Starting our work exactly a year ago, we considered what information might be most useful to companies preparing reports and to investors and other stakeholders who use the reports. At the time, in February 2019, it was already known that the European Commission would significantly expand reporting requirements on climate change issues in a few months. This was, after all, what insurers, banks and investors expected of it. We decided that a set of detailed best practices selected from existing company reports would be most helpful to authors and readers of reports on climate issues.
This is the first compilation of examples from reports that takes into account both perspectives: not only of the company, but also of the people who later read the report and make investment decisions based on the information and data found in it. Nearly 150 reports were surveyed, carefully selected to represent issuers from different industries and sectors, and both large and medium-sized, smaller companies.
We conducted our work simultaneously in two working groups. One, of which I was a member, analyzed how companies addressed the twelve TCFD recommendations. It is these recommendations that form the basis of the European Commission's new guidelines. The other working group dealt with the most complicated element of reporting on climate issues, namely scenario analyses. Even among the largest companies listed on the major stock exchanges, there is not a single one that reports perfectly on all areas of climate issues. Nor is there a correlation whereby the best reporting practices are only evident in the reports of large companies with greater organizational, human and financial resources. On the contrary, sometimes it is the smaller or medium-sized companies that have been able to surprise with an exceptionally consistent approach to describing climate-related risks and opportunities, or a solid presentation of climate strategy management processes. These are two extremely important lessons that indicate that good reporting does not depend on what resources one has, but on how seriously one takes the issues that are strategically most important both to the company's future and to its investors and other stakeholders.
The common characteristics of the best climate disclosures boil down to several points. First, reports rich in numbers stand out. A company that counted its greenhouse gas emissions according to standards, quantified the impact of particular risks, or calculated the expenditures needed in the coming years to meet the coming changes was usually better able to justify that it would be able to not only survive, but thrive in the economic reality that was coming. Secondly, the companies that stood out positively were those that did not treat reporting on climate issues as a compliance exercise that someone told them to do for homework, but approached the task from the side of deep analysis of what is really important in the interplay of business, operations and environment. The conclusions of a robust materiality study helped give coherence to the entire equity story and strongly justified the strategic decisions made and their expected impacts.
Third, rich comments on the presented data and explanations of observed trends lent credibility to the report. This gave the impression that management was actually using the presented performance indicators to make decisions and steer the company's operations. A clear negative contrast, on the other hand, were those reports that companies tried to use to brag about apparent achievements, highlighting insignificant but seemingly spectacular „stocks” and „projects” or in which they directly practiced greenwashing.
Fourth, the solid reports on climate issues were characterized by far-reaching honesty. The company's openness in declaring that some data had not yet been counted, or that some piece of risk analysis was yet to be conducted in the next year allowed the company to build a coherent picture of the state the company is in today and what path it has taken to better prepare for change. I am convinced that The report „How to improve climate-related reporting. A summary of good practices from Europe and beyond” will be useful for the nearly 150 companies listed on the Warsaw Stock Exchange, which this year, in preparing their reports for 2019, will for the first time try to meet investors' information requirements, as described in such detail in the European Commission's new guidelines.
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