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Navigating the Climate Disclosure Landscape

This explainer provides an overview of the evolving and interconnected landscape of climate targets, metrics, reporting standards and frameworks for independent directors and non-executive directors (NEDs). There are a range of frameworks and standards supporting corporate disclosure of climate, sustainability and ESG (Environmental, Social and Governance) information.

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This summary, alongside the Centre for Climate Engagement’s (CCE’s) interactive tool, will help you understand and identify the initiatives most relevant to the company boards you sit on.

Climate targets, supported by a robust delivery plan, are an important part of a business’s decarbonisation strategy. Effective climate disclosure, using appropriate reporting frameworks and standards, provides stakeholders with comparable and reliable information to make informed decisions. Climate targets and disclosures often need to be considered within a broader sustainability or ESG context. The World Economic Forum 2020 White Paper ‘Measuring Stakeholder Capitalism’ highlights that aligning with the UN Sustainable Development Goals (SDGs) will help create long-term sustainable value, while driving positive outcomes for business, the economy, society and the planet.

Global harmonisation of sustainability disclosure standards is underway. Following increasing demand from investors and corporates for comparable global sustainability data, the IFRS Foundation launched the International Sustainability Standards Board (ISSB) in November 2021. The ISSB is developing a global baseline of sustainability disclosure standards to meet investor needs, building on existing frameworks including the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and industry-based disclosure requirements under the Sustainability Accounting Standards Board (SASB). When the ISSB standards are finalised, they will encourage companies to make a step change in sustainability reporting. Individual countries will decide whether to mandate the new standards.

In this Explainer

How can independent directors enable robust climate targets and reporting?

1.     Understand the organisation’s footprint and set targets

  • To set a meaningful target it is important to understand the organisation’s baseline emissions by measuring emissions across the whole value chain (Read Chapter Zero’s scope explainer to understand scope 1, 2 and 3 emissions).
  • Your company can set both near-term targets and long-term net zero targets adhering to the Science Based Target Initiative’s (SBTi’s) Net Zero Standard
  • The company may want to join a coalition of climate leaders setting net-zero targets as part of the UN’s Race to Zero campaign. Accredited partners provide support and guidance on setting credible targets and delivering meaningful action.
  • Consider how companies in your sector are progressing against climate goals – the World Benchmarking Alliance assesses performance in key industry sectors.
  • There are a range of methodologies to support companies in setting climate targets, for further information visit the CCE’s interactive tool: Navigating the climate disclosure landscape

2.     Understand the organisation’s disclosure and reporting requirements

  • The disclosure and reporting requirements for your company will depend on the jurisdiction it operates in. Several countries now mandate climate-related reporting and disclosures, and while many encourage voluntary disclosure, there is an increasing trend towards making this compulsory. See below for the jurisdictions mandating reporting and disclosure.
  • There are many voluntary disclosure and reporting frameworks that companies may decide to follow – for further information, visit ‘Navigating the climate disclosure landscape

3.     Share your experiences


Climate Targets

Defining climate targets, also referred to as pledges or goals, is an important step in a company’s decarbonisation strategy. Climate targets usually take the form of a greenhouse gas (GHG) emissions reduction target from a defined baseline, to be delivered within a specific timescale. To date, companies have predominantly concentrated on establishing a baseline carbon footprint and setting carbon reduction targets, for example to achieve net zero emissions by a specific date. The focus now is on action and delivery to achieve, or refine, those targets. Developing a robust measurable climate action plan, which is an integral part of the corporate strategy and aligned with capital allocation plans, is crucial for all companies.

The scientific and international policy consensus states that net zero carbon dioxide (CO2) emissions must be reached by 2050, with 50% of emissions reductions needed by 2030, to limit global temperature increase to 1.5°C from pre-industrial levels and avoid the worst impacts of climate change, as set out in the 2015 Paris Agreement.  With growing awareness and support for a net zero transition, businesses are increasingly setting their own net-zero targets.

In order to ensure credibility of corporate net-zero targets that will accelerate climate action, the World Resources Institute (WRI) proposes three key steps:

  1. Set near-term science-based targets, sometimes referred to as interim targets, which put a company on a net-zero trajectory without reliance on offsets. This will help companies understand how much, and how quickly, they need to reduce emissions across the full value chain (scopes 1, 2 and 3).
  2. Set long-term science-based net zero targets –  research by the International Energy Agency (IEA) suggests that most companies can, and should, reduce their emissions by 90-95% by 2050 or sooner, with the remaining residual emissions (those not possible to eliminate) to be offset via carbon removals. For further information on offsetting and removals, read Chapter Zero’s carbon offsetting explainer and the CCE’s greenhouse gas removal’s briefing paper
  3. Invest in cutting emissions beyond current activities – companies may want to consider financing additional mitigation or carbon removal activities to compensate for historical emissions or to become ‘carbon positive’.

The Science Based Targets Initiative (SBTi) provides guidance and support for companies to set science-based emissions reduction targets and has also developed a Net-Zero Standard for validating corporate net zero targets which provides clear criteria to ensure robustness.

Businesses taking ambitious climate action can sign up to the UN’s Race to Zero campaign, a coalition of credible net zero targets from business, cities, regions and investors committed to halving global emissions by 2030 and achieving net zero emissions by 2050 at latest. 

At a solution-based level, RE100, EV100 and EP100 provide a platform for businesses to set and achieve ambitious commitments in relation to zero carbon electricity grids, electric vehicles and energy efficiency that will help deliver against a net-zero goal.

The Carbon Trust’s Route to Net Zero Standard also offers support for businesses on their net zero journey, and provides independent verification and certification enabling businesses to confidently report progress to stakeholders.


Mandatory reporting & disclosure

An increasing number of countries are moving towards mandatory reporting and disclosure for businesses and financial institutions. This section summarises the countries and jurisdictions currently mandating climate-related reporting and disclosure:

ASEAN – a number of countries in the ASEAN region have reporting and disclosure requirements in place for publicly listed companies, including Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Further detail for each jurisdiction in the ASEAN can be found in a 2022 report by the Global Reporting Initiative (GRI).

ChinaChina’s Ministry of Ecology and Environment (MEE) requires some listed companies, specifically those with a high environment impact to disclose on a range of environmental information.

EU – In the EU, the Sustainable Finance Disclosure Regulation (SFDR) imposed mandatory ESG disclosure obligations for asset managers and other financial markets participants from March 2021, with additional entity and product level disclosures required from January 2022.

In addition, the European Financial Reporting Advisory Group (EFRAG) is supporting the European Commission in preparing draft EU Sustainability Reporting Standards.

Hong Kong – the Hong Kong Stock Exchange (HKEX) requires ESG reporting for listed companies, with both mandatory disclosure requirements and ‘comply or explain’ provisions.

New Zealand – large publicly listed companies, insurers, banks, non-bank deposit takers and investment managers are required to make climate-related disclosures. Further detail can be found on New Zealand’s Ministry for the Environment page.

UK – it is mandatory for all publicly listed companies, banks, authorised insurance companies and high-turnover companies (more than £500m turnover per year) to disclose climate-related risks and opportunities in line with TCFD recommendations. For more detail on the requirements in the UK, please see Chapter Zero’s explainer, and guidance on the Government’s page.

Incoming Regulation

The US Securities and Exchange Commission (SEC), the Canadian Securities Administrators (CSA) and Japan’s Financial Services Agency (FSA) are all preparing for similar mandatory approaches in line with the 2021 announcement from G7 finance ministers to mandate climate-related financial reporting based on TCFD recommendations.

The Central Bank of Brazil (BCB), Chile’s Financial Market Commission (CMF), the Securities and Exchange Board of India (SEBI), and the Swiss government have all announced plans to mandate climate reporting in the next couple of years.

For further detail on the disclosure requirements in place at a jurisdictional level, especially those which have an operational CGI Chapter, please see the CCLI/CGI Climate Change Disclosures briefing .


Voluntary Standards

There are a number of voluntary frameworks and standards that an organisation can consider using for climate and sustainability reporting and disclosure. The new International Sustainability Standards Board (ISSB) is developing a global baseline of high-quality sustainability disclosure standards to meet investor needs. The ISSB’s first two proposed standards build on TCFD recommendations and incorporate industry-based disclosure requirements derived from SASB Standards.  Consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation under the IFRS is an important step towards improved connectivity between sustainability and financial reporting, helping to ensure corporate transparency that meets the needs of all stakeholders. 


Tool for navigating the climate disclosure landscape

Development of the IFRS Sustainability Disclosure Standards under the ISSB will help to consolidate the labyrinth of sustainability reporting frameworks and standards that currently exist. The Centre for Climate Engagement (CCE) has developed a simple tool for ‘Navigating the climate disclosure landscape’ . This tool provides basic information about what the different frameworks and standards are used for, and who they are aimed at, framed under the following categories:

  • Standards for Measuring GHG Emissions provide guidance on how to account for and present data on emissions. The Greenhouse Gas (GHG) Protocol provides an internationally accepted approach for accounting and reporting on greenhouse gas emissions.
  • Climate Targets are a critical step in an organisation’s decarbonisation strategy allowing businesses to define climate ambition within a specific timeframe and track progress. The Science-Based Targets Initiative, The Climate Pledge and PAS 2060 all support business to set ambitious climate targets.
  • Management System Standards provide guidance for companies to create processes to manage risks and opportunities and to deliver continued performance improvements. Common standards include ISO 14001 to manage environmental issues.
  • Sustainability Reporting and Disclosure Frameworks and Standards provide guidance on how a business’ sustainability information should be presented in publicly available reports. These frameworks are important to facilitate disclosure of comparable, consistent and reliable information, for example, the Global Reporting Initiative (GRI) Standards, the SASB Standards, CDP and the TCFD Recommendations.
  • Investor data viasustainability indices supports institutional investors to benchmark companies on a range of ESG metrics. MSCI is the world’s largest provider of ESG indexes for investors. Stock market indices also provide benchmarks for listed companies including FTSE4Good, Dow Jones Sustainability World Index, Singapore Exchange (SGX) Sustainability Indices, and the Hang Seng Corporate Sustainability Index.

The tool can be filtered by different categories, depending which different elements of disclosure the user is interested in e.g. disclosure frameworks and standards, GHG calculation tools, science based targets, etc. Click through to the tool below to explore the climate disclosure landscape.

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Glossary of terms

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental impacts.

Environmental, social and governance (ESG) criteria are used by investors to screen potential investments. Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.

Stakeholder capitalism is a form of capitalism in which companies seek long-term value creation by taking into account the needs of all their stakeholders, and society at large.

Sustainable development is defined by the UN Brundtland Commission (1987) as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” In 2015 the Millennium Development Goals were replaced with the UN Sustainable Development Goals (SDGs) which outline 17 goals – ‘a blueprint to achieve a better and more sustainable future for all’ by 2030.

Sustainability is an umbrella term addressing the different aspects of sustainable development. Embedded into this term are concerns for environmental, social and economic issues.

Visit our climate terminology page for a full glossary of climate terms for NEDs.