Thanks to the power of information, consumers are more aware of their role in society and the environment and, at the same time, more careful in choosing the companies they support. Investors - and the public - are demanding more transparency, disclosure and socially responsible leadership from companies.
The ecopostureo, or better known by the English voice greenwashing, refers to the market practice of some companies to appear more environmentally friendly when presenting their products or services than they actually are.
A study on the greenwashing in the European Union last year found that almost half of the sustainability claims made by companies were exaggerated, misleading or false. Specifically, 42% of the cases analysed on sustainability practices show “exaggerated, false or misleading claims and could be considered unfair commercial practices under EU rules”. And almost 6 out of 10 of the cases do not provide easily verifiable evidence to back up their claims.
A recent study by the consulting firm Transcendent, specialising in corporate social impact, shows how listed companies in Spain are involved in sustainability issues, based on measurable and quantifiable variables. To this end, they have analysed the environmental and social objectives of 85 companies, including all IBEX 35 companies and another 50 listed on the continuous market with the aim of:
- To publicise the environmental and social benchmarks that companies have set for themselves.
- To compare the degree of progress of the IBEX 35 and the rest of the listed companies.
- Analyse how it has evolved compared to the previous year.
Study on the evolution of environmental objectives
Some conclusions drawn from the study on the evolution of the environmental and social objectives of listed companies:
- 9 out of 10 IBEX 35 companies have set themselves environmental targets for 2021, a 31% more than in the previous year.
- 47% The IBEX 35 sets targets to promote the circular economy, especially recycling and waste reduction policies.
- 100% Of the companies with environmental objectives, they have set climate change targets for 2021.
- 54% Of the IBEX 35 companies have set social targets in 2021, 86% more than in the previous year.
- 28% Of the companies listed on the Madrid Stock Exchange have social indicators, compared to 2% a year ago.
The road ahead. Despite significant progress in the setting of social and environmental targets, there is still some way to go, both in the level of commitment to their targets and in the number of companies setting them.
New reporting standards for large companies
Investors are becoming very critical of companies' approach to disclosing important information on sustainability activity. Analysis of financial metrics alone is no longer sufficient.
The Corporate Sustainability Reporting Directive (CSRD) -adopted in October 2022- will make companies more publicly accountable by obliging them to regularly disclose information on their social and environmental impacts. The directive, which aims to end the greenwashing and set the basis for global sustainability reporting standards.
Socially responsible business benefits greatly from transparency
Companies that embrace ESG values are seen as socially responsible. Customers and investors have a good perception of companies that strive to achieve their goals for the people and communities in which they operate.
This transparency in communicating its actions and plans for the future, through Non-Financial Information Statements (NFS), gives customers the assurance that they can trust the company to improve society.
The EINF is a report that provides insight into how the company is evolving on ethical, environmental and social issues.
Gesvalt, is helping to create long-term value for customers, people and society by building trust in markets. The company advises its clients in the development of the Statement of Non-Financial Information (NFI), We can also assist you in complying with the disclosure obligations for companies with eligible activities according to the European taxonomy. Contact us here.