US investor pressure paying off as more companies disclose net zero goals

A fast-growing number of public companies in the U.S. are voluntarily disclosing climate and environmental-related goals, metrics and progress on their net zero efforts, largely as a direct result of mounting shareholder pressure.

In the world's largest equity market, close to 90% of all public companies now voluntarily report some climate or net zero-related targets, primarily due to pressure from shareholders and investors, as well as a general appetite within most industries to include climate efforts in their disclosures, according to a new survey among investors and their investee companies.

Prominent areas of disclosure include Scope 1 and 2 GHG emissions (73%), followed by other environmental metrics ( energy, water, and waste-related goals or targets) (36%), Scope 3 emissions (26%), and net zero or carbon neutral goals (23%), according to the data from Persefoni and the U.S. Society for Corporate Governance.

Ahead of the SEC announcing its climate disclosure proposals, expected next month, the findings show “that US-listed companies are today making significant commitments to understand their climate risk ahead of any climate disclosure regulations requiring them to do so,” explained Mike Wallace, chief decarbonization officer of Persefoni.

“Mandatory disclosure rules around the globe, which are expected to ultimately include SEC climate disclosure requirements in the US, will further shape companies’ governance structures and processes and standards of reporting,” Wallace said.

He argued that “society members, including general counsels and corporate secretaries, are extensively involved in their companies' disclosure and governance processes, and are keenly sensitive to the dynamic regulatory environment and the changing needs and priorities of investors.”

The sustainability/CSR report was the most common platform for voluntary climate data disclosure (96%), followed by the company website (59%), CDP questionnaires (52%), and TCFD reports (42%).

Notably, only 15% reported climate data disclosure in the annual report and 14% in Form 10-K.

About 30% of respondents said that their company does not receive third-party assurance of climate-related metrics and 7% said they were unsure.

The board nominating the governance committee assumed primary oversight responsibility for climate and other environmental issues in 63% of cases, while 26% reported full board oversight.

The survey also found that board or board committee oversight is chiefly documented in committee charters (88%), proxy disclosures (61%), and ESG/sustainability reports (59%).

Moreover, climate-related topics were distributed across different frequencies on the meeting agenda for the full board or board committee/s.

Meanwhile, environmental-related topics, excluding climate, trended towards ad hoc or on an as-needed basis.

Finally, approximately 49% of respondents identified their company’s standalone sustainability department as having primary responsibility for climate and environmental matters; however, responses varied widely by company size.

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