Stockholm (NordSIP) – The Nordic Region has a global reputation for being ahead of the curve in terms of corporate sustainability policies and behaviour. However, a new report from environmental not-for-profit disclosure platform CDP examining private companies in the Region shows that they still lag behind their publicly listed peers. The study, conducted in partnership with Danish consultancy the Footprint Firm, focused on 2,000 private Nordic companies that would be expected to comply with the European Union’s (EU) forthcoming Corporate Sustainability Reporting Directive (CSRD).
Private firms lack dedicated reporting resources
CDP gathers data from companies and public bodies around the world through a voluntary disclosure process. 1,000 Nordic private companies have been invited to report via CDP, but so far only 43% of these have responded. CDP acknowledges that smaller privately-owned companies are likely to have fewer internal resources to handle the growing sustainability-related reporting burden. Many of these firms simply add sustainability reporting to the existing responsibilities of Compliance, Human Resources, Accounting, or Marketing departments, which may explain the incomplete overall response. CDP believes that there is an ongoing effort to recruit specialists in anticipation of greater disclosure obligations. Unlisted companies have not been subject to the more stringent requirements imposed on their publicly listed counterparts, but CDP argues that they should be brought up to speed, especially given private firms’ widespread presence in innovative sectors driving the green transition.
Whether or not they report via CDP, 62% of the surveyed companies do publish their Scope 1 and 2 greenhouse gas (GHG) emissions. Only 42% report on Scope 3 emissions, for which only 27% report on purchased goods and services. Just 7% of the respondents have emissions targets approved by the Science Based Targets initiative (SBTi). Nevertheless, the overall trend is positive, with many firms at the initial stages of setting up their climate reporting processes. CDP also examined how the Nordic private companies treat climate reporting and strategy from a governance perspective. Awareness is high, with a healthy 82% of firms having implemented Board-level oversight on climate issues. However, only 24% have appointed a Board member to the task, and just 16% of firms claim to have climate expertise at Board level. Financial incentives for management to reach climate goals are only present in roughly one third of the respondents.
Biodiversity blind spot
Despite its rapid rise up the economic and political agenda, biodiversity remains a worrying blind spot within the firms surveyed by CDP. Only a third of Nordic private companies have put in place Board-level oversight or executive management responsibility for biodiversity, with Denmark lagging behind its regional peers at only 18%. Formal commitments relating to biodiversity have so far been made by just 7% of the surveyed Nordic firms.
In their report, CDP and the Footprint Firm urge Nordic private companies to anticipate upcoming reporting requirements and begin expanding their environmental disclosure as soon as possible. They recommend using the recently introduced European Sustainability Reporting Standards (ESRS) as a basis for building up their capabilities over time. Increased environmental transparency from Nordic private companies should be seen as a potential competitive advantage, argues the CDP, with the better-informed firms translating climate data into efficiency measures and a strengthened reputation with stakeholders.