The Financial Reporting Council (FRC) has published a thematic review entitled “CRR Thematic review of climate-related metrics and targets” which assesses the quality and maturity of climate-related metrics and targets disclosures across 20 companies annual reports for 2022. The review focusses on 4 sectors- materials and buildings, energy, banks and asset managers.
The report is intended to assist preparers in the preparation of climate-related disclosures and highlights instances of good practice identified as well as opportunities for improvement and omissions identified.
Throughout the report the FRC consider the following overarching questions;
- Has companies’ climate-related metrics and targets reporting improved since last year?
- Are companies adequately disclosing their plans for transition to a lower carbon economy, including interim milestones and progress?
- Are companies using consistent and comparable metrics?
- Are companies explaining how their targets have affected the financial statements?
Overall, the report shows an improvement in the quality of companies’ disclosures of net-zero commitments and interim emissions targets, however it also noted that disclosures of actions and milestones required to meet these targets were sometimes unclear.