Companies need to add much more detail into their disclosures about emissions and energy consumption, according to the UK’s company reporting watchdog.

The news comes in a review conducted by the Financial Reporting Council (FRC) that looks at examples of disclosures made under the Streamlined Energy and Carbon Reporting (SECR) rules, which were introduced last year.

According to Mark Babington, the FRC’s director in charge of regulatory standards, “Companies need to do more to make disclosures understandable and relevant to users.”

The FRC says companies reported the bare minimum and in many cases failed to go into any detail. Disclosures failed to provide information on the methodologies used to calculate emissions and energy use, while a number of companies reported targets but failed to include the metrics.

The FRC report also found that independent checks on on disclosures were missing. The review says: “The extent of the third-party assurance obtained over the SECR information was not adequately explained in most cases.”

The FRC looked at 27 companies including a selection from the FTSE 350 and AIM.

Progress on climate goals

The somewhat disappointing results stand in contrast to the FRC’s look at the future of corporate reporting, in which those responding to a consultation said they were in favour of reporting not only climate information but also carbon accounting. Almost half (48%) of those who responded expressed support for a standalone “public interest report”, although the FRC also heard from doubters.

In November last year the FRC examined climate reporting, concluding companies “need to do more”. With the government’s pledge to be net zero by 2050 and the introduction of TCFD climate reporting by 2022, corporates have much to work on—not least because investors are making their own demands.

The FRC concluded: “Consideration and disclosure of climate change in the financial statements lags behind narrative reporting.” It added: “Some companies have set strategic goals such as ‘net zero’, but it is unclear from their reporting how progress towards these goals will be achieved, monitored or assured.”

One investor told the FRC: “Board-level understanding of climate risk and the need to transition has to improve. There are too many conversations where the board really doesn’t get it.” They added: “It’s concerning that too many boards seem comfortable with management dragging their feet.”

The pressure to be transparent about the effects of climate change are undeniable. And yet the FRC continually finds itself reporting that companies could up their game. This latest report adds to the many demanding more and better reporting.