A group of investors with nearly $10 trillion in assets called out more than 700 companies for not reporting their environmental data to the nonprofit global disclosure platform CDP. The list includes Exxon Mobil, BP, Chevron, Amazon, Volvo, Alibaba, Qantas Airways, and the palm oil company Genting Plantations

The 88 investors are targeting companies through CDP’s annual Non-Disclosure Campaign, now in its fourth year. Their aim is to use shareholder influence to push companies to respond to CDP’s disclosure request.

Of the 707 companies targeted, 546 were asked to disclose on climate change, 166 on water security, and 115 on deforestation, according to CDP. For climate change, the services industry was the most targeted for climate change. Manufacturing led the water security requests while retail topped the deforestation disclosure requests.

In 2002, CDP collaborated with a small group of investors on the first questionnaire and 245 companies responded, says Emily Kreps, global director of investor initiatives at the nonprofit. Last year more than 7,000 companies disclosed to the platform. Kreps, who leads CDP’s global work with investors and the broader capital markets, shares the business case for transparency — and specific steps to take to get there.

What prompted this investor action?

Working with company shareholders to request corporate environmental data sits at the heart of CDP’s theory of change. The Non-Disclosure Campaign offers CDP’s investor signatories the opportunity to engage with companies that have been requested in previous disclosure cycles, but have not responded or have stopped responding to CDP. The expectation is that companies will disclose to CDP during the current cycle.

While CDP has run the Non-Disclosure Campaign for four years, the increased focus on climate action by companies and the increasing need for standardized disclosure information prompted us to publicize the importance of these engagements by investors.

What are the biggest hurdles to transparency that these companies face?

Internal buy-in is a key first step. But it shouldn’t be too hard to look at the wider market and sector peers to make a business case for disclosure. Of course, if a company does not already have the highest-level governance of its environmental impact, transparency can be more challenging.

Another hurdle lies in the complexity of evaluating risk. However, this is changing. A few years ago the risks were not so evident, but now, “once in a century storms” are becoming the new norm.

Earlier this year, we saw the first “climate change bankruptcy” at PG&E, as a result of the billions of dollars of liabilities it faced following wildfires that swept its service areas the two years prior. The extensive damage was attributed, in a large part, to the hot dry conditions made more severe by global warming.

How can corporate leaders overcome those hurdles?

The business case for environmental disclosure and moving to sustainable practices is clear. Risk and sustainability departments working together through the process of disclosure can make it evident to their C-Suite that companies need to shore up on climate-related risks.

Companies should implement several best practices in order to take swift environmental action:

Ensure board-level oversight of environmental impact.

Have processes in place to monitor emissions; do scenario analysis.

Engage with suppliers and do a comprehensive Scope 3 inventory.

Move towards renewable energy.

Ensure deforestation practices are removed from supply chains.

Commit to protect water resources involved in the production of goods.

Commit to set a science-based target.

What are the main advantages for companies that disclose?

Disclosing increases awareness of potential issues and opportunities and helps forge a pathway for action. It also builds up a picture of what progress is being made and makes it easy to track which actions have had the greatest impact.

Companies also see financial benefits. Research has found that businesses that disclose their emissions are likely to benefit from a lower cost of capital, saving on average up to $1.2 million each year in interest payments. At the same time, disclosing companies rated highly by CDP on our climate change A-List outperformed the market by 5.4% between 2011 and 2018.

At CDP we provide a streamlined, efficient process to disseminate the data companies provide to their wider stakeholders, which eases the burden for companies. We also aligned our questionnaires with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, making it easier for companies to prepare TCFD-compliant responses. These can be inserted into financial filings, too.

Do you think this new campaign will work? And if so, why?

As shareholders, investors have influence over companies and can be a compelling lever to drive change. This campaign has been successful at driving more transparency among previously non-disclosing companies.

Last year the companies targeted in the campaign were 2.5 times more likely to disclose than those that were not targeted. This year, 13 more investors — 15% — have signed up so we hope that this further engagement will drive even better results.