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Finnwatch studied Finland's largest companies’ climate disclosures in their first CSRD reports. While the reporting by the observed companies covered most of the required ESRS information there are major differences in the reporting practices that should be addressed with better guidance.
A recent report from the Finnish corporate watchdog NGO Finnwatch compares the climate transition plans of ten large Finnish companies that published their first CSRD reports this spring. These plans should give a clear picture of how a company's business is to be reconciled with the fact that global warming must be limited to 1.5°C. The results of the study show that this requires further work from the companies.
The weakest plan was reported by retailer Kesko, whose reported transition plan left out 99 percent of the company's emissions. This shortfall is due to the fact that Kesko does not address its value chain emissions that are mainly generated in the manufacture of the sold products. Instead it mainly focuses on the energy consumption of its stores and logistics.
– Reducing emissions of energy used in own operations is important, but insignificant in the big picture if the business otherwise remains unchanged. Without a clear plan to reduce the emissions related to the sold products, it is unclear how Kesko plans to achieve its long-term climate goals, says Finnwatch's climate policy specialist Lasse Leipola.
The study found shortcomings in transition plans of all the observed companies. A common flaw was that the justifications for the emission reduction targets were weak or nonexistent. The majority of the companies also did not present their overall targets for 2030 in terms of absolute emission tonnes. In addition, many reports lacked clarity on what kind of changes are needed in the companies’ business models in order to achieve the long-term target of climate neutrality.
The least flaws were observed in the transition plans by Ilmarinen, Nokia and Stora Enso. Although various deficiencies were fairly common in the examined group, only Neste said directly that it does not yet have a separate transition plan that is in accordance withthe reporting standard. Even so, Neste still reported a large part of the required information in its text on the transition plan.
– The top priority for all companies is to adopt a plan and thoroughly report on it in line with the reporting requirements. But when that is not the case, it is important to be open about the shortcomings and not leave them to be interpreted between the lines, says Leipola.
Finnwatch's report also looked at companies' reporting on emission from 2024. In this respect, the companies performed clearly better and more consistently, although small shortcomings were detected across the group. Nokia provided the most comprehensive information on its emissions. It performed best also in Finnwatch's 2023 study on corporate emission reporting.
– The requirements of the CSRD bring forth a new kind of transparency on the impacts of companies' operations. Based on our review on climate reporting, an important step forward has already been taken in the first round of reporting. Next, it is important that the practices become uniform, says Leipola.
In particular, Finnwatch hopes for improvements in the comparability of companies' reports. The CSRD was supposed to improve comparability, but the practices in the first reporting round turned out to be quite varied.
– Addressing the shortcomings of reporting can be achieved with fairly light measures, such as improving the reporting guidelines, correcting the differences between the translations of the standards, and simply by companies taking lessons learned from the first reporting round to the next. For example, spreading the best practices highlighted in our report would be another clear step forward, Leipola states.
However, the so-called Omnibus I proposal issued by the European Commission in early 2025 threatens to mix things up just when the companies are learning their lessons from the first round of reports. A major revision of the standards is already under way, in addition to which the extension of the reporting obligation to medium-sized companies has been postponed and its cancellation altogether is currently under political consideration.
– Several companies included in our study told us that the new reporting requirements have strengthened their work on sustainability. The European parliament and the member states should take this into account and stop the unnecessary deregulation and focus on clarifying the requirements, says Leipola.
The new reporting requirements come from the Corporate Sustainability Reporting Directive (CSRD) by the EU. They aim to ensure that companies' sustainability reporting is comprehensive and leads to a better comparability than before. In addition to the climate transition plan and other climate data, the reporting requirements also cover other aspects of sustainability such as other environmental impacts and human rights. The companies whose reporting was observed in the Finnwatch study were Ilmarinen, Kesko, Kone, Neste, Nokia, Nordea, OP Group, Sampo, Stora Enso and UPM.
The full report is available in Finnish.
An English translation of the summary and recommendations is available here.
