“We surely live in the best of all possible worlds, in the European Union, but it has a huge tendency to overregulate, in my personal opinion,” said Francisco Román, president of the ESG Working Group of the Círculo de Empresarios on Tuesday. .
“Companies face a risk of hyper-regulation, because Europe has generated an enormous machinery, tremendously effective in regulating many aspects, but which has both sides,” he said. On the face of it, this regulation “fuels transformation, encourages all companies, large or small, to be aligned in the same direction,” she explained. On the other hand, “we all know that digesting all that regulation sometimes causes excessive costs.” Román recalled that Europe “competes with lighter regions in these aspects; you have to ask yourself what price you are willing to pay”, he pointed out.
“Europe has a certain excess of regulatory vocation and that can weigh us down,” he emphasized. That is why “we recommend that we be pragmatic, so as not to overcharge” companies. Particularly, in a country whose productive fabric includes “many small companies for which this can be done more uphill.” This type of “ballast” reduces “competitiveness,” she added.
Francisco Román made these statements during the presentation of the report, prepared by EY. One of the main conclusions of this study is that “the general level of Spain in relation to the main international instruments of sustainability can be improved”.
Best in ‘E’ for ESG
The level of preparation of the Spanish company to respond to this regulatory challenge and change in the economic model “is not homogeneous for the three ESG dimensions,” says the study. Where this country is best positioned is in the E of the acronym: “In environmental matters, the starting position of Spain could be qualified with a score of 4 out of 5”, it is pointed out. This statement is based on several strengths: “It occupies position 14 out of 180 in the Environmental Performance Index (2020); greenhouse gas (GHG) emissions are lower than the EU average of the 27 (2019); in renewable energies, is the country that invested the most (7,394 million euros in 2019), and 21.2% of the country’s total energy comes from renewable sources (2020)”. It is also highlighted that, in installed capacity for gas storage, it represents a third of the total import capacity of Liquefied Natural Gas (LNG) of the EU by sea and that dependence on Russian gas is minimal. However, there are still opportunities for improvement, especially with regard to the clarification of the regulation related to renewable energies and the connection of gas infrastructures with Europe.
In social matters, Spain’s starting position could be classified as 2 points out of 5. “In terms of corporate health and safety policies, 41% of European companies (including those in the United Kingdom) and 26% of those in the rest of the world consulted by the United Nations Global Compact that declare to incorporate these policies are Spanish (2020); in terms of equality, and from the point of view of equal rights in the legal system, Spain is one of the 12 countries in the world 100% egalitarian; in terms of disability, 72% of active people with disabilities have a job”. However, there are still very important areas for improvement, “especially in those related to the youth unemployment rate (38.3%, which places us at the head of the EU) and total unemployment (15, 5%, the second highest in the EU and far from the average of 6.83%).
In terms of governance, Spain’s starting position could be classified as 2.5 out of 5. 79% declare that they include ESG metrics in their Long-Term Incentives and 29% include them in short-term ones, “which positions Spain above the EU average”; the presence of women on the boards continued to increase, standing at 26.1% (23.4% in 2019) in listed companies and 31.3% in “. Most recent data from, reveal that the Spanish market as a whole the data is already 29.3%, and exceeds 34% in the .
“However, there are still important lines of improvement, especially in aspects related to Spain’s position in the democratic quality indices (in 2021 Spanish democracy went from being a full democracy to an imperfect democracy) and in the Perception of Democracy indices. Corruption (Spain occupies position 32 out of a total of 180 countries, with 62 points).
Regarding the Sustainable Development Goals (SDGs), in 2021 Spain was in twentieth position (among 165) with a score of 79.46 out of 100. On the other hand, 81% of Spanish companies are aware of the SDGs and a 86% have established some measure to help achieve them.
Taxonomy: opportunity and challenge
The report also alludes to , which establishes what kind of economic activities fit in with the EU’s climate objectives. “On the one hand, banks and investors have to publish and how this affects their risks (Sfrd); on the other hand, companies will have to explain in their sustainability reports what part of the company’s activity is eligible according to taxonomy criteria. (Csrd)”.
In this framework, “the main opportunity for Spanish companies is to access financing for which there is enormous market appetite.” And the main challenge “will be to transform the company’s balance sheet into green, determining what percentage of its Opex, Capex and Ebitda is eligible” according to the taxonomy.
Facebook Comments
Disqus