Scandinavian countries with a reputation for upholding green credentials are far from perfect when it comes to their sustainability disclosures.
That’s according to a report published Friday that found just over half of the largest Scandinavian companies are disclosing information in line with the new mandatory European Union environmental, social and governance regulation set to take effect at the start of next year.
Tens of thousands of companies across Europe will need to start reporting their operations’ ESG impacts after the European Commission adopted a checklist that they must use to disclose the impact of climate change and other environmental and social factors on their businesses.
Last year, 54% of the top 300 publicly listed companies in Sweden, Denmark and Norway ticked all the 68 boxes of disclosures that are included in the European Sustainability Reporting Standards, and the rest skipped some disclosures, according to a report published by Position Green.
The private equity backed sustainability software and advisory firm said that indicates large gaps in the companies’ readiness for the upcoming regulation. Given that the Scandinavian countries are “typically more advanced” in disclosing ESG data, “substantial gaps” could be found in wider Europe, it warned.
Position Green urged companies to “act quickly to assess and close their gaps to readiness,” highlighting the investment needs in “an ESG data management system that ensures the accuracy and traceability of sustainability information.”
Read More: EU Companies Get ESG Rules Aimed at Addressing Climate Risks
The study, labeled ESG100, focused on the quality of ESG reporting rather than the actual ESG performance of 100 companies in each Scandinavian country.
It found 14 companies with the top A+ score in Norway, including Yara International ASA, Europe’s largest fertilizer maker, and the country’s second-biggest oil and gas producer Aker BP. Sweden had 4 companies with the top rating, including Volvo Car AB and Saab AB. Overall, Danish companies had the largest gap in readiness, the report found, with 14 companies with the lowest possible score, compared to Sweden with just one.
Privately owned companies in the region may lose their lead in environmental reporting, according to a separate report published on Wednesday by CDP, a nonprofit company that runs one of the world’s biggest voluntary disclosure systems. It found that more than 2,000 private businesses in the Nordics could be subject to the EU’s Corporate Sustainability Reporting Directive, but only 460 of these companies disclosed environmental data through CDP in 2022.
--With assistance from Sanne Wass.