Corporate disclosure of ESG information is getting better, "but progress will remain patchy and haphazard as long as it remains voluntary," according to a Morningstar report released Wednesday.
Morningstar analysts found that U.S. companies disclose 67% of material ESG topics, compared to a 73% disclosure rate in Europe and 52% in Asian companies.
Reporting on key social issues like gender pay or industry-specific environmental issues in sub-sectors, such as chemicals, food and oil, lags even further, according to the Corporate Sustainability Disclosures report.
"The social indicators related to employees generally see some of the poorest disclosure. Given the public interest in social indicators — particularly in the form of gender pay and broader diversity metrics — disclosure is surprisingly low. It's only to a small extent explained by local data privacy rules constraining what and how this type of data can be gathered and reported," the report said.
Carbon and emissions data is most prevalent in Europe, while politics and lobbying information is most disclosed by U.S. companies. Those are a reflection, in part, of disclosure rules, but even where rules do exist, they often only apply to the largest companies, the report found.
The findings reinforce the argument for mandatory minimum disclosures that would help investors, enhance ratings accuracy and avoid firms choosing what to disclose.
"Regulatory mandates improve consistency, quality, and completeness of disclosures, and would not be placing a huge new burden on many companies, given the progress already made," the report said.