The report includes insights from 25 IGCC survey participants, 84% of whom use disclosures to engage companies, while 76% use them for ESG integration. Climate risk is considered a material financial risk in investment analysis by greater than 80% of the respondents.

84% of the survey participants use disclosures to engage with companies, suggesting that engagement is an essential feature that investors look for in corporate reporting. Investors also use disclosures as a basis for ESG integration, moving towards integrating climate change risks with their investment assessments. The findings reveal that investors use reporting to lower risk and/or generate returns.

The report notes that consistency in reporting across various sectors is a critical factor to ensure efficient carbon transition. Investors are requesting climate-related financial disclosures that guarantee the accuracy and transparency of the risks faced by companies, in addition to procedural risk management and its corresponding actions. Investors seek to understand a company’s strategy and planning, following a quantitative (and qualitative) analysis of the potential impact of said strategic plans.

Investors expect transparency in scenario analysis exercises through the provision of variance analysis to the standard set of assumptions used in bespoke modelling, among other things. Additionally, scenario analysis should account for both company-wide and project/asset-level impacts and their strategic implications.

The report highlights six priority areas that can improve corporate reporting. They are:

• Demonstrating board, director, and executive-level skills and expertise in climate change.
• Reporting links between climate-related performance and executive remuneration.
• Demonstrating connections between risks and opportunities and the corresponding strategic response by the company.
• Extending reporting to include Scope3 emissions metrics and targets in categories where they are material.
• Highlighting the costs and implications of both transition and physical risks.
• Providing auditing and assurance of results.
• Investors want companies to connect their climate-related disclosures to purposeful actions taken with regard to findings of climate-risk assessments. Companies have a responsibility to engage stakeholders with their reports to protect against the financial impact of unsustainable practices. Materiality and consistency of reporting are critical to guarantee efficient carbon transition across the board.

In conclusion, the report provides crucial insights into the priorities, expectations, and uses of investors’ climate-related financial disclosures. The core message of the report is that climate reporting must move beyond thought-provoking assertions and claims to provide substantive evidence. This will enable investors to make informed decisions about a company’s climate-related risks and opportunities. The call to action is for companies to not only provide accurate and timely disclosures but to also reinforce their commitments to reducing the impact of their operations on the environment.