2° Investing Initiative is pleased to launch “Limited Visibility: The Current State of Corporate Disclosure on Long-term Risks.” The paper analyzes how far in the future listed companies disclose their plans and financial forecasts, and how they discuss ‘long term risks’ that are only weak signals today but might disrupt their business model in 5, 10 or 20 years. Based on corporate financial disclosures of the 1,600 largest companies (MSCI World), including annual reports, regulatory filings, guidance to analysts, and other publications, the study is the most comprehensive review of the topic published to date.
The key takeaways are presented below. They suggest that the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures) regarding 2° scenario analysis will face significant obstacles, given the lack of equivalent disclosure on core financial risks and metrics across all sectors.
To address this issue, the report includes a number of recommendations based on voluntary best practices and innovative policies. These conclusions are currently being discussed in the context of the European Commission High Level Expert Group on Sustainable Finance that will produce its final recommendations at the end of the year.
Please click here to download the report. The other papers of this series are available below:
Changing Colors: Adaptive Capacity of Companies in the Context of a Transition to a Low Carbon Economy
2° Investing Initiative and the CO-firm with input from Allianz Climate Solutions and Allianz Global Investors
July 2017
The Long and Winding Road: How Long-only Equity Managers Turn Over Their Portfolios Every 1.7 Years
2° Investing Initiative, Mercer, and the Generation Foundation
February 2017
All Swans are Black the Dark: How the Short-term Focus of Financial Analysis Does Not Shed Light on Long-term Risks
2° Investing Initiative and the Generation Foundation
February 2017
The Long-term Risk Signal Valley of Death: Exploring the Tragedy of the Horizon
2° Investing Initiative and the Generation Foundation
November 2015
This report has been produced thanks to the support of the European Investment Bank and the Life Program of the European Commission.
We look forward to your feedback.
All the best,
2° Investing Initiative Team