Climate change remains the paramount existential threat, yet EY’s 2024 Climate Action Barometer indicates that most companies are unprepared for the impending disruptions. Despite incremental improvements, only 41% of ~1,400 surveyed companies have adopted comprehensive transition plans necessary to achieve net-zero by 2050. Regions like the UK and Europe lead in disclosure quality and transition plan adoption, driven by stringent regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD).
Disclosure Quality and Transition Planning
The Barometer shows a modest increase in climate disclosure quality, rising from 50% to 54%, yet this progress is insufficient in response to the accelerating climate agenda. Major emitters like the US, India, and China have significant room of improvement, with China reporting an 8% transition plan adoption rate. This highlights a critical need in strategising and disclosing against implications of climate change.
Financial Integration and Scope 3 Emissions
A concerning 36% of companies reference climate-related financial impacts in their statements, indicating a disconnect between climate risk and financial performance. Additionally, only 74% disclose Scope 3 emissions, which typically account for over 70% of a company’s carbon footprint. This lack of comprehensive assessment and reporting undermines the effectiveness of climate strategies.
Your turn
EY urges organisations to prioritise climate action by developing actionable transition plans, integrating climate risks into financial statements, leveraging data for decision-making, and fostering cross-sector collaborations. By taking these steps, businesses can bridge the gap between ambition and action, moving towards a sustainable and resilient future.