The implementation of the Corporate Sustainability Reporting Directive (CSRD) marks a significant shift in corporate sustainability practices, driving the issue directly into boardrooms across Europe. This EU directive aims to increase the availability of reliable sustainability information, enabling investors to make informed decisions that channel capital towards sustainable ventures and contribute to the EU’s Green Deal. A crucial element of CSRD is the mandatory reporting of greenhouse gas emissions, encompassing both direct emissions from operations (Scope 1) and indirect emissions from the value chain (Scope 2 and 3). While tracking emissions within the value chain presents a complex challenge, it is essential for providing a comprehensive overview of a company’s true climate impact. Companies are expected to meticulously report their emissions data, and any failure to do so requires thorough justification. The directive also heightens the consequences of reporting inaccuracies. Misrepresenting emission levels can mislead investment decisions and potentially damage a company’s reputation and financial standing. Directors bear legal responsibility under company law and face potential penalties, including fines or imprisonment, for providing false or misleading information.
For companies with state ownership, the mandate for sustainability is further reinforced by government ownership policies. These policies often emphasize the importance of aligning corporate strategies with national environmental and climate goals, as well as international agreements like the Paris Agreement. State-owned companies are expected to exemplify best practices in sustainability and act as leaders in the transition to a low-carbon economy. Accurately measuring and reporting emissions is the cornerstone of effective emission reduction strategies. The global impact of climate change is directly linked to the total amount of greenhouse gases released and the rate at which these emissions are reduced. The Intergovernmental Panel on Climate Change (IPCC) emphasizes the urgency of immediate, substantial, and sustained emission reductions. The ”carbon law,” a guideline developed by the Stockholm Resilience Centre, proposes halving global carbon dioxide emissions every decade starting from 2020 to meet the Paris Agreement targets, translating to an annual reduction of at least 7%.
An analysis of sustainability reports from 24 state-owned companies in Sweden, each with a turnover exceeding one billion kronor, revealed a combined reported emission total of nearly 42 million tons in 2023. This figure is alarmingly close to Sweden’s total fossil fuel emissions of 44 million tons in the same year, highlighting the significant contribution of these companies to the nation’s carbon footprint. While some companies demonstrate commendable progress in emission reduction, others fall short of expectations, revealing inconsistencies and gaps in reporting practices. Vattenfall and Postnord stand out as positive examples, having achieved substantial emission reductions through measures such as divesting from coal power and transitioning to electric and biofuel-powered vehicles, respectively. Both companies provide transparent and comprehensive emission data across all three scopes (Scope 1, 2, and 3).
However, the analysis also uncovered significant shortcomings in reporting among other state-owned companies. Several companies, including Almi, Lernia, and SJ, failed to report any emission data. Others, like LKAB and Infranord, reported emissions only from their direct operations, neglecting the substantial emissions embedded in their value chains, estimated to represent 60-80% of their total impact. Swedavia’s reporting, focusing on emissions per airport, employs a non-standard metric that hinders meaningful comparison with other companies. Similarly, Sveaskog, Sweden’s largest forest owner, omits biogenic greenhouse gas emissions from its reporting, contrasting with the practices of other forestry companies like Billerud, Holmen, and Södra, which acknowledge the significance of these emissions, often exceeding their fossil fuel emissions. Furthermore, some companies present incomplete data, as exemplified by Systembolaget, which includes the climate footprint of packaging but excludes the emissions associated with the beverages themselves.
While the complexities of emission calculation, particularly within the value chain where supplier data may be lacking, present a challenge, the overall pattern of reporting highlights a need for improvement among state-owned companies. These companies fall short of the expectation that they should lead by example in sustainability reporting and demonstrate a more comprehensive approach to emissions accounting. The observed patterns in reporting among state-owned companies mirror those seen in larger corporations, where emission data often receives less attention and scrutiny compared to financial data. This lack of rigorous and transparent reporting hinders public scrutiny and accountability, which is particularly concerning for companies owned collectively by citizens.
The Riksrevisionsverket (RRV), the Swedish National Audit Office, identified deficiencies in the sustainability reporting of state-owned companies in a 2021 evaluation. The RRV criticized the government for prioritizing broad policy statements over concrete results and called for greater emphasis on measurable outcomes in sustainability reporting. The Ministry of Finance bears the responsibility for ensuring compliance with the state’s ownership policy and aligning corporate actions with government guidelines and objectives. Therefore, Finance Minister Elisabeth Svantesson should ensure that all relevant state-owned companies are prepared for the implementation of CSRD and take proactive steps to establish these companies as leaders in sustainability. This includes prioritizing climate-related information in shareholder communications, strengthening board competence through the appointment of sustainability experts, and actively promoting sustainability as a core corporate value. By prioritizing robust and transparent sustainability reporting, with a clear focus on climate emissions, state-owned companies can fulfill the requirements of CSRD, uphold their own ownership policy commitments, and truly exemplify the leadership in sustainability that is expected of them.
