Companies operating in the United States are finding climate change is becoming a larger business concern as they face more scrutiny and regulation tied into issues ranging from value chain emissions to worker’s rights.
In 2023, while many businesses took stock of sustainability considerations effecting their operations, 76.2% of the 3,000 biggest companies in the United States mentioned climate change as a risk factor in their annual financial reports, up from 68.2% a year prior, according to the new Diligent Market Intelligence: ESG Engagements in 2024 report.
Diligent, which produces insight software that helps companies with governance, risk, compliance, audit and ESG issues, identified three themes emerging from the report’s key findings:
- Companies Are Preparing for a New Climate Reporting Regime. The year 2024 marks a new frontier for climate reporting, with the finalization of the U.S. Securities and Exchange Commission’s Climate Rule, as well as emerging regulations from California and the European Union. More U.S. companies identify climate change as a risk in their corporate disclosure statements. As noted, in 2023, 76.2% of the 3,000 largest U.S. companies mentioned climate change as a risk factor in their 10-K reporting, up from 68.2% in the year earlier. Of the 500 largest U.S. companies, 98.6% voluntarily disclosed Scope 3 emissions in 2022 and/or 2023, those outside the organization but occurring in their value chain, while 65.7% of the 3,000 largest U.S. companies also provided this disclosure.
- Nature-Related Reporting Climbs Up the Agenda. The 10 nature-related proposals subject to a vote at S&P 500 constituents averaged 24% support in 2023, compared to 65 climate change proposals securing 21% support. New reporting frameworks from the Taskforce on Nature-related Financial Disclosures and the Science-based Targets Network are set to standardize and clarify nature-related disclosures, while the International Sustainability Standards Board has announced its intention to develop related reporting standards.
- Labor Unions Drive Engagements on Workers’ Rights and Human Capital. In the first quarter of 2024, U.S.-based companies rolled out 181 campaigns inclusive of social demands, more than double the 71 environmental campaigns launched in the same period last year and on track to exceed the 234 social campaigns launched in 2023. Labor unions are driving social initiatives, pressing companies to enhance worker rights and freedoms. During the 2024 first quarter, seven social campaigns involving labor unions launched globally, the same number as in the entirety of 2023.
