(Bloomberg) -- Europe’s markets watchdog says companies in the bloc are directing a larger chunk of their investments toward environmentally and socially sustainable activities than they used to.

The European Securities and Markets Authority said it reviewed the 2022 accounts of 54 large and small non-financial companies, and found they’re making investments that are more in line with the bloc’s list of climate-friendly activities than their current operations would otherwise indicate.

The new figures signal “investment efforts in the transition,” ESMA said. 

The proportion of capital expenditures aligned with the European Union’s Taxonomy Regulation — a list of sustainable activities — was 28.1% last year, ESMA said. That compares with 17.3% for revenue. The authority said its sample of companies, though small, mirrors similar findings in a study earlier this year that looked at the STOXX Europe 600.

The study comes amid signs that ESG asset managers are still struggling to find taxonomy-compliant companies. 

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The EU is seeking stakeholder input for a review of the taxonomy, to improve its usefulness and to expand the number of business activities that the list covers.

Background:

This year, non-financial companies were required to report their alignment with the taxonomy. ESMA said it undertook the survey to learn how well companies are complying with the new reporting requirement.

There remain reporting gaps, with companies failing to disclose some key performance indicators, and ESMA says it will work with national supervisors to improve compliance. 

A third of the companies surveyed had a market capitalization of more than €5 billion ($5.3 billion), while a third were valued at less than €749 million euros. None operated in the financial sector.

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