EU: Carbon reporting disclosures by firms are full of holes  

Commission calls for firmer directive on climate-related reports, as investors are unable to compare firms' environmental impact

Revealing which companies are C02 transgressors is a key step in diverting investors — and therefore firms — towards low-emission technology, but the information that many companies file is inadequate. 

The EU is calling for a significant expansion of climate reporting requirements after finding that businesses and banks aren’t providing the information needed to guide capital toward a carbon neutral future.

The European Commission said the Non-Financial Reporting Directive should be expanded to include unlisted companies and proposed dropping a 500-employee threshold. Small and medium-sized companies listed on stock markets should also be subject to the requirement, the commission said.

The proposal follows a review showing the existing directive failed to achieve the desired results. Though companies have to report both on how sustainability affects their business, and how their business affects the environment, there is “ample” evidence that “the information that companies report is not sufficient”, it said. 

Green investment criteria

The recommendations come as the EU moves a step closer to setting its first criteria for what constitutes a green investment. The EU wants to reduce 2030 emissions by at least 55% from 1990 levels. A key instrument is disclosing CO2 transgressors in order to spur investment in environmentally-friendly technologies.

However, the commission said the information that companies and the financial industry provide is full of holes that make it difficult for investors to compare businesses, and that leave users “often unsure” whether the information can be trusted. 

• Bloomberg