Really green or just prettified? In the future, the EU wants to oblige large companies to report on their commitment to sustainability. Critics are not long in coming.
Many companies like to present themselves as sustainable. Not all of them have green inside where it says green on the outside.
Many companies like to advertise that they are sustainable and committed to human rights, the environment and the climate. However, one should not necessarily believe these statements. Again and again they turn out to be embellished, exaggerated or unrealistic. Other companies prefer to remain silent about their (lack of) commitment to sustainability.
The EU now wants to change both. In the future, large companies in the EU will have to provide information about the sustainability of their activities. Negotiators from the EU states and the European Parliament agreed on this on Tuesday. They should report on how their business activities affect the environment, human rights and social standards, among other things. In addition, this data must be checked and certified by an independent party.
Companies from the EU and other countries are held accountable
The new reporting obligations are to apply from 2024, as announced by Parliament and the French presidency of the EU states. Both sides have yet to formally confirm the agreement. However, there are restrictions again, because the new regulation only applies to large companies with more than 250 employees and a turnover of 40 million euros. Companies from outside the EU with an annual turnover of at least 150 million euros would also have to comply with equivalent regulations.
“Financial and sustainability reporting will be on an equal footing, and investors will finally have access to reliable, transparent and comparable data,” it said. According to the Council of the EU States, exceptions should be possible for small and medium-sized companies in a transitional period until 2028.
More bureaucracy, higher costs for a better environment
Nevertheless, the CSU deputy Angelika Niebler complained that the agreement was unsatisfactory for German medium-sized companies. The fact that small and medium-sized companies listed on the stock exchange “should be obliged to report on sustainability can pose huge challenges for the companies concerned,” said Niebler. “They have to change their processes, hire additional staff and strictly monitor compliance. All of this costs our companies a lot of time and money.”
Consumers are currently looking more at food prices than at sustainability. This was the result of a current survey commissioned by the German Institute for Food Technology (DIL).
A long-term survival strategy for companies
According to business administration professor René Schmidpeter, aligning the economy with sustainability goals will take years and require a lot of effort in companies. “Sustainability must no longer be an add-on, but must be integrated into corporate management across all functions,” says Schmidpeter.
“The previous understanding of sustainability in companies is often like this: a bit of risk management, a a bit of PR, a bit of green.” That's not enough anymore. “Because in the foreseeable future, there will often be no more non-sustainable business models.” Studies by the renowned Harvard University showed that sustainable companies made more profits in the long term than less sustainable ones. Investors would are increasingly asking the question of whether companies will still be viable in ten years' time – and are also investing their money in this direction.
iw/hb (dpa)