What 3,000 Financial Documents Say About Climate Change

Over the past decade, the way that publicly traded companies have spoken publicly about climate change has unmistakably changed. Now, it’s become standard for many companies to, at the very least, pay lip service to the problem—though of course what a business says in press releases and what executives say behind closed doors, let alone what a company actually does, can differ dramatically.

One of the best, consistent records we have for how large businesses address the looming crisis are their annual 10-K filings—financial documents that public companies are required to submit annually to the Securities and Exchange Commission (SEC). While a 10-K can’t put you inside the boardroom, it amounts to the one of the best public records of the obstacles a company foresees to future profitability.

TIME analyzed thousands of these documents from the past 10 years and found that general terms relating to climate change had already crept in by 2012, suggesting that some companies have long perceived climate change to be a threat to their operations. Moreover, even among those who have long mentioned the climate crisis in broad terms, it is only recently that specific terms relating to corporate climate goals and initiatives have become part of companies’ thinking about the crisis.

Experts say that this shift—from speaking theoretically about climate to talking more practically—tracks with what they’ve noticed in boardrooms and company operations, and indicates that companies are rushing to at least make investors feel they are working to mitigate climate-related risks. Patrick Callery, a professor at the University of Vermont who studies corporate climate disclosures, notes that this progression is a bit like processing an emotional shock. “First we deny it, then we accept it, and then at some point, we actually do something about it,” he says. “I think at this point we’re kind of at the acceptance stage and companies are talking about doing things, but I don’t think to a large extent companies are actually really doing things quite yet.”

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Indeed, TIME found that terms that generally describe climate, or that refer to vague corporate values around climate, are now very common in the filings. For instance, fewer than half of the 300 companies in the analysis mentioned climate change or similar phrases in their 2012 10-Ks. In 2021, that figure was 91%. The word sustainability, meanwhile, soared from 27% to nearly 80% in the same period, and the buzzy acronym ESG—referring to corporate ideals around environmental, social, and governance standards—went from being relatively unknown to appearing in half of the filings for fiscal or calendar year 2021.

But TIME also found that language documenting companies’ specific plans for achieving their climate goals are still fairly uncommon, despite a recent uptick. Renewable energy more than doubled, from 15% to 37%, while environmental impact went from 14% to 26%. The phrase science-based targets first showed up in 2017 and is now in 7% of filings.

To come up with these numbers, TIME curated a list of about 200 climate change-related words, phrases, and acronyms with input from experts at the University of Vermont’s Sustainable Innovation MBA program. We then took the 300 companies that have been consistently part of the S&P index since 2012 and wrote a computer script to extract all the 10-Ks covering the corporations’ past 10 fiscal years—a total of 3,000 documents—from the SEC’s digital archives. These firms represent a mix of all the major industries, with financial firms making up the largest share (16% of the companies); communications firms accounting for the smallest share (4%); and all the others such as tech, health, energy, and consumer industries falling somewhere in between. We then wrote a second program that scanned through every word in the documents and tallied the changing frequency of those terms in 10-Ks over time.

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Climate language in SEC filings holds more weight than informal climate-related statements and sustainability reports that companies put on their websites, because 10-Ks are subject to SEC audit and even lawsuits if the information they provide is deemed misleading. That likely explains why broad references to climate change have appeared in these documents with some regularity for at least 10 years: Public companies have been obligated to disclose business risks in their 10-K filings for decades—and many investors and companies were, by the early 2010s, aware that climate change could become—or already was—a risk to their operations.

To date, the SEC hasn’t yet mandated that companies divulge their exposure to climate change, but it is traveling down that path. In 2010, the agency issued guidelines for companies that wanted to address climate in their filings, suggesting that they consider how physical damage, climate legislation and regulation, and shifting business and consumer demands could impact their bottom line. Then, in March 2022, the agency issued a lengthy proposal that would formalize and standardize climate risk disclosures as well as require companies to explain how they plan to manage and mitigate that risk. The agency is now receiving public input on the proposal.

By grouping the terms into categories, TIME’s analysis found that words describing the causes and effects of climate change were regularly used a decade ago (and have since become ubiquitous), while those pertaining to actually addressing the crisis became the norm only in the past two or three years. This trend suggests that corporations previously only acknowledging climate change are now admitting that they’ve played a role in causing it.

Take, for instance, what we are calling the “climate effects” group—including terms like sea levels and drought—which were already showing up in two-thirds of filings a decade ago. Citing these disasters as a business risk, as they would similarly label the impacts on their bottom line of, say, a poor economy or a pandemic, positioned corporations as victims of—not contributors to—climate change.

Meanwhile, the “climate goals” group (containing decarbonize, net zero, carbon-neutral, and similar terms) and the “social responsibility” group (with lingo like fair trade and closed loop) more than doubled. This uptick indicates that companies are recognizing their own accountability—and are setting targets to do better.

A number of “watershed moments” spurred this shift, says Paul Washington, executive director of the ESG Center at the Conference Board, a nonpartisan research group in New York City. In 2017, an international climate task force released guidance to standardize climate-risk disclosures across industries and countries. Public U.S. companies started anticipating that the SEC would issue its own proposal to require formalized climate-risk assessments. Additionally, climate analysis rapidly improved, thanks to a growing trove of climate data and a rising workforce of corporate climate advisers. Then came COVID-19, which forced companies to think about vulnerabilities to Mother Nature. In light of this confluence of events, Washington notes, companies felt increasing heat from their boards, shareholders, and investors to deal with what has become a mainstream financial concern.

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TIME’s analysis hints at where companies’ climate efforts could shift next. The “climate measurement” word group lags behind the others, but it’s been gaining steam, jumping from 10% of the analyzed filings in 2018 to 39% of them in 2021. This group include terms like life-cycle assessment and Scope 3, which refers to emissions generated upstream or downstream from a company’s direct business. If the SEC mandates that companies provide specific information about their climate objectives in their filings, these words may become commonplace—but that still wouldn’t guarantee that corporations are implementing truly substantive policies.

Callery observes that many companies have been “dragging their heels” on investing in robust assessments and worthwhile initiatives that will be necessary for companies to actually reach their emissions-reduction targets. “I don’t put a lot of stock in [net-zero goals] as any kind of commitment, because the time frame for these targets is so far in the future that companies don’t actually have to do anything about it right now,” he says.

But Mindy Lubber, CEO of the sustainability nonprofit organization Ceres, is more optimistic. She says that companies are attempting to meet that challenge in reaction to investor demands and the Biden Administration’s push for climate-conscious policies. “Over the last three years there’s been mini revolutions,” she says, “going from companies that planted a tree or something insignificant to really fundamentally getting it.”

Write to Chris Wilson at chris.wilson@time.com.