ESG Disclosure Levels Aren’t Yet Living Up to the Hype

Black and white chart showing financial performance

by | Jul 25, 2023

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Black and white chart showing financial performance

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Corporate environmental, social, and governance disclosures aren’t making their way into financial material in a big way just yet, according to the latest research from ESG Book.

European countries are more likely to disclose ESG reporting measures compared to the United States, but there’s still room for improvement, ESG revealed through its performance score, which provides an in-depth, real-time assessment of corporate sustainability based on more than 450 standardized emissions metrics. The ESG report covered nearly 10,000 companies.

The findings come as ESG disclosures are increasingly on the mind of executives across industries. New ESG standards have been coming to light, requiring companies to disclose ESG reporting alongside other financial disclosures. The new standards, created by the International Sustainability Standards Board standards, aim to create a common language for discussing climate-related disclosures. 

Despite the publication of the standards in June, U.S. companies are lagging behind European counterparts, according to ESG Book. European companies are doing better with sustainability reporting, with France being the leader of the region with an average ESG Performance Score of (54.9). U.S.-based companies on average have a score of 50.1, with Japanese companies scoring on average 49.5.

The ESG Performance Score has two options – “Core”, a point-in-time score measuring corporate sustainability performance based on publicly available data, and “Plus”, an overlay of media and NGO coverage to account for the public perception of a company’s performance.

“We are transitioning from a world of simplistic and opaque ratings to an increasingly more advanced sustainability data landscape, and moving on from the past when a single score would be used to explain how a company is performing on ESG and climate issues,” Dr. Daniel Klier, CEO of ESG Book, said in a statement. “ESG Book is leading this transformation by delivering fully transparent, traceable ESG data that is aligned with latest industry standards, and which provides a more sophisticated view of financially-material corporate sustainability performance. With the launch of the ESG Performance Score, we are empowering investors and corporates with a more accurate tool to determine financially material ESG risks and opportunities, and greater transparency to enable more sustainable outcomes.”

The findings underscore that ESG disclosures aren’t widespread just yet when on financial reports globally, but there has been improvement as standardization has come about. The report found worldwide ESG regulations have increased 155% over the past decade.

See the full ESG Book here.

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