CSR Europe launched the first-ever European Sustainable Industry Barometer. The barometer provides data on the ESG performance and sustainability level and maturity of European industry sectors and federations, contextualising the United Nations and the European Union’s annual reports on SDG progress.
The European Sustainable Industry Barometer has been developed by CSR Europe in collaboration with V.E, part of Moody’s ESG Solutions, in the framework of the European Pact for Sustainable Industry.
1. The foundations for progress are set – but a transformation is likely needed
Our research into the practices of industry federations showed clear differences in how they look to tackle sustainability challenges for their sectors. All industry federations appear to have embedded sustainability within their mission statement and roadmaps. This indicates that a foundation for progress has been set. However, gaps appear when we examine their approach to setting targets for their members, the provision of training and level of engagement in impact orientated projects. With the European Union having set clear targets for when it aims to achieve net-zero emissions status, a lack of industry level target setting may embed the fragmented approach to tackling ESG and Climate challenges that is visible in V.E’s research on companies in Europe today. Many of the industry federations interviewed indicated that they were still in a period of ramping up their activities on sustainability issues. Some indicated that targets were being discussed internally. In order to accelerate progress at an industry level in the years ahead it will be necessary that industry federations progressively harmonise their practices whilst simultaneously transforming the manner in which they work to become more “hands-on” and ambitious in the sustainability initiatives of their sectors.
2. Climate Action is happening – but in a fragmented manner
Findings from V.E’s assessments on Energy Transition and Physical Risk Management raises concerns for European industry. Across sectors, many companies continue to appear silent on their initiatives to transition their business models in line with a low carbon economy. This includes players from high emitting sectors such as chemicals and building materials as well as in the banks sector. European industry will also have to navigate the challenges posed by the physical risks of climate change (floods, wildfires etc). V.E’s current data on European companies indicates that they are largely silent on how they are preparing to identify and manage these kinds of risks. Alongside this, V.E’s data shows progressive rise in the number of ESG controversies related to Climate Change which exposes companies to reputational and operational risks. On the positive side, there are clear champions of climate action at corporate level across all sectors. Many have set net-zero targets that align or in some cases anticipate the 2050 target of the European Green Deal. However, the substantial gap that appears between leaders and laggards underlines the idea that individual champions alone are insufficient in leading Europe to its 2050 net zero targets. There remains a lot of work to do at company and industry level to accelerate the energy transition and build sector level resilience.
3. Six years after their launch, a strategic approach on the SDGs remains hard to determine
Despite being launched in 2015, the level of integration of the SDGs within industry federations and the level of identifiable activity on the SDGs by companies remains concerning. A minority of the panel we interviewed (40%) reference the SDGs within their mission and/or vision statements. For many, these foundational documents pre-date the release of the SDGs in 2015. 60% of the industry federations we interviewed had the SDGs explicitly referenced within their roadmaps with the same percentage confirming that they were being referenced within policy papers. V.E’s data on the SDGs also indicates that progress remains uneven and is not moving fast enough to meet the ambitious goals set by the UN for 2030. We can identify many more companies that are adapting their business conduct to align to the SDGs than at the product and service level. This indicates that globally, more work could be done to accelerate investments in innovation to better address the different SDGs. At individual goal level, there is a clear concern visible on SDG 1 (Zero Hunger) with very few companies (particularly from the food, beverage and supermarket sectors) providing public disclosures on how they are working to tackle these issues. With less than a decade to go to achieve the global goals, findings pathways to better embed the SDGs within
industry federations and stimulate action across their members remains imperative.