The themes of the sustainability they have always joined more stably of the decision-making processes of companies starting from the boards of directors and the impact can also be seen on the remunerations of the managing directors of Italian companies, in road shows, in the company's strategic plans.
These are some of the considerations that emerged from the 2021 Report on non-financial reporting of Italian listed companies, with which Consob examines the non-financial statements (dnf) that listed companies are required to submit annually based on Legislative Decree 54/2016 transposing Directive 2014/95/EU.
The analysis concerns, among other things, i behavior which may signal progress in the process of cultural transformation linked to factor consideration ESG (Environmental, Social and Governance) in the definition of business models, business strategies and corporate governance models. The Consob Report shows that over the course of 2021 they have released a Non-financial statement , 151 listed companies, representative of the 69% of the list and approximately 97% of capitalisation market at the end of 2020. These also include 2 companies that drafted the document on a voluntary basis.
Consob: compliance leads to a cultural transformation
La non-financial statement occupies a prominent place in the communication plans of large companies, called to do their part to improve environmental sustainability, inclusion and social equity by aiming to do business in a more ethical and circular way, without sacrificing profit, but giving back to the reference community, consumers and employees a share of the value achieved in the form of a more respectful use of raw materials and energy, social inclusion projects and personal growth. What in the Anglo-Saxon world is defined Corporate Social Responsibility.
Often companies see the ability to communicate their commitment to issues relevant to the community as an excellent one opportunity to engage not only end customers but also business partners, investors and employees.
For Consob it is a fulfillment which can introduce mechanisms for “a progressive cultural transformation triggered by the consideration of sustainability in the corporate decision-making process which can be traced back to three phases: Awareness, Capability and Involvement”, he says in the Report.
At the EU headquarters moreover, the introduction of a new system has already been foreseen for the next few years Sustainability reports, which will lead to a significant increase in the number of companies required to present their identity card for ESG (environmental, social, governance) purposes. It is estimated that in the future the obligation will apply to around 2-3 thousand Italian companies, starting on a staggered basis from 2024.
The materiality analysis used by all companies
I'm very the solutions varied adopted by the companies to integrate the DNF, but the so-called emerges more consistent materiality analysis (i.e. the one that allows to identify the aspects related to sustainability most relevant to the company, as well as for its stakeholders) which was performed by all companies for the purpose of drafting the NFS, says Consob: the materiality analysis has been updated compared to 2020 in 120 cases. As part of the update and in order to map the most relevant topics, the companies have involving internal organs in 116 cases (114 in 2020) and, in particular, the top management in 83 cases (74 in 2020).
Involved the entire board of directors with specific guidelines
The entire board of directors is increasingly involved in this analysis: indicated by 51 companies compared to 39 in 2020, while the number of issuers that provided inductions on ESG topics to members of the board of directors increased from 32 to 53.
Speaking of boards and sustainability, Consob also reports that in 2021, among the 49 companies that drafted the NFS and renewed the board, 34 published guidelines for the appointment of the new board of directors or have given indications on the desired composition of the board in the context of the explanatory report on the items on the agenda of the shareholders' meeting called to resolve on the appointment of the new administrative body.
According to Consob "first there is a reference to the topics concerning respectively the sustainable success , value creation in the long run (8 quotes), le strategy long-term (subject of three inductions) and the sustainable remuneration (5 cases)”.
Esg issues also involve remuneration policies
A significant increase has been noted for the number of companies that declare that they also consider ESG issues in the remuneration policies of the managing directors (106 from 63 in 2020), thus helping to accelerate the transformation process. The reference to these factors concerns short-term remuneration in 97 cases and the long-term component in 56.
A more accentuated propensity for the inclusion of sustainability issues in the remuneration of managers can be found among the larger companies, belonging to the Ftse Mib index (30 cases, equal to 91% of the index) or to the Mid Cap (27 cases, equal to 73% of the index).
There are no significant differences between sectors, considering that the link between compensation and ESG factors is found in 24 financial issuers (49% of the sector), 59 industrials (47% of the sector) and 23 service companies (45%).
There is if anything a more significant difference related to the type of control of the company: sustainable compensation is provided more frequently in companies controlled by the State or by public bodies and in companies for which it is not possible to identify an ultimate controlling agent (respectively in 80% and 62% of cases).
La share of the remuneration short-term related to ESG factors is equal to an average of 20%, a slight increase compared to 2020, when it was 17%. With reference to long-term variable remuneration, the portion linked to ESG factors is equal on average to 18%, oscillating between a minimum value of 5% and a maximum of 35%.
Attention to diversity, inclusion, smart working, training
Sustainability does not only concern the so-called green topics, i.e. of environmental sustainability, but also those related to corporate governance and social factors. Of the latter, the most relevant for the remuneration of the chief executive officer, in line with 2020, are those who concern employees are the most common (diversity and inclusion, smart working, training; 44 cases), followed by the reference to the reduction of the rate misfortune sul labor (17 cases) and to customer satisfaction (16 cases). Furthermore, for the first time, three companies are reported that link remuneration to the CEO's ability to integrate ESG factors along the supply chain.
ESG factors enter road shows and strategic plans
To grasp the integration of factors ESG in the corporate vision, the summaries of the Strategic plans presented to investors in road show and available in the section Investor Relations of company websites. In 2021, summaries were published by 63 companies, of which 30 mentioned some long-term business considerations, 16 linked the strategy to the United Nations Sustainable Development Goals and 8, active in the Energy/Oil and Gas sector, have fully integrated in their communication topics that generate value in the short and long term, describing the connections between financial and non-financial issues.
The use of dedicated platforms and data analysis are growing
As part of the process of identifying material topics, 14 companies (12 in 2020) resorted to dedicated platforms interaction with stakeholders oa for the use of advanced methodologies of data analysis. Furthermore, 26 issuers (20 in 2020) have set up a special information system for collecting non-financial information useful for drafting the document. Overall, there are 58 companies which, for the purpose of identifying the material topics, have made clear both that they have taken into consideration the points of view of the company and of external stakeholders and the related methods of involvement, following best practices, in compliance with the indications of the GRI Sustainability Reporting Guidelines and the IIRC Integrated Reporting Framework.
