Climate Risks and Opportunities Disclosures of Leading Companies Are Often Insufficient to Meet Investor Needs

This blog was co-written by YaoDan Qi, Yesenia Moreno Carrillo, Isolde D'hert, Vera Virta, and Irem Şanal from Utrecht University, and builds on their research

Companies are under pressure to disclose climate risks and opportunities

Climate change poses a range of risks and opportunities to companies. Driven by investor pressure (as well as regulatory pressure), leading companies are starting to disclose their climate-related risks and opportunities. The Taskforce on Climate-related Financial Disclosure (TCFD), established by the Financial Stability Board (FSB), published a set of recommendations in 2017 that enable companies to provide more investor-relevant information for capital allocation decisions.

TCFD’s transformative potential is recognized globally. The European Commission and the U.S. Securities and Exchange Commission (the “SEC”) published climate disclosure guidelines for companies, partly based on the TCFD recommendations. Many other countries, including Japan, New Zealand, United Kingdom and Hong Kong, have or will be issuing mandates for TCFD-aligned reporting as well. [1][2][3]

Key challenges for companies

Our latest review of company disclosures found that companies are facing several challenges and that a step-change improvement is required to enable investors to effectively price in climate risks and opportunities.

Our research focused on a subset of leading companies in the energy and apparel sectors to explore sectoral differences due to low vs high asset intensity and different risk cultures. However, we expect some common challenges that also apply to other sectors: .

  • Flexibility and complexity - Different approaches to TCFD and the need for specific capabilities (e.g. systems analysis, scenario analysis) may lead to results that are difficult to compare between companies.
  • Lack of single global standard - Existence of numerous standards and frameworks (e.g. CDP, CDSB, SASB, GRI) are causing confusion among report preparers or users.
  • No assurance of disclosed information - Companies mostly disclose sustainability information only in non-financial reporting due to fear of litigation or enforcement.
  • Irrelevant metrics - Many of the metrics and targets developed and disclosed by the companies do not cover the most material risks and opportunities that the companies have identified (e.g., firms disclose GHG emissions rather than total physical climate risk as % of asset value).

Recommendations for climate risks and opportunities disclosures

The study revealed some recommended practices for companies that are new to TCFD reporting, including:




Include Audit or Risk committees in governance of climate-related issues.

  • Involve both board-level individuals and committees to improve management of risks and opportunities, as this would deliver the required multi-disciplinary knowledge and skillsets.


Use climate scenarios to define risks and opportunities and estimate financial impacts under those scenarios.

  • Scenario planning is a complex process, but it can generate insights about resilience across different global warming scenarios.
  • Benchmark identified risks and opportunities against peer disclosures to ensure coverage and understand key differences.

Metrics & targets

Cover material risks and opportunities in metrics and targets.

  • Develop metrics & targets that reflect identified risks and opportunities, such as[4]
    • % of executive management remuneration linked to climate considerations
    • % of assets or business activities vulnerable to climate-related risks
    • % of business activities aligned with climate-related opportunities
  • Include existing GHG metrics & targets alongside other risk metrics

Risk Management

Develop a mitigation approach tailored to your business.

  • Find appropriate mitigation approach for your company, for example:
    • Apparel: incorporate climate risks in their supply chain and materials management
    • Energy: shift investments to renewables and technology development.
  • Integrate climate risks and opportunities in business cases for new assets or business activities.
  • Set up a dedicated working group to ensure consistent implementation of climate risks and opportunities in decision-making processes.


Implementing these recommendations is a resource-intensive process, involving various functions and departments, and requiring systematic assessments often with external data or analytical support. However, the insights will drive innovation and create competitive advantage, and the resulting disclosures boost investor confidence.




  1. European Commission. (n.a.). Corporate disclosure of climate-related information. Retrieved from:
  2. Alekseyev, Y., Barrett, B., Bienenfeld, M. ( 2022, May 23,). SEC’s climate proposal vs. TCFD: What you need to know. Linklaters. Retrieved from:
  3. Alun, J. (2020, December 20). Hong Kong sets new climate disclosure rules, aligns with global standard. Reuters. Retrieved from:
  4. Task Force on Climate-related Financial Disclosures. (2021). TCFD Proposed Guidance on Climate- related Metrics, Targets, and Transition Plans. Retrieved from:

[1] European Commission., n.a.

[2] Alekseyev, Barrett & Bienenfeld, 2022

[3] Alun, 2020

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