New study reveals: This is how the EU deals with corporate sustainability!

New study reveals: This is how the EU deals with corporate sustainability!

Compliance with the new European guidelines for corporate sustainability reporting (CSRD) is becoming increasingly important. According to a recent report from Datamaran, which examined over 300 companies in Europe, it appears that implementing these policies is not only a legal obligation, but also an opportunity for companies to optimize their sustainability strategy. The report analyzes how companies implement CSRD and what topics they address.

The study, “CSRD Reports Uncovered: Insights from a Detailed Analysis of 11,000+ IROs from 300+ Companies,” highlights trends in materiality and interpretation of disclosure requirements that matter to corporate executives. The analysis found that negative impacts outweigh opportunities - by a ratio of 3 to 1, with 99% of companies reporting on climate change, 98% on their own workforce and 92% on business practices. In contrast, topics such as affected communities, water and biodiversity are only found in less than half of the reports.

New requirements from the CSRD

The CSRD was introduced in response to the growing importance of Corporate Social Responsibility (CSR). The EU Commission published its proposal in April 2021, and after an agreement between the authorities, the directive came into force on January 5, 2023. This introduces comprehensive changes and significantly expands the scope, increasing the number of companies required to report from 11,600 to an estimated 49,000. It applies in particular to large corporations and capital market-oriented small and medium-sized enterprises (SMEs). However, micro-enterprises are excluded from the reporting requirement.

Under the new requirements, public interest companies with more than 500 employees must report comprehensively on their sustainability practices from January 1, 2024, and all other large companies from January 1, 2025. The reporting requirements provide for the introduction of dual materiality, which addresses both the impact of companies on people and the environment as well as their financial consequences.

Uniform standards and testing obligations

The new directive not only offers expanded reporting requirements, but also introduces binding EU standards and external auditing of sustainability reporting. This test will initially be carried out with limited certainty and will later be expanded to sufficient certainty. Sustainability information becomes part of the management report and is subject to the same requirements as financial reporting. Renaming the “non-financial statement” to “sustainability reporting” should underpin this claim to equality.

BaFin will also actively intervene in monitoring and take sustainability reporting into account in its balance sheet controls. It examines the reporting of capital market-oriented companies to ensure that the new standards are adhered to.

The results of the Datamaran study, which is based on sustainability reports from 304 companies from 21 countries, make it clear that many companies still have challenges to overcome when implementing CSRD guidelines. The average length of CSRD statements is 103 pages, which represents an increase compared to previous requirements.

Overall, it shows that the CSRD is not only a regulatory instrument, but can also function as a strategic tool to improve transparency and responsibility in the area of ​​corporate sustainability. Time will tell how effectively these measures can be implemented in practice.

For further information on the initial results of the CSRD assessment, please visit ÖkoNews, which CSR in Germany for political backgrounds and the BaFin for regulatory information.