Achieving net-zero goals for corporations: Developing an evidenced-based decision-making and benchmarking tool

The challenge

Corporations worldwide are under increasing pressure to align with climate targets and mitigate financial risks associated with climate change. Publicly listed companies in particular face growing regulatory and investor scrutiny regarding climate-related risks, including physical threats (e.g., extreme weather events) and transition risks (e.g., policy changes, market shifts). Despite international momentum – such as the UK mandating Task Force on Climate-related Financial Disclosures (TCFD) reporting in 2022 – Australia only recently mandated reporting, and many Australian companies still struggle with assessing, benchmarking and reporting their climate actions in line with best practices. 

The lack of standardised tools to measure corporate climate risk exposure and assess alignment with net-zero commitments presents a critical gap. Without evidence-based decision-making tools, corporate leaders and executives face challenges in balancing financial imperatives with climate resilience goals. This challenge is compounded by data accessibility issues, inconsistencies in climate risk reporting and the complexity of aligning with science-based targets. 

Solution

To address this gap, the Centre for Climate Risk and Resilience collaborates with key stakeholders to develop practical solutions. As part of a multi-institution ARC Linkage Grant, the Centre works alongside external partners, including the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB). The work of the Centre is also supported by UTS’  Strategic Research Accelerator program, with current work providing a structured framework for corporations to: 

• Assess their alignment with science-based targets and net-zero pathways, and

• Benchmark their climate actions against TCFD recommendations and evolving regulatory standards. 

• Literature Review and Secondary Data Analysis: Synthesising best-practice climate risk assessments and corporate disclosure trends.

• Machine Learning and Text Mining: Developing a climate risk index by analysing sustainability reports from ASX-listed companies.

• Benchmarking and Scenario Analysis: Mapping corporate climate actions against projected decarbonisation pathways.

• Stakeholder Engagement: Consulting a range of stakeholders to refine the tool’s functionality.

Outcome and impact

Our work highlights significant gaps in corporate climate risk disclosures and demonstrates a need for enhanced reporting standards. Moreover, the research underscores the challenges companies face in accessing reliable data on climate risk impacts. 

Our work helps our partners to

• Identify areas of improvement in climate-related financial disclosures.

• Strengthen strategic decision-making by incorporating climate risk data.

• Align corporate reporting with evolving global standards to ensure compliance with potential future regulations.

The centre also offers targeted courses for training opportunities.