Boston, MA – FCLTGlobal, a not-for-profit organization that develops research to drive long-term value creation, today released a new report that shows the disparities between the climate commitments and climate strategies of some of the world’s largest companies. Sustainability or Strategy: Bridging the Gap Between Climate Change and Long-Term Value Creation finds that, despite investor attention, climate change is still not widely reflected in business strategy and performance communications to investors.

A detailed analysis of the world’s 100 largest companies’ climate and business communications revealed the following^[1]:

• 84 have set climate change commitments; the majority of which were made or updated as of January 2020.
• Only 27 mention climate change in investor presentations on long-term strategic planning. Of these, only eight featured climate change as a central component in strategy communications to investors.
• 26 companies reference climate change in their most recent financial results disclosures. Of these, only seven provided meaningful details on climate change implications on capital allocations and investments.
• 79 companies reference climate change in their annual reports. However, only 25 disclosed plans to take advantage of climate business opportunities. Only 13 provided details on planned capital allocation in support of this.

“Companies and investors agree about the importance of being resilient in light of the climate transition. The rise in climate-related goals is evidence for this,” said Veena Ramani, a director at FCLTGlobal and the report’s lead author. “But based on our research, it is unclear if, when, and which companies are doing the work to position themselves for resilience.”

The research suggests that companies could do more to bridge the gap between their climate change approach and strategies for long-term value creation. Companies must also communicate how they plan to generate value and stay resilient in a low-carbon future to build investor trust.

This concept is echoed in a recent comment from FCLTGlobal submitted to the U.S. Securities and Exchange Commission that outlines the need for new climate performance metrics that are quantitative, consolidated with other financial analyses, and compatible with other global regulators and standard setters in order to streamline adoption by both issuers and investors. Integrating these elements into corporate strategy and disclosures, in partnership with global regulatory bodies, will be critical to improving the financial community’s impact on the climate transition over time.

To facilitate this integration, the report includes the Climate Transition Conversation Guide, a tool designed to help companies develop a consolidated view of their plan to transition to net zero. The guide outlines a series of questions for companies to use to assess how climate change affects every aspect of their business strategy. The information generated by this tool will position companies to communicate effectively with investors on their integrated climate transition strategy and enhance their climate change disclosures.

To learn more, visit https://www.fcltglobal.org/resource/sustainability-strategy-climate-change.

^{[1] Analysis of the top 100 companies in the MSCI ACWI.}

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About FCLTGlobal

FCLTGlobal’s mission is to focus capital on the long term to support a sustainable and prosperous economy. We are a non-profit organization whose members are leading companies and investors worldwide that develops actionable research and tools to drive long-term value creation for savers and communities. Please visit www.fcltglobal.org to learn more.

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