The march of climate governance into the corporate mainstream is continuing apace, according to the latest annual CDP report for the European market.

The investor-backed climate disclosure platform published its annual review of the climate-related data publicly released by European firms. It found that the vast majority of firms are managing climate risks and working to tap into green business-related opportunities. Meanwhile, numbers increasingly are incentivizing executives to deliver wide-ranging climate strategies and planning to undertaken in-depth scenario planning to better understand climate and clean tech transition risks.

However, the report revealed that despite the growing momentum and increasing pressure from investors, over half of the firms responding to CDP's information request are yet to set an emissions reduction target.

This year's CDP report for Europe covers environmental disclosures from 859 companies, which together account for three-quarters of the continent's market cap. It follows the January launch of CDP's A List report hailing the global companies delivering the most impressive performance in tackling climate change, water risk and deforestation.

Last week's report shows that 80 percent of companies see business risks in adapting to climate change, while almost 90 percent expect to see business opportunities resulting from climate change, including almost half who expect more demand for lower carbon goods.

80 percent of companies see business risks in adapting to climate change, while almost 90 percent expect to see business opportunities resulting from climate change. As such, 47 percent of the companies disclosing information to CDP offer monetary incentives to their C-suite or boards linked to climate strategies, while one in four incentivize meeting climate targets financially. Moreover, 72 percent are planning to use climate scenarios to inform their business strategies by 2020 at the latest, potentially providing a major boost to the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations which call for companies to provide investors with information on their scenario analysis.

The report also confirms that European corporates are making considerable progress in cutting their carbon emissions. It calculates that reductions in greenhouse gas emissions equal to Austria's annual emissions were reported in 2018 by European companies. In addition, the number of European companies signed up to science-based targets to lower their emissions in line with the Paris Agreement grew by 65 percent last year.

However, CDP confirmed that a significant gap remains between those companies with the most ambitious climate strategies and many of their peers.

For example, 53 percent of the firms analyzed do not have a target for their total emissions, and among the companies that do have targets, only a third stretch past 2025. Yet at the same time, 76 European companies received an A rating in CDP's annual rankings, making up around half of the global A-List.

Steven Tebbe, CDP Europe Managing Director, said that those companies prioritizing climate action were outperforming the wider market, at the same time as driving the low carbon transition.

The next decade is vital if our shift to a sustainable economy is to be successful, and companies lie at the heart of this transition. "The next decade is vital if our shift to a sustainable economy is to be successful, and companies lie at the heart of this transition," he said. "Companies on the A list show that environmental and economic leadership go hand in hand, with the A list-based STOXX Global Climate Change Leaders Index having outperformed the STOXX Global 1800 by 5.5 percent per annum from 2011 to 2019."

Tom Delay, chief executive at the Carbon Trust, said the results underlined Europe's position as a global green business hub. "Europe is home to some of the world's most ambitious corporates, showing transformative leadership on sustainability issues and finding new ways to prove that profitability doesn't have to come at the expense of the planet," he said.

But he also warned that "even in a part of the world where there is an almost unique combination of committed businesses, comparatively strong environmental policy frameworks, and citizen support for action, progress is still not happening quickly enough," adding that more businesses needed to "follow rapidly in the footsteps of those leaders if we are to tackle one of the most urgent global challenges we face today."

The report was published the same day as a separate ranking from Climetrics, which uses CDP data to highlight the asset managers of the 10 European investment funds with the best climate performance.

Asset managers BNP Paribas AM, Candriam and Mirova all have two funds among the 10 receiving a Climetrics Fund Award, while French asset managers received 70 percent of all awards, underlining the country's emergence as a green finance hub.

"Greater transparency in the fund industry is important for helping to move capital towards sustainable investments and to achieve the Paris Agreement," said Nico Fettes, head of Climetrics at CDP. "Climetrics' goal is to give investors confidence in their investments, and these awards recognize that certain funds represent lower long-term risks from climate change."