Researchers - Ario Saeid Vaghefi, Tushar Manekar, Tobias Schimanski and Markus Leippold – at the University of Zurich have used an AI-powered tool to assess the decision-usefulness of companies’ nature related disclosures.
In particular, they assessed reports issued by Nature Action 100 companies – a collection of large companies identified by investors as having high potential impacts on nature.
The study found that these companies’ narrative disclosures were broadly aligned with the Task Force on Nature-related Financial Disclosures recommendations, however they scored poorly on their quantitative metrics and targets.
It also found that the disclosures “are not sufficiently decision-useful for stakeholders and lack legal enforceability”.
The summary reads: “Our analysis reveals a disconnect between reporting and reality: disclosures are dominated by positive sentiment despite ongoing biodiversity loss, geographically ignore many of the world's most critical natural assets, and contain commitments that score high on declaration but low on specificity and even lower on legal enforceability.”
Based on the results, the researchers recommend the establishment of “a legally binding regulatory framework for sustainability disclosures that reflects real-world impacts and covers more detailed information about the location of activities and supply chains.”
Highlighting the CSRD as an example, they argued that “rigorous and enforceable measures are the only way to ensure that corporate disclosures are truly decision-useful”.
