An overwhelming number of auditors in the largest companies responsible for the majority of pollution-inducing emissions inadequately disclosed climate-related risks in their financial statements, according to an analysis by independent think tank Carbon Tracker.

Of the 134 companies that emit 80 percent of the world’s carbon pollution -- such as Chevron, Exxon Mobil, BMW, and Air France-KLM -- “98 per cent did not provide evidence that their 2021 financial statements had taken into account the effects of climate-related matters” and "96 percent of auditors did not sufficiently address how they considered the impact of climate.”

“Despite the growth in net zero pledges and other climate-related commitments and increased reporting on climate risks ‘outside’ the financial statements…most companies still do not appear to be including the financial impacts of such commitments, or indeed climate change risks, in their financial statements,” the report read.

The report’s other key findings were:

• In general, companies failed to disclose the relevant quantitative climate-related assumptions and estimates used to prepare the financial statements, even when they indicated that climate risks may impact these assumptions;
• Companies did not present consistent climate narratives. Their financial statements failed to fully reflect climate considerations included in the companies’ other reporting;
• There was little evidence that auditors considered the impact of material climate-related matters;
• No company used assumptions and estimates that were aligned with achieving net zero by 2050 or sooner. This was despite a significant majority of companies having targets or ambitions to achieve this drive.

The International Accounting Standards Board (IASB) is currently examining whether it should clarify its existing requirements, under which companies must “consider climate-related matters” when preparing their financial statements “when the effect of those matters is material,” the Financial Times reported.