Despite the existential threat of climate change, companies are not accelerating their transition to net-zero at the rate needed to achieve the goals of the 2015 Paris Agreement. This apparent lack of action has been starkly highlighted by the 2024 EY Global Climate Action Barometer (pdf) (the Barometer), which reveals that less than half (41%) of large companies worldwide have published a transition plan for climate change mitigation even as global temperatures hit new highs.
What’s more, whether they have a transition plan or not, many companies are avoiding long-term commitment to greenhouse gas (GHG) emission reduction targets, with just over half (51%) of companies setting targets beyond 2030.
An already worrying picture becomes even more concerning given the Barometer’s finding that just over one-third (36%) of companies have referenced climate-related financial impact in their financial statements. This is despite 67% having conducted climate-related scenario analysis that shows they likely are aware of the potential threats they might face.
This disconnect between companies’ ambition and action on the decarbonization agenda became more obvious, as the EY teams were carrying out the research for the report. The Barometer - now in its sixth year and previously known as the EY Global Climate Risk Disclosure Barometer - offers an industry standard for gauging global advancements in the breadth and depth of climate-related disclosures. Unfortunately, while a notable improvement in disclosure coverage has been recorded over time, from 61% in the first edition of Barometer in 2018 to 94% in 2024, the quality of these disclosures is not improving at the same rate. Coverage was measured by assigning a percentage score on the basis of the number of Task Force on Climate-related Financial Disclosures (TCFD) recommendations addressed by them. A score of 100% indicated that the company had disclosed some level of information compliant to each of the recommendations, regardless of the quality of information provided. The average score for disclosure quality in 2024 is 54%, up from 31% in 2018. Companies were given a rating based on the quality of the disclosure, expressed as a percentage of the maximum score, should the company implement all 11 recommendations.
There are several reasons why companies choose not to make detailed climate disclosures. They may not want to divulge sensitive commercial information, risk allegations of greenwashing or expose themselves to litigation from stakeholders if they don’t deliver on their strategy. Or maybe, simply, there is no positive story to tell: in other words, they are not taking sufficient action on climate.