Analysis of ESG disclosures: Companies move forward, but more specific data is needed

‍New research on the sustainability disclosures of 250 companies shows positive trends in ESG reporting, but also reveals data gaps that threaten companies’ competitiveness as we move towards a more sustainable economy.

According to these results, while progress has been observed in disclosing climate-related information and science-based targets, corporations from high-risk sectors such as energy or transport, are still lagging behind when it comes to disclosing indirect GHG emissions, climate-related risks, and human rights impacts. This is information that investors and other finance providers increasingly demand. 

Getting better, but not enough

Research conducted by Frank Bold examined information on key climate and human rights matters disclosed by 250 companies from high risk sectors (e.g., energy, transport, development and finance) in Germany, Spain, Poland, and the Czech Republic. Analysed corporations included for instance Volkswagen, Siemens, BMW, Allianz Group or Tauron Polska Energia. Results showed that companies have improved in disclosing climate and also science-based targets set in relation to climate change (for example, reduction of emissions). Compared to the 2019 results, the increase is 7 % and 18 %, respectively. 

ESG information becomes more and more important in the assessment of companies’ sustainability by investors, banks and other stakeholders.

However, half of the companies did not report climate-related risks, and only 8 %  provided risks for short, medium and long-term horizons. GHG Scope 3 emissions were disclosed by approx. one third of companies assessed. When it comes to specific information on human rights matters, 85 % of them did not describe specific risks of human rights impacts linked to their value chain.

This ESG information becomes more and more important in the assessment of companies’ sustainability by investors, banks and other stakeholders. "Quality ESG data reporting is vital for the future market position of companies and their ability to take advantage of the unprecedented opportunities offered by the green transformation. In recent months, we have seen a huge increase in demand for green projects from investors," says Pavel Franc, CEO of Frank Bold.

Current EU sustainability reporting rules are guided by the 2018 Non-Financial Reporting Directive (NFRD), which requires large listed corporations to disclose relevant information on climate, environmental, human rights and anti-corruption risks and impacts. As the EU needs better reporting rules in order to mobilise sufficient funding for Green Deal objectives, it is now preparing a revision of this directive (CSRD), which will extend the reporting obligations to all listed companies, regardless of size.

Guiding companies through the legislation changes

At the same time, the EU is developing reporting standards that will clarify which key ESG information will be required of companies. Two experts from Frank Bold are directly involved in the development of these standards as members of the European Commission's EFRAG body. 

In previous years, the Alliance for Corporate Transparency, led by Frank Bold, analysed the reports of 1000 European corporations and subsequently 300 corporations in climate change risk sectors from the CEE region. ‍

Frank Bold experts have already reviewed more than 1500 ESG reports. 

‍The Frank Bold team uses its in-depth knowledge of upcoming changes in the European legislation and the ESG reporting landscape to help companies prepare for the green transformation. With long-term experience directly from Brussels, Frank Bold experts will guide companies through the legislation changes, support them to define rules for quality ESG reporting and also arrange the issuance of green bonds. 

See how Frank Bold can help your company.

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