What if a client handed you their sustainability report tomorrow? Would you know whether it reflected genuine climate risk management or sophisticated greenwashing? That question led me to explore climate due diligence through a risk-management lens.

Corporations are increasingly expected to manage both the impact of climate change on their business and the impact of their business on the climate. On a global scale, private sector organisations are adopting structured disclosure frameworks, not just to report on climate risks, but to demonstrate that they are being managed. Proactively. Systematically. With governance that holds up to scrutiny. Regulators aren't waiting either. Governments have Nationally Determined Contributions to meet, and they need the private sector to move with them.

This pressure is also being written into law. The EU's Corporate Sustainability Due Diligence Directive (CSDDD) – once fully in force – will require large companies to identify, prevent, and account for environmental and human rights risks across their own operations and value chains. For any firm conducting due diligence on a CSDDD-in-scope client, climate disclosure screening won't be a value-add. It will be table stakes.

And the trajectory is clear: What starts in the boardroom may not stay out of the courtroom.

The implications of inadequate climate due diligence are illustrated by the case of McVeigh v. REST, where a young Australian superannuation fund beneficiary sued his own pension fund, arguing that REST's failure to adequately disclose and manage climate-related investment risk was a direct threat to his retirement savings. The case settled in 2020, with REST committing to TCFD-aligned reporting and crucially to conducting due diligence on its investment managers' approach to climate risk. The precedent this set is straightforward: if you manage other people's money or business, you are responsible not just for your own climate risk exposure, but for screening the climate risk practices of every counterparty you engage with.

For a professional services firm, the reputational stakes of client onboarding extend well beyond the client themselves. When a firm lends its name – through audit, advisory, or risk services – to a client whose climate disclosures don't hold up to scrutiny, that association becomes public. And in an environment where regulators, investors, and civil society are increasingly tracking not just what companies disclose, but who signs off on it, proximity to poor disclosure is no longer a neutral position. The firms that have faced the sharpest reputational damage in recent years weren't always the ones making the problematic disclosures, they were the ones who didn't ask the right questions before putting their name on the work. Due diligence, in this context, is the first line of reputational defence. Screening a client's climate disclosure rigorously before onboarding is how a firm ensures that its standards – and its credibility – remain intact long after the engagement begins. Just as KPMG UK stated in their article, “ESG commitments contained in public statements, decarbonisation pledges, CSR claims, etc., must translate into real action to avoid vulnerability to accusations of greenwashing, not only against the corporates themselves but increasingly also brought against ‘facilitators’ such as financiers, insurers, advisors, and PR agencies.”

Which brought me to a question I started asking myself recently -

If a client handed me their sustainability or ESG report tomorrow, would I know what to look for?

I decided to examine what rigorous climate disclosure screening should look like in any onboarding context.

Before reading anything, I built a simple lens from TCFD's four pillars: Governance, Strategy, Risk Management, and Metrics & Targets, and translated them into five practical questions I wanted each report to answer: