Editorial

An influential report, Flying Blind, published in 2021 showed that more than 70% of over 100 companies from carbon-intensive industries around the world did not explain whether they had taken climate risks into account in their financial statements (WAR, October 2021). The report was the result of a joint project between the Carbon Tracker Initiative, an independent think tank that specialises in analysing the impact of energy transition on capital markets, and the Climate Action Project (CAP), which comprises a team of accounting and finance experts drawn from the investor community and commissioned by the Principles for Responsible Investment (PRI). Their findings showed that investors were unable to judge how much capital was vulnerable to climate risk, and whether they were funding unsustainable businesses. A similar message was given to the IASB during the consultation on its agenda. The truism that good disclosure cannot compensate for poor accounting might in this case mean that no matter how much information companies disclose in accordance with sustainability frameworks and standards, investors still want to be able to understand the effects of the relevant area on the financial performance and position of a company.