Climate risk disclosure only works when materiality thresholds are consistent — too lax and real risk goes unreported, too strict and disclosures drown in noise.
disclosed if risk_score > materiality_threshold
- Reporting companies — companies required or choosing to disclose climate risk.
- Disclosure network density — how much peer benchmarking pressure links companies' disclosure practices.
- Disclosure rate — how often companies file updated risk assessments.
- Materiality threshold — the risk level a company must assess as material before it's required to disclose it.
Frameworks like the TCFD (Task Force on Climate-related Financial Disclosures) set exactly this kind of materiality bar that investors now use to price climate risk into markets.