The Financial Reporting Council (FRC) recently published a thematic review of Climate-related Financial Disclosures (CFD) by AIM and large private companies, following the first cycle of mandatory reporting. 

As companies across the UK adapt to mandatory Climate-related Financial Disclosures, it’s clear that identifying and addressing climate risks and opportunities remains a significant challenge for many. The Financial Reporting Council’s recent review underscores not only the inconsistency in disclosures but also the underlying factors that contribute to this variability.

A key issue is the sectoral differences that influence how organisations perceive and report climate-related risks. Industries such as energy and transportation have long been at the forefront of climate accountability, while others—perceived as less exposed—may still be building their frameworks to assess these risks effectively. This uneven maturity across sectors leads to reporting gaps and makes it difficult to compare disclosures or establish benchmarks.

Adding to the complexity is the absence of a robust double materiality assessment in many organisations. Without a clear understanding of both financial materiality (impact of climate on the business) and environmental/social materiality (impact of the business on climate), companies may struggle to prioritise and disclose the most relevant topics. This could result in disclosures that are often superficial or fail to address the issues most critical to stakeholders.

But meaningful climate reporting isn’t just about compliance—it’s about embedding sustainability into corporate strategy. Helping organisations navigate the complexities of identifying material risks and opportunities is at the core of our ESG services. By fostering a deeper understanding of materiality and bridging the gaps across sectors, we can support businesses to make informed decisions.