In the week of COP29, a stark warning: investors are not receiving the information they need to assess the environmental risks and opportunities faced by companies.

The warning comes from perhaps the most high-profile expert on climate change-related disclosures—the International Sustainability Standards Board (ISSB), after it reviewed take-up of reporting standards published by the Task Force on Climate-related Financial Disclosures (TCFD).

The ISSB finds 82% of companies (up on 2022’s 73%) used at least one of the 11 TCFD reporting recommendations. However, fewer than 3% reported in line with all 11 disclosure guidelines.

That means only a small number of companies issue reports covering climate-related governance, strategy, risk management or metrics and targets, according to ISSB

The news comes in the same week that COP29 heard from the Climate Action Tracker that the world is on course for 2.7 degrees C of warming over pre-industrial levels—way above the 1.5 degrees C target built into the Paris Agreement.

Many commentators expect the new era of Donald Trump’s second presidency to kill off efforts to introduce the mandatory climate change reporting measures developed by the US Securities and Exchange Commission, the chief financial watchdog for Wall Street. A number of companies operating in California will still face some reporting rules after the state initiated its own legislation.

Falling short

Emmanuel Faber, chair of the ISSB, says there has been some progress on TCFD disclosures. “But further action is needed to address the fact investors are still not receiving the information they need to assess and price appropriately climate and other sustainability-related risks and opportunities.”

However, Faber adds that momentum is building and says the adoption of climate risk reporting rules—including the ISSB’s own, released in June last year—into national regulation “is of vital importance for the healthy functioning of capital markets around the world”.

The report finds that 30 jurisdictions (representing about 57% of global GDP and 40% of global capitalisation) are currently in the process of mandating ISSB standards.

This includes the UK, where TCFD reporting is already mandatory for some companies. Among companies, 1,000 around the world have so far referenced use of ISSB standards.

According to the ISSB, Europe is ahead of North America when it comes to using TCFD disclosures.

In European companies, the most popular environmental reporting issues are board oversight (70%), greenhouse gas emissions (84%), climate related targets (83%) and climate-related metrics (80%). Least reporting takes place on the resilience of corporate strategy (22%), and integration of climate risk into overall risk management (29%).

However, European Union companies fall under the new Corporate Sustainability Reporting Directive (CSRD) , a vast piece of legislation that mandates reporting which mostly matches TCFD disclosures, though not in their entirety.

Regulators and policymakers still see disclosures as a significant route to cleaner companies, better prepared for climate change. However, the global process may suffer under Trump’s presidency. Given the ISSB findings, there may still be a way to go before disclosure has its full impact.