Skip to Content

Centre for Environmental Rights

Methodology

Climate Change Disclosure Assessments

The Climate Change Disclosure Assessments are based on the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD Recommendations), which were released in June 2017. The four recommendations are:

  • Governance: Disclose the organisation’s governance around climate-related risks and opportunities.
  • Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning where such information is material.
  • Risk Management: Disclose how the organisation identifies, assesses, and manages climate-related risks.
  • Metrics and Targets: Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

In addition to the TFCD Recommendations and Guidance for All Sectors, the supplemental guidance, particularly for the financial sector, was also considered. Further additional information was also assessed in terms of the extent of liability under the carbon tax and participation in the Department of Environmental Affair’s voluntary carbon budget programme.

A. The Criteria

Governance

1. Who has oversight of climate-related risks and opportunities?

The role that the board and/or management play in overseeing, assessing and managing climate-related risk is important to determine whether adequate attention is being given to the issues.

The TCFD recommends that organisations disclose:

  1. The board’s oversight of climate-related risks and opportunities.
  2. management’s role in assessing and managing climate-related risks and opportunities.

Possible answers:

Board = Disclosure explicitly mentions that the board is responsible for overseeing climate risk. Board responsibility for “sustainability”, “environmental issues”, or “ESG” is not sufficient.

Non-board executive(s) = Climate-related issues are managed by management-level appointees or committees.

Not disclosed = Responsibility is not clearly disclosed.


2. Does the remuneration policy include performance metrics used to measure and manage climate-related risks?

The TCFD recommends that the key metrics used to measure and manage climate-related risks are disclosed and, where climate-related issues are material, whether and how these performance metrics are incorporated into remuneration policies is described.

Remuneration policies should be designed to incentivise long-term corporate behaviours.

Climate-related performance metrics might include energy or emission reduction targets. These targets and metrics are usually provided in the Annual or Integrated Report, but CDP disclosures also provide additional information.

Possible answers:

Yes = Remuneration policy includes climate-related performance metrics.

No = Remuneration policy does not include climate-related performance metrics.

Unclear


Strategy

3. Does the company identify climate change as a material business risk?

 The TCFD recommendations call for the disclosure of “the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is material.”

 Possible answers:

Yes = Climate risks are explicitly mentioned as a material or principal risk in the annual or integrated report.

No = Climate risks are not explicitly mentioned as a material or principal risk in the annual or integrated report.

Unclear


4. Has the company outlined the risks and opportunities from climate change?

The TCFD recommends that an organisation describe the climate-related risks and opportunities that it has identified over the short, medium and long term and the impact that they will have on businesses, strategy and financial planning.

Possible answers:

Mainstream reports = Detailed disclosure, including timeframes and impacts, with timeframes in mainstream annual reporting

Limited = Detailed disclosure in CDP with some disclosure in mainstream reports, but limited detail on timeframes and/or impacts provided.

CDP only = Detailed disclosure, including timeframes and impacts, with timeframes in CDP only

No = no disclosure


5. Does the company describe how its strategy might change to address climate change risks and opportunities?

The TCFD recommends organisations describe how resilient their strategies are to climate change and that they consider disclosing how their strategies might change to address climate-related risks and opportunities.

Possible answers:

Yes = disclosure of how climate risks and opportunities are incorporated into strategy through efforts such as mitigation, adaptation, resource efficiency, pollution reduction and transition plans.

Limited = some disclosure of how climate risks and/or opportunities are incorporated into strategy, but with insufficient detail.

No = no disclosure of how climate risks and opportunities are incorporated into strategy.

Unclear


6. Does the company describe the climate change scenarios used to inform strategy and financial planning?

The TCFD recommends that organisations describe “how resilient how resilient their strategies are to climate-related risks and opportunities, taking into consideration a transition to a lower-carbon economy consistent with a 2°C or lower scenario and, where relevant to the organization, scenarios consistent with increased physical climate-related risks.”

Possible answers:

Yes = disclosure of scenario analysis describes the range of scenarios used (including a 2°C or lower scenario), critical inputs and assumptions, timeframes, and potential implications.

Partial = disclosure of scenario analysis describes the range of scenarios used (including a 2°C or lower scenario), but does not adequately address areas such as critical inputs and assumptions, timeframes, and potential implications.

Limited = disclosure of scenario analysis indicates that scenarios are used, but only limited descriptions are provided.

No = none of the above.


Financial institutions only

7. Does the bank describe significant concentrations of credit exposure to carbon-related assets or the amount and percentage of carbon-related assets relative to total assets?

 The TCFD Supplemental Guidance for Banks recommends that banks should describe significant concentrations of credit exposure to carbon-related assets and the amount and percentage of carbon-related assets relative to total assets.

Possible answers:

Yes = significant concentrations of credit exposure to carbon-related assets and/or the amount and percentage of carbon-related assets relative to total assets are disclosed.

No = no disclosure


8. Does the bank disclose their climate-related risks (transition and physical) in their lending and other financial intermediary business activities?

The TCFD Supplemental Guidance for Banks recommends that banks should consider disclosing their climate-related risks (transition and physical) in their lending and other financial intermediary business activities.

Possible answers:

Yes = climate-related risks (transition and physical) in their lending and other financial intermediary business activities are disclosed.

No = climate-related risks (transition and physical) in their lending and other financial intermediary business activities are not disclosed.


Risk Management

9. Does the company have a process to manage climate-related risks?

The TCFD’s recommended disclosure is for the organisation’s processes for managing climate-related risks to be described, including how decisions to mitigate, transfer, accept or control these risks are made.

Possible answers:

Yes = Climate-related risks form part of company-wide risk management programme or specific climate-related risk management process.

No = No evidence that climate-related risks form part of company-wide risk management programme or specific climate-related risk management process.

Unclear


Metrics and Targets

10. Has the company set GHG emission reduction targets?

Under the TCFD recommendations, companies should disclose their key climate-related targets such as those relating to GHG emissions, water usage and energy usage. GHG emission reduction targets can be absolute or intensity-based. Absolute targets are stronger as, under an intensity target, emissions can increase as along as emission intensity decreases.

Possible answers:

Absolute = The company has set an absolute emission reduction target.

Absolute and intensity = The company has set an absolute emission reduction target and an emission intensity reduction target.

Intensity = The company has set an emission intensity reduction target.

Unclear = The company states there is a target, but it is not clear.

No = There is no GHG emission reduction target currently in place.


11. Is there a long-term GHG emission reduction target?

The TCFD indicates that organisations should consider including the timeframes over which the target applied. Long-term targets are considered to be those over five years.

Possible answers:

Science-based = a target recognised by the Science Based Targets Initiative beyond 5 years has been set.

Yes = There is an absolute or intensity reduction target over five years in duration.

No = There is not an absolute or intensity reduction target over five years in duration.


12. Does the company disclose its GHG emissions?

Companies are assessed on whether they report:

Scope 1—Direct emissions from owned or controlled sources;

Scope 2—Indirect emissions from generation of purchased energy;

Scope 3—Indirect emissions in the value chain of the reporting company such as those from business activities such as purchased goods and services, business travel; use of sold products; transportation and distribution.

The TCFD Recommendations stipulate the disclosure of Scope 1, Scope 2 and, if applicable, Scope 3 GHG emissions, while it is suggested that historical data and “generally accepted industry-specific GHG efficiency ratios” are provided.1

Possible answers:

Scope 1, 2 and 3 = Companies report on their Scope 1, 2 and 3 emissions for the current year and at least the previous year.

Scope 1 and 2 = Companies report on their Scope 1 and 2 emissions for the current year and at least the previous year.

Scope 1 = Companies report only on their Scope 1 emissions for the current year and at least the previous year.

No = Companies do not report on their emissions.


13. Does the company provide their internal carbon price?

The TCFD calls on organisations to provide their internal carbon price where relevant. A price on carbon is considered to be one of the best ways to cut carbon emissions and meet the Paris’ agreements target of holding global average temperature increases to 2°C.

Possible answers:

Yes = internal carbon price is disclosed

No = no internal carbon price is disclosed


Additional information

Major GHG emitters only

14. Does the company disclose the extent of liability under the carbon tax?

The Carbon Tax, which was introduced in June 2019, imposes a tax on GHG emissions at the base tax rate of R120 per tonne of CO2e. The rate will increase at CPI+2% until 31 December 2022 and at CPI after this date.

Possible answers:

Full = liability is disclosed with additional information on whether the rate being used is R120/tonne of CO2 or is the rate after various allowable deductions.

Partial = liability is disclosed without additional information.

CDP only = liability is only disclosed in CDP submissions.

No = no liability is disclosed


15. Does the company disclose its participation in the DEA’s voluntary carbon budget programme?

The Carbon Tax Act provided for various allowances up to a maximum total percentage. Participation in the DEA’s voluntary carbon budget programme provides for a 5% allowance.

Possible answers:

Yes = participation is disclosed in mainstream reports.

CDP only = participation is only disclosed in CDP submissions.

No = not disclosed.


Financial institutions only

16. Does the bank have a publicly-available policy on funding coal mining and coal-fired power?

The Institute for Energy Economics and Financial Analysis has reported that over 100 major global financial institutions have introduced policies restricting coal funding.2

Possible answers:

Yes = a publicly-available policy addresses funding of coal mining and coal-fired power

Partial = a publicly-available policy addresses either funding of coal mining or coal-fired power

No = no disclosure or policy not publicly-available

B. The company assessment process

This report provides an assessment of the climate-related disclosures of 15 JSE-listed companies. These companies are ten of the largest emitters of Greenhouse Gases (GHG) in South Africa, and the five major banks. The report considers the extent to which these companies report on climate change, and the quality of existing disclosures.

The TCFD recommends that climate-related financial disclosures should be provided in mainstream annual financial filings. As a result, company reports and filings are the main focus of the analysis in this report. However, other public disclosures, such as those made to the CDP, were also drawn on in certain instances.

The assessments were also informed by the TCFD’s Principles for Effective Disclosures:

  1. Disclosures should represent relevant information.
  2. Disclosures should be specific and complete.
  3. Disclosures should be clear, balanced and understandable.
  4. Disclosures should be consistent over time.
  5. Disclosures should be comparable among companies within a sector, industry, or portfolio.
  6. Disclosures should be reliable, verifiable and objective.
  7. Disclosures should be provided on a timely basis.
  1. TCFD Recommendations, p 22.
  2. UNCC. 5 Dec 2015. Carbon Price Needed for Climate Change Success. and McKenna, and F Sybesma. 21 Nov 2017. Could carbon pricing be the answer to climate change?

Charts

Governance

Is the company a supporter of the TCFD?

No11 Yes4

Who has oversight of climate-related risks and opportunities?

Board8 Not disclosed5 Non-board executive(s)2

Does the remuneration policy include performance metrics used to measure and manage climate-related risks?

No10 Yes4 Unclear1

Strategy

Does the company identify climate change as a material business risk?

Yes10 No5

Has the company outlined the risks and opportunities from climate change?

CDP only8 Limited4 Mainstream reports3

Does the company describe how its strategy might change to address climate change risks and opportunities?

Limited7 Yes6 No2

Does the company describe the climate change scenarios used to inform strategy and financial planning?

No12 Yes2 Limited1

Does the bank describe significant concentrations of credit exposure to carbon-related assets or the amount and percentage of carbon-related assets relative to total assets?

No4 Yes1

Does the bank disclose their climate-related risks (transition and physical) in their lending and other financial intermediary business activities?

No4 Yes1

Risk Management

Does the company have a process to manage climate-related risks?

Yes12 No2 Unclear1

Metrics and Targets

Has the company set GHG emission reduction targets?

No7 Absolute7 Intensity1

Is there a long-term GHG emission reduction target?

No11 Yes4

Does the company disclose its GHG emissions?

Scope 1, 2 and 311 Scope 1 and 23 Scope 11

Does the company provide their internal carbon price?

No13 Yes2

Additional Information

Does the company disclose the extent of liability under the carbon tax?

Partial5 CDP only4 No1

Does the company disclose its participation in the DEA's voluntary carbon budget programme?

Yes7 No2 CDP only1

Does the bank have a publicly-available policy on funding coal mining and coal-fired power?

No3 Partial2