Quantitative analysis of green investments in European automotive companies: a digital reporting analysis

Abstract Automotive companies are a major driver of the economy due to their high production volumes and extensive supply networks. However, the shift towards focusing on Environmental, Social, and Governance (ESG) aspects to comply with regulatory constraints and meet shareholder expectations presents significant challenges. This study addresses the need for transparency in green investments and their impact on CO2 emissions within the automotive sector. To achieve this, a sample of 22 listed European automotive companies were selected based on their digital financial reports (XBRL), as well as their annual sustainability reports. Key variables, including Scope 1, Scope 2, and Scope 3 emissions, were evaluated alongside three categories of corporate investments: tangible, intangible, and other long-term assets. A robust Analysis of Covariance (ANCOVA) model was employed to quantify the relationship between these investment activities and emissions. The results indicate a significant interaction effect on Scope 1 emissions, while the effects on Scope 2 emissions were not significant and Scope 3 emissions showed marginal results. These findings suggest that companies disclose green investments to mitigate reputational risks, offering insights into the relationship between financial and sustainability metrics in ESG reporting, while highlighting the importance of transparent reporting for achieving sustainability goals and enhancing comparability among companies. Graphical abstract