FTSE 100: Climate Disclosure Standards

This article is part of our ongoing series that leverages advanced LLM frameworks to assess the FTSE 100’s progress in ESG disclosures, focusing on climate and nature standards. In this article we dive into the current alignment with climate disclosure frameworks, the evolving regulatory landscape in the UK, and how this impacts stewardship teams.

Environmental Disclosure in the UK

The regulatory landscape for climate disclosure in the UK has evolved significantly in recent years.

This timeline reflects the progression in disclosure standards, as we move from more a largely disaggregated system with separate frameworks such as SECR, TCFD, TPT and CSRD to instead move towards a unified approach with the ISSB (International Sustainability Standards Board) informing future standards.

Starting with SECR and advancing to mandatory TCFD disclosures, the UK has been at the forefront of climate reporting. The TPT (Transition Plan Taskforce) further encourages robust transition planning, while the ISSB and CSRD promises more harmonised international reporting. Now the UK’s Sustainability Disclosure Technical Advisory Committee is also developing a framework to ensure alignment within the UK to these global standards, with rollout expected in the coming years.

Simultaneously, expectations around nature-related disclosures are increasing, driven by the TNFD (Taskforce on Nature-related Financial Disclosures), which calls for “nature transition plans” to address biodiversity impacts. This broadening focus on nature aligns with the Kunming-Montreal Global Biodiversity Framework’s goal to reverse biodiversity loss by 2030.

FTSE 100 Climate Disclosure Alignment

When it comes to the more mature standards the FTSE 100 has made significant strides in climate-related disclosures. The most ingrained frameworks like TCFD and the GHG Protocol show high levels of adoption within the FTSE 100 in 2024, underscoring the prioritization of greenhouse gas emissions and climate risk in corporate reporting. These disclosures offer critical insights for investors assessing climate strategies and the robustness of companies’ response to climate risks.

The SBTi (Science Based Targets initiative) uptake, though lower, highlights the importance of setting science-based targets. This standard is crucial as it indicates a company’s commitment to aligning with global climate goals in line with the Paris-Agreement commitment to keep temperature below 1.5 degrees. However, not all FTSE 100 companies have embraced SBTi targets, likely due to the challenges in meeting stringent requirements and the level of scrutiny involved.

Incoming international standards such as ISSB and the EU's CSRD are having an increased impact on UK climate reporting. Our analysis of the FTSE 100 showed CSRD was mentioned by 34 of the FTSE 100 in their 2024 annual reports. While TPT (Transition Plan Taskforce) was also mentioned by 17, as more and more companies develop full transition plans to indicate to investors how they plan to meet their climate goals.

The ISSB was established to create a global baseline for sustainability reporting, consolidating various frameworks to provide consistent, comparable disclosures across jurisdictions. By harmonising standards from the TCFD and others, the ISSB aims to reduce reporting complexity and foster uniformity in how companies disclose climate and sustainability data.

While CSRD directly applies to EU-based companies, it also affects non-EU companies, including those in the UK, if they meet certain criteria. Specifically, UK companies must comply with CSRD if they:

• Generate more than €150 million in EU revenue,

• Have a substantial presence in the EU, or

• Have EU subsidiaries that meet specific size thresholds.

The combined impact of ISSB and CSRD reinforces climate and sustainability reporting as central to corporate accountability, with UK and EU frameworks increasingly converging on rigorous, standardised disclosures.

FTSE 100 Nature Disclosure Alignment

While climate disclosures that focus on risk and Greenhouse Gas reporting are relatively mature, nature disclosures remain in their infancy.

Our analysis of the FTSE 100's reporting in 2024 highlighted that frameworks like TNFD (Taskforce on Nature-related Financial Disclosures), SBTN (Science-Based Targets for Nature) were the two nature based frameworks that are building traction. 22 companies in the FTSE 100 are already reporting on TNFD related disclosures, while 13 have also referred to the SBTN.

The TNFD has been a leading force in shaping nature-related disclosures, calling for “nature transition plans” to help companies outline their impacts, dependencies, risks, and opportunities related to biodiversity. At the COP 16 Biodiversity Conference in October 2024, TNFD have announced 500 companies have signed up to their framework, showing a willingness from the private sector to take nature issues seriously. As regulation tightens around nature impact, this number will have to increase, though the question remains on how effective these disclosures will be for taking action.

What This Means for Stewardship

The insights from our FTSE 100 analysis highlight critical opportunities for asset managers to drive corporate accountability. As ESG disclosure expectations grow, investors can play an active role in guiding companies towards more transparent and consistent reporting. For companies with inconsistent or incomplete disclosures, stewardship teams can focus on pushing for alignment with emerging standards, particularly in areas like nature-related risk management, where frameworks like TNFD are gaining traction.

Roots tools, including resolution intelligence and company benchmarking analyses, empower institutional investors to engage more meaningfully on specific ESG issues. Root's LLM frameworks can allow stewardship teams to not only identify gaps in company disclosures but enhance their research so they can more effectively engage companies on issues important to their voting policy. This proactive approach strengthens accountability and provides a clear pathway for influencing corporate ESG strategies.

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Looking ahead, we will be providing access to customers of this type of information on 1,000s of global companies, and piloting access to this data to customers, so get in touch to find out more. Beyond this we have created a bunch of new intelligence frameworks to support stewardship teams such disclosures by companies along TPI, Nature100+ and other best practice ESG benchmarks.

Stay tuned as we uncover the stories behind the data and highlight where companies are excelling—and where they need to do more!

Disclaimer: This content is generated using Generative AI and Large Language Models (LLMs), which may introduce inaccuracies. Our FTSE 100 series analysis focuses solely on the annual reports of these companies. It is important to note that some companies may publish additional information on their ESG disclosures and strategies in other reports not covered in this analysis. Therefore, this analysis should not be considered a comprehensive or definitive source of information.