High Emitters Fail to Account for Climate Impact

Around 140 of the world’s highest-emitting companies and their auditors fail to properly account for the impact of climate change on their business, a new report from financial think tank Carbon Tracker has shown. According to the research, only 37% of companies’ financial statements provided investors with “some” information on how they incorporate a range of financial risks related to climate change and the energy transition. Investors in the remaining 63% could not tell whether balance sheets reflect climate impacts, and so lacked a window into management views. The report also found that 70% of companies’ financial statements were inconsistent with their other climate narratives, with discrepancies standing as potential evidence of material errors, poor corporate governance and greenwashing. “If management and investors are basing their decisions on incomplete or incorrect information – such as potentially overstated assets and profits and understated liabilities – then investors, including pension funds and retail shareholders, risk significant financial loss in the face of a disorderly energy transition,” said Barbara Davidson, Carbon Tracker’s Head of Accounting, Audit and Disclosure. Some of the companies deemed to provide little to no information to investors on climate impact included: Berkshire Hathaway, Caterpillar, Chevron, ExxonMobil, General Electric, Procter & Gamble and Walmart in the US, as well as Germany’s Bayer and thyssenkrupp, France’s Danone, and Saudia Arabia’s Saudi Aramco. The report also found that auditors often lagged behind companies, with 80% of audit reports providing little or no information about whether climate impacts have been assessed. Most companies are audited by one of the big four audit firms: Deloitte, EY, KPMG and PwC.

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