Improving audit report transparency in the face of climate and transition-related risks

Carbon Tracker’s Flying Blind series examines whether companies and their auditors are providing evidence that they are assessing the financial impacts of climate change and energy transition – and whether these impacts are reflected in today’s financial statements and audits. 

This report, the latest in the series, throws the spotlight on the auditors. Auditors, as the independent verifiers of financial reporting, play a crucial role in maintaining transparency and therefore trust in capital markets. And yet, the vast majority of audit reports assessed still lack transparency over whether and how the auditors addressed the impacts of climate risk and the energy transition on financial statements. This reduces investors’ abilities to engage, assess investment choices and, hence, to effectively allocate capital. 

The analysis focuses on over 140 “carbon exposed” companies’ audit reports for fiscal year 2022 financial statements, as well as 2021 and 2023 fiscal years. It highlights the urgent need for investors and regulators to push for improved transparency.  

The research explores how factors such as extended audit tenure and inconsistent audit firm practices can impact disclosures, before offering recommendations to auditors, audit committees and regulators to improve transparency and help reinforce climate-related reporting and regulatory requirements, providing data and analysis to complement existing investor engagement activities. 

We encourage readers to read this report alongside the 2025 Flying Blind: Accounting and Audit Regulation note – addressing implications for standard setters and jurisdictional enforcement.