In the era of ESG investing and conscious consumerism, companies are pouring more resources into communicating their environmental targets and actions as part of their ‘climate story.’ Your company’s climate communications provide essential transparency and accountability into its climate-related risks and opportunities. But not all climate stories are effective, and publishing endless amounts of data in the name of transparency rarely makes for a compelling message.
This article explores the key attributes of what makes an effective climate story and explains how to deliver a meaningful message on climate action.
Why your climate story matters
The public nature of ESG concerns means any climate action taken internally should be made public at some point. As the world transitions to low-carbon and more sustainable economies, investors, consumers, and other stakeholders — such as partners and communities — are putting pressure on companies to provide better disclosures and improve their climate-related risk and opportunity management. Without a clear picture of a company’s climate risk management, investors can’t accurately price a company’s climate risk, which may lead to significant financial losses. Additionally, many investors have taken a values-based approach to fund management through the establishment of ESG funds. Without accurate data on climate, investors can’t make data-driven decisions on ESG-related assets.
Good climate management is good for business, but companies that fail to convey their climate action may miss out on crucial investment or on the marketing benefits of becoming an industry climate leader. Greenwashing incidents may make headlines, but “green-hushing” — when companies fail to disclose their climate strategies — means investors don’t get a clear picture of a company’s climate competence. Additionally, it means issuers miss out on the financial and reputational benefits of climate leadership. Communicating your climate story in a comprehensive, decision-useful manner can help to address various climate-related risks, including lack of investor confidence and subsequent market devaluation.
What makes an effective climate story
Clear and detailed climate disclosures
Clear and detailed disclosures are essential for understanding how a company is performing with regards to its climate risk management. Certain frameworks, particularly the Task Force on Climate-related Financial Disclosures (TCFD), offer consistent and standardized reporting templates, as well as support the robust disclosure of climate-related information. The TCFD is widely considered the gold standard for climate reporting. Its 11 detailed disclosure recommendations offer comprehensive insights into how a company is identifying, evaluating, and managing its material climate-related risks and opportunities.
This is why the TCFD is highly regarded and typically required or recommended by institutional investors. Additionally, regulators are increasingly releasing reporting rules that align with the TCFD. Many upcoming and current climate reporting requirements, such as the US Securities and Exchange Commission’s climate disclosure rule and the European Union’s Corporate Sustainability Reporting Directive (CSRD), cleave closely to the TCFD. That’s why we highly recommend companies begin their disclosure journeys with this foundational framework.
To effectively communicate your company’s climate journey, your organization’s disclosures should be based on the recommendations of the TCFD, which support clear and detailed climate reporting. The TCFD is foundational for robust climate disclosure since it supports companies in preparing for other disclosure requirements and standards.
A focus on climate management
Many companies focus their climate disclosures on metrics — such as emissions and energy usage numbers — and targets — net zero by 2050, for example. But without effective climate management — including proper governance, detailed strategy, and comprehensive risk management — a company’s metrics and targets mean very little to stakeholders. Any brand can disclose data on greenhouse gas emissions or water consumption, but what inspires confidence in investors is knowing how your company is managing and taking action on critical climate risk factors that impact financial viability.
Solely communicating your company’s targets as the basis of your climate story is effectively meaningless without a supporting strategy or plan. Stakeholders are becoming aware of the growing corporate ‘say-do’ gap on climate — where companies’ climate actions fail to live up to their public announcements — and are likely to be skeptical of ‘target talk.’ In the UK, for example, only 5% of FTSE 100 companies have credible net-zero plans, despite over 80% having net-zero targets. Meanwhile, in 2021, just 46% of companies with science-based targets reported full progress toward all targets. Clearly, issuers are better at announcing climate targets than they are at achieving them — and this is a concern for investors and consumers.
Alongside credible data, focus your disclosures on management and action so investors and consumers are reassured that you are taking action to identify, mitigate, and respond to climate-related risks. In the world of climate, talk is cheap, but the cost of inaction is significant.
How the right technology can help you tell your climate story
Manifest Climate is the leading Climate Risk Planning software that helps organizations tell their climate stories.
We are the best in the world at assessing climate disclosures, and our platform represents a single source of truth to guide your organization for the long term. Our software helps you align your reporting with the TCFD and other global frameworks and standards. Up-to-date, TCFD-aligned disclosures offer organizations a competitive edge, potentially attracting new investors and consumers.
Disclosure reviews
Manifest Climate offers nearly real-time disclosure reviews to ensure your public reporting stacks up against global regulatory requirements. Your company will be assessed on how well it manages climate-related risks and opportunities. You’ll also uncover gaps and opportunities in both your disclosures and climate management, with customized next-step recommendations that are based on your organization’s unique attributes.
Benchmarking
Manifest makes it faster and easier to conduct benchmarking and track peers’ and cross-sectoral leaders’ climate-related actions and disclosures. You’ll get a highly relevant, consolidated view of your peers’ climate disclosures and activities, allowing you to double down on material risk factors, share valuable insights with internal stakeholders, and craft strategic communications.
Building climate competence
Manifest Climate helps keep ESG and sustainability teams up to date with relevant climate news and changing regulations. Our Trends feature curates custom climate news directly to your inbox, meaning your team can spend less time keeping track of the latest updates and more time taking action. It’s also important to build a base of climate competence within your organization. Manifest Climate makes this possible — and scalable — with a range of climate-related tools and resources. With climate competence embedded across an organization, it’s possible to craft a holistic, meaningful, and unique climate story.
Ready to learn more? Book a free demo today.
