Skip to main content

Thank you for visiting You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

Misplaced expectations from climate disclosure initiatives


The financial sector’s response to pressures around climate change has emphasized the role of disclosure, notably through the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. This Perspective examines two dimensions of the expectations behind transparency and disclosure initiatives: the belief that disinvestment is driven by disclosure; and that investment ‘switches’ from high- to low-carbon assets. We warn about the risk of disappointment from inflated expectations about what transparency can really deliver and suggest some areas that research and public policy should examine to mobilize the required capital to meet climate goals.

Access options

Rent or Buy article

Get time limited or full article access on ReadCube.


All prices are NET prices.

Fig. 1: S&P 500 versus S&P 500 Energy sector performance for 2009–2020.
Fig. 2: MSCI Europe versus MSCI Europe Energy sector performance for 2009–2020.
Fig. 3: Top public fossil fuel and renewables companies according to market capitalization in 2019.

Data availability

The results data are provided in Supplementary Table 1. Source data are provided with this paper.


  1. 1.

    Adoption of the Paris Agreement, 21st Conference of the Parties, Paris COP21 Decision 1/CP.20 (UNFCCC, 2015).

  2. 2.

    Carney, M. Breaking the Tragedy of the Horizon—Climate Change and Financial Stability (Bank of England, 2015).

  3. 3.

    TCFD Final Report: Recommendations of the Task Force on Climate-Related Financial Disclosures (TFCD, 2017).

  4. 4.

    Changing Course: A Comprehensive Investor Guide to Scenario-Based Methods for Climate Risk Assessment in Response to the TCFD (UNEP FI, 2019).

  5. 5.

    First Comprehensive Report—A Call for Action: Climate Change as a Source of Financial Risks (NGFS, 2019).

  6. 6.

    Taxonomy Technical Report (EU TEG, 2019).

  7. 7.

    Report on EU Green Bond Standard (EU TEG, 2019).

  8. 8.

    Report on EU Benchmarks (EU TEG, 2019).

  9. 9.

    LOI no 2015-992 du 17 Août 2015 Relative à la Transition Energétique pour la Croissance Verte (Legifrance, 2025);

  10. 10.

    ESG Data in China: Recommendations for Primary ESG Indicators (UNEP FI, 2019).

  11. 11.

    The Bank’s of England Climate-Related Financial Disclosure 2020 (Bank of England, 2020).

  12. 12.

    Mandatory Climate-Related Disclosures (Ministry for the Environment, 2020);

  13. 13.

    Best Practices in Corporate Climate Disclosure: How the Leaders are Leading (S&P Trucost, 2019).

  14. 14.

    Fama, E. Efficient capital markets: a review of theory and empirical work. J. Financ. 25, 383–417 (1970).

    Article  Google Scholar 

  15. 15.

    Fama, E. Efficient capital markets: II. J. Financ. 46, 1575–1617 (1991).

    Article  Google Scholar 

  16. 16.

    Ameli, N., Drummond, P., Bisaro, A., Grubb, M. & Chenet, H. Climate finance and disclosure for institutional investors: why transparency is not enough. Climatic Change 160, 565–589 (2020).

    Article  Google Scholar 

  17. 17.

    Jackson, G., Bartosch, J., Avetisyan, E., Kinderman, D. & Knudsen, J. S. Mandatory non-financial disclosure and its influence on CSR: an international comparison. J. Bus. Ethics 162, 323–342 (2020).

    Article  Google Scholar 

  18. 18.

    García‐Sánchez, I. ‐M., Hussain, N., Martínez‐Ferrero, J. & Ruiz‐Barbadillo, E. Impact of disclosure and assurance quality of corporate sustainability reports on access to finance. Corp. Soc. Resp. Environ. Manage. 26, 832–848 (2019).

    Article  Google Scholar 

  19. 19.

    Perera, L., Jubb, C. & Gopalan, S. A comparison of voluntary and mandated climate change-related disclosure. J. Contemp. Account. Econ. 15, 243–266 (2019).

    Article  Google Scholar 

  20. 20.

    Monasterolo, I., Battiston, S., Janetos, A. C. & Zheng, Z. Vulnerable yet relevant: the two dimensions of climate-related financial disclosure. Climatic Change 145, 495–507 (2017).

    Article  Google Scholar 

  21. 21.

    Goldstein, A. et al. The private sector’s climate change risk and adaptation blind spots. Nat. Clim. Change 9, 18–25 (2019).

    Article  Google Scholar 

  22. 22.

    Edwards, I., Yapp, K., Mackay, S. & Mackey, B. Climate-related financial disclosures in the public sector. Nat. Clim. Change 10, 588–591 (2020).

    Article  Google Scholar 

  23. 23.

    Christophers, B. Climate change and financial instability: risk disclosure and the problematics of neoliberal governance. Ann. Am. Assoc. Geogr. 107, 1108–1127 (2017).

    Google Scholar 

  24. 24.

    Krueger, P., Sautner, Z. & Starks, L. T. The importance of climate risks for institutional investors. Rev. Financ. Stud. 33, 1067–1111 (2020).

    Article  Google Scholar 

  25. 25.

    Christophers, B. Environmental beta or how institutional investors think about climate change and fossil fuel risk. Ann. Am. Assoc. Geogr. 109, 754–774 (2019).

    Google Scholar 

  26. 26.

    Bernhardt, A. et al. The Long and Winding Road: How Long-Only Equity Managers Turn Over Their Portfolios Every 1.7 Years (Mercer, 2° Investing Initiative & The Generation Foundation, 2017).

  27. 27.

    Naqvi, M., Burke, B., Hector, S., Jamison, T. & Dupre, S. All Swans are Black in the Dark—How the Short-Term Focus of Financial Analysis Does Not Shed Light on Long Term Risks (2° Investing Initiative, 2017).

  28. 28.

    Thomä, J., Weber, C., Dupré, S. & Naqvi, M. The Long-Term Risk Signal Valley of Death: Exploring the Tragedy of the Horizon (2° Investing Initiative, 2015).

  29. 29.

    Johnson, O. W., du Pont, P. & Gueguen-Teil, C. Perceptions of climate-related risk in Southeast Asia’s power sector. Clim. Policy 21, 264–276 (2021).

    Article  Google Scholar 

  30. 30.

    Silver, N. Blindness to risk: why institutional investors ignore the risk of stranded assets. J. Sustain. Financ. Invest. 7, 99–113 (2017).

    Article  Google Scholar 

  31. 31.

    Sen, S. & von Schickfus, M. T. Climate policy, stranded assets, and investors’ expectations. J. Environ. Econ. Manage. 100, 102277 (2020).

    Article  Google Scholar 

  32. 32.

    Special Climate Change Resolution at Barclays Plc for Consideration at 2020 AGM (ShareAction, 2020);

  33. 33.

    Braungardt, S., van den Bergh, J. & Dunlop, T. Fossil fuel divestment and climate change: reviewing contested arguments. Energy Res. Soc. Sci. 50, 191–200 (2019).

    Article  Google Scholar 

  34. 34.

    Ayling, J. & Gunningham, N. Non-state governance and climate policy: the fossil fuel divestment movement. Clim. Policy 17, 131–149 (2017).

    Article  Google Scholar 

  35. 35.

    Fossil Free (2020);

  36. 36.

    Bergman, N. Impacts of the fossil fuel divestment movement: effects on finance, policy and public discourse. Sustainability 10, 2529 (2018).

    Article  Google Scholar 

  37. 37.

    Tollefson, J. Reality check for fossil-fuel divestment. Nature 521, 16–17 (2015).

    CAS  Article  Google Scholar 

  38. 38.

    Banking on Climate Chaos: Fossil Fuel Finance Report 2021 (Rainforest Action Network, 2021).

  39. 39.

    Schifeling, T. & Hoffman, A. J. Bill McKibben’s influence on US climate change discourse: shifting field-level debates through radical flank effects. Org. Environ 32, 213–233 (2019).

    Article  Google Scholar 

  40. 40.

    Bloomberg Terminals, S&P 500 and MSCI Index Composition and Returns (Bloomberg, S&P, MSCI, 2021).

  41. 41.

    Olson, B. Hess has been 2019’s top oil and gas stock. It has nothing to do with shale. The Wall Street Journal (20 August 2019).

  42. 42.

    Plantinga, A. & Scholtens, B. The financial impact of fossil fuel divestment. Clim. Policy 21, 107–119 (2021).

    Article  Google Scholar 

  43. 43.

    Trinks, A., Scholtens, B., Mulder, M. & Dam, L. Fossil fuel divestment and portfolio performance. Ecol. Econ. 146, 740–748 (2018).

    Article  Google Scholar 

  44. 44.

    Henriques, I. & Sadorsky, P. Investor implications of divesting from fossil fuels. Glob. Financ. J. 38, 30–44 (2018).

    Article  Google Scholar 

  45. 45.

    Huang, W. & Mollick, A. V. Tight oil, real WTI prices and US stock returns. Energy Econ. 85, 104574 (2020).

    Article  Google Scholar 

  46. 46.

    Ewing, B. T., Kang, W. & Ratti, R. A. The dynamic effects of oil supply shocks on the US stock market returns of upstream oil and gas companies. Energy Econ. 72, 505–516 (2018).

    Article  Google Scholar 

  47. 47.

    Basher, S. A., Haug, A. A. & Sadorsky, P. The impact of oil-market shocks on stock returns in major oil-exporting countries. J. Int. Money Financ. 86, 264–280 (2018).

    Article  Google Scholar 

  48. 48.

    Bloomberg Terminals: Crude Oil Historical Data (2020).

  49. 49.

    OPEC Annual Statistical Bulletin 2019 (OPEC, 2019).

  50. 50.

    Short-Term Energy Outlook (EIA, 2020).

  51. 51.

    McGlade, C. & Ekins, P. The geographical distribution of fossil fuels unused when limiting global warming to 2 °C. Nature 517, 187–190 (2015).

    CAS  Article  Google Scholar 

  52. 52.

    Semieniuk, G., Campiglio, E., Mercure, J. F., Ulrich, V. & Edwards, N. R. Low-carbon transition risks for finance. WIREs Clim. Change 2020, e678 (2020).

    Google Scholar 

  53. 53.

    Van der Ploeg, F. & Rezai, A. Stranded assets in the transition to a carbon-free economy. Annu. Rev. Resour. Econ. 12, 281–298 (2020).

    Article  Google Scholar 

  54. 54.

    Mercure, J. F. et al. Macroeconomic impact of stranded fossil fuel assets. Nat. Clim. Change 8, 588–593 (2018).

    Article  Google Scholar 

  55. 55.

    Shell and BP’s debt problems are getting worse. Bloomberg Opinions (30 June 2020).

  56. 56.

    Ozsoylev, H. N., Walden, J., Yavuz, M. D. & Bildik, R. Investor networks in the stock market. Rev. Financ. Stud. 27, 1323–1366 (2014).

    Article  Google Scholar 

  57. 57.

    Masini, A. & Menichetti, E. Investment decisions in the renewable energy sector: an analysis of non-financial drivers. Technol. Forecast. Soc. Change 80, 510–524 (2013).

    Article  Google Scholar 

  58. 58.

    Yergin, D. The Prize: The Epic Quest for Oil, Money & Power (Simon and Schuster, 2011).

  59. 59.

    Stern, J. & Imsirovic, A. A Comparative History of Oil and Gas Markets and Prices: Is 2020 Just an Extreme Cyclical Event or an Acceleration of the Energy Transition? Energy Insight 68 (Oxford Institute for Energy Studies, 2020).

  60. 60.

    Evans, B., Nyquist, S. & Yanosek, K. Mergers in a low-oil-price environment: proceed with caution. J. Pet. Technol. 68, 49–51 (2016).

    Article  Google Scholar 

  61. 61.

    World Energy Investment 2020 (IEA, 2020).

  62. 62.

    Renewables 2008: Global Status Report (REN21, 2009).

  63. 63.

    Renewables 2009: Global Status Report (REN21, 2010).

  64. 64.

    Butler, N. The private sector alone will not deliver the energy transition. Financial Times (27 October 2019).

  65. 65.

    Alolo, M., Azevedo, A. & El Kalak, I. The effect of the feed-in-system policy on renewable energy investments: evidence from the EU countries. Energy Econ. 92, 104998 (2020).

    Article  Google Scholar 

  66. 66.

    Liu, W., Zhang, X. & Feng, S. Does renewable energy policy work? Evidence from a panel data analysis. Renew. Energy 135, 635–642 (2019).

    Article  Google Scholar 

  67. 67.

    Polzin, F., Egli, F., Steffen, B. & Schmidt, T. S. How do policies mobilize private finance for renewable energy? A systematic review with an investor perspective. Appl. Energy 236, 1249–1268 (2019).

    Article  Google Scholar 

  68. 68.

    Wall, R., Grafakos, S., Gianoli, A. & Stavropoulos, S. Which policy instruments attract foreign direct investments in renewable energy? Clim. Policy 19, 59–72 (2019).

    Article  Google Scholar 

  69. 69.

    Frankel, D., Janecke, N., Kühn, F., Ritzenhofen, I. & Winter, R. Rethinking the Renewable Strategy for an Age of Global Competition (McKinsey, 2019).

  70. 70.

    Bloomberg Terminals, Market Capitalization and Revenues Data (Bloomberg, 2020).

  71. 71.

    Herciu, M. in Economic and Social Development: Book of Proceedings (eds Studzieniecki, T. et al.) 420–428 (2018).

  72. 72.

    Battiston, S., Mandel, A., Monasterolo, I., Schütze, F. & Visentin, G. A climate stress-test of the financial system. Nat. Clim. Change 7, 283–288 (2017).

    Article  Google Scholar 

  73. 73.

    Donovan, C., Fomicov, M., Gerdes, L. K. & Waldron, M. Energy Investing: Exploring Risk and Return in the Capital Markets (CCFI & IEA, 2020).

  74. 74.

    Global Trends in Renewable Energy Investment 2020 (Frankfurt School–UNEP, 2020).

  75. 75.

    Stein, A. L. Breaking energy path dependencies. Brook. L. Rev. 82, 559 (2016).

    Google Scholar 

  76. 76.

    Granoff, I., Hogarth, J. R. & Miller, A. Nested barriers to low-carbon infrastructure investment. Nat. Clim. Change 6, 1065–1071 (2016).

    Article  Google Scholar 

  77. 77.

    Polzin, F. & Sanders, M. How to finance the transition to low-carbon energy in Europe? Energy Policy 147, 111863 (2020).

    Article  Google Scholar 

  78. 78.

    Ragosa, G. & Warren, P. Unpacking the determinants of cross-border private investment in renewable energy in developing countries. J. Clean. Prod. 235, 854–865 (2019).

    Article  Google Scholar 

  79. 79.

    Mazzucato, M. & Semieniuk, G. Financing renewable energy: who is financing what and why it matters. Technol. Forecast. Soc. Change 127, 8–22 (2018).

    Article  Google Scholar 

  80. 80.

    Barazza, E. & Strachan, N. The co-evolution of climate policy and investments in electricity markets: Simulating agent dynamics in UK, German and Italian electricity sectors. Energy Res. Soc. Sci. 65, 101458 (2020).

    Article  Google Scholar 

  81. 81.

    Donovan, C. W. (ed.) Renewable Energy Finance: Powering the Future (World Scientific, 2015).

  82. 82.

    Deleidi, M., Mazzucato, M. & Semieniuk, G. Neither crowding in nor out: public direct investment mobilising private investment into renewable electricity projects. Energy Policy 140, 111195 (2020).

    Article  Google Scholar 

  83. 83.

    Owen, R., Brennan, G. & Lyon, F. Enabling investment for the transition to a low carbon economy: government policy to finance early stage green innovation. Curr. Opin. Environ. Sustain. 31, 137–145 (2018).

    Article  Google Scholar 

  84. 84.

    Donovan, C. W. (ed.) Renewable Energy Finance: Powering the Future (World Scientific, 2020).

  85. 85.

    Castrejon-Campos, O., Aye, L. & Hui, F. K. P. Making policy mixes more robust: an integrative and interdisciplinary approach for clean energy transitions. Energy Res. Soc. Sci. 64, 101425 (2020).

    Article  Google Scholar 

  86. 86.

    Lindberg, M. B., Markard, J. & Andersen, A. D. Policies, actors and sustainability transition pathways: a study of the EU’s energy policy mix. Res. Policy 48, 103668 (2019).

    Article  Google Scholar 

  87. 87.

    Schmidt, T. S. & Sewerin, S. Measuring the temporal dynamics of policy mixes—an empirical analysis of renewable energy policy mixes’ balance and design features in nine countries. Res. Policy 48, 103557 (2019).

    Article  Google Scholar 

  88. 88.

    Dikau, S. & Volz, U. Central bank mandates, sustainability objectives and the promotion of green finance. Ecol. Econ. 184, 107022 (2021).

    Article  Google Scholar 

  89. 89.

    D’Orazio, P. & Popoyan, L. Fostering green investments and tackling climate-related financial risks: which role for macroprudential policies? Ecol. Econ. 160, 25–37 (2019).

    Article  Google Scholar 

  90. 90.

    Campiglio, E. et al. Climate change challenges for central banks and financial regulators. Nat. Clim. Change 8, 462–468 (2018).

    Article  Google Scholar 

  91. 91.

    Action Plan: Financing Sustainable Growth COM/2018/097 (European Commission, 2018).

  92. 92.

    Dafermos, Y., Gabor, D., Nikolaidi, M., Pawloff, A. & van Lerven, F. Decarbonising is Easy: Beyond Market Neutrality in the ECB’s Crporate QE (New Economics Foundation, 2020).

  93. 93.

    Geddes, A. & Schmidt, T. S. Integrating finance into the multi-level perspective: technology niche-finance regime interactions and financial policy interventions. Res. Policy 49, 103985 (2020).

    Article  Google Scholar 

  94. 94.

    Donaubauer, J., Neumayer, E. & Nunnenkamp, P. Financial market development in host and source countries and their effects on bilateral foreign direct investment. World Econ. 43, 534–556 (2020).

    Article  Google Scholar 

  95. 95.

    Bilir, L. K., Chor, D. & Manova, K. Host-country financial development and multinational activity. Eur. Econ. Rev. 115, 192–220 (2019).

    Article  Google Scholar 

  96. 96.

    Schmidt, T. Low-carbon investment risks and de-risking. Nat. Clim. Change 4, 237–239 (2014).

    Article  Google Scholar 

  97. 97.

    Steffen, B. Estimating the cost of capital for renewable energy projects. Energy Econ. 88, 104783 (2020).

    Article  Google Scholar 

  98. 98.

    Egli, F., Steffen, B. & Schmidt, T. Bias in energy system models with uniform cost of capital assumption. Nat. Commun. 10, 4588 (2019).

    Article  CAS  Google Scholar 

  99. 99.

    Matthäus, D. & Mehling, M. De-risking renewable energy investments in developing countries: a multilateral guarantee mechanism. Joule 4, 2627–2645 (2020).

    Article  Google Scholar 

  100. 100.

    Ameli, N. et al. Higher cost of finance exacerbates a climate investment trap in developing economies. Nat. Commun. 12, 4046 (2021).

    CAS  Article  Google Scholar 

Download references


This project has received funding from the European Research Council under the European Union’s Horizon 2020 research and innovation programme (grant agreement number 802891).

Author information




N.A., S.K. and M.G. contributed to the writing of the manuscript, under the coordination of N.A.

Corresponding author

Correspondence to Nadia Ameli.

Ethics declarations

Competing interests

The authors declare no competing interests.

Additional information

Peer review information Nature Climate Change thanks Allie Goldstein, Gregor Semieniuk and the other, anonymous, reviewer(s) for their contribution to the peer review of this work.

Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary information

Supplementary Information

Supplementary Table 1.

Source data

Source Data Fig. 1

Numeric data used to generate Fig. 1.

Source Data Fig. 2

Numeric data used to generate Fig. 2.

Source Data Fig. 3

Numeric data used to generate Fig. 3.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Ameli, N., Kothari, S. & Grubb, M. Misplaced expectations from climate disclosure initiatives. Nat. Clim. Chang. (2021).

Download citation


Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing