Despite being the second-best performing sector, the transport sector showed significant discrepancies across the different markets in terms of quality. One-third of the assessed companies scored less than 10% in quality, while some obtained over 50%.
Top-performing markets in the sector included France, Germany, the US and South Korea. While France, Germany and the US were already identified as leaders of the transport sector in 2018, South Korean companies improved their quality of climate disclosures when compared with 2018. This could be explained by the maturing reporting market.
The lowest-performing markets in the sector included Argentina, China mainland, Kazakhstan, Malaysia, the Philippines, Portugal, Russia and the UAE. Companies in those markets were not bound by any national or local legislation to disclose any information regarding climate-related topics. Singapore and Belgium were also among the lowest performers.
We examined how the transport sector performed against the four areas, through which the TCFD recommendations are structured.
Companies in the transport sector attained the best coverage score of all the sectors for governance recommendations. This could be attributed to the board and management of companies assessed being significantly involved in climate-related issues. The transport sector also ranked the second-highest for the quality of governance disclosures. Companies assessed generally provided detailed information on the:
- Responsibility of the board on climate-change matters and a description of the board’s oversight on climate-related risks and opportunities
- Processes and the frequency by which the board committees are informed about climate-related issues
- Consideration of climate-related issues in their overall business strategy
The management of specific climate-related issues was not always outlined in the disclosures. This could be because most companies in the transport sector do not have a governance structure dedicated to climate-related issues. Instead, companies tended to have global corporate social responsibility (CSR) or sustainability committees, or departments with responsibility for climate-change matters. The disclosures typically consisted of a general mention of the climate-related issues, but no acknowledgment that the sustainability committee was responsible for overseeing its risks and opportunities.
Structures for climate-related management for the top performers of the transport sector were well described and well explained. They particularly showed how climate matters were considered at all the different levels of the company and clearly defined their responsibilities, demonstrating a solid interaction between management and the board.
In terms of strategy recommendations, the transport sector achieved the second-highest score of all the sectors. Companies assessed usually described more information than the other sectors about their strategy regarding climate-related risks and opportunities. The transport sector also achieved the second-best score in strategy quality. Across the transport sector, there were varying results for strategy quality, with over one-third of the companies assessed attaining less than a 10% score and almost an equal amount of the companies scoring more than 60%. The description of climate-related risks and opportunities was commonly adopted by the transport sector companies.