Almost two-thirds of European companies do not have revenues that meet the EU criteria. for climate-friendly activities and half have no planned capital expenditure that can be considered green, according to a new analysis published yesterday. The European Union’s categorization classifies economic activities that can be promoted as sustainable to improve transparency and encourage investment to combat climate change. Companies are now required to disclose what portion of their revenue is compliant with the classification.
Green alignment means revenue generated from climate-friendly sectors such as renewable energy, or other sectors that meet certain criteria – for example, a steel mill that has carbon dioxide emissions below a certain level.
An analysis by sustainability data firm ESG Book, which looked at 683 companies representing 40% of the European market capitalization, found that the average share of company revenue according to the classification was 8%, while for capital expenditure, which concern corporate long-term spending plans, the percentage was at 13%.
More than 60% of European companies studied had zero revenue based on the classification and 50% had no aligned capitalization, according to ESG Book. “The scale of the challenge in moving towards a low-carbon economy is becoming much clearer,” said Leon Saunders Calvert, chief product officer at ESG Book. “For a lot of businesses that have to go through a transition, we would like and expect more to be done with their capital to bring about an alignment.”
In addition, he pointed out that the findings showed the extent to which, for example, car companies still make far more money from internal combustion engines than from electric vehicles, and oil and gas companies from fossil fuels than from renewable energy generation.
The analysis points out that the data, which comes from the European Union’s sustainability rating system, one of many generated globally, is useful because it shows how and where companies make money. Most environmental, social responsibility and governance (ESG) data measures companies’ exposure to these types of risks with ESG initials.
The very low levels of compliance partly reflect that these are new regulations, while companies’ reporting should improve over time. However, the reality is that they show limited compliance. Finally, the classification of the E.E. it does not record revenue that is climate neutral.
In addition, companies without much revenue that nevertheless meet the green criteria are not necessarily a problem.
