Scientific paper ID 2299 : 2022/3

Combating climate change is among the highest priorities of the European Parliament and a component of the European Union institutions’ strategy and long-term policy. The primary goal of the United Nations Paris Agreement was to keep global temperature below the probable increase of two degrees, preferably 1.5 degrees Celsius, compared to pre-industrial times. The goal itself suggests that many states, governments, governmental institutions, present and potential investors, creditors, lenders, and other stakeholders across the world will increasingly be expected to play a key role in transitioning to a low-carbon economy and sustainable growth in the future. It is an undeniable fact that nowadays low-carbon technologies are becoming more competitive.

Both of the factors aforementioned undoubtedly influence investment decisions and encourage investors to diversify portfolios of assets and integrate risk arising out of climate change into the decision-making process. Investors companies to provide credible information about climate-change impact through corporate reports, reports on sustainability, or otherwise in a considered and consistent manner. The publication of the Recommendations (TCFD’s 2017 Final Report) developed by the Task Force on Climate-related Financial Disclosures was of global significance and intended to support climate-related reporting and disclosure of information and contribute to improving it worldwide.

According to reliable data for 2018 and 2019 of Ernst & Young (EY) and experts’ analysis, the range of assessed companies with operating activities in the transport sector achieves the second-highest score of 36% for the quality of disclosures on climate-related issues, with companies on average covering 65% of the recommendations of the Task Force on Climate-related Financial Disclosures. The analysis of the 2019 EY Global Climate Risk Disclosure Barometer revealed that as a whole the transport sector was one of the best-performing ones in terms of fulfilling the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Each of the companies in the transport sector that were reviewed received a score for the coverage and quality metrics based on how they addressed or implemented all of the eleven recommendations by the TCFD. Recently three significant proposals for climate-related disclosures have emerged and all of them are based on the TCFD’s recommendations making the proposals comparable and more similar than different. In June 2021, the EY Global Climate Risk Disclosure Barometer revealed that the highest- and lowest-performing markets have not significantly changed in comparison with previous years. On average, higher coverage scores for companies continue to be associated with the maturity of the markets where governments, shareholders, investors, and local market regulators are active and strong regulations have been introduced.

Leading international experts in sustainability and climate change argue that most companies in the transport sector disclosed the information for the relevant reporting periods at a certain level covered by the TCFD recommendations, and that way helped the transport sector to achieve a relatively satisfactory score. Thirty-eight percent of the assessed companies covered all of the TCFD recommendations, and sixty-three percent of the assessed companies achieved a higher score for quality than the overall average score the transport sector achieved.

The present article and the summaries are partially based on the author’s investigations of data and information contained in the 2019 EY Global Climate Risk Disclosure Barometer and a thorough analysis grounded on those data and information carried out by Mathew Nelson. The analysis provides a snapshot of the transport sector’s acceptance level of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), presenting trends and assessments (emerging for the 2018 and 2019 reporting periods) of how companies from different countries and continents carrying out operating activities in the transport sector integrate risks into corporate disclosures regarding corporate governance, strategy, risk management, and targets and metrics – the four pillars in the TCFD’s recommendations.

The article aims to justify the global necessity of transparent and meaningful disclosures of material information on climate-related issues and improving disclosure policies on a global scale – for the benefit of humankind and all living beings. The thesis (hypothesis) held by the author is that a need and potential exist for improvement of corporate policies and practices of disclosure on a global scale.