98% of companies responsible for greenhouse gas emissions fail to disclose risks

According to a report released by Carbon Tracker on Thursday, almost all of the companies that are responsible for greenhouse gas emissions are failing to disclose how climate-related risks might affect them financially.

The lack of disclosure leaves investors in the dark and makes it hard for markets to function efficiently and allocate capital - undermining efforts to decarbonise the global economy, said Carbon Tracker, a think tank that analyses the impact of climate change on financial markets.

In its second annual report on corporate disclosures, it found 98% of 134 companies -- collectively responsible for up to 80% of emissions -- did not provide sufficient evidence that they had considered the impact of climate matters when preparing their 2021 financial statements.

Barbara Davidson, Carbon Tracker's head of accounting, audit and disclosure, said that when companies don't take climate-related matters into account, their financial statements may include overstated assets, understated liabilities and overstated profits.

The report found that auditors are not considering climate-related matters.

Almost all audits by Carbon Tracker did not say whether or not they considered the impact of emissions reduction targets, changes to regulations or a fall in demand for a company's products.

Businesses need to improve disclosure of climate-related risks and impacts in order to push money towards efforts to meet net zero emissions by the year 2050, according to regulatory bodies.

Carbon Tracker said some progress had been made, showing how it was possible to provide sufficient disclosure.

Glencore had provided relevant information in order to align with its ambition to achieve net zero emissions by the year 2050.

The financial statements of Glencore show that it would have to write down virtually all the value of its thermal coal assets in the event of a scenario like the IEA Net Zero Emissions by 2050, according to Rob Schuwerk, Carbon Tracker's executive director.

How many more company balance sheets have similar risks?