Investors release major new guide to climate change reporting in Asia

Source(s): Asia Investor Group on Climate Change

Today the Asia Investor Group on Climate Change (AIGCC) is releasing a new report ‘Building on the base: TCFD Disclosure in Asia’, the first comprehensive guide developed by investors to look at climate change reporting by publically listed companies in Asia against the Taskforce on Climate-related Financial Disclosure (TCFD).

In developing this report, AIGCC has worked in conjunction with EY and FTSE Russell to look at current levels of reporting by Asian companies in key industry sectors and across major markets in the region. It draws upon previously unpublished data analysis of corporate reporting on climate change and is the first report to benchmark performance against the TCFD for the region. 

This guide outlines the expectations that investors have of listed companies on their climate disclosure and is designed to provide a practical tool for investors as they work in partnership with their investee companies in Asia.

“With Asia lashed yet again by increasingly extreme weather events in 2018, the impacts on climate change are really hitting home,” said Rebecca Mikula-Wright, Director of AIGCC. 

“Companies in the region are directly impacted by the physical impacts of climate change but are also innovating to provide the products and solutions needed for the world to transition to net zero carbon by 2050”.

“Investors want to know how listed companies in Asia will manage these climate change risks and the TCFD framework can help them do this. By undertaking this analysis, we hope to show how companies are measuring and managing the financial impacts of climate change”, said Mikula-Wright. 

Key highlights from the report include:

  • The highest level of disclosure across the region was in the category of climate change policy, as companies start to report their position on key issues. Although other Governance areas remain key gaps in disclosure.
  • Companies are consistently underreporting on their Strategy for managing risks and capitalising on opportunities. In particular, more work remains to be done in the area of detailed scenario analysis.
  • Transport and energy are the two sectors which stood out as having higher levels of disclosure, both in terms of coverage and quality, with insurance close behind.
  • Taiwan stood out with high levels of corporate reporting across all areas of corporate disclosure on climate change issues, owing to a strong pre-existing regulatory regime. Beyond that, there was mixed performance across countries, with Japanese companies having the highest rate of disclosure on short and long term emissions targets, South Korea was strong on Risk Management disclosure and Thailand performing well on Metrics and Targets. 

A full breakdown of disclosure by industry sector was developed by EY. FTSE Russell looked at country by country analysis on the TCFD, compared with global benchmarking.

The guide also utilises a number of existing Investor Expectations sector guides developed for oil and gas, mining, utilities, auto manufacturers and upcoming steel report by the Global Investor Coalition on Climate Change, which provide additional sector specific disclosure recommendations, particularly regarding the oversight of public policy positions and activity.

The release of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations in June 2017 has created a single framework for investors and corporates to report on their climate change exposures. Investors have begun escalating their requests for greater transparency through TCFD reporting from their investee companies with initiatives such as the Climate Action 100+, a 5-year collaborative engagement initiative to improve governance on climate change, curb emissions and strengthen climate-related financial disclosures. The initiative now has a record number of 310 signatories representing US$32tn assets under management. 

AIGCC will continue to work with our members in the region to develop tools and resources for investors in Asia to manage climate related investment risks and opportunities. 

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