Nordic private companies risk losing leading position on environmental reporting, must take action as regulation bites

• More than 2,000 privately-owned Nordic companies potentially required to report under the EU’s Corporate Sustainability Reporting Directive (CSRD).
• But only 460 private Nordic companies disclosed environmental information to CDP in 2022, out of the 1000+ businesses that received requests through CDP.
• Just 35% of private Nordic companies have set emissions reductions targets vs. 40% in DACH and 37% in France/Benelux.
• Of those setting targets, Nordic private companies double the European average in terms of science-based target setting.
• Less than 1 in 10 businesses have established any commitments on biodiversity. The report urges companies to get ahead of regulation and stakeholder demands.

Nordic private companies outperform their European peers for environmental reporting but are stalling on action amid mounting regulation, a new report from The Footprint Firm and CDP reveals.

The research finds more than 2,000 private businesses in the Nordics could be subject to the EU’s Corporate Sustainability Reporting Directive, which begins to come into effect next year. But only 460 of these companies disclosed environmental data through CDP in 2022 - less than half (43%) of the more than 1,000 businesses that received requests.

Of the Nordic private companies disclosing, more report on emissions than those in any other part of Europe. More than half (62%) report on their direct emissions, compared with the European average of 55%.

With Nordic prime ministers pledging for the region to become the most sustainable by 2030[1], the region will need to contribute to a nearly 50% reduction in global emissions by then to limit warming to 1.5 degrees.

To reach these goals, companies must look to cut emissions across their supply chains as European companies’ greatest impact laying beyond their direct operations[2]. The Nordics are also among leading regions for reporting scope 3 - with 42% of private companies disclosing in 2022, compared with the 35% European average.

But when it comes to setting firm targets to reduce emissions, the Nordic region is lagging behind others in Europe. Just above 1 in 3 private Nordic private companies have set emissions reductions targets (35%), compared to 40% in the DACH region and 37% in France/Benelux. Although they are showing ambition in having these targets approved in-line with climate science; this proportion - 7% - is double the European average (3%).

The report urges Nordic companies to get ahead of regulation and stakeholder demands to continue leading the way, on both environmental reporting and action. Outtakes for businesses include utilising existing guidance to prepare for incoming frameworks, using a disclosure system that enables uniform responses to stakeholder requests and implementing substantive initiatives on both climate and biodiversity at the board-level.

CDP Europe Executive Director, Maxfield Weiss, said: “This decade is a moment of truth for the Nordic private sector. The data from the region’s leading disclosure system is most powerful when translated into action, and companies must now take that next crucial step. It’s the only way we will prevent temperatures rising beyond 1.5 degrees and preserve nature for future generations. From 2024, when the CSRD takes effect, large companies will need to publicly disclose information on how they manage their environmental impacts and risks. Yet while Nordic private companies lead on environmental reporting compared with other regions, they are currently lagging behind their public counterparts in terms of disclosure rates. And for those organizations that are disclosing, there is further work to be done in taking the next steps on the environmental journey, including setting science-based emissions reduction targets and using biodiversity indicators to monitor and manage performance. In a world in which mandatory disclosure is becoming the norm, companies that take a proactive approach stand to gain.”

The Footprint Firm Director, Phil Doolan, said: “The private sector has the potential to play an important role in reducing environmental impacts across the value chain, helping prevent warming above 1.5 degrees and restore nature. The unfortunate reality is that many privately-owned companies in the Nordics are still at an early stage of understanding and reporting their impacts, and thus lack the foundation for reducing them.While it will soon be a requirement for many companies in the Nordics to report extensively on their environmental impacts, in this critical decade for the climate we can’t afford to wait. I really hope that privately-owned companies see this as an opportunity to position their business for success in a low carbon future, not as an isolated reporting exercise.”

While board level oversight on climate related issues is now the norm for Nordic companies, with the vast majority (82%) having this in place, less than a quarter (24%) have a board member with dedicated responsibility. This drops even further when looking at biodiversity-related issues, with just 7% of Nordic private companies having public commitments on biodiversity, despite it being critical in regulating the climate[3].

For more information, read the full report ‘Charging ahead or losing steam? Nordic companies lead EU in environmental reporting, but lag amid regulation’ here.

-ENDS-

Note 

• Companies disclosing to CDP are typically more exposed to material environmental topics – increasing the likelihood that they are requested to disclose – or more actively addressing them and making them more likely to respond – increasing the likelihood of response. Therefore, our analysis may indicate a higher level of transparency and action than that which exists across all privately-owned companies – this includes around three quarters of companies that don’t currently report to CDP.
• Analysis of private Nordic companies potentially subject to the CSRD was based on all large companies meeting at least two out of three criteria of:
  

250 employees; and/or
40mEUR Turnover; and/or
20mEUR Total Assets.

Application of the CSRD will take place in three stages:

• 1 January 2024 for those already subject to Non-Financial Reporting Directive (‘NFRD’). First report in 2025.
• 1 January 2025 for large companies that are not presently subject to the NFRD. First report in 2026.
• 1 January 2026 for listed SMEs, small and non-complex credit institutions and captive insurance undertakings. First report in 2027.

About CDP

CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states, and regions. Founded in 2000 and working with more than 740 financial institutions with over $130 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests.

Nearly 20,000 organizations around the world disclosed data through CDP in 2022, including more than 18,700 companies worth half of global market capitalization, and over 1,100 cities, states and regions. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy.

CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative.

Find out more via www.cdp.net 

About The Footprint Firm

The Footprint Firm is an advisory and investment company with a sole focus on sustainability.

Founded in 2019 and connecting companies, science, academia, government institutions, startups and capital to support climate positive innovations and sustainable solutions. 100% of profits are invested in sustainable start-ups, where The Footprint Firm works closely with investments to help them realise their impact potential.

The Footprint Firm is a certified B Corporation based in Copenhagen.

Find out more via www.thefootprintfirm.com 

[1] https://www.norden.org/en/news/nordic-leaders-pled...

[2] https://www.cdp.net/en/articles/companies/only-37-...

[3] https://www.unep.org/news-and-stories/story/why-nature-holds-key-meeting-climate-goals#:~:text=UNEP%20research%20shows%20that%20land,acting%20as%20natural%20carbon%20sinks.