Since 2014, the
European Union’s (EU’s) Non-Financial Reporting Directive (NFRD) has mandated
large EU firms to disclose non-financial performance, aiming to promote
corporate sustainable behaviour. This study empirically examines the impact of
the NFRD on corporate environmental performance, with a focus on greenhouse gas
(GHG) emissions. The analysis consists of two main components: (1) a
descriptive, industry-level overview of both absolute GHG emissions (Scopes 1,
2, and 3) and emissions intensity among firms subject to the NFRD, and (2) a
quantitative estimation of the Directive’s causal impact on GHG emissions, both
in absolute terms and intensity, across ten different industry sectors. The
results reveal significant variation across sectors. The highest absolute and
intensity emitters are the Energy, Materials, and Utilities sectors. Across all
industries, GHG emissions are largely driven by Scopes 2 and 3 sources. On
average, the NFRD is associated with a 22.12% reduction in total GHG emissions.
Nonetheless, this effect is highly uneven across sectors and primarily driven
by reductions in low-emission industries. In contrast, high-emission sectors
such as Energy, Materials, and Utilities show no statistically significant
reductions. The results highlight the limited effectiveness of a horizontal
approach to sustainability regulation, suggesting the need for sector-specific
requirements in terms of non-financial publication and Climate Transition Plans.