What is an ESG Disclosure Score for Listed Companies?

Ultimately, there is no perfect way to calculate an ESG Disclosure Score. This article will focus on different ways you can assess a company's overall ESG Disclosure and what type of players on the market aim to provide ESG Disclosure Scores. 

Defining ESG Disclosure Scores: An ESG disclosure score measures the comprehensiveness and transparency of a company’s ESG reporting. Strong ESG Disclosure does not necessarily mean strong ESG performance. See our article on ESG Rating Agencies to understand performance assessments. Take the below example:

Company A Discloses the Following Metrics:

• Employee Turnover Rate: 25%
• Health and Safety Accidents: 23 accidents in the year
• Employee Engagement Survey Participation Rate: 15%

That company could be viewed as having a “Strong ESG Disclosure,” as the above are all important metrics to communicate, however their ESG performance could be consider as poor as they are not reaching best in class performance on various metrics. Strong performance on the above 3 metrics would traditionally be: 

• Employee Turnover Rate: Less than 10%
• Health and Safety Accidents: 0
• Employee Engagement Survey Participation Rate: 90%+ (survey is completed annually)

Why would a company disclose data points they are not strong at? 

In a pre-ESG regulation world of “Voluntary” ESG reporting, many companies tried to only disclose data points they were performing well at. As the market standardises, it is harder and harder to take this approach. Stakeholders require all companies to provide transparent reporting on certain data points. Furthermore, there are some standard setters that purely assess a companies “ESG Disclosure Score” not necessarily their “ESG Performance.” This is because strong ESG Disclosure = transparency. 

What types of topics are included in a companies ESG disclosure. 

While regulation is the only required topic, some common themes companies should disclose on are listed below: 

1. Environmental Reporting: Information about greenhouse gas emissions, energy consumption, water usage, waste management, and climate-related risks. Biodiversity is an emerging “E” topic. 
2. Social Reporting: Data on diversity and inclusion, employee well-being, employee training, community engagement, health and safety and human rights practices. 
3. Privacy and Data: Reporting on data breaches, users rights to privacy, cybersecurity certifications and more. 
4. Governance Reporting: Details on board composition, executive compensation, shareholder rights, business ethics, and anti-corruption measures.

Why ESG Disclosure Scores Matter

For listed companies, strong ESG disclosure scores represent a company’s commitment to transparency and accountability. Increasingly, they also represent compliance. Some factors to consider: 

1. Regulatory Compliance: As regulatory requirements for ESG reporting become stricter worldwide, companies with high disclosure scores are better positioned to meet compliance standards and avoid penalties. (CSRD, IFRS)
2. Investor Confidence: Investors rely on ESG disclosure scores to assess the risks and opportunities associated with a company’s sustainability practices. Transparent reporting builds investor trust and can attract ESG-focused capital.
3. Reputation Management: Transparent ESG disclosures enhance a company’s reputation among customers, employees, and communities. They signal a commitment to ethical and sustainable practices.
4. Risk Mitigation: By disclosing ESG information, companies can identify and address potential risks before they escalate, protecting their long-term value.

Want to assess your company's ESG Disclosure Score? Get in touch with the Nossa Data team. We are experts in listed companies ESG Disclosure Scores assessments. 

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