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More than half of Standard & Poor's Global 1200 companies have adopted a climate change strategy, yet only 16 percent publicly disclose the specific risks that climate change poses to their businesses, according to a recent study.

“Sustainability Practices 2017,” a report from the Conference Board Inc., said the low level of climate risk disclosure is driving increased shareholder activity on the topic. “And companies can expect to face growing pressure from investors to improve disclosure of climate-related risks,” it added.

The report confirms a trend of increased disclosure revealed in an earlier announcement by a task force appointed by the international Financial Stability Board, an organization that makes recommendations about the global financial system. The task force announced in early December 2017 that nearly 240 companies had committed to include climate risk data in their financial disclosure reports.

Jane Montgomery, an environmental partner with Schiff Hardin in Chicago, said after the task force announcement that the disclosures will have an impact as investors demand more information about climate change risks.

“This means top business leaders are going to begin treating this as a mainstream business issue,” she said.

Matteo Tonello, managing director for corporate leadership at the Conference Board Inc., agreed. “Mainstream investors are increasingly using ESG [environmental, social and governance] metrics in conjunction with more traditional financial metrics to choose and evaluate their portfolio companies,” Tonello said in an interview.

He explained, “Not long ago only specialized, socially responsible investors would do so. Now pension funds—and, increasingly, even mainstream and traditionally more passive mutual funds—have understood that good ESG performance can be a synonym for long-term sustainability. This would have been unimaginable only a few years ago.”

Tonello said some traditionally passive large mutual funds, like Vanguard and BlackRock Inc., “are now looking at climate change as a major investment risk issue, and are beginning to exert pressure on companies to disclose and manage their climate-related risk.”

The Conference Board study also found that an increasing number of companies—especially among the world's 250 largest companies—are providing third-party verification for data in their sustainability reports. It said almost two-fifths of the 1,200 companies now include such assurance of their sustainability data, up 52 percent from three years ago.

In other key findings, the report said:

• Nearly one-fifth of the companies now link executive compensation to ESG performance, and that number continues trending up.
• The health care sector showed the biggest drop in sustainability disclosure compared to last year. And it was the only sector to record a drop in average disclosure compared to 2013.
• Companies are lagging in disclosing gender diversity figures. Only 28 percent of S&P 1200 companies disclose the ratio of women to men in management positions, a slight drop from recent years. And the median percentage of women holding management positions has remained fairly flat over the last few years: less than 1 in 4.
• European companies are four times more likely to disclose their share of women holding management positions. But only about 1 in 5 managers are women in Europe, less than the U.S. median.
• A larger share of charitable giving is becoming increasingly concentrated among a smaller number of companies.