III Comparative study on non-financial information declarations (EINF), prepared by EY
Ibex 35 companies show great strides in sustainability and pay gap
Ibex 35 companies continue to make progress in the quantity and quality of their non-financial information statements (EINFs), as well as in improving the supervisory mechanisms of the board of directors. Thus, in three years, the disclosure of information relating to extra-financial risks has increased from 20% in 2017 to 94% in 2019. This clearly emerges from the III Comparative study on the declarations of extra-financial information (EINF) , prepared by EY, for the third consecutive year, and which has become the benchmark report for sustainability reporting.
For Alberto Castilla, Partner in charge of the EY Sustainability area, “the entry into force of Law 11/2018, as well as the new requirements of the financial market, has contributed to the development of the extra-financial information of IBEX companies. 35 with a double effect. On the one hand, the instruments of the boards of directors have been strengthened to control and supervise their responsibility for extra-financial information and sustainability. On the other hand, the quality and quantity of information on sustainability in a broad sense has increased (that which refers to how companies deal with environmental issues, social and personnel issues, corruption rights and bribes). -vin and social problems) ”.
The report deals with non-financial information in Ibex companies according to three blocks: the role of the board of directors; the results obtained in the five areas of extra-financial information and, finally, the progress made in the management of sustainable development by comparing the 2019 results with the 2018 data.
Block I: the role of the Council
Despite this progress, there is still a large margin for improvement in the integration of sustainability into the business strategy of companies, since only 60% of the companies in this index have taken extra-financial issues into account when defining your business targets, a percentage that increased by five points from the previous year.
Regarding risks, only 19% of the Ibex 35 explicitly include a specific framework for managing extra-financial or ESG risks. If they are analyzed by typology, those associated with climate change and environmental aspects represent 77% and 74% respectively. However, threats related to technological, health and safety aspects and those related to respect for human rights have been identified with a much lower percentage in companies: between 45% and 32%. In this sense, Castilla predicts that “the impact of the COVID-19 pandemic will contribute to the latter gaining presence on the radar of the board of directors”.
Block II: The five domains of non-financial information
Regarding the way of reporting ESG information, the EY study observes progress compared to fiscal years 2017 and 2018, highlighting the construction of more robust sustainability frameworks and the availability and depth of certain indicators, as well as to the declaration and calculation forms. The most notable progress is observed in the analysis and dissemination of materiality information or in the verification of information.
In terms of the environment, it is positive that the companies analyzed have increased their use of renewable energies by 43% and that 78% have implemented measures to mitigate or adapt to climate change.
In terms of social impact and talent, 66% report their pay gap in different ways (overall, by age, category or country, among others) and it should be noted that the companies studied have improved the gap by 10%. In addition, 78% have measures to facilitate disconnection from work, although only 53% detail the procedures adopted.
In the section on respect for human rights, it appears that 75% of the companies analyzed have due diligence procedures in this area and that 97% describe measures to prevent and manage risks related to human rights. man in their supply chain.
Regarding information on the fight against corruption and bribery, all the companies studied have measures designed for this purpose and 75% detail them
Ibex companies also show a growing commitment to society and value creation in the future. 84% of people analyzed report their contribution to the Sustainable Development Goals (SDGs), more specifically 75% indicate a greater contribution to SDG 8 (Decent work and economic growth) and SDG 13 (Climate action). In addition, only 56% of the sample describe the risks associated with the supply chain.
The report underlines that the main weaknesses resulting from the analysis of the extra-financial reporting of the Ibex 35 in 2019 relate to issues related to the monitoring and control of non-financial information. Little growth is observed in the way policies and their results are linked, as well as in the dashboards or the level of maturity of the integration of extra-financial aspects into the strategy and risk management systems.
Block III: Progress in sustainability management
According to the analysis carried out, the main improvements obtained in the Ibex 35 reporting concern aspects such as renewable energies, scope 1 and 2 emissions, content on diversity and disability, social commitment and associated actions. or information on supplier oversight and audit systems (see Annex 1 for more information).
Beyond the areas for improvement both in the management of sustainable development issues and in their reporting, Alberto Andreu, Senior Advisor at EY, explains that “for the 2020 financial year, companies are facing a triple challenge. First, the extension of Law 11/2018 to companies with more than 250 workers who need to prepare an EINF for the first time. Second, the inclusion of aspects related to the impact of Covid-19 in non-financial matters and, finally, the proliferation of new standards and regulations in this area which feed the universe of subjects covered by the law ”.