A new measure of environmental reporting practice based on the recommendations of the Task Force on Climate-related Financial Disclosures

Climate change is introducing greater risk and uncertainty into the economy and financial system. Despite wide acceptance of the need to reduce emissions, information failures limit understanding of the financial risks. As a result, the Financial Stability Board is pushing for greater disclosure via an international initiative: the Task Force on Climate-related Financial Disclosures (TCFD). Based on content analysis of firms’ reference documents over 2015-2017, this article examines CAC 40 firms’ compliance with the recommendations of TCFD by building a new index to measure the disclosure of environmental information, our results highlight a gradual improvement in environmental disclosure by CAC 40 companies over the three years. CCI levels were relatively satisfactory in 2015 and 2016 to the extent that the TCFD report had not yet been published, but it masks discrepancies. Sectors with high environmental impact have higher index scores than low impact sectors. In 2017, CAC 40 companies communicated the most in the areas of risk management, metrics and governance, far ahead of strategy, and there was an improvement in the environmental disclosure in each area. Finally, our content analysis allows us to develop a matrix of climate risks and opportunities per sector. The latter are a contribution to make more readily implementable the recommendations of the TCFD. Lastly, this paper identifies some limitations in terms of company communication and concerning the TCFD’s grid.