A Finity analysis of the first wave of mandatory climate disclosures has found wide variation in how companies interpret and apply the framework.

The review of 26 disclosure reports shows 24 exceeded minimum scenario analysis requirements and 70% used three or more scenarios, but detailed findings rarely made it into public reports.

“The analytical rigour is clearly there,” principal Sharanjit Paddam said. “What we expect to see develop over successive reporting cycles is greater confidence in translating that internal work into public disclosure.”

The mandatory disclosure rules are being phased in, and the first reports are available for “group 1” entities with a December 31 reporting date.

Finity’s analysis includes seven insurers and reinsurers, eight resource industry companies, six bank and wealth management groups, and five real estate investment trusts and other businesses.

The reporting standard requires entities to disclose time horizons used, how they are defined and their link to strategic decision-making.

Finity finds a large variation in how companies define long-term, with four in the resources sector looking ahead five to 12 years and three looking at 25 years.

“Many physical climate risks are more likely to materialise over longer time frames than strategic planning processes typically consider, a tension the framework has yet to resolve,” the consultancy said.

There is a trend towards qualitative disclosure of resilience and financial effects, and only a few reports attempted to link results quantitatively to financial statements.

“Transition plan disclosures were similarly mixed, with some entities scaling back emissions reduction commitments from earlier voluntary reporting, reflecting increased scrutiny on target setting and greenwashing risks,” Finity said.

Disclosures are expected to increase in sophistication and maturity, and Finity anticipates quantitative disclosure will feature more as entities develop capabilities.

It says reviewing the first round of disclosures can help the thousands of entities subject to the framework as group 2 and group 3 companies report next year and in 2028.

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