Exploring the Effectiveness of Sustainability Measurement: Which ESG Metrics Will Survive COVID-19?

Climate change and the necessary energy transition, as described in the European Green Deal (EU, 2020a) of the European Union (EU), are clear and well-known issues and can no longer be considered a secondary problem even in the situation of the health and economic crisis of Covid-19. The economic recovery must start from the real economy and from those sectors that present more just and inclusive activities with low environmental impact, resilient to climate change.

Among several studies aimed at highlighting the link between climate and health (Watts et al., 2019¹; IPCC, 2019²), the World Economic Forum (WEF, 2021) in the recent Global Risks Report 2021 also highlights that climate change is the greatest threat to global health in the twenty-first century and exacerbates the incidence of infectious diseases.³

The current crisis calls for a systemic approach that pays attention to the different dimensions of sustainable development in the medium–long term. In Europe, environmental action has been defined as primary and urgent and the activities connected to this action have not stopped even in the peak of the pandemic. In fact, in the first quarter of the year 2020 the milestones of the European Green Deal were presented, including among the others: the proposed European Climate Law (EC, 2020b), the regulation on the EU Taxonomy for Sustainable Activities (EC, 2020c) and the New Circular Economy Action Plan (EC, 2020d). The green rationale is confirmed in the Technical guidance on the application of “do no significant harm” under Recovery and Resilience Facility Regulation⁴ intended to assist national authorities in the preparation of the Recovery and Resilience Plans should ensure that each and every measure, reform and investment within the plan complies with the “Do Not Significant Harm” (DNSH) principle. The latter requires research and innovation activities should not be supporting or carrying out activities that make a significant harm to any of the six environmental objectives, within the meaning of Article 17 of EU Sustainable Finance Disclosure Regulation (SFRD), on the establishment of a framework to facilitate sustainable investment (EU Taxonomy Regulation).

The interest in green and sustainable finance is rising very fast among investors worldwide, and several voluntary private initiatives have tried to create some market standards. Policymakers have also been very active in launching numerous regulatory and non-regulatory initiatives at global or local level. To avoid market fragmentation, there is a demand for greater harmonization among the different measures. There is also a need to increase the standardization and disclosure of non-financial information published by companies and used to evaluate the risks. Doing so will help to increase data availability, to make data more comparable, and to bring more transparency and clarity to investors. Given that climate change and environmental degradation are global challenges, international cooperation is in the common interest; the European Union is actively promoting this through the International Platform on Sustainable Finance.⁵

To make the European Green Deal working effectively, EU policy-making will not be enough. A positive outcome will be related to an efficient exchange of Environmental, Social and Governance (ESG) data and information between companies, financial analysts and investors (Amel-Zadeh & Serafeim, 2018; Atkins et al., 2015; Bizoumi et al., 2019). However, current metrics often seem insufficient and companies face many difficulties while disclosing non-financial information (Cho et al., 2015; Capelle-Blancard & Petit, 2017; Boiral & Henry, 2017). With the outbreak of the COVID-19 crisis, some Social ESG metrics are resulting less representative of the reality that many companies are facing. That is why it is important to test these metrics and keep the dialogue between companies, financial analysts and investors open with the purpose to ensure that companies are using them in a dynamic and strategic way (Cheng et al., 2021). The current crisis should therefore be considered by companies, investors, financial analysts and other market players like an opportunity to change mindset and to use ESG metrics and materiality as an activity to inform corporate strategy (Broadstock et al., 2020; Cheng et al., 2021), not just reporting and use ESG disclosure for orientating capital flows toward impact investment to finance the economic recovery (Capelle-Blanchard & Petit, 2019; Tamimi & Sebastianelli, 2017).

Given these considerations the aim of this study is to assess and investigate whether the current metrics methodology is valid and will survive the COVID-19 crisis by adopting a qualitative research approach. This analysis can offer a useful insight on ESG integration in the business context by providing signals to practitioners and policymakers to make mandatory some specific ESG indicators. Particularly, the research objectives of this paper are threefold: (1) to investigate the impact of COVID-19 on ESG metrics and their effectiveness and usefulness for companies, financial analysts and investors; (2) to theorize corporate reactions in the significance of ESG metrics for businesses during and after the pandemic crisis; (3) to interpret the findings of interviews with top managers of a sample of listed European companies through a sociological lens. The motivations of this study are linked to the primary and urgent need to assess the current state of corporate reporting practices affected by the pandemic crisis by identifying and highlighting possibilities for changing some sustainability disclosure practices that could be useful for preparers, users, regulators and policymakers. As some previous studies confirmed, this unexpected and very critical situation may benefit the business context by pushing some changes on ESG issues to improve the corporate reporting transparency and to move toward more accountability based reporting practices by satisfying new information needs (Crovini et al., 2022; Hassan et al., 2021; Leoni et al., 2021; Lodhia et al., 2021; Rinaldi, 2022).

Our analysis focused on a sample of European companies and this choice is mainly motivated by the EU-wide initiatives on ESG issues and sustainable and inclusive growth (Tettamanzi et al., 2022) as it is explained previously. As this research is exploratory and grounded on practitioners’ perceptions a qualitative analysis can be considered appropriate (Corbin & Strauss, 1990; Gephart, 2004; Boiral et al., 2021) to provide a timely and detailed insight into the managers’ reaction to this new corporate disclosure scenario caused by the outbreak of Covid-19.

Our preliminary analysis can contribute to the literature in three ways. First, we can extend the current knowledge about the measurement of sustainability through ESG metrics and its effectiveness during the time of a global crisis. Second, this analysis can offer a first assessment of the primer responses to this unprecedented health emergency providing a different view of ESG reporting replying to different needs of users. Finally, this survey can give practical suggestions for changing the rationale on ESG reporting during the time of crisis.

The rest of the paper proceeds as follows. Section “Impact of COVID-19 on ESG Data and “Extra-Financial” Corporate Reports” and “The Changing Nature of Accountability and Responsibility During and After a Pandemic” describe the ESG reporting state respectively before and during/after COVID-19 and summarize previous research on this field. Section “Theoretical Framework” evokes an historical and sociological framework to support and justify our qualitative analysis and Sect. “Research Methodology” explains the research methods. Section “Findings” shows the main findings and Sect. “Discussion” discusses these results by establishing connections with existing literature and by identifying key challenges. Finally Sect. “Conclusion” draws some final remarks by proposing avenues for future research and highlighting the main implications of this research.

In absence of a shared standardization of technical standards, their widespread and official disclosure, it is not easy to read and evaluate the corporate extra-financial data, known by practitioners as ESG data. Disclosure ESG data is now synonymous with a valuable proposition for the company which can thus demonstrate to convey the company's activity toward the creation of value in the medium–long term, with particular attention to the mitigation of ESG risks (Boiral et al., 2020; O’Dwyer & Unerman, 2020). To get the competitive advantages that can arise from sustainability, companies have to develop a certain awareness on the topic and translate it into a corporate vision and strategy that allow them to evaluate how sustainable issues can impact the business in the short, medium and long term (Adams, 2017; Buallay, 2019; Galbreath, 2013).

The integration of ESG data into company policies and practices is growing all over the world and now there are numerous guidelines that have been drawn up, among the most important, certainly include those of the United Nation Principles for Responsible Investment (UN PRI), United States Social Investment Forum (US SIF) and London Stock Exchange Group (LSEG) and more recently that of the Nasdaq, the Luxembourg Stock Exchange (LuxSE) and the Stock Exchange of Hong Kong Limited (HKEX). The reporting on ESG information still remains mostly on a voluntary basis, although significant steps have been taken, especially from Europe which holds a leading position in the sustainable sphere. If, on the one hand, the legislation on EU taxonomy for environmentally friendly activities is being finalized, on the other, a complete reception of the NFRD (EC, 2014) by all member countries is expected. The first European initiative will allow the definition of ESG data in terms of reliability and comparability; the second will certainly allow a greater and more widespread communication of ESG data. The EU committed to review the Non-Financial Reporting Directive in 2020, as part of the strategy to strengthen the foundations for sustainable investment. It is important to improve the framework and to harmonize between the regulations (such as EU 2019/2088, EU taxonomy for sustainable activities and European Climate Law) to ensure credibility and effectiveness. A standard is required at this stage to have ESG data consistent, comparable by sector and along the time horizon and data assurance may be required in the future, to avoid the proliferation of estimates from different external providers, different approaches that can undermine the stability of the market itself. On 21 April 2021 the European Commission published a new package of measures within the framework of the EU Action Plan for sustainable finance and climate neutrality objectives by 2050 which includes the proposal for a Directive on Corporate Sustainability Reporting (CSRD) which intends to introduce more rigorous transparency requirements on corporate sustainability, with more uniform reporting standards (EFRAG tasks), which guarantee the comparability of information for consumers, lenders and investors. Among these, it is required to communicate sustainability information with a digitally tagging in machine-readable format. Digital tagging is essential to seize the opportunities that digital technologies present to fundamentally improve the way sustainability information is used.

Among the main initiatives included in the Action Plan, the European Commission has entrusted the European Financial Reporting Advisory Group (EFRAG)⁶ with setting up a European Laboratory (Lab) whose objective is to encourage innovation and the development of best practices in corporate reporting, including environmental accounting. In this Lab, companies and investors can share best practices in sustainability reporting, such as reporting on climate in line with the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosure (TCFD).⁷ The European Commission issued a mandate to EFRAG for undertake preparatory work for possible EU sustainability reporting standards in a revised NFRD and on 8 March 2021, EFRAG published its final report proposing a roadmap for the development of a comprehensive set of EU sustainability reporting standards. The proposed roadmap comprises 54 detailed proposals describing the scope and structure of future sustainability reporting standards that contribute to the achievement of the EU policy objectives. The proposals do not to set out specific disclosure requirements, indicators or metrics, which is a task for EU’s future standard setter. In summary the key conclusions are the following:

An urgent action on the social dimension definition is necessary as COVID-19 emergency remarked. A definition of a social due diligence, that each operator must promptly follow with clear references in the standards and possibly in indicators to be reported. Moreover, supply chain due diligence with defined standards and indicators is necessary in order to have data very difficult to compute at the moment, such scope 3 GHGs. Moreover, availability of non-financial information in a digital format will be a benefit for investors and analysts (La Torre et al., 2018). Allow information be machine-readable will ensure investors and financial analysts cost saving in data processing and in reporting process, greater speed, reliability and accuracy of data handling, improved analysis, and better quality of information for the decision-makers (AIAF, 2020; Ricci et al., 2020).

At the global level, we can recognize an increasing emphasis on sustainability corporate reporting nudged by the pandemic crisis. For example, during the 37th meeting of UNCTAD’s intergovernmental working group on International Standards of Accounting and Reporting (ISAR) UNCTAD Secretary-General Mukhisa Kituyi said: “At this difficult time, the task of promoting high-quality reporting on the financial and non-financial performance of enterprises has become more important than ever.” (https://​unctad.​org/​news/​sustainability-reporting-central-achieving-global-goals-post-pandemic). Many experts confirmed that an increasing high-quality reporting on the financial and non-financial performance of companies can help boost sustainable development (Whitelock, 2019) and recovery from COVID-19. In this perspective different initiatives in various contexts can be mentioned to provide a brief summary on how corporate reporting can react to an unprecedented global crisis (see below Table 1).

Investors must re-prioritize engagement to focus on COVID-19 and pay more attention to the ‘S’ and the ‘G’ in the ESG acronym. Most engagement activities with affected companies and sectors should be re-focused on issues relating to COVID-19 and the response to it. Engagement on other topics (as ecosystem services, biodiversity, and species extinction) should be postponed, where possible, to allow top management and Board of Directors to focus on both, health and economic, crisis.

The EU Taxonomy, approved by the European Parliament on 18 June 2020, will be essential to pursue the engagement on these issues, which has been defined by 2020, and are part of the framework of the European Sustainable Strategy. Clear and shared KPIs need to set common goals and be effective. Finally, it is necessary to carry out researches about the gravity of the problems that undermine the livability of the earth, the existence of peoples and the ability of our society to exist. The health crisis has deeply affected our system and has brought to light many weaknesses and shortcomings that everyone has become suddenly aware and afraid of. At the beginning of the pandemic, it does not seem that biodiversity was considered as an economic priority, as well the apparent loss of importance of the climate crisis.

In the short term, also the institutions called to greening the economy operate in areas that require immediate intervention to restore normal activities and the life that every human being has currently lost in the lockdown situation. The longer-term vision and planning/strategy must necessarily be considered to define a re-start that also include climate change and biodiversity among the core elements. Currently, however, immediate priorities must considered to save human lives and providing economic and financial relief to support the most vulnerable subjects, therefore COVID-19 has affected investors demand mainly related following topics such as:

How a company responds could increase their reputation, investors’ confidence and make the company more resilient to the market shock. Obviously, not all answers are relevant within the context of COVID-19, employment and supply chain practices are expected to be core areas. In addition, modalities to repositioning their operations and products will be a relevant consideration. Avoiding lay-offs, providing flexible work schedule, and paid sick leave could allow the companies to be more resilient in the adversity as they might be able to maintain high employee productivity while mitigating costs by avoiding employee churn.

Similarly, those companies with well managed logistics department, efficient procurement into their supply chain, might be able to respond more quickly adapting their supply chain to avoid costly production halts. Finally, companies that change their research and development (R&D) or production efforts to create vaccines or shift manufacturing to produce test kits, ventilators, sanitizer, or other health crisis-specific services or products might signal an ability to be responsive and innovative thereby finding new ways to satisfy emerging demands. Particularly some industries such as automotive, textiles, fashion, chemical and manufacturing have been able to partially or completely reconvert their production during the pandemic crisis. The change of business activities for providing needed products and services can improve the degree of customer focus by enhancing brand loyalty and customer satisfaction. For the above reasons, firms that exhibit more positive sentiment around their human capital, supply chain and operational crisis response might earn investor confidence.

These impacts are stronger for companies that receive more coverage from external news (media, blogs, industry publications, financial analysts, etc.) consistent with more attention on these responses being associated with more significant reaction from the financial markets.

The large impact of Covid-19 on businesses can be interpreted as a significant driver for stimulating companies during pandemic to implement Corporate Social Responsibility in its real meaning by contributing to society (García-Sánchez & García-Sánchez, 2020). The Covid-19 crisis offers a great opportunity for observing differential corporate responses (Schaltegger, 2021) and for highlighting companies that are making significant and credible commitments to their stakeholders’ relationships by signaling resilience to investors (Cheema-Fox et al., 2021).

In this perspective, some recent studies demonstrated some positive externalities of pandemic crisis in the business context, such as human management practices that can re-engage employees in CSR (Aguinis et al., 2020), or by reconfiguring the role of business in society (Brammer et al., 2020) or by positively affecting strategic marketing approach (He & Harris, 2020). The pervasive consequences of Covid-19 crisis in society are generating businesses that more oriented to authentic and credible CSR practices and a real commitment to social problems (García-Sánchez & García-Sánchez, 2020).

The effects of a global crisis on businesses can boost different companies’ reactions and changes in accounting and accountability, as prior literature demonstrated (Baker, 2014; Dillard & Vinnari, 2017; Sinkovics et al., 2015). From an historical perspective we can found a similar understanding of the current pandemic in De Rerum Natura (first century BC), one of the most famous Lucretius’s work. The description of the Athens plague that struck Attica in 430 BC. allows the poet to offer a view of nature hostile to man which recalls the materialistic conception of the Greek philosopher Epicurus by arguing the question of “culpa naturae” or the wickedness of nature toward man (Lucretius, V, 195–199). Similarly, the current pandemic crisis brings out the negative effects of nature on man but which would have resulted from man's destructive action on the environment. Like most of the emerging diseases such as Ebola, AIDS and SARS, COVID-19 hopelessly signals the critical relationship between pandemics and the “boomerang” effects of the ecosystems destruction (WWF Italy, 2020). The man with his activities has significantly altered three quarters of the emerged lands and two thirds of the oceans, changing the planet to determine the birth of a new era called “Anthropocene” (Bebbington et al., 2020). The huge impact of the pandemic crisis on planet and human life is increasingly highlighting the importance to quantify and evaluate as much as possible rationally the current and future consequences of systemic shocks. By adopting a materialistic philosophical approach, all countries and organizations have to develop and adapt measurement systems to manage this uncertainty. As an interesting sub-field in sociology argued, the process of “quantification”, i.e., the production and communication of numbers, can produce many social implications (Espeland & Stevens, 2008), particularly in times of crisis (Lai et al., 2014; Sinkovics et al., 2016). By conceptualizing the quantification as a social action it is possible to analyze the “doing of numbers” and the different aims and meanings in multiple contexts (Espeland & Stevens, 2008; Mennicken & Espeland, 2019). Given the enormous proliferation of social measures that can evaluate performance of individuals and organizations, measures in firms can make them accountable and auditable by the increasing use of quantitative indicators (Hoskins, 1996; Power, 1994, 1997; Strathern, 1996). As the use of indicators can benefit in different ways, such as making relevant information more accessible for multiple users, stimulating organizations to improve by providing important feedback on policies, it is crucial to focus on the potential changes to face and manage uncertainty. Given that measures have to continually monitor and interpret different phenomenon they can elicit reactions from users that are involved in the objects they measure (Espeland & Sauder, 2007). By using the sociological framework by Espeland and Sauder (2007) we identified two different patterns, reactivity and reflexivity in order to evaluate and interpret our findings in the light of intended and unintended consequences of the pandemic crisis. The increasing production of quantitative measures during a systemic shock can produce harmful implications, such as alterations in status system, work relations, production of inequalities (Espeland & Sauder, 2007). According to Espeland and Sauder (2007) we decided to analyze the reactivity of measures by identifying the mechanisms of this reactivity through a qualitative analysis of some anonymous semi-structured interviews. In this way we can capture how indicators react to the pandemic and provide a generalized account of the situation and how respondents interpret indicators for defining objectives and justifying their decisions. By adapting the sociological framework suggested by Espeland and Sauder (2007) we analyzed the mechanisms of reactivity by evaluating two patterns, i.e., self-fulfilling prophecy and commensuration. The first one (Merton, 1968) can be defined as “processes by which reactions to social measures confirm the expectations or predictions that are embedded in measures or which increase the validity of the measure by encouraging behavior that conforms to it” (Espeland & Sauder, 2007, p. 11). Commensuration is the second mechanism by which qualities are converting in quantities “that share a metric, a process that is fundamental for measurement (Espeland & Sauder, 2007, p. 16). These mechanisms can help to understand how measurement systems interact with the real objects they measure (Clementino & Perkins, 2020) and react to the COVID-19 crisis.

As stated in the introduction, sometimes metrics are unable to present a complete picture of company’s practices and performance on ESG. At the same time, many recent studies demonstrated that non-financial/sustainability reporting is very weak, especially in some areas such as risk management and board oversight (Econsense, 2018; Alliance for corporate transparency, 2019; TCFD, 2019; EUROPEAN LAB@EFRAG, 2020). To achieve better outcomes, it is important to keep a continuous dialogue between investors, financial mediators, and companies on how to best mirror company’s practices in a defined framework or metrics Amel-Zadeh & Serafeim, 2018). Especially, in the current context of the COVID-19 outbreak a dynamic approach to it is key to understand which metrics will survive the current pandemic crisis and are more relevant in the current situation where companies are operating.

To test these assumptions, we have conducted a number of anonymous interviews with companies, i.e., heads or managers of sustainability/CSR departments, to understand from practice how ESG integration is being undertaken by companies and how did Covid-19 impact it. We selected companies that are part of the CSR Europe network (CSR Europe, 2021).⁸ Our focus is on the European companies as the European Union context is particularly involved in several projects, actions and policies on sustainability and ESG issues mentioned in the previous sections. The selection was based on companies representing the sectors that may be considered high environmental sensitive (see Table 2).

The research method involved three steps. Firstly, we sent the questionnaire to selected companies by email and then we conducted a series of interviewees with senior level managers for discussing and asking them for more details about the responses we collected in the first phase. Given restrictions and limitations of the pandemic crisis, we conducted the interviews via whichever media platform was most readily available to the interviewees. Therefore, all interview data was gathered by on line meetings through Microsoft Teams and Skype. All meetings lasted at least 1 h. Additionally these interviews were enriched by email dialogue in order to clarify some points of discussion. A total of 14 managers that are senior practitioners in leading roles and are actively involved in ESG issues in different ways are interviewed. We assigned codes to each manager that are displayed in Table 2.

The interviews were structured around the questionnaire created from the WEF and NASDAQ’s ESG Reporting Guide (Nasdaq, 2019⁹), expanded with more forward-looking and situational questions (see “Appendix 1”). In our exercise, we considered mostly metrics related to Environmental issues, but, to make our analysis more complete, and updated in relation to the current situation we decided to include as well one metric under Social pillar and one under Governance. In particular, the questionnaire (“Appendix 1”) focused on six clusters: (1) Emissions, (2) Energy, (3) Water and Environment Management, (4) Board and Management Oversight (5) ESG Reporting, (6) Health and Safety and we decided to assign to each cluster the ESG dimension: the first, the second and the third (Environmental), the fourth and fifth (Governance) and finally the sixth (Social). In the third phase, during the interviews, the companies were also asked to go beyond the questionnaire and indicated their perspectives and comments on the future of ESG metrics and in general on sustainability reporting.

The methodology seems a good first step to give a clear picture on where its metrics are enough clear and where there is still work to do in the definition of well-defined metrics on ESG practices.

As an overall result, we found that all companies have demonstrated a high level of maturity in reporting ESG information, and in particular in disclosing their activities related to the six clusters that have been selected for this analysis (see “Appendix 1”).

Generally speaking, the interviewees noticed that sustainability and corporate social responsibility have currently reached sincere attention of top management and public opinion and this increased largely the quality of ESG reporting. “COVID-19 has increased this attention and next reporting exercise will have to present even better what is truly material for the company and how resilience is the business to any type of ESG-related crisis that—as it happened for the COVID-19 outbreak—can have strong financial and non-financial impacts for the company”. (R1C—Cluster 5) (Emphasis added).

It is notable that “materiality” and “resilience” represents the main drivers of the interviewees’ responses. By adopting the institutionalism theory, the first one can be linked to the normative pressure and the second one, i.e., the resilience, to institutionalism diversity and polycentricity (Aligica, 2013). Transferability as well as operationalization and implementation of resilience propositions have to be developed for increasing the intercultural transferability of resilience thinking into organizational practices (Garschagen, 2013).

The analysis of the interviewees’ revels an initial assessment of the main remarks shown by companies in some of the clusters as reported below.

Conducted anonymously, the interviews for this study show the increasing importance of the validity of measurement in the ESG context (Semenova & Hassel, 2015) as a response to COVID-19, from both corporate board and public opinion. Companies feel that in their next reporting exercise there will be the need to address how they managed the double crises we are facing: the health and the economic ones. As well as the rebound for recovery. This will leave a lasting impression of what their true sustainability priorities are (Tables 3 and 4).

In more details we categorize our main interview data in the six clusters of the questionnaire (“Appendix 1”) and we can identify some connections with the previous recent literature and some selected theories.

Given these evidences, the main overall trends of this survey can be interpreted through the lens of the sociological framework by Espeland and Sauder (2007) by assessing the mechanisms of reactivity by companies on the effectiveness of ESG measures in times of COVID-19. In the table below we identified four typologies of reactivity (Clementino & Perkins, 2020) and the main Corporate Social Responsibility (CSR) institutional factors (DiMaggio and Powell, 1983; Campbell, 2018) that affect managers’ reactivity by integrating institutional theory in this theoretical analysis. The four typologies of reactivity (Clementino & Perkins, 2020; Espeland & Sauder, 2007) include different degrees of conformity, i.e., from passive to active, and of resistance, i.e., from passive to active. In the case of “conformity” the mechanism of reactivity requires to conform to government regulations (passive) or government and private self-regulations (such as internal organizational changes, implementing new policies, setting incentives, etc.). Otherwise in the case of “resistance” the mechanism of reactivity refers to a divergence between companies’ information needs and private self-regulations and normative expectations (active resistance).

This relatively new interconnectedness between businesses and quality of life is determining a radical change in the corporate sustainability boundaries to make accessible how companies are contributing to human life and safety (Parker, 2020). An extensive re-formulation of the ESG metrics is required in the light of times of crisis, as accountability and transparency linked to quantitative measures can play a critical role in the financial system (Espeland & Vannebo, 2007). Particularly, this questionnaire survey shows a strong need for better and more standardized metrics on many aspects of sustainability: biodiversity, social aspects, including diversity and looking more at the resource management and at its impact on the quality of life. Companies will, however, include new content in relation to how they managed the pandemic crisis and the rebound. Moreover the corporate response to COVID-19 needs to better assess the interconnectivity among the different aspect of sustainability (e.g., what is the impact of biodiversity loss and climate change on social aspects?) (Adams & Abhayawansa, 2022; Biehl & Thomson, 2020). Only in this way we will be able to ensure a just and inclusive transition, as the Sustainable Development Goals and Agenda 2030 have already pointed out (Bebbington & Unerman, 2018; Consolandi et al., 2020; Lokuwaduge & Heenetigala, 2017). Additionally, many have noticed that they are not sure if there will be the need for metrics related to resilience to pandemic. It would be better to use “horizontal” indicators than specific ones. Some companies questioned the importance of resilience over flexibility to react. While resilience means reacting to something to avoid its negative impacts, flexibility includes managing the crisis actively. Investing on a flexible model before (e.g., digitalization and teleworking policies) can save its stability of the company in times of crisis. This preliminary assessment can provide several practical implications for managers and policymakers to stimulate a radical improvement of ESG metrics enhancing some indicators rather than other ones, in a more extensive approach. Hence, the strict distinction between “E”, “S” and “G” issues should be abandoned claiming a different holistic re-design of sustainability measures by considering the relevance of the Social dimension, particularly the strong connection between safety conditions at the workplace and personal life (Atkins et al., 2020; Parker, 2020).

Moreover, an overall forward-looking reaction to COVID-19 in terms of next reporting exercises will also deal with a new debate on supply chain management (Sharma et al., 2020) and what is the responsibility of companies also over the current due diligence frameworks. ESG metrics should be re-designed along the supply chain in an inclusive and holistic approach as the European Commission announced as a new regulatory standard or framework (EC, 2020e) that has been published in 2022, i.e., EU Due Diligence Act.

This research offers the first initial assessment of managers’ reaction to Covid-19 impact on the current ESG metrics framework by conducting a series of semi-structured interviews with senior practitioners of some high environmental sensitive large companies in the European context. By highlighting six clusters within 30 ESG metrics our interview data identifies different managers’ reactions to some metrics/issues affected by pandemic crisis.

These findings can provide useful suggestions for regulators, policymakers, preparers, users and managers on the main metrics to be carefully monitored during times of crisis. Additionally, this analysis has practical implications for the financial sector as the current crisis requires a systemic resolution approach. One example of this approach is the use of public finance for sustainable development, like in the case of the vigorous monetary and fiscal policies just implemented in the Eurozone which are in line with the demand to overcome the current crisis. However, this request must incorporate as well long-term strategic policies for an effective transition to a climate-resilient low-carbon economy. This is the only truly effective “vaccine” to address not only climate risks, but future social and economic risks as well.

Nevertheless this study shows some limitations. Our sample is drawn from a subjective selection on the basis of the environmental relevance of some industries and it is not representative of the overall population of companies. The data collected are affected by managers’ perceptions and are not necessarily shared by other stakeholders (Boiral et al., 2021). The number of the interviewees is relatively low but we believe that, at this phase of Covid-19, our empirical evidence can address the need for identifying the emerging corporate disclosure practices and understanding how the institutional environments can influence these ESG metrics (Rinaldi, 2022).

This research opens to further avenues for exploring managers’ perceptions on more typologies of ESG metrics, related, for example, to GRI or SASB standards. Future research could investigate the perceptions of different kinds of stakeholders on ESG metrics by carrying out larger-scale quantitative studies, on both high and low environmental sensitive sectors. More studies are needed after the Covid-19 emergency period to evaluate changes in managers’ reactions to the validity of ESG metrics.