Romanian corporations significantly trail their global peers when it comes to the reporting of non-financial ESG data, according to Global ESG Monitor (GEM), a research project dedicated to investigating transparency in non-financial reporting.
“Compared with the European indices EUROSTOXX and DAX, companies in the BET 20 perform poorly, achieving an average of just 41 out of 100 possible points. Compared with the indices from the USA, Asia and Australia, the BET 20 also brings up the rear of all the ten indices covered by the Global ESG Monitor 2022, albeit just barely behind WIG 20 (51 points)”, writes the 2022 report for Romania.
“Unfortunately for stakeholders, investors, and the world at large, transparency in sustainability reporting was not a high priority in Romania,” GEM says in a press release.
The Romania report includes a 5-pages Executive Summary detailing the situation in respect to the companies analyzed, as well as recommendations for improving the rankings. This approach is very helpful as the ESG reporting is something new even for the largest companies in Romania. In fact, six of the companies listed on the local stock exchange – OMV Petrom, Alro, BRD, Banca Transilvania, Romgaz and One United Properties – already rank better than the average in all other regions covered by the global report from GEM. Enel SpA occupies the leading position globally (90 points), while other four energy majors enter the top 10: Iberdrola (87), TotalEnergies (78) and Schneider Electric SE (77).
The ESG reporting assessments are also in their infancy, not only in Romania, but especially here. No recently than February 2022 , the first ESG scores of BVB listed companies were made available on the BVB Research platform by Sustainalytics. one of the global leaders in the segment of ESG research and ratings. The scores of the BVB companies are somehow more encouraging, with TeraPlast, for instance, seen among the 25% best ESG scores for the companies in the sector, covered by Sustainalytics – compared to a modest 29/100 score given by GEM.
BVB launched its first ESG guidelines last November with the European Bank for Reconstruction and Development (EBRD), and the ESG hub is already available with reports for each company.
Yet another study carried out by PwC Romania with BVB, shows that for most Romanian listed companies, non-financial reporting is a compliance issue, and only 30% have an implementation plan for environmental, social and governance (ESG) objectives. Further on, only 10% have an integrated business and sustainability strategy.
The PwC 2021 Global Investor ESG Survey, capturing the views of 325 investors from around the world, discovered that companies failing to act on ESG issues risked losing investors. ESG factors increasingly drive investment strategies, and this research from PwC finds ESG has now become a make-or-break consideration for leading investors globally. Almost half of investors surveyed, 49%, express willingness to divest from companies that aren’t taking sufficient action on ESG issues. More than half, 59%, also say lack of action on ESG issues makes it likely they would vote against an executive pay agreement, while fully a third say they have already taken this action. A large majority, 79%, say the way a company manages ESG risks and opportunities is an important factor in their investment decision making.