The “disclosure” project approach to persuading companies to adjust to climate change is starting to work, according to leading figures in corporate governance.

In a co-authored article, Robert Eccles from Oxford University and Vanessa Havard-Williams, global head of the climate change practice at law firm Linklaters, argue that companies are beginning to reveal the ”obstacles” they face in achieving emissions reduction targets, a sign that progress is under way.

“We should expect more of this and it is a sign that robust governance is beginning to be put into place, that boards are taking their corporate targets seriously, and that the disclosure process is starting to work,” they write.

The article responds to a Financial Conduct Authority consultation on “sustainability-related” governance and surveys the governance landscape and its likely impact on the ability of firms to cut greenhouse gases.

Eccles and Havard-Williams identify some of the headwinds corporates will have to face in moving from an “initial phase of setting targets to the harder task of implementing and disclosing performance against them”.

Rules of engagement

One difficulty navigating the “disclosure project” is the sheer profusion of reporting schemes now affecting corporates, with the number set to increase in the coming months. The International Sustainability Standards Board will soon have new guidelines ready for adoption around the world (Rishi Sunak, when chancellor, had committed to implementation in the UK), while the European Union will soon enact new disclosure rules through the Corporate Sustainability Disclosure Directive and the Corporate Sustainability Due Diligence Directive.

Other stumbling blocks include “geopolitical forces” causing turbulence across markets. And, in some jurisdictions, ESG and climate risk reporting have become highly politicised.

While the left demands more disclosures, the right opposes “any kind of standards for climate, and sustainability disclosure more generally”.

The answer to navigating these difficulties may be better stakeholder engagement.

“Chairs, non-executive directors and chief sustainability officers should be spending time regularly with a representative range of investors and other stakeholders to understand their views and appetite on salient sustainability topics and to explain their own thinking.”