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The urgent need to combat climate change highlights the critical role of climate finance in advancing global sustainability initiatives. This thesis presents a gap analysis of environmental disclosures submitted to the CDP (Carbon Disclosure Project), an organization that operates a global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts. By leveraging the extensive database of financial disclosures related to climate change provided by CDP, this study aims to elucidate the current state of climate finance and pinpoint areas for enhancement.
Our analysis examines the breadth and quality of climate finance declarations made by CDP participants. It emphasizes discrepancies between the financial resources declared as necessary for climate action and the amounts actually secured or allocated. Key criteria evaluated include the stated financial risks and opportunities associated with climate change, the alignment of financial flows with climate targets, and the transparency and consistency of these disclosures across different industries and regions.
The results reveal a substantial gap in climate financing, marked by inconsistent disclosure practices and underreporting. While many organizations acknowledge the risks posed by climate change, they often lack comprehensive financial strategies to mitigate these risks. The analysis also uncovers regional disparities, with developed areas providing more detailed disclosures compared to their developing counterparts. Furthermore, sectoral differences are evident, with the energy sector demonstrating the highest level of financial support and transparency for climate initiatives, whereas the industrial sector lags behind.
The findings underscore the need for stricter regulatory measures and standardized reporting frameworks to enhance the reliability and transparency of climate finance disclosures. Strengthening these disclosures is essential to effectively direct investments towards sustainable outcomes and mobilize the financial resources needed to fulfill global climate commitments. Closing the gaps in climate finance disclosure is crucial for fostering a resilient and transparent global financial system.
Enhanced environmental reporting can drive collective action towards a sustainable future, support informed decision-making, and bridge the climate finance gap. To address the identified gaps in CDP disclosures, future research should focus on developing standardized criteria and exploring innovative financial solutions.
