Taking Stock of the FTSE 100 key trends in sustainability
We recently published our 2018 Sustainability Reporting Performance reports. The reports are based on annual research into the public disclosures of the FTSE 100. The purpose is to highlight trends and recognise leadership in environmental performance and disclosure across some of the world’s largest and most carbon intensive companies.
Here we take a dive into some of this year’s trends and take stock of sustainability in 2018.
Governance on climate change is improving.
Our 2018 results mark a step-change in the response of FTSE 100 corporations to global climate change. Scores have increased by between 10-15% compared to 2017. Most notable is an improvement to strategy and governance across the index. This includes the growing use of climate scenario analysis, science-based targets (SBTs) and recognised reporting frameworks.
Companies are tackling Scope 3
This year more companies are disclosing their Scope 3 emissions and more companies are incorporating these emissions into their own targets. It might be no surprise given the demand for public accountability, but the Fast-Moving Consumer Goods (FMCG) industry scores particularly highly in relation to supplier engagement. Big business is waking up to the risks and opportunities present in their supply chains.
Renewable energy use has jumped 10% this year with more companies committing to 100% renewables. The report explores some of the reasons for this steady performance increase but ultimately it demonstrates the increasing competitiveness of the renewables market and a strengthening green economy, which for the first time is now a competitive economic offering.
The financial sector is stepping up
Previously hiding in the shadows in our sustainability reporting performance research, this year the banking sector has awoken and risen to the top to be one of the best performing industries. In the last two years there has been a great deal of attention given to climate-related financial risk, from the recommendations of the Task Force for climate-related Financial Disclosures (TCFD) and the European High-Level Expert Group on Sustainable Finance (HLEG) calling for sustainability to be hard-wired into the EU’s regulatory and financial policy framework. The world of finance is bracing itself for climate change.
There is still an urgent need for improvement
Despite this step change in sustainability reporting and climate-related financial risk, the report shines a spotlight on the need for more concerted action. The average score across the indices is 50%, demonstrating that among the high achievers, there are still plenty of companies lagging behind.
Moreover, more than 50% of FTSE businesses are still not providing evidence of risk assessment to their shareholders. This comes at a time when investors are increasingly demanding that companies assess the impacts of a hotter world and more extreme weather events. The report also shows that the index as a whole is lagging behind other international indices in relation to climate risk assessment, scenario analysis and risk mitigation. With COP 24 on the horizon, it is time for all of big business to jump into action.
To find out the detailed results and the drivers behind this year’s trends, download the full report today.