A European bank has found that the oil and gas sector is the least “on track” in disclosing its nature-based risk in an analysis that considered three of the most exposed industries to nature loss and climate.
The report, published at the end of January by Paris-headquartered Societe Generale, assessed disclosures made by 18 companies across the food and beverage, mining, and oil and gas sectors, analysing their dependency on and use of natural resources.
The findings showed that across the four categories considered – environmental, social, governance, and additional disclosures – oil and gas was “on track” across just 17% of the metrics, compared to 54% in mining, and 33% in food and beverage.
“In our view, the level of company disclosures is quite varied by sector and does justice to only a few areas of the biodiversity field. With no strong global disclosure framework currently in place, it makes little sense at present to make any investment decision analysing the companies’ disclosures,” Societe Generale stated in the report.
There had been a push for including mandatory corporate disclosure rules at the UN’s bi-annual biodiversity summit in December but this did not make the final text in Montreal.
Organisations such as the Science Based Targets Network (SBTN) are already moving to aid firms to align their commitments and actions with the necessary speed and scale to halt and reverse global nature loss.
A recent report found, however, that over 40% of the most-at-risk businesses and investors have no plans to address deforestation.
In the analysis, the French bank found that the greatest level of disclosure was in the governance category, with 67% of companies being considered “on track” and 33% “needing improvement”.
“This reflects the fact that governance has been a dominant aspect of ESG over the years,” the report stated.
However, it’s the other way around for social disclosures, where only 28% of companies are “on track” and 72% “needing improvement”.
The progress on environmental disclosures was also mixed, with half of companies considered “on track”, 44% “needing improvement”, and 6% classified as “weak”, while most companies also perform poorly on additional disclosures.
“This highlights the lack of progress made on social disclosures in comparison to environmental and governance disclosures, with social impacts being difficult to measure and quantify,” the authors wrote, adding that overall, there was not a system in place to enable results for nature.
Many from the finance community have seen the framework agreed in Montreal as a positive “call-to-action” for the private sector to direct capital towards protection of nature, with the Societe Generale report also offering an optimistic view.
“We believe companies will increasingly seek to reduce their nature-related risks, in order to abide by the international regulations, and accordingly make investments in low-carbon, resource-efficient, environmentally safe solutions,” the bank stated.
By Roy Manuell – roy@carbon-pulse.com
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