DGAP-News: Study: ESG reporting in DAX and MDAX still frequently inadequate

Study: ESG reporting in DAX and MDAX still frequently inadequate

• Reporting falls short of the expectations of many investors
• Limited verifiability and comparability of ESG information
• Merck presents the best separate Sustainability Report
• Siltronic with best Sustainability Declaration within the Annual Report

Wiesbaden, 07 July 2020 - The ESG reporting of DAX and MDAX companies shows striking weaknesses. This was one of the findings of the 'ESG Monitor 2020' by cometis and KOHORTEN that focused on quality issues in ESG reporting. The analysts with experience in the financial market examined the sustainability reporting of 87 DAX and MDAX companies under ESG reporting obligation for the 2018 financial year: "It's not easy to establish a good ESG reporting. The quality of the disclosed information is often inadequate. The reports are hardly comparable. This creates room for concealment and whitewashing", says Michael Diegelmann, CEO of cometis.

ESG progress remains superficial

The investigation showed that ESG is mainly seen as a way to build a good image. The link to business activity is often still very limited. This means that investors find it difficult to identify the non-financial risks of companies. In contrast, progress is being made in ESG structures within companies. Many companies have created special ESG committees and defined new reporting lines. KOHORTEN's market researchers have determined this in extensive, qualitative interviews with ESG managers. And the report analysis confirmed that reporting standards are now mostly established and external auditors are being involved.


However, there is little communication on the extent to which previous ESG objectives have been achieved. Possible controversies or dilemmas, such as problems with supply chain control, are often not mentioned in the reports. And governance structures are mostly not adequately presented in the reports. The Wirecard case currently shows how important good governance is. The report of this company ranks third to last in the study.

Reports often not very specific

There are often still very large deficits in the provision of quantifiable data. For example, only two-thirds (67%) of the reports provide absolute figures onCO₂ emissions and only around one-fifth on inclusion (22%) and the adequacy of wages and salaries (17%). Instead of making problems and possible solutions transparent, companies conceal unfavourable data.


Ariane Hofstetter, Managing Director of KOHORTEN, commented on the results: "It has become clear that all players have not yet been able to solve their fundamental problems. A sector-specific definition of sustainability is still missing. Rating agencies set different priorities or use egalitarian standards. And issuers tend to resort to differing sustainability interpretations that are advantageous for them."

Independent sustainability reports perform better

Of the 87 companies, 33 published a separate non-financial report, 28 a non-financial statement in the annual report and 26 both.


The integration of ESG information in the annual report is often still insufficient. Few ESG topics are addressed or only diffusely illuminated. The separately published non-financial reports (an average of 51 out of 91 possible points) were consequently more convincing than the non-financial statements with an average of 33 out of 91 possible points.

Ranking: These companies were convincing

In the separate sustainability reports from DAX and MDAX, Deutsche Wohnen shines with the best content, just ahead of overall winner Merck. In contrast, Munich Re and Telefónica Deutschland were able to convince with the design of their reports.

In the integrated sustainability statements from DAX and MDAX, the content winner was BASF. Overall winner Siltronic achieved the highest score in the graphic presentation.

 

Michael Diegelmann, CEO of cometis AG, comments: "Some companies already take ESG very seriously and have built up a strong reporting system. However, most companies fall short of the requirements. There is a risk that investors, customers or business partners will turn away from these companies in the medium to long term".


About the study

The study is based on the data collection tool of ESG Monitor 2020 and evaluated the non-financial reporting of 87 companies from the DAX and MDAX share indices of Deutsche Börse AG (cut-off date: 31 December 2019), which were legally obliged to submit a non-financial consolidated statement for the 2018 financial year. Around 180 ESG characteristics from the areas of measurability, transparency, comparability and appropriateness of ESG reporting were examined. Three sub-categories were formed for the ranking: Indication of material requirements, general reporting quality and quality of design.


The truthfulness or the qualitative level of the results obtained was not assessed. In addition, 12 representatives from the IR and sustainability departments of DAX and MDAX companies were questioned in expert interviews to better understand the opportunities and difficulties of ESG reporting from an issuer perspective.


The complete ranking can be viewed on the cometis AG website at https://www.cometis.de/en/esg-monitor-study-results and the study results can be requested free of charge. Further explanations of the study can be obtained from the contacts at cometis and KOHORTEN listed below.


cometis AG

Since 2000, cometis AG has been active as a consulting firm for strategic and operational financial communication. Our team of more than 25 employees consists of business economists and economists, journalists, business lawyers and designers. Our predominantly medium-sized clients benefit from the in-depth experience gained from more than 500 completed capital market projects. In the past years, we have led over 25 IPOs to success. In addition, we managed our clients' communications in numerous corporate finance and M&A transactions and in special situations. Our services range from the development of investor relations and communication strategies to the preparation of annual reports, presentations, announcements and websites, as well as management coaching in preparation for meetings with investors, journalists and analysts. Through our membership in the "Public Relations Global Network" (PRGN), which unites over 50 owner-managed PR & IR consultancies on all continents, we also offer our services on a global level.

Contact:

cometis AG

Michael Diegelmann

Phone: +49 (0)611 - 205855-18

E-Mail: [email protected]
www.cometis.de

KOHORTEN Social and Economic Research GmbH & Co.KG

KOHORTEN Sozial- und Wirtschaftsforschung GmbH & Co.KG has been working in an interdisciplinary manner with a psychological focus since 1973. The institute is known for many pioneering works in market research, e.g. early price elasticity studies and conjoint analyses, but also depth psychological investigations. Typical for the institute is that its research is multi-stage, or that several methods are combined to avoid a "one-sided" approach. For this purpose, KOHORTEN draws on a large pool of psychological-qualitative, ethnological-descriptive and quantitative methods as well as the diverse industry experience that has grown over 45 years.

Contact:

KOHORTEN Sozial- und Wirtschaftsforschung GmbH & Co.KG

Ariane Hofstetter

Phone: +49 (0)611 - 880011-05

E-Mail: [email protected]
www.kohorten.com