Investor pressure doubles environmental disclosures

CDP report shows 'power of direct engagement'

Companies were more than twice as likely to report environmental impact data when directly engaged by institutional investors compared with a control group, according to a report by CDP.

The global non-profit reviewed the effects of investor engagement on companies causing the greatest environmental damage.

It found the number of companies asked to report on forests and water security increased substantially in 2022 – 35% and 51%, respectively.

This, it said, showed how financial institutions are becoming more aware of the need to address both the climate and nature crises.

As a result, there were increased disclosure rates in these areas, with companies targeted on forests 3.2 times more likely to respond and 2.2 times for water security. 

This is particularly encouraging in the run up to the UN 2023 Water Conference in March, CDP pointed out.

Disclosure impact

Claire Elsdon, CDP’s global director of capital markets, said: “This campaign shows the power of direct engagement. Financial institutions are more aware of their role in tackling the economic threats posed by the climate and nature crises. 

“By pushing companies in their portfolio to disclose – some of which have huge environmental impacts – they can kickstart a fundamental and positive change in how businesses operate.”

CDP’s 2022 Non-Disclosure Campaign is an initiative which uses the power of investors to encourage global companies to report environmental data.

The results of the campaign show more investors are on board than ever – a record 260 financial institutions with nearly $30trn in assets participated. This is a 56% increase over 2021.

These institutions – including HSBC, Cathay Financial Holdings, and Schroders – were taken from 30 countries. They engaged 1,466 global companies to report on climate change, forests, and water security. In total 388 of these companies, or 26%, responded.

Companies targeted in the campaign that did not disclose through CDP in 2022 include Tesla, Exxon Mobil and Berkshire Hathaway.