The financial sector has faced significantly higher levels of regulatory scrutiny compared with other sectors and as a whole was expected to score more highly. The sector includes:
The banks maintained a similar level of performance compared to 2018, despite the expanded coverage of the 2019 analysis, including less mature countries. However, both the insurance and asset owners and managers lost 10% and 4% respectively on coverage of the recommendations compared with the 2018 results.
This could potentially be due to new entrants in the data used for the 2019 analysis. When the score was compared on a like-for-like basis, the insurance sector’s score was found to have increased by 4%, and the asset owners and managers did not improve year-on-year.
Similar to 2018, the asset owners and managers underperformed across all sectors. This finding highlights a global issue with the climate risk disclosures of companies within this sector. This is despite well-established initiatives targeting investors, including the Montreal Pledge and the Portfolio Decarbonization Coalition.
It was not surprising that overall companies within the energy sector were again top performers in 2019, achieving an average score of 66% for coverage and 36% for quality of TCFD recommendations. The sector includes major oil and gas and energy utility companies that have faced scrutiny from investors, direct shareholder action and increased pressures from changing public opinion. Data used in the 2019 analysis included a number of new companies from large oil-producing markets. The disclosure scores for these new entrants were low compared with others in the sector, which likely reflects the lack of focus by companies and shareholders on climate risks and opportunities despite the relatively high carbon intensity of the sector.
The top performing companies were predominantly from European markets, including Spain, France, Italy and the UK. Within these markets there has been increased legislative influence from new directives such as the Extra-Financial Performance Declaration. Companies in the Australian market continued to perform strongly in the face of increased pressure on climate risk disclosure from regulators and potential new legislation.
Leading companies in the energy sector had also disclosed new types of information, providing stakeholders with additional information related to their action around climate-related risks and opportunities. For example, some companies included metrics related to investments in low carbon technology, information on the effectiveness of carbon capture technologies, targets to phase down fossil-fuel generated electricity, and how an internal carbon price is used in decision-making. These metrics had been included across multiple forms of reporting, including a company’s annual report.
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Manufacturing and transport sectors