Case study: corporate climate disclosures - a leading company’s implementation and lessons learned

Executive summary

Many UK companies have begun reporting climate-related financial information, yet the quality and usefulness of these disclosures vary widely. The Financial Reporting Council (FRC) reviewed 20 reports from AIM-listed and large private companies and found that most firms provided only high-level statements about governance, risk management and strategy. Few linked climate risks to financial impacts, quantified scenario analyses or set clear targets. Only half of companies disclosed greenhouse-gas (GHG) reduction targets and fewer still specified base years or included Scope 3 emissions. The FRC recommended structured, entity-specific disclosures with clear governance roles, detailed risk assessment processes, quantitative scenario analysis and measurable targets.

Aviva plc’s climate-related financial disclosure demonstrates how an experienced insurer is moving beyond box-ticking towards an integrated approach. Aviva has adopted all eleven TCFD recommended disclosures and reduced absolute Scope 1 and 2 emissions by 51 % from a 2019 baseline while sourcing 100 % of its electricity from renewable sources. It has also developed a Net Zero 2040 ambition, set science-based targets across operations and investments, integrated climate metrics into executive remuneration and sold more than 564 000 “Aviva Zero” policies that allow customers to offset their emissions. However, the company’s Scope 3 emissions (excluding investments) rose 29 % year on year because of supply-chain spending, illustrating the difficulties of managing value-chain emissions.

This case study compares FRC’s findings with Aviva’s disclosure to provide lessons for sustainability leads. It offers a step-by-step framework to produce decision-useful climate reports, identifies common pitfalls and highlights emerging best practices.

Why it matters

Regulatory landscape

The UK was among the first countries to mandate climate-related financial disclosures. Listed companies, large private companies and asset managers must report under the Companies (Strategic Report) (Climate-related Financial Disclosures) Regulations. These regulations require companies to explain governance arrangements, climate-related risks and opportunities, strategies, risk management processes and metrics and targets. Other rules such as the Streamlined Energy and Carbon Reporting (SECR) regime mandate reporting of Scope 1 and Scope 2 emissions, recommend Scope 3 disclosure and require intensity ratios and energy-efficiency initiatives. The UK is also preparing Sustainability Disclosure Standards aligned with the International Sustainability Standards Board (ISSB), due to apply from 2025.

Market expectations

Investors, regulators and stakeholders increasingly expect consistent, comparable climate information. High-quality disclosures help organisations build trust, attract capital and avoid accusations of greenwashing. Conversely, poor reporting can lead to regulatory scrutiny, reputational damage and missed opportunities. The FRC emphasised that decision-useful disclosures should not merely comply with templates but should be tailored to the business, linking climate risks and opportunities to strategy, financial planning and governance.

Key concepts and fundamentals

TCFD and ISSB frameworks

The Task Force on Climate-related Financial Disclosures (TCFD) recommends that companies organise their climate reporting under four pillars: Governance, Strategy, Risk management and Metrics & targets. Each pillar contains recommended disclosures, such as board oversight of climate issues, the resilience of strategy under different temperature scenarios, integration of climate risks into enterprise risk management and disclosure of Scope 1, 2 and 3 emissions. The UK’s Climate-related Financial Disclosures Regulations follow these recommendations. The ISSB’s IFRS S1 and IFRS S2 standards will soon supersede TCFD guidance; they retain the four-pillar structure but include more prescriptive requirements such as industry-based metrics and standardised scenario analysis.

Greenhouse-gas scopes

• Scope 1 emissions are direct emissions from owned or controlled sources (for example, company vehicles and onsite fuel use).
• Scope 2 emissions are indirect emissions from purchased electricity, steam, heating or cooling.
• Scope 3 emissions are all other indirect emissions occurring in the value chain, including purchased goods and services, business travel and investments. Calculating Scope 3 emissions often involves estimations and assumptions and requires engagement with suppliers and data providers. Reporting on all scopes is essential for a comprehensive climate strategy.

Scenario analysis

Scenario analysis helps organisations understand how physical and transition risks might affect their business under different temperature pathways (for example, 1.5 °C or 3 °C). The FRC noted that many companies provided only qualitative assessments and rarely explained assumptions. Quantitative analysis can reveal strategic inflections, such as when insurance claims may spike under higher frequency flooding scenarios or when carbon prices rise under net-zero policies.

Case study: Aviva plc

Governance and strategy

Aviva reports that climate change is a principal risk impacting its strategy and business model. Its Board oversees climate matters through specialised committees: the Audit Committee reviews financial and non-financial disclosures; the Board Risk Committee monitors climate risks and stress testing; the Investment Committee integrates ESG factors into investment strategy; and the Customer and Sustainability Committee tracks progress against science-based targets and net-zero aims. Climate metrics are also incorporated into executive remuneration: the long-term incentive plan includes an emissions reduction performance condition weighted at 10 %.

Aviva’s strategy is anchored on a Net Zero by 2040 ambition covering operations, investments and underwriting. The company has near-term science-based targets validated by the Science Based Targets initiative (SBTi). It uses 100 % renewable electricity, offsets residual emissions and intends to reduce absolute Scope 1 and 2 emissions by 90 % by 2030 from a 2019 baseline. Aviva continues to work on measuring and reducing Scope 3 emissions and awaits finalisation of the Financial Institutions Net-Zero Standard to set supply-chain targets.

Risk management

The company integrates climate considerations into its enterprise risk framework. It identifies transition risks (policy, legal, technology and market shifts), physical risks (acute and chronic weather impacts) and litigation risks arising from greenwashing claims. Aviva monitors exposures to high-carbon sectors and physical hazards; for example, less than 1 % of its equity release mortgage portfolio is exposed to properties with a 1 in 75-year flood risk. It conducts climate scenario analysis and uses internal models to stress-test investments and insurance portfolios under temperature pathways. Risk assessments feed into underwriting, investment decisions and capital planning.

Metrics and targets

Aviva discloses scope-by-scope emissions and intensity metrics. In 2024 it achieved a 51 % reduction in absolute Scope 1 and 2 emissions compared with its 2019 baseline. These emissions amounted to 6,792 tCO2e, a 3 % year-on-year reduction. The company sources 100 % renewable electricity for its operations. Scope 3 emissions (excluding investments) totalled about 354,390 tCO2e in 2024 and increased by 29 % due largely to higher purchased goods and services. Aviva uses spend-based methods for supply-chain emissions and applies the Partnership for Carbon Accounting Financials (PCAF) methodology for financed emissions. It also discloses intensity metrics such as tCO2e per £ million of net insurance revenue and per employee.

Aviva offers innovative products to engage customers. Its “Aviva Zero” general insurance product allows policyholders to offset emissions; it sold approximately 564 000 such policies in 2024 and over 1 million cumulatively. The company invests in sustainable assets and monitors exposure to high-carbon sectors. Climate metrics are assured by external auditors and presented alongside qualitative narratives.

Challenges and gaps

Despite its strengths, Aviva faces challenges common to many companies. Its Scope 3 emissions increased due to supply-chain spending and data limitations. The company has not yet set an external target for supply-chain emissions and relies on industry averages for some categories. Scenario analysis methodologies continue to evolve, and climate models for insurance underwriting have limitations. As with many insurers, aligning investment and underwriting portfolios with a 1.5 °C trajectory requires industry collaboration and policy support.

Lessons from the FRC review

The FRC’s thematic review provides a roadmap for companies seeking to improve their climate disclosures. Key lessons include:

1. Embed climate governance – Board and management roles should be explicit, with clear lines of accountability. Use diagrams and cross-references to illustrate oversight.
2. Provide detailed risk management – Describe processes for identifying, assessing and mitigating climate risks. Use risk matrices and explain how climate risks are integrated into enterprise risk management.
3. Balance risks and opportunities – Many companies focus on risks but neglect opportunities such as new low-carbon products or operational efficiencies. Disclosures should address both and link them to strategy.
4. Quantify scenario analysis – Move beyond qualitative descriptions to include quantitative scenario modelling with clear assumptions and resilience assessments.
5. Link strategy and business model – Explain how climate risks and opportunities influence strategic decisions and operational changes.
6. Set measurable targets – Include base years, interim targets and coverage of Scope 1, 2 and 3 emissions. Align targets with science-based pathways and explain progress tracking.
7. Ensure clarity and conciseness – Present material information in a structured way using tables, charts and cross-references; avoid generic statements and duplication.

Quick framework for sustainability leads

Sustainability leads can use the following framework to produce high-quality climate disclosures:

1. Assess regulatory scope – Determine which UK and international disclosure regimes apply (SECR, CFD/TCFD, SDR, ISSB) and map their requirements.
2. Establish governance – Define board-level and management responsibilities for climate strategy, risk management and reporting; integrate climate metrics into remuneration.
3. Identify risks and opportunities – Engage stakeholders to map physical, transition and litigation risks, and opportunities for new products, markets or efficiencies.
4. Conduct scenario analysis – Select credible scenarios (for example, 1.5 °C, 2 °C, high emissions) and quantify financial impacts; document assumptions and resilience actions.
5. Set science-based targets – Develop interim and long-term targets covering scopes 1–3; align with SBTi or ISSB guidance; monitor progress using intensity and absolute metrics.
6. Develop data and systems – Collect high-quality data across operations, supply chain and investments; use recognised methodologies like the GHG Protocol and PCAF; engage suppliers for Scope 3 data.
7. Communicate clearly – Use tables, charts and narratives to present material information; cross-reference to other reports; ensure information is decision-useful and avoids greenwashing.
8. Seek assurance and feedback – Obtain external assurance where possible; solicit feedback from investors, regulators and civil society; continuously improve disclosures.

Fast-moving segments to watch

• ISSB adoption – UK Sustainability Disclosure Standards aligned with IFRS S1 and S2 are expected to take effect in 2025. Companies should prepare to report under these global standards.
• Integrated reporting – Organisations are increasingly combining climate disclosures with transition plans, biodiversity risk reporting and human rights due diligence. Integrated reporting will help investors understand the interplay between sustainability themes.
• Supply-chain decarbonisation – Firms are partnering with suppliers to collect data and drive emissions reductions; digital tools like spend-based carbon accounting and supplier engagement platforms are growing.
• Climate metrics in remuneration – More companies are linking executive pay to emissions reduction and climate milestones. Clear targets and transparent calculations build accountability.
• Financed emissions transparency – Financial institutions are adopting PCAF and other methodologies to disclose the carbon intensity of investment portfolios and align assets with net-zero pathways.

Action checklist

1. Review FRC and regulatory guidance to understand mandatory elements and good-practice expectations.
2. Map existing disclosures to TCFD/ISSB requirements; identify gaps in governance, strategy, risk management and metrics.
3. Engage with board and senior management to establish roles, oversight structures and accountability mechanisms.
4. Develop or update scenario analyses incorporating quantitative modelling and stress testing of financial impacts.
5. Set science-based targets across scopes 1–3 and develop interim milestones; communicate progress in a transparent manner.
6. Improve data quality by collaborating with suppliers and using recognised methodologies; consider digital solutions to automate data collection.
7. Enhance narrative and visual presentation through clear tables, charts and cross-references; avoid generic boilerplate language.
8. Seek external assurance to build credibility; respond to feedback and iterate disclosures annually.

Frequently asked questions (FAQ)

What is the difference between TCFD and ISSB disclosure frameworks?
TCFD is a voluntary framework focusing on climate risks and opportunities across four pillars. The ISSB standards (IFRS S1 and S2) are comprehensive sustainability reporting standards expected to be mandated in many jurisdictions. ISSB adopts the TCFD structure but provides greater detail, prescriptive metrics and cross-industry and industry-specific requirements.

Why are Scope 3 emissions important?
Scope 3 emissions often represent the majority of a company’s carbon footprint (for example, supply-chain and investment emissions). Without addressing Scope 3 emissions, companies cannot align with net-zero pathways. Reporting Scope 3 helps identify hotspots and engage suppliers, investors and customers in decarbonisation efforts.

What are common pitfalls in early climate disclosures?
The FRC found that many companies provide generic statements, omit scenario analysis or fail to quantify targets. Incomplete or unclear disclosures risk regulatory scrutiny and stakeholder distrust. Companies should tailor reports to their operations, link climate risks to strategy and provide quantified, time-bound targets.

How can companies manage supply-chain emissions?
Companies should prioritise high-emissions suppliers, use spend-based estimation methods until more granular data is available, integrate sustainability criteria into procurement and collaborate with suppliers to implement decarbonisation programmes. Joining sector initiatives and using digital platforms can help track and reduce supply-chain emissions.

Sources

• Financial Reporting Council. (2024). Thematic Review of UK Corporate Climate Disclosures: GHG Reduction Targets and Scope 3 Emissions. FRC.
• Financial Reporting Council. (2024). Governance Disclosures, Risk Management Processes and Scenario Analyses Recommendations. FRC.
• Aviva plc. (2024). Climate-Related Financial Disclosure: Scope 1 and 2 Emissions Reduction. Aviva Annual Report.
• Aviva plc. (2024). Renewable Energy Sourcing and Flood Risk Exposure Analysis. Aviva Annual Report.
• Aviva plc. (2024). Aviva Zero Policy Sales and Customer Emissions Offsetting. Aviva Annual Report.
• Aviva plc. (2024). Scope 3 Emissions Analysis: Supply Chain Spending Impact. Aviva Annual Report.
• Aviva plc. (2024). Supply Chain Emissions Methodology and PCAF for Financed Emissions. Aviva Annual Report.