Views on improving the integrity of global capital markets
11 November 2019

Climate-Related Issues: The Gap Between Current Reporting and Investor Expectations

Posted In: Financial Reporting

According to the October 2019 report Climate-Related Corporate Reporting from the UK Financial Reporting Council’s (FRC) Financial Reporting Lab, 

Companies are falling short of investors’ expectations for clearer reporting on climate-related issues. As economies increasingly transition towards low carbon and climate resilient futures, the Lab’s report highlights the gap between current reporting and investor expectations and calls on companies to bridge this gap.

As noted in the report, investors would like companies to disclose the following:  

  • how boards consider and assess the topic of climate change; 
  • whether, and how, the business model may be affected by climate change, whether it remains sustainable, and how the company may respond to the challenge posed by climate change; 
  • what the opportunities and risks are, including the prioritization of risks and their likelihood and impact; 
  • what changes the company might need to make to its strategy to capitalize on a changing climate and related opportunities; 
  • what scenarios might affect the company’s sustainability and viability — and how; 
  • how the impact is measured; and 
  • how the company measures the climate-related challenges and the success of its strategy through strategically aligned, reliable, transparent metrics, and financially relevant information.

This report provides practical guidance about areas in which companies can improve their reporting. We encourage you to read this report to gain a better understanding of investor perspectives on climate-related issues.  

mage credit: ©Satyam Bhorwal / EyeEm

About the Author(s)
Mohini Singh, ACA

Mohini Singh is director of financial reporting policy at CFA Institute. She represents membership interests regarding financial reporting and disclosure proposals issued by the FASB, the IASB, and others. Singh holds the Associate Chartered Accountant (ACA) designation.

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