A team from the University of Cordoba compared the sustainability reports put out by 100 agri-food companies in Spain, Italy, the Netherlands and Germany. Their study is published in the Journal of Policy Modeling.

The philosophy of establishing common standards has been embraced by the European Union (EU) since its inception. Regulatory harmonization is a central issue in the EU, seeking to establish common ground rules for member countries through different regulatory frameworks, mainly directives.

To gauge how sustainable European companies are, in 2014 the EU enacted Directive 2014/95/EU (NFRD), which requires companies to submit sustainability reports with the aim of measuring, monitoring, comparing and managing companies' performance with regards to their sustainability.

Ten years after its launch, a team from the Department of Agricultural Economics, Finance and Accounting at the University of Córdoba, formed by Carlos Anguiano, Melania Salazar, Rossana Tornel and Macario Rodríguez, analyzed the amount and homogeneity of sustainability-related information divulged by 100 agri-food companies in the sector's strongest countries in Europe: Germany, the Netherlands, Italy and Spain.

Although this directive obliges some companies to produce sustainability reports (according to their size and whether they are listed on the stock exchange, depending on the country), provides for audits of those reports, and even sanctions for non-compliance, it does not stipulate a specific model to be used.

"The directive establishes that there are some standards and that each company can use the one that it finds most appropriate, as long as the reports have social, economic, governance and environmental sections, which are the basic ones," explained researcher Carlos Anguiano.

"The fact that the way the report is prepared is not standardized makes the information more difficult to compare and verify," he added.

The team analyzed the contents of the sustainability reports produced by the 100 European agri-food companies selected. These firms proceeded in accordance with the Global Reporting Initiative (GRI) disclosure standard which, divided into sections, sub-sections and indicators, makes it possible to better compare levels of disclosure. The conclusion was clear: disclosure as regards the sustainability of European agri-food companies is scant and very heterogeneous.

German companies stand out, disclosing a greater amount of sustainability-related information, closely followed by Spanish ones. Italy comes in third place, followed by the Netherlands, according to the study.

"In addition to the low levels of disclosure, the information collected is very heterogeneous," said Anguiano. The flexibility of the Directive allows countries to apply it in different ways. While in Spain companies with more than 500 employees must turn out a sustainability study, in Germany and Holland they are required only of those companies listed on the stock exchange.

According to the researcher, despite the lack of disclosure, the directive is still positive, as it can serve to dissuade companies from greenwashing or issuing misleading claims about their environmental practices. "In Spain we see that before there was a requirement, the level of disclosure was actually higher, so we believe that the information, although now less abundant, may be more accurate," added Anguiano.

The team's recommendation is the adoption of frameworks that are less flexible than a Directive, since "this may not be the most appropriate instrument to achieve the harmonization of sustainability information at the European level, if a wide margin is allowed for transposition by countries and it does not affect companies equally."

This is an analysis that could help the European Commission improve its updating of the regulation proposed for 2025.