Creation of a System for Climate-Related Risks Disclosures in Companies’ Reporting

Abstract

The article explores the way of disclosing issues related to climate change in companies’ reports as well as these issues’ impact on the business functioning and business response to them. The conducted study has analyzed the financial and corporate reports (integrated, environmental, on sustainable development) drawn up by the leading Russian oil and gas companies, that consider climate change influence or environmental impacts as the most significant ones. Based on linguistic, statistical and qualitative analyses, it was possible to obtain the following conclusions. Firstly, there is no comprehensive approach to revealing information on the climatic aspects of business activities in various types of company’s reports with the corresponding cross-references. Secondly, there is almost no confirmation of disclosures in non-financial reports supported with financial reporting data. Thirdly, there is hardly traced mutual influence, both direct and reverse, between a climate and a business entity in all types of reporting. Thus, the unifying factor for both non-financial and financial reporting is, first and foremost, the risk zones under climate change for the company on the one hand, and the companies for the environment on the other hand. Nowadays, one of the tools to turn risk zones into indicators of success, including progress of a company, lack of harm to the climate, can and should be systematized climate disclosures in reports. The article makes recommendations on improving the logical alignment and quality of disclosures on the climate-related risks impact on the company’s strategy and its most important financial indicators. The implementation of the proposals suggested will allow increasing the validity of investment decisions and make the financial market more transparent.