RECOMMENDATIONS FOR IMPROVING DISCLOSURE OF CLIMATE-RELATED OPPORTUNITIES
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MARCH 2022 BUSINESS
RECOMMENDATIONS FOR IMPROVING
DISCLOSURE OF CLIMATE-RELATED
OPPORTUNITIES
As companies increasingly measure, assess, manage, and The revised TCFD guidance arrives at a key moment.
report their climate-related risks in response to investor As of this writing, more than 2000 large global
and customer inquiry, they are also being asked to companies have set targets or are planning to set targets
disclose opportunities that arise from a changing climate to achieve net-zero greenhouse gas emissions by 2050 or
and corresponding market and policy shifts. sooner. Financial institutions have begun committing
Opportunities can include increasing one’s market to decarbonize their portfolios, with several institutions
advantage by being prepared to meet and exceed joining the Glasgow Financial Alliance for Net Zero
regulatory changes, acquiring new business ventures (GFANZ), a global coalition of institutions committed
to move into industries with lower greenhouse gas to accelerating economy-wide decarbonization. As such,
emissions, or reducing the greenhouse gas emissions investors are increasingly asking companies to disclose
associated with the manufacture and use of one’s not only their climate risks and opportunities, but also
products. Examples include vehicle manufacturers their transition plans for how they will address climate
developing zero-emissions; power companies investing in change.
renewables, hydrogen, and other low-carbon fuels; and Transition plans may include how companies intend
technology companies developing digital solutions that to reduce their emissions to achieve their net zero
enable customers to increase their energy efficiency and targets, and, crucially, how they will manage their
use clean power. businesses—or transition their business models—to
Companies have been disclosing their opportunities thrive in a low-carbon future. In October 2021, the
related to climate change in their annual sustainability TCFD released its Guidance on Metrics, Targets, and
reports and reporting to CDP, one of the largest Transition Plans, where disclosure of transition risks and
platforms for climate-related disclosures, for over a mitigation plans, and the strategies for why companies
decade. Since recommendations of the Task Force on pursue certain opportunities, can serve as building
Climate-related Financial Disclosures (TCFD) were blocks for robust transition plans.3
first released in 2017, CDP has aligned with the TCFD’s While there is increasing interest in opportunity
framework,1 and specific questions on how companies disclosure and transition planning, guidance and best
were addressing opportunities arising from climate practices are still needed to help companies thoroughly
change are included in the CDP questionnaire.2 In late and effectively assess and communicate the business
2021, the TCFD released revised guidance, Implementing opportunities from climate change—and how they plan
the Recommendations of the Task Force on Climate-related to address climate change—internally and externally
Financial Disclosures, providing more details, including to customers, investors, and, increasingly, regulators. It
potential metrics, on how different sectors could frame is expected that companies will face growing requests
their climate-related opportunities. from multiple stakeholders to demonstrate that their
1RECOMMENDATIONS FOR IMPROVING DISCLOSURE OF CLIMATE-RELATED OPPORTUNITIES
transition plans progress toward a low-carbon future the TCFD framework. C2ES examined how a subset of
to maintain credibility on their net-zero targets. In leading companies from the four sectors in its study—
addition to how companies plan to decarbonize and/or including additional companies outside of the study—
support decarbonization, a better understanding of how reported climate-related opportunities in their 2021
companies can best communicate opportunities arising CDP reports. CDP is often the main climate disclosure
from their climate resilience is also needed. platform for companies and includes a specific question
These recommendations synthesize the TCFD’s 2021 asking companies how they are addressing their climate-
guidance on disclosing climate-related opportunities related opportunities. Of note, the companies selected
for select industrial sectors; compares the most recent are considered to be industry leaders in sustainability,
disclosure guidance to companies’ actual disclosure from where many have net-zero emissions targets, and
2021 CDP reports; and provides recommendations in therefore, do not necessarily represent all large, publicly
alignment with, and in addition to, the TCFD for further traded companies’ climate disclosures.
enhancing disclosure of climate-related opportunities, C2ES then compared the opportunities companies
especially for these sectors. disclosed in their 2021 CDP reports to the TCFD’s
Implementing the Recommendations of the Task Force on
Climate-Related Financial Disclosure, which provides
METHODOLOGY supplemental guidance for disclosing both risks and
In 2021, C2ES undertook research to better understand opportunities.4 “Section E: Supplemental Guidance for Non-
how companies were measuring, assessing, addressing, Financial Groups” provides guidance for non-financial
and then disclosing their climate-related risks and industries (and their related supply and distribution
opportunities. C2ES interviewed companies, many of chains) more likely to be financially impacted than
which belong to C2ES’ Business and Environmental others due to their exposure to certain transition and
Leadership Council, representing energy, transportation, physical risks from greenhouse gas emissions, energy, or
buildings, and heavy industry. These are high water dependencies associated with their operations and
greenhouse gas-emitting sectors reflecting key actors products. These non-financial industries are grouped
in the U.S. economy that will all play a vital role in into energy; transportation; materials and buildings; and
transitioning to a low-carbon future. Companies across agriculture, food, and forest products. The comparison
sectors are in different stages of examining, integrating, below focuses on the first three sectors that aligned with
and reporting their risks and opportunities, mostly using our study.
2 Center for Climate and Energy SolutionsMARCH 2022
SECTOR DISCLOSURE IN COMPANIES’ 2021 CDP TCFD GUIDANCE FOR DISCLOSURE: ELEMENTS
REPORTS CITING THE FOLLOWING CLIMATE- TO CONSIDER AND INCLUDE IN DISCLOSING
RELATED OPPORTUNITIES RISKS AND OPPORTUNITIES
Energy For power and utility companies: Disclosures should focus on qualitative and
• increased demand for electricity, resulting in quantitative assessments and potential impacts
large revenue opportunity of the following for electric utilities, oil, and gas
sectors:
• opportunity to take advantage of regulatory
changes or government incentives (cap and • changes in compliance and operating costs,
trade, clean energy targets, credits) risks, or opportunities (e.g., older, less-efficient
facilities or un-exploitable fossil fuel reserves
• increased energy efficiency in the ground)
• provide low-carbon goods/services (add • exposure to regulatory changes or changing
renewables to mix for low emissions consumer and investor expectations (e.g.,
generation) expansion of renewable energy in the mix of
• invest in R&D (smart grids, addressing energy supply)
methane leakage, energy storage, hydrogen) • changes in investment strategies (e.g.,
• respond to demand from customers for low- opportunities for increased investment
carbon options in renewable energy, carbon-capture
• enhance the resilience of the grid to better technologies, and more efficient water usage).
serve increasing demand for energy Energy Group organizations should consider
• voluntary customer participation in providing additional industry-specific metrics.
environmental programs designed to reduce Examples of potential metrics include percent of
emissions or energy use. water withdrawn in regions with high baseline
water stress and amount of gross global Scope
Participating utilities disclosed additional metrics 1 emissions from (1) combustion, (2) flared
related to their opportunities: hydrocarbons, (3) process. emissions, (4) directly
• reducing regulatory liability through vented releases, and (5) fugitive emissions/leaks.
minimizing gas compressor venting and other
The TCFD also recommends consulting, SASB,
ways to reduce methane leakage from natural
“Climate Risk Technical Bulletin,” April 12, 2021,
gas
WBCSD and WBCSD, “TCFD Electric Utilities
• percent of renewable energy deployed across Preparer Forum,” July 16, 2019 for more sector
customer base specific information.
• detailed installment numbers of EV charging
infrastructure to support vehicle electrification
• partnerships with other companies and
industries to advance vehicle electrification.
Center for Climate and Energy Solutions 3RECOMMENDATIONS FOR IMPROVING DISCLOSURE OF CLIMATE-RELATED OPPORTUNITIES
SECTOR DISCLOSURE IN COMPANIES’ 2021 CDP TCFD GUIDANCE FOR DISCLOSURE: ELEMENTS
REPORTS CITING THE FOLLOWING CLIMATE- TO CONSIDER AND INCLUDE IN DISCLOSING
RELATED OPPORTUNITIES RISKS AND OPPORTUNITIES
Transportation For airlines: Disclosures should focus on qualitative and
• fleet renewal and fuel efficiency quantitative assessments and potential impacts of
the following:
• low-carbon fuels such as sustainable aviation
fuel, battery, or hydrogen-powered options • financial risks around current plant and
equipment, such as potential early write-offs
• explore and invest in offsets. of equipment and R&D investments or early
• For automotive companies: phasing out of current products due to policy
• provide, develop, and expand low-carbon • constraints or shifts or the emergence of new
products & services for customers, such as technology
EVs and autonomous vehicle technology • investments in research and development
• increase building efficiency (for plants and of new technologies and potential shifts in
facilities) demand
• take advantage of international emissions • for various types of transportation carriers
systems and regulations. • opportunities to use new technologies to
Some transportation companies disclosed address lower-emissions standards and
additional metrics related to their opportunities: increased fuel-efficiency requirements,
• percent increase in fuel efficiency over time including transport vehicles (cars, ships,
planes, rail) that run on a range of traditional
• anticipated increases in building efficiency and alternative fuels.
due to investments
Transportation Group organizations should
• amount of investment in low-carbon consider providing additional industry-specific
technologies metrics. Examples of potential metrics include
sales weighted average fleet fuel economy by
region and weight/number of people transported,
Energy Efficiency Design Index (EEDI) for new
ships, life cycle reporting of greenhouse gas
emissions of transportation products (e.g., air,
ship, rail, truck, auto).
4 Center for Climate and Energy SolutionsMARCH 2022
SECTOR DISCLOSURE IN COMPANIES’ 2021 CDP TCFD GUIDANCE FOR DISCLOSURE: ELEMENTS
REPORTS CITING THE FOLLOWING CLIMATE- TO CONSIDER AND INCLUDE IN DISCLOSING
RELATED OPPORTUNITIES RISKS AND OPPORTUNITIES
Materials and • provide, develop, and expand low-carbon Disclosures should focus on qualitative and
Buildings (in products and services for customers quantitative assessments and potential impacts of
its comparison, • improve and innovate products and services the following:
C2ES included through R&D • stricter constraints on emissions and/or pricing
companies carbon emissions and related impact on costs
in the heavy • diversify business activities into low-carbon
industrial sector industries • assess risks related to the increasing
that produce • support expansion of electrification • frequency and severity of acute weather
materials and • increased demand for materials for events or increasing water scarcity that
sectors with a electrification, such as copper and nickel impact their operating environment for the
large portfolio construction material and real estate sectors
in the built • increased demand for new chemical-based
materials that enable greater decarbonization • opportunities for products (or services) that
environment improve efficiency, reduce energy use, and
since the TCFD of other sectors (i.e., automotive).
support closed-loop product solutions.
guidance Some buildings, as well as some industrial,
combines the companies disclosed additional metrics related to Materials and Buildings Group organizations
two) their opportunities: should consider providing additional industry-
specific metrics. Examples of potential metrics
• capital expenditures to improve energy include building energy intensity by area;
efficiency building water intensity (by occupants or square
area); percent of fresh water withdrawn in
regions with high or extremely high baseline
water stress; and area of buildings, plants, or
properties located in designated flood hazard
areas.
INSIGHTS
Both companies’ CDP disclosures and information metrics, which may drive value in a low-carbon
shared from the project’s interviews demonstrate that transition (e.g. building emissions intensity or vehicle
their disclosure of opportunities broadly align with emissions)
the revised TCFD’s sector-specific recommendations, • opportunity to serve as an enabler of a low-carbon
which were released after C2ES conducted interviews transition.
in Summer 2021 and after companies’ 2021 disclosures C2ES also observed that the following types of
were published. disclosure and/or metrics were generally not included
Generally, companies have framed their climate- and could be incorporated into companies’ future
related opportunities within one or more of the disclosures:
following parameters, according to short-term, medium-, • a view of the magnitude of their opportunities,
and long-time horizons: including when they see the opportunities becoming
• clear, new market, or technological opportunities substantial
arising directly from a transition to a low-carbon • a fuller view of how the opportunities integrate
economy, often due to increased customer and within their broader strategic framework
consumer demand
• the relevance of opportunities under different
• opportunity to exceed regulatory requirements climate scenarios, per the TCFD recommendations
• opportunities to outperform competitors on climate
Center for Climate and Energy Solutions 5RECOMMENDATIONS FOR IMPROVING DISCLOSURE OF CLIMATE-RELATED OPPORTUNITIES
• quantitative and/or qualitative metrics to economy. Examples of information that companies could
align with the opportunities referenced in the disclose include: (1) the total percentage of a company’s
TCFD recommendations, to the extent possible exposure to climate risk relative to its potential to benefit
and practicable from climate opportunities (e.g., revenue or asset); and
• opportunities related to building climate resilience.5 (2) the percentage of assets and/or product offerings
dependent on fossil fuels versus those dependent on
zero- or low- carbon fuels and the anticipated change
RECOMMENDATIONS over time, especially by 2030 and 2050 when many
In their disclosures, wherever possible, companies companies have set their net-zero targets. Of note,
should provide context when describing how they improving quantitative disclosures around information
are positioning themselves to benefit from climate- such as revenue, investment, capital deployment will
related opportunities. In doing so, companies who likely require significant resources given much of
are transforming their operations and product or companies’ efforts could arguably be ones that are
service offerings to succeed in a low-carbon economy aligned with climate-related opportunities.
can assist their investors and other key stakeholders
understand how their climate-related investments TO COMPLEMENT CONTEXTUALIZED DISCLOSURE,
compare to other investments across the entire COMPANIES SHOULD ALSO REPORT CONSISTENTLY
company, and how broader market barriers and OVER TIME.
dynamics impact opportunities. Based on how some
leading companies are reporting their climate- Context from TCFD
related opportunities compared to the guidance in The TCFD’s 2021 Implementing the Recommendations
the TCFD’s 2021 Implementing the Recommendations of guidance include cross-industry, climate-related metrics6
the Task Force on Climate-Related Financial Disclosure, where “companies should disclose the proportion of
C2ES recommends the following measures to enhance revenue, assets, or other business activities aligned
disclosure of opportunities. These recommendations with climate-related opportunities. Using an amount or
also align with specific TCFD Recommendations for percentage, companies should disclose the proportion
non-financial industry sectors, as follows below. of revenue, assets, or business activities aligned with
Additionally, C2ES provides a few nuances, building off climate-related opportunities to provide insight into
the TCFD’s recommendations, including that companies the position of organizations relative to their peers and
articulate the policies necessary for their industries to allow users to understand likely transition pathways
accelerate and adopt climate-related opportunities. and potential changes in revenue and profitability over
time. Regarding, capital deployment, companies should
PROVIDE BROADER CONTEXT FOR COMPANIES’ disclose the amount of capital expenditure, financing,
CLIMATE OPPORTUNITIES, INCLUDING or investment deployed toward climate-related risks and
INVESTMENTS IN LOW-CARBON SOLUTIONS opportunities. Using their reported currency, companies
Where possible, companies should provide information should disclose capital investment to give an indication
on their climate-related opportunities contextualized of the extent to which long-term enterprise value might
across their own operations and externally for their be affected.”
sector, as well as in the context of the risks that they face. According to the Implementing the Recommendations
Companies should demonstrate how their opportunities guidance, Appendix F, Fundamental Principles for
not only create new revenue streams, but also how they Effective Disclosure,7 “disclosures should be consistent
meaningfully help the company pivot the business over time to enable users to understand the development
from high climate-related risks to opportunities where and/or evolution of the impact of climate-related issues
companies can benefit from a transition to a low-carbon on the organization’s business.”
6 Center for Climate and Energy SolutionsMARCH 2022
PROVIDE COMPLETENESS AND RELEVANCE sectors and jurisdictions. The level of detail provided
in disclosures should enable comparison and
Where possible, companies should provide a holistic view
benchmarking of risks across sectors and at the
of how they are addressing their climate opportunities.
portfolio level, where appropriate.”
Several of the participants in our study provided details
on how they were positioning themselves to save costs,
building market advantage by reducing emissions in ASSESS OPPORTUNITIES AGAINST A 2 DEGREE C
operations and product lines, and partnering with OR LOWER SCENARIO; WHERE POSSIBLE, SELECT A
stakeholders in new ventures. An integrated mapping, or 1.5 DEGREE C SCENARIO
description, of where companies are embracing multiple As companies conduct their own scenario analysis to
opportunities across their operations and services, identify risks and opportunities alike, the TCFD suggests
outlining the greatest potential benefits, could provide a they should articulate opportunities within the context
more complete picture of the extent to which companies of a 2 degree C or lower scenario to account for a low-
are harnessing climate-related opportunities. Doing carbon future that aligns with the goals of the Paris
so can also enable better benchmarking across peer Agreement. However, the IPCC’s Special Report on
industries and assess the extent to which whole sectors Global Warming of 1.5 degree C suggests that to avoid
are transitioning to a low-carbon future. the worst effects of climate change, warming should
be limited to 1.5 degree C, as opposed to well below 2
Context from TCFD degree C. Though the policy requirements to meet a
low-carbon transition are substantial, using a 1.5 degree
The TCFD’s 2021 Implementing Recommendations
C scenario could help inform a companies’ own net-zero
provide cross sectoral guidance for non-financial
targets and can assist stakeholders in understanding
companies in its Appendix F, Fundamental Principles
the magnitude of company’s opportunities in the most
for Effective Disclosure, which includes the following
aggressive transition scenarios.
recommendations:8
• Disclosures should present relevant information:
Context from TCFD
“The organization should provide information
specific to the potential impact of climate-related The TCFD’s 2021 Implementing the Recommendations
risks and opportunities on its markets, businesses, provides cross sectoral guidance for non-financial
corporate or investment strategy, financial companies seeking to articulate risks and opportunities
statements, and future cash flows” as part of a company’s strategy: “Organizations with
• Disclosures should be specific and complete: “An more than one billion U.S. dollar equivalent (USDE)
organization’s reporting should provide a thorough in annual revenue should consider conducting more
overview of its exposure to potential climate-related robust scenario analysis to assess the resilience of their
impacts; the potential nature and size of such strategies against a range of climate-related scenarios,
impacts; the organization’s governance, strategy, including a 2 degree C or lower scenario and, where relevant
processes for managing climate-related risks, and to the organization, scenarios consistent with increased
performance with respect to managing climate- physical climate-related risks. Organizations should
related risks and opportunities. To be sufficiently consider discussing:
comprehensive, disclosures should contain historical • where they believe their strategies may be affected by
and future-oriented information in order to allow climate-related risks and opportunities
users to evaluate their previous expectations relative • how their strategies might change to address such
to actual performance and assess possible future potential risks and opportunities
financial implications.” • the potential impact of climate-related issues on
• Disclosures should be comparable among financial performance (e.g., revenues, costs) and
organizations, within a sector, or portfolio: financial position (e.g., assets, liabilities)
“Disclosures should allow for meaningful • the climate-related scenarios and associated time
comparisons of strategy, business activities, risks, horizon(s) considered.”
and performance across organizations and within
Center for Climate and Energy Solutions 7RECOMMENDATIONS FOR IMPROVING DISCLOSURE OF CLIMATE-RELATED OPPORTUNITIES
HIGHLIGHT POLICIES NEEDED TO ADVANCE • Critical input parameters, assumptions, and
CLIMATE OPPORTUNITIES FOR A NET-ZERO, LOW- analytical choices for the climate-related scenarios
CARBON FUTURE used, particularly as they relate to key areas
such as policy assumptions, energy deployment
Building on the TCFD’s recommendations for including
pathways, technology pathways, and related timing
parameters, assumptions, and choices in how companies
assumptions.
disclose climate-related risks and opportunities, C2ES
recommends that companies go one step further to • Potential qualitative or quantitative financial
include in their disclosures a brief narrative explaining implications of the climate-related scenarios, if any.”
existing constraints or limitations on the viability of
making greater investments in low-carbon technologies ALIGN DISCLOSURE OF CLIMATE-RELATED
and/or practices. Companies should explain where and OPPORTUNITIES WITH TRANSITION PLANS
why policy measures, including market instruments Disclosure of climate-related opportunities and
and incentives, are needed to help their sector advance information included in transition plans to a low-
toward a net-zero future. In C2ES’ experience engaging carbon future are intertwined and should be aligned
large companies—including those in hard-to-abate and congruent, especially when disclosing in different
sectors where climate technologies and solutions are not contexts and for different audiences.
yet cost effective to be scalable, as well as those in sectors
with readily available solutions that still need substantial Context from TCFD
deployment—many recognize the need for policy
In the TCFD’s 2021 Guidance on Metrics, Targets,
interventions if they are to achieve their own net-zero
and Transition Plans,9 “the Task Force encourages
targets. Helping investors and other key stakeholders
organizations to disclose key information from their
understand companies’ perspectives on where policy can
transition plans as part of their disclosure of climate-
unlock new opportunities could help build support for
related financial information, including the following:
ambitious climate policies across a broader constituency.
current GHG emissions performance; impact on
In discussing the implications of different
businesses, strategy, and financial planning from a low-
assumptions, C2ES also recommends that companies
carbon transition; and actions and activities to support
provide additional context for what policy measures are
transition, including GHG emissions reduction targets
needed for assumptions such as energy deployment,
and planned changes to businesses and strategy.”
technology pathways, and other related market changes
to hold true.
CONCLUSION
Context from TCFD As companies become more experienced with disclosing
In assessing the climate-related risks and opportunities their climate-related risks and opportunities, they will
against their strategies, the TCFD’s 2021 Implementing be better positioned to respond to growing interest from
the Recommendations states that “organizations should investors, regulators, and the public to understand their
consider discussing the implications of different role in a transition to a low-carbon economy. Disclosure
policy assumptions, macroeconomic trends, energy of climate-related opportunities can provide greater
pathways, and technology assumptions used in clarity on how companies address their climate-related
publicly available climate-related scenarios to assess risks and adopt new approaches or ventures that can
the resilience of their strategies. For the climate- improve or benefit from decarbonization and resilience.
related scenarios used, organizations should consider Such information can also to be used to build or reflect
providing information on the following factors forthcoming carbon transition plans, the next frontier of
to allow investors and others to understand how climate disclosure.
conclusions were drawn from scenario analysis:
8 Center for Climate and Energy SolutionsMARCH 2022
ACKNOWLEDGEMENTS
C2ES would like to thank Bloomberg Philanthropies for their support of this work. As a fully independent
organization, C2ES is solely responsible for its positions, programs, and publications. For further information, please
visit https://www.c2es.org/about/annual-reports-funding. Any research involving companies does not represent their
endorsement of the contents of this set of recommendations.
ENDNOTES
1 “How CDP is aligned to the TCFD,” CDP, last accessed February 22, 2022, https://www.cdp.net/en/guidance/
how-cdp-is-aligned-to-the-tcfd
2 In CDP’s 2021 climate change questionnaire, Section C2.4 included several questions on how companies were
identifying, assessing and responding to their climate-related opportunities.
3 Task Force on Climate-related Financial Disclosures, Guidance on Metrics, Targets, and Transition Plans
(TCFD, 2021), Page 43, https://www.fsb.org/wp-content/uploads/P141021-2.pdf
4 Task Force on Climate-related Financial Disclosures, Implementing the Recommendations of the Task Force on
Climate-Related Financial Disclosure (TCFD, 2021), Page 56, https://www.fsb.org/wp-content/uploads/P141021-4.pdf
5 While some companies provided information on how they are building their resilience to climate risks,
more options exist to disclose on how improving resilience to climate change (especially the physical risks) relates to
opportunities.
6 Task Force on Climate-related Financial Disclosures, Implementing the Recommendations of the Task Force on
Climate-Related Financial Disclosure (TCFD, 2021), Page 79, https://www.fsb.org/wp-content/uploads/P141021-4.pdf
7 Task Force on Climate-related Financial Disclosures, Implementing the Recommendations of the Task Force on
Climate-Related Financial Disclosure (TCFD, 2021), Page 70, https://www.fsb.org/wp-content/uploads/P141021-4.pdf
8 Task Force on Climate-related Financial Disclosures, Implementing the Recommendations of the Task Force on
Climate-Related Financial Disclosure (TCFD, 2021), Page 70, https://www.fsb.org/wp-content/uploads/P141021-4.pdf
9 Task Force on Climate-related Financial Disclosures, Guidance on Metrics, Targets, and Transition Plans
(TCFD, 2021), Page 43, https://www.fsb.org/wp-content/uploads/P141021-2.pdf
The Center for Climate and Energy Solutions (C2ES) is an independent,
nonpartisan, nonprofit organization working to forge practical solutions to
climate change. We advance strong policy and action to reduce greenhouse gas
emissions, promote clean energy, and strengthen resilience to climate impacts.
3100 CLARENDON BLVD. SUITE 800 ARLINGTON, VA 22201 703-516-4146 C2ES.ORG
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