ESG Reporting in CEE: 2000-2009

Author Name: 
Geoffrey Mazullo, Principal – Emerging Markets ESG

During the decade 2000-2009 the largest listed companies in Central and Eastern Europe (CEE) significantly improved their financial and extra-financial reporting, thereby increasing disclosure of information on environmental, social and governance (ESG) indicators. This article outlines the drivers that led to increased ESG disclosure in CEE, presents detailed data on the types of ESG data disclosed and analyzes the trends which developed over the decade. 

Corporate governance – The primary driver behind ESG reporting in CEE

From the outset, corporate governance was the common denominator and primary driver behind ESG reporting across CEE. Beginning in 2002, corporate governance reforms were implemented across CEE. By 2009 a corporate governance code had come into force in each of the ten CEE countries that became new European Union (EU) member states in 2004 and 2007. In each of these countries, the local stock exchange played a major role in drafting and implementing the corporate governance code.[1]  Whereas reporting on environmental and social indicators varies widely among CEE blue-chip companies, the implementation of a corporate governance code in each country led to incremental and sustainable increases in reporting on governance indicators over time. 

The promulgation of corporate governance principles by the Organization for Economic Cooperation and Development (OECD) and regional corporate governance initiatives financed by the International Finance Corporation (IFC) in CEE as well as South East Europe (SEE) laid the groundwork for the drafting of the corporate governance codes and buttressed national initiatives in each of the CEE/SEE countries. A wide range of conferences and events helped raise consciousness; educate stock exchanges and regulatory authorities; train management and board members of listed companies; and promote media attention on governance issues. In turn, all of these activities helped strengthen the implementation of the respective codes, with more success in some countries than in others. Nevertheless, the disclosure data speaks for itself: In general, the largest listed companies in CEE provide more information about governance indicators than they do about environmental or social indicators. 

Other developments also moved forward the process of standardization of financial and extra-financial ESG reporting in CEE. The following were the most important: the evolution of International Accounting Standards (IAS) into International Financial Reporting Standards (IFRS) and the adoption of IFRS in the EU and several other jurisdictions; European Commission initiatives to promote corporate social responsibility (CSR) reporting by listed companies in member states; work by the International Standards Organization (ISO), the United Nations Conference on Trade and Development (UNCTAD), United Nations Global Compact (UNGC)  and other international organizations on standards in extra-financial reporting; the emergence of Extensible Business Reporting Language (XBRL) as a new reporting language; including both financial and extra-financial data; the launch of Global Reporting Initiative (GRI) as a standard for extra-financial reporting; increased public and regulatory scrutiny of the impact of climate change on corporate performance; increasing consumer interest in fair trade, organic food and sustainability; the growth of socially responsible investment (SRI); the launch of SRI indices on several stock exchanges, including emerging markets such as Brazil; .the launch of the United Nations Principles for Responsible Investment (UNPRI); and seismic developments in national legislation on ESG issues, including mandated gender equality in boards (Norway) and mandated CSR reporting by listed companies, state-owned companies and financial institutions (Denmark as of 2010). 

In addition to the above-mentioned drivers, the process of mainstreaming ESG into the financial industry also slowly began to impact the consciousness of a new generation of business and financial leaders in CEE. In an article in Financial Times on November 10, 2008 SRI was listed as a separate asset class.[2]  On November 1, 2009 Bloomberg announced that it had joined UN PRI and would launch ESG data on its screens.[3] The financial industry in CEE could no longer afford to ignore that the financial community had begun to take ESG reporting seriously.

ESG Reporting in CEE: 2001-2009

In 2001, the Partners for Financial Stability Program (PFS) Program ( conducted its inaugural survey “Investor Relations Online.”[4]  It analyzed corporate governance information available on the English-language websites of the ten largest listed companies in the then eight EU candidate countries. From 2002-2009 the survey was conducted semi-annually. In 2003 an inaugural “Survey of Reporting on CSR” by the same peer group was conducted; it too was thereafter conducted semi-annually though 2009. The Survey of Reporting on CSR analyzed disclosures on five questions related to corporate governance, five questions related to environmental policy and five questions related to social policy on the English-language websites and in the English-language annual reports of the same peer group.

In 2004 the peer group was widened to include Bulgaria, Croatia and Romania. In 2007, Brazil, Russia, India and China (BRIC) as well as Ukraine were added. The surveys analyzed the annual reports and websites of the ten largest listed companies in the above-mentioned countries in order to document disclosure practices, collect time-series data and identify best practice among the emerging market peer groups. The goal of the surveys was to motivate companies to benchmark their disclosure practices against peers on a national, industry and regional basis. 

Graph 1 charts the development of the publication of stand-alone ESG reports (in English) by the largest listed companies in the above-mentioned 11 CEE countries. In mid-September 2009, 45 of the 110 CEE companies surveyed (41%) issued a stand-alone English-language ESG report, compared with 41 companies (37%) in April 2009 and 28 companies (25%) in September 2008. The percentage of companies which publish the report in compliance with internationally recognized standards, such as GRI, has also grown, although not as incrementally and sustainably. Only a small minority of the reports published include an assurance statement. 

Graph 1

19 of the 40 companies surveyed in BRIC (47.5%) issued a stand-alone English-language ESG report in September 2009. The number was unchanged since April 2009, and represented a slight increase vis-à-vis 18 companies in September 2008. As a group, BRIC blue-chips generally outperformed CEE peers in ESG reporting; however, the gap continues to narrow and a few CEE countries approach the disclosure levels found in BRIC. One Ukrainian company issued a stand-alone English-language ESG report in September 2009. 

In marked contrast to all 12 previous surveys, the September 2009 (and final) edition of the Survey of Reporting on CSR in CEE documented increased disclosure in almost all areas analyzed. In 27 of the 30 categories surveyed, disclosure increased. In some categories, the increase was significant. Disclosure of information on shareholder rights increased in the annual report to 69%, from 47% in April 2009 and on company websites to 64%, from 51% in April 2009. Disclosure of information on environmental considerations in supply chain management increased in the annual report to 24%, from 19% in April 2009 and on company websites to 39%, from 30% in April 2009. In these and many other categories, new thresholds were attained. In three categories of social policy, disclosure in the annual report decreased. Below are some specific examples of the development of ESG disclosures in CEE over the past few years:  

  • English-language website: 97% of the 110 CEE companies surveyed have an English-language website on the record date of September 16, 2009, compared with 95% in April 2009, 96% in September 2008, 96% in April 2008, 94.5 % in September 2007, 94% in April 2007, 94% in September 2006, 87% in April 2006, 89% in September 2005 and 82% in April 2005.   
  • English-language annual report online: 96% of the 110 CEE companies surveyed have either a 2008 or 2007 English-language annual report online on the record date of September 16, 2009 compared with 92% in April 2009, 94% in September 2008, 87% in April 2008, 81% in September 2007, 84% in April 2007, 71% in September 2006, % in April 2006 and % in September 2005. 
  • Employee development/benefits policies: 79% of the 110 CEE companies surveyed disclosed employee development/benefits policies in the (2008 or 2007) annual report available online in September 2009. This was the highest percentage recorded since the first survey was conducted in August 2003 and the first time that the 75% threshold was exceeded.  
  • Implementation of a corporate governance code: 77 of the 110 CEE companies surveyed (70%) disclosed implementation of a corporate governance code in the (2008 or 2007) annual report available online in mid-September 2009, compared with 57 companies (52%) in April 2009 and 60 companies (54.5%) in September 2008. This too was the first time since the survey was first conducted that disclosure of information regarding compliance with a corporate governance code in the annual report available online reached the 70% threshold. 

·        Environmental performance: 53% of the 110 CEE companies surveyed reported on environmental performance in the (2007 or 2008) annual report available online in mid-September 2009. This was the highest percentage recorded since the first survey was conducted in August 2003 and the first time that the 50% threshold was exceeded.   The percentage was 34.5% in September 2008, 33% in September 2007, 25% in September 2006 and 22% in September 2005.

Trends in ESG Reporting in CEE

From 2000-2009 ongoing, incremental improvements in financial disclosure can be observed across CEE, in response to national legislation and harmonization with EU legal requirements related to accounting, audit, corporate governance and financial disclosure. EU accession also brought with it increased English-language disclosure. In brief, one could conclude that the investor relations activities of CEE blue-chip companies focused on financial disclosure.  

Conversely, until very recently (2008-2009), one could discern a perceived lack of urgency for benchmarking with best practice and international standards in extra-financial (ESG) disclosure, with the exception of reporting on governance indicators, as explained above. This could perhaps be explained in terms of a cost-benefit analysis, with a (perceived) lack of appreciation of the benefits (internal and external) of an effective ESG reporting program 

One explanation for the marked increase in ESG disclosures in 2009 by CEE blue-chip listed companies could be that finally, after several years, the impact of a broad range of pressures - consumer, investor, media, public and regulatory – emanating from EU accession can be felt. Another explanation could be that a new and more internationally-focused generation of CEE business-financial leaders and investor relations professionals has embraced ESG reporting as a new business reality. 


CEE listed companies have dramatically improved their ESG reporting over the previous decade. Corporate governance reforms provided the initial impetus and corporate governance codes improved disclosure on governance data. Other drivers, both EU-specific and international, led over time to create pressure for reporting on ESG data. Development of a cadre of talented and internationally-savvy investor relations professionals, ongoing information technology (IT) advances and the overall impact of the above-mentioned “mainstreaming” of ESG reporting promise to continue to propel this trend forward in the near future.

[1] See Corporate Governance Codes and Their Implementation. EBRD.  

[2] Pension funds set to flee equities, Financial Times, November 10, 2008.

[3] See Responsible Investor, November 1, 2009.

[4] The surveys may be found on the capital markets research page of the PFS Program website. See


About Geoffrey Mazullo

Geoffrey Mazullo is Principal of Emerging Markets ESG ( and Adjunct Professor of the School of American Law (SAL) in Gdansk and in Wroclaw, Poland. He is Chair of the Baltic Market Awards Committee, an initiative of the Riga, Tallinn and Vilnius NASDAQ OMX Stock Exchanges to promote excellence in investor relations. From 2001-2009 he directed the PFS Program (, a regional financial sector development project co-financed by USAID and East-West Management Institute. Previously he worked as a corporate governance analyst with IRRC and ISS. Since the mid-1990s he has been directly involved in a number of corporate governance initiatives across CEE. Since 2001 he has increasingly focused on ESG reporting by listed companies in emerging markets, postulating that rigorous analysis and detailed reporting on ESG indicators bring internal benefits to the company and external benefits to its shareholders and stakeholders.