Record number of financial institutions press high-impact companies to disclose environmental data

An unprecedented 288 financial institutions with assets totalling nearly US$29 trillion are directly engaging with 1,607 high-impact companies that are currently not disclosing environmental data through CDP, a global environmental disclosure non-profit. This marks the launch of the annual Non-Disclosure Campaign (NDC), which targets businesses that have not responded to CDP’s disclosure request. Notably, this list includes high-profile corporations like Saudi Aramco, Exxon Mobil Corporation, Glencore, Chevron, Tesla Inc, and Volvo Group, to name a few.

Since its inception in 2017, the number of financial institutions supporting the CDP campaign has more than quadrupled. The urgency behind this rapid rise has been driven by impending mandatory disclosure regulation across several major economies, including the UK, EU, Brazil, Japan, and the US.

Furthermore, the demand for companies to disclose their impacts on climate change remains high, at nearly 72%, and the call for disclosure on forest impacts has risen by 3%.

Companies more likely to disclose if engaged directly by financial institutions

CDP’s analysis of its 2022 non-disclosure campaign, which elicited responses from 388 environmentally high-impact companies, showed that companies were 2.3 times more likely to disclose if directly engaged by financial institutions. This year, Schroders, Cathay FHC, Aviva Investors, Manulife, Sumitomo Life Insurance, AQR, Legal & General Investment Management (LGIM) and PGGM will join other institutions from 31 countries to urge non-disclosing companies to comply with CDP’s disclosure request.

The 2023 campaign targets 1,607 high-impact companies spread across 51 countries, representing a combined US$21 trillion in global market capitalisation (as of February 2023) and an estimated emission of 4,200 megatonnes (Mt) of CO2 equivalent annually – nearly equivalent to the greenhouse gas emissions of the UK, EU, and Canada combined.

Focus on climate change, forests, water, and plastics

This year, companies will be requested to disclose data relevant to their operations on at least one of the four priority themes – climate change, forests, water, and, for the first time, plastics in the water. This initiative aims to increase transparency regarding environmental impacts and investment risk, and to drive more action on sustainability from capital markets.

Demand for data on climate change remains high, with 72% of targeted companies asked to disclose on this theme. However, financial institutions are also increasingly pressing for disclosure and action on water and deforestation. This year, 28% of companies will be asked about their water-related impact, and 26% will be prompted to disclose on forests.

Companies under the spotlight

Several corporations that failed to disclose their climate change, forests, and water-related impacts in 2022 have been targeted this year. These include Glencore, Swatch Group, DTE Energy, and South32. Companies like BP, Amazon, and BMW, who disclosed on climate change but did not respond on forests and water security, are also being pressed to disclose across all three themes in 2023.

Water-related impact is also emerging as a focal point for financial institutions. Industries such as biotech and pharmaceuticals, retail, as well as oil and gas extraction and production, are particularly under scrutiny for disclosure on water in this year’s campaign.