Analysis of the 2019 EY Global Climate Risk Disclosure Barometer revealed that surprisingly the agriculture, food and forest products sector scored the lowest for coverage and quality of climate-related risk disclosures across all the non-financial sectors. However, except for a few poor performers (including companies from Russia, Kazakhstan, China mainland, South Korea and the Philippines), most companies disclosed some level of information required in the recommendations. Each of the companies from the sector that were reviewed received a score for both the coverage and quality metrics on the basis of how they addressed or implemented all of the 11 recommendations by the Task Force on Climate-related Financial Disclosures (TCFD).
Overall, the sector showed significant discrepancies across regions — almost a quarter of companies within one market scored on average 10% less for quality, while another quarter of companies obtained over 40%. Companies in the US, France and Japan were some of the top performers, while Brazil and the UK were some of the other markets that ranked as good performers. This is likely because of the global exposure of these companies’ operations and supply chains (which were headquartered in these markets) to transition and physical risks. Also combined with it was the growing consumers’ expectation for greater transparency and traceability for the sector in these markets. Companies from markets with the least regulation scored the lowest for both quality and coverage, and this included Argentina, China mainland, India, Kazakhstan, Russia, Saudi Arabia and Taiwan.
We examined how the agriculture, food and forest products sector performed against the four areas, through which the TCFD recommendations are structured.
Over one-third of the assessed companies provided some level of information regarding their board’s overall responsibility for climate-related issues and the governance structure in charge of climate-related topics. However, the information often lacked details, which resulted in a low quality score.
Most companies assessed did provide some information regarding their governance apparatus for sustainability issues, but did not provide specific disclosures on the climate-related topics. These companies only made a brief mention in their disclosures that their “sustainability” structure was also responsible of managing climate-related issues.
The good performers described the different governance structures involved in detail in the management and oversight of climate-related topics (e.g., listing the name and position of the members of the climate committee or other climate governance structure), as well as the interactions between these structures. One company also outlined the roles and structure of climate governance at both the company and asset level.
Over half of the assessed companies listed climate-related risks in their disclosures. A quarter of these companies also provided a detailed description of each of these risks as well as their climate opportunities, indicating the time horizon for each risk and opportunity. Most of this information was provided to Carbon Disclosure Project (CDP) during its annual reporting process.
The other companies did not provide any description regarding the climate-related risks they are exposed to, their climate-related opportunities or their materiality process. This resulted in them scoring “zero” for all three TCFD recommendations. Most of these companies did not respond to the CDP questionnaire.
Companies who responded to the CDP questionnaire tended to provide information aligned with the TCFD recommendations on strategy. This information included detailed descriptions of both transition and physical risks, climate-related opportunities, and their materiality process.
Only three companies in the sector published detailed information regarding climate-related scenarios — on the basis of the Intergovernmental Panel on Climate Change (IPCC) scenarios, the International Energy Agency (IEA) scenario or on their market’s nationally determined contributions (NDCs). Two of these three companies included general comments in their disclosures regarding the company’s resilience in these different scenarios.