EY Report Highlights Need for Urgent Action on Climate Change Despite Improved Disclosures

A new report from EY reveals a troubling disconnect between corporate climate action and the urgent need to combat climate change. The 2024 EY Global Climate Action Barometer found that while the quality and coverage of climate-related disclosures have improved, the pace of corporate action is still not sufficient to avoid the looming climate crisis. As global temperatures soar, companies worldwide continue to fall short of the necessary targets outlined in the 2015 Paris Agreement.

The findings underscore a significant gap between corporate awareness and effective action on climate change. While 94% of companies now disclose some form of climate-related information, only 54% of those disclosures meet the minimum quality standards. Even more concerning, just 41% of large companies have published detailed transition plans for climate change mitigation, leaving the majority without clear strategies to reduce their carbon footprints.

Despite widespread awareness of the risks climate change poses, only 19% of companies have taken steps to mitigate physical climate risks, which include threats from extreme weather events or changing weather patterns. This lack of preparedness is starkly at odds with the increasing frequency of climate-related events globally, with business leaders and governments alike calling for urgent action.

Long-Term Emission Reduction Targets in Short Supply

As of 2024, only 51% of companies have set greenhouse gas (GHG) emission reduction targets extending beyond 2030, highlighting a lack of long-term commitment to the necessary decarbonization efforts. This short-term focus undermines the ambition to reach net-zero emissions and keeps companies well behind the pace needed to meet climate goals.

The Barometer also revealed a worrying gap between climate risk awareness and financial accountability. While 67% of companies have conducted climate-related scenario analysis, only 36% have referenced the potential financial impacts of climate change in their financial statements. This suggests that many businesses are either underestimating or avoiding the financial implications of climate risk, despite knowing the risks they face.

The 2024 Barometer paints a concerning picture: as climate-related disclosures improve, the quality of those disclosures has not kept pace with the quantity. Companies now disclose on average 94% of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations—an improvement from just 61% in 2018—but the quality of those disclosures has risen only modestly from 31% to 54% over the same period.

Several reasons contribute to the failure to provide detailed disclosures. Companies may be hesitant to share sensitive information, fearing it could expose them to accusations of greenwashing or trigger legal repercussions if they do not meet their climate goals. In some cases, companies may simply lack substantive action to report on, undermining their ability to provide meaningful climate disclosures.

What Needs to Change?

The Barometer’s findings send a clear message: businesses must take more meaningful and decisive action to accelerate the transition to net-zero emissions and mitigate the growing physical risks of climate change. While disclosure improvements are encouraging, they are not enough. Companies must adopt long-term plans, set clear emissions targets, and take concrete steps to reduce their environmental impact if they are to meet the challenges ahead.

“Despite improvements in disclosure, the lack of urgency and long-term planning in tackling climate change is deeply concerning,” said the EY team behind the Barometer. “Only through comprehensive, actionable plans can businesses begin to address the existential threat posed by climate change and drive the energy transition that is crucial for a sustainable future.”

With global temperatures continuing to break records, the pressure is mounting for businesses to not only report on their climate impacts but to act swiftly and with greater ambition. The 2024 Barometer, which analyzed disclosures from 1,400 companies across 51 countries and 13 sectors, serves as a wake-up call for businesses worldwide to accelerate their climate strategies. Only by making climate action a central part of their operations can companies hope to lead the way in the transition to a sustainable, net-zero future.

As climate risks grow ever more tangible, businesses cannot afford to wait any longer. The time for detailed disclosures and decisive action is now—before the consequences of inaction become irreversible.

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