When Thorsten Sellhorn looks at corporate sustainability reports, he sees progress—but also a reminder that measuring it is tricky business. Sellhorn, a professor of accounting at LMU Munich, recently helped lead a study analyzing 10 years of corporate disclosures from Europe's 600 largest companies. The findings, published in Nature Communications, reveal both encouraging trends and important nuances about how businesses are stepping into the light on climate and social issues.
The research team, which also included scientists from the University of Cologne, used artificial intelligence to scan nearly 9,000 PDF documents—equivalent to 1.7 million pages—spanning 2014 to 2023. They tracked 501 different environmental, social, and governance (ESG) indicators, where ESG is just a shorthand for the three big categories companies report on: how they affect the environment, how they treat people, and how they run their businesses. The result is the largest open-source dataset of its kind, now freely available to the public.
One major bright spot: companies are talking more openly about their environmental impact. The average number of sustainability indicators disclosed grew by 52.4% over the decade. Perhaps more striking, companies that once lagged behind their peers have been catching up fast. In 2014, lower-performing companies disclosed 39.4% fewer indicators than the top 10% of sustainability leaders. By 2023, that gap had shrunk to just 6.8%. "Sustainability performance and transparency are thus converging," the researchers noted.
Women are also gaining ground in executive suites. The proportion of women in top management roles increased by 9.2 percentage points across the decade—a concrete sign that diversity commitments are translating into real changes at the highest levels of companies.
But the researchers caution against reading good news in every number. Take emissions reporting: while direct emissions fell, reported indirect emissions—those produced by suppliers and customers along a company's value chain—grew more than fivefold. That sounds alarming, but it's largely because more companies are now measuring emissions they previously ignored, not because they're necessarily polluting more. "At first glance, greater transparency about emissions can seem like a rise in emissions, although emissions may actually be flat or declining," explained Victor Wagner, a co-author who recently joined the Stockholm School of Economics as an assistant professor.
One persistent dark spot: the gap between executive pay and median employee wages grew more than twelvefold since 2014, a sign that not all corporate challenges are improving equally.
Still, the researchers believe their open database can help investors, regulators, and ordinary citizens hold companies accountable. "Before now, sustainability data were often buried in long reports or only available from commercial providers at a price," said lead author Kerstin Forster. "Our open-source approach now empowers supervisory authorities, investors and NGOs to systematically compare companies and hold them to account."
In other words, the transparency revolution is just getting started—and that's something worth watching closely.