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18 Jan. 2019 | Comments (0)
The business landscape is changing rapidly around the globe and much more is being expected of corporates in terms of demonstrating and embracing sustainability or responsible business practices. As a result, over time we have seen an increase in non-financial disclosure requirements specifying corporates to disclose environmental and social impacts along with the traditional financial reporting.
Although the European Union (EU) and many of its Members States have adopted an active stance to promote sustainability reporting, a significant gap remains in reporting practices between Western and Eastern Europe.
The Sustainability Practices report by The Conference Board looked at reporting practices of the 250 largest publicly traded companies (by revenue) domiciled in the 10 largest economies (by GDP at purchasing power parity) in Europe. It found that companies in the UK, France, and Germany lead in sustainability disclosure across Europe. Across the 91 environmental and social practices, the average disclosure rates are highest among companies in the UK (26 percent), France (18 percent) and Germany (14 percent), whereas companies in Poland (2 percent), Russia (5 percent) and Belgium (5 percent) have the lowest average disclosure rates. The figure below shows the average disclosure rate, across 91 practices for the 10 largest economies in Europe. It also presents the regional average for North America, Asia-Pacific and Europe.
Because 2018 is the first-year when companies are obliged to report their sustainability initiatives from the preceding year, it may be some time before we start to see the effects of the Directive. But what can we expect in the coming 12 months and beyond?
It’s likely that the EU non-financial reporting directive will provide fresh impetus to encourage companies to be more transparent and increase disclosure. Further, we are likely to see a continued growth in investor interest in ESG. This is likely to reinforce the need for improved consistency and quality of disclosures, and incentivize companies to adopt more integrated approach, not just for reporting but also for their strategy and reporting.
You can hear more on this topic by viewing the webcast “ESG Reporting: Current Practices and Emerging Trends”.