- Banks and insurance companies scored just under 50%, slightly above average
- Financial institutions show awareness of climate issues but lack in-depth reporting
Banks and insurance companies are making strides in their climate reporting but still have room for improvement, according to the latest evaluation by the Global ESG Monitor (GEM) 2024. The study analysed the non-financial reporting of 194 companies, including 10 large insurers and 10 banks, with a focus on European Sustainability Reporting Standards (ESRS).
The financial sector, comprising banks and insurance companies, achieved just under 50% of possible points in reporting quality, slightly surpassing the overall sample average of 45%. This performance indicates progress but also highlights areas for potential enhancement.
Michael Diegelmann, co-founder of GEM and co-CEO of cometis, an IR and ESG consultancy, said, “Banks and insurance companies can tap into further future-proof investment and return opportunities in the long term through the pressure they generate. To this end, they should also continue to improve their own reporting quality. The best practices of the pioneers from the sectors show that there is still a lot of potential here.”
The evaluation revealed that financial institutions demonstrate strategic awareness of key climate issues. They performed well in areas such as commitment to the Paris Climate Agreement, disclosure of scope emissions, and presentation of transition plans. However, significant gaps were identified in reporting on resilience and the financial impacts of climate change.
In resilience reporting, both sectors scored just under 60% of points, outperforming the overall sample average of 38%. However, only about half of the nine significant institutions according to the European Central Bank reported on resilience analyses. The level of reporting on the financial impact of climate change was particularly low, with companies scoring only 15% of possible points in this area.
Ariane Hofstetter, co-founder of GEM and board member of cometis, emphasized the importance of transparent reporting: “Climate change is already causing immense costs today. Transparent reporting is therefore essential, because it is about more than just documented responsibility, but about the sustainable transformation of the economy.”
The study also assessed ESRS compliance, where banks and insurers scored below 50%. This indicates a need for more transparent communication, both for their own interests and in view of their status as important partners and stakeholders for numerous companies.
The Global ESG Monitor, an independent think tank, has analysed over 1,300 reports from more than 500 companies worldwide since its foundation in 2020. Its methodology integrates principles and criteria from various international standards and frameworks.
Click here to download the report.
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