In preparation for the 2021 United Nations Climate Change Conference, also known as COP26, a Nasdaq Corporate Platform conducted a survey among large asset managers to comprehend which climate change topics they included when examining companies. The results of this survey on investor demand for climate data will be discussed in the following sections.
Announcements & Effects of COP26 on climate action expectations
COP26 provided clarity for companies in the form of harmonized disclosure guidelines. The newly formed International Sustainability Standards Board (ISSB) will create a global set of high-grade sustainability disclosure standards. It will include the consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF). This will give investors the opportunity to compare sustainability efforts more effectively across the different sectors of industries, markets, and issuers.
Another finding of COP26, was an announcement by the Glasgow Financial Alliance for Net Zero. Its members, which include a wide range of financial organisations like asset managers, asset owners, insurance companies, financial services or investment consultant, now cover over $130 trillion in assets. This amount of capital will now be managed in line with “Net Zero”, which includes assessing reported GHG emissions, setting emission reduction targets, monitoring climate transition plans and tracking the progress towards the set targets. To receive financial support, companies therefore have to sufficiently disclose on these aspects.
The third takeaway of COP26 is that climate reporting is more and more considered by regulators. As an example, the UK government announced that it will require financial organizations and larger companies to publish climate transition plans to secure alignment with UK’s net zero target. This will have to happen aligned to the recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD). Introducing these mandatory and aligned disclosure processes is currently discussed in the US as well and will become a mayor example for other countries to follow by in 2022.
What are further key findings of the survey?
- Over 90 % of surveyed investors are adding new hires to their climate teams in 2022 to better capture climate risks and opportunities.
- The demand for qualitative and quantitative metrics increases, especially for TCFD- aligned reports and Scope 3 GHG emission data.
- Most surveyed investors prefer near-term targets with an overall strategy and action plan over just long-dated Net Zero commitments.
What happens if companies do not act on climate strategy implementation in 2022?
In 2022, the topic of climate action and disclosure will be on the agenda of a vast majority of shareholder proposals. This will be supported even stronger by investors this year than in 2021. Around 85% (compared to 80% in 2021) of surveyed investors are likely to support shareholder proposals on climate disclosure, which sends a strong signal towards the corporate world to seriously adapt to these demands in 2022.
If you and your company want to catch up on climate action and disclosure, then you could get in contact with one our experts at DFGE via mail () or phone (+49 819 29973320) and make the next step with a carbon footprint calculation, the conceptualization of an impactful climate strategy or guidance on CSR reportings like CDP and EcoVadis.