2022-08-04-KPMG_Global-Setting_the_baseline_towards_transparency_33页_1mb

Report Summary: EU Taxonomy Disclosures from 275 European Companies

This report analyzes the first mandatory EU Taxonomy disclosures from 275 large non-financial undertakings in the EU, providing a baseline assessment of transparency and challenges. The analysis covers disclosures on eligible economic activities for climate change mitigation and adaptation, highlighting variations in reporting practices and opportunities for improvement in the upcoming alignment reporting years.

Key Findings from Disclosures

• Overall Compliance and Trends: Of the companies analyzed, 61% reported significant EU Taxonomy-eligible Turnover, 79% for Capital Expenditure (CapEx), and 60% for Operating Expenditure (OpEx). This indicates that CapEx was most frequently identified as contributing to environmental sustainability, while Turnover alignment remains less consistent. Common challenges include inconsistent data collection, difficulty interpreting technical requirements, and limited use of standardized terminology, leading to low comparability between companies.

• Eligible Activities: Eligible activities under the EU Taxonomy were most commonly associated with sectors like Construction, Real Estate, and Energy, based on the Climate Delegated Act. Companies often linked investments to sustainability improvements, with some using a directional approach for non-revenue-generating CapEx. For example, nearly half of companies cited explanatory details on economic activities, but not all adhered to the required terminology for transparency.

• Qualitative Disclosures: The level of detail and length in disclosures varied greatly, with some reports concise and others extensive. While thoroughness isn't directly correlated with quality, most companies explained how they determined eligibility denominators, but mandatory alignment tables for next-year reports are expected to enhance consistency. Key issues include insufficient data availability, especially for operations-based assessments, and the need for clearer accounting policies.

• Link to ESG Strategy: Few companies explicitly integrated EU Taxonomy elements into their broader Environmental, Social, and Governance (ESG) strategies. Most focused on compliance, but some are leveraging it to set targets (e.g., Volvo Car), describe connections (e.g., Heineken), or plan future links (e.g., Campari). This gap presents an opportunity to align sustainability efforts more comprehensively over time.

Sector-Specific Insights

• Automobiles and Parts: Showed high eligible Turnover and CapEx, with many linking Taxonomy to emissions reduction targets.
• Real Estate: Reported the highest average Turnover eligibility due to ongoing construction and renovation activities, but voluntary alignment disclosures were rare.
• Healthcare, Retail, and Travel/Leisure: Had low or zero Turnover eligibility, reflecting limited alignment with current EU Taxonomy categories.
• Energy: Split between traditional fossil-fuel firms (low eligibility) and renewable-focused companies (high eligibility), demonstrating sector heterogeneity.
• Consumer Goods and Basic Resources: Generally low engagement, with data challenges and minimal voluntary reporting.

Recommendations for Improvement

• Enhance data collection and governance structures to prepare for alignment assessments.
• Adopt standardized terminology from the Climate Delegated Act for improved comparability.
• Strengthen connections between EU Taxonomy disclosures and ESG strategies to provide a clearer sustainability narrative.
• Leverage upcoming guidance and stakeholder feedback to refine reporting for future disclosures.

This baseline analysis underscores the need for greater consistency and proactive integration of EU Taxonomy into business reporting to support climate goals effectively.