New research reveals a record number of companies are identifying climate change as a risk in corporate disclosures, as global regulators push for enhanced ESG accountability

In 2023, 76.2% of the 3000 largest U.S. companies mentioned climate change as a risk in their annual financial reports, up from 68.2% a year prior. This is according to the new Diligent Market Intelligence: ESG Engagements in 2024 report from Diligent.

Featuring insights from Glass Lewis and Clarity AI, the report examines how companies can best prepare for new climate-related reporting standards, as well as the rise of workers’ rights activism and nature-related engagements.

“Regulatory developments are revolutionizing how companies globally are held accountable for their ESG policies and practices,” said Josh Black, Editor-in-Chief of Diligent Market Intelligence. “Given the increasing focus on director accountability for ESG, it’s important for leaders to be proactive in addressing ESG-related risks and opportunities.”

Three themes emerge from the report’s key findings that both boards and investors should have on their radar, including:

Companies are preparing for a new climate reporting regime:

• 2024 marks a new frontier for climate reporting, with the finalization of the Securities and Exchange Commission’s (SEC) Climate Rule, as well as emerging regulations from California and the EU.
• An increasing number of U.S companies are identifying climate change as a risk in their corporate disclosures. In 2023, 76.2% of the 3000 largest U.S. companies mentioned climate change as a risk in their 10-K reporting, up from 68.2% a year prior.
• Of the 500 largest U.S. companies, 98.6% voluntarily disclosed Scope 3 emissions in 2022 and/or 2023, while 65.7% of the 3000 largest U.S. companies also provided this disclosure.

Nature-related reporting climbs up the agenda:

• Investors place a high priority on disclosures, as they did with climate before regulators took up the burden. The 10 nature 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 (TNFD) and the Science-based Targets Network (SBTN) are set to standardize and bring clarity to nature-related disclosures, while the International Sustainability Standards Board (ISSB) has announced its intention to potentially develop related reporting standards.

Labor unions drive engagements on workers’ rights and human capital:

• In Q1 2024, 181 campaigns were launched at U.S.-based companies inclusive of social demands, more than double the 71 environmental campaigns launched in the same period and on track to exceed the 234 social campaigns launched throughout 2023.
• Labor unions are driving social initiatives, pushing companies to enhance workers' rights and freedoms. In Q1 2024, seven social campaigns have been launched globally involving labor unions, the same number as in the entirety of 2023.

To download the full report click here.

Register HERE to attend Diligent’s webinar, Charting the Future of Sustainability Reporting in 2024 and Beyond, examining key takeaways from the report.

About the report

ESG Engagements in 2024 draws on Diligent Market Intelligence’s world-leading datasets. Year-to-date data from Diligent Market Intelligence’s Activism, Voting and ESG modules run from January 1, 2024, to March 31, 2024. Further data is available on request, although bespoke analysis may take 48 hours. For more information, please email dmi.press@diligent.com

About Diligent Market Intelligence

Diligent Market Intelligence (DMI) is a market-leading provider of shareholder activism, investor voting, and corporate governance data. Through its web application and data feeds, clients can access the most complete solution for listed company intelligence on the market, with broader and deeper insights than ever before.

About Diligent

Diligent is the leading GRC SaaS company, empowering more than 1 million users and 700,000 board members and leaders to make better decisions, faster. The Diligent One Platform helps organizations connect their entire GRC practice — including governance, risk, compliance, audit and ESG — to bring clarity to complex risk, stay ahead of regulatory changes and deliver impactful insights, in one consolidated view. Learn more at diligent.com.

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