A new study titled, Flying blind: The glaring absence of climate risks in financial reporting, from Carbon Tracker and the Climate Accounting Project (CAP) showed that 107 global businesses that work in high-emissions fields like oil and gas firms, construction, car manufacturers, and aviation businesses, have not been transparent about their sustainability. Researchers wrote that there was a "glaring absence of climate risks in financial reporting" and that more than 70% of the companies analyzed did not include their climate impact in their financial statements.

Why this Matters

"The fact that we don't have transparency means we have no idea if capital is being allocated to sustainable activities so we can actually transition to a greener future," Barbara Davidson, an analyst at Carbon Tracker and lead author of the report, told the BBC.

The world needs to decrease emissions enough to meet the Paris Agreement and prevent further climate disaster -- and it's difficult to do so if no one knows how much companies emit or how much money they allocate to unsustainable projects or businesses.

"There's a level of disclosure that needs to be provided, so we know how they are going to achieve these targets," Davidson continued, "It's very important for companies to set these goals, but without understanding the risks, it's hard to know if they're greenwashing -- so investors need to take the statements with a pinch of salt."

Dire Consequences

In many cases, the report found inconsistencies across reporting, with firms purporting to implement emission targets and climate strategies but not explaining how these targets would affect their financial statements. Moreover, 8 out of 10 audits of these firms also showed no evidence of assessing climate risk.

This lack of data not only hurts the planet, but also creates problems for investors. Tracey Cameron, Senior Manager from Corporate Climate Engagement at Ceres, told the BBC: "Investors grappling with quantifying portfolio risks aren't given the data needed to make informed decisions. In many cases, that data exists, but it lives behind a locked door, and only companies and auditors have the key."

That companies are withholding this information isn't a surprise as they are neither required nor punished for refusing to account for climate risk. But investors could make a difference if they threaten to divest or otherwise deter concealing climate risk data.