory guidelines around disclosure requirements and investors clamouring for transition plans, the pressure is on.