February 2, 20247:44 PM GMT+7, By Simon Jessop
Source: Weak company data hampers impact of EU fund greenwashing rules | Reuters
LONDON, Feb 2 (Reuters) - Europe's flagship rule-book to prevent asset managers green-washing requires portfolio data on a range of measures covering everything from greenhouse gas emissions to board diversity. The problem? None of the world's largest companies provide it all.
Under the Sustainable Finance Disclosure Regulation, from Jan. 1, any firm based in or selling into the European Union has to report the so-called 'Principle Adverse Impacts' of their investments on the environment and society.
However, the bloc's rules pushing companies in the real economy to disclose their own data on the same topics are only just starting to come into force, while many countries outside the European Union have no such rules yet.
Data shared exclusively with Reuters by data firm ESG Book showed of the 9,000 biggest listed companies globally, none reported all the PAI metrics, seven reported more than 90%, 251 reported more than 80% and 4,235 reported less than 10%.
"What I think is tricky for financial services firms is that their timeline is front running the disclosure timeline of companies," Daniel Klier, ESG Book chief executive told Reuters.
"(Real economy) companies are slowly phasing this in now to 2025, 2026 and there is obviously very strong lobbying to delay it further as it is quite a big ask ... but financial services firms are expected to report from this year on."
Under SFDR, financial services firms have to disclose 14 mandatory data points and 2 voluntary PAI data points from a list of 33 connected to their investments.
While governance metrics had a good disclosure rate and greenhouse gas emissions data among most big firms was "decent", a lot of metrics, particularly around social issues and nature, were far less developed, Klier said.
Among specific PAIs, just 1.5% of the companies reported the scale of the gap in pay between male and female workers; while just 0.1% of companies disclosed their usage of renewable and fossil energy.
Average disclosure across all the mandatory metrics, including greenhouse gas emissions, was 22.3%, while average disclosure across all metrics was 20.1%.
Under SFDR, investment firms also need to report PAIs at the entity level. A recent study, opens new tab by consultants PwC Luxembourg of 3,212 investment management companies showed just 21.6% had issued a publicly accessible PAI statement.
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