As a result of the Green Deal, the EU and Commission President Ursula von der Leyen new guidelines on sustainability for companies have been introduced. This includes the “Corporate Sustainability Reporting Directive (CSRD)”, under which companies in Germany have been forced to provide detailed reports on their ecological and social responsibility since January 1, 2024.
“Our goal is to reconcile our economy with our planet and make it work for our people,” von der Leyen said at the time.
However, this does not seem to work for entrepreneur Manfred Schultheis. According to “Spiegel”, he is just one of many who suffer under the requirements: “It’s unbelievable how many questions we have to answer,” he says.
Even questions about slave labor: a burden for companies
The questionnaires that land on his desk are no longer just about the prices and specifications of his machines, but also about resource consumption, CO2 emissions and human rights in his company. The reports are intended to help banks and fund companies direct their investors’ money into sustainable investments.
What sounds sensible in theory threatens to become a “bureaucratic nightmare” in practice, according to “Spiegel”.
Businessman Schultheis explains that two of his 190 employees are currently exclusively occupied with filling out the sustainability questionnaires. The workload still amounts to around 20 hours a month, but if his approximately 200 major customers become required to report in the next few years, that could quickly change: The costs for the information service could then amount to up to 50,000 euros per year, the businessman calculates.
He can still easily answer questions such as those about slavery or child labor in Schultheis’ company. But others pose a greater challenge: Recently, a customer wanted to know whether his targets for reducing greenhouse gases were certified by the Science Based Targets Initiative. If not, he was asked for a certificate from the “SME Climate Hub” or the “Race to Zero” initiative.
High costs for the economy
According to estimates by the Federal Ministry of Justice, the implementation of the new regulation will burden the economy with one-off costs of 750 million euros and annual costs of 1.4 billion euros.
And that’s not all: Since companies initially need up to seven specialists each to prepare the reports, the German Chemical Industry Association (VCI) predicts costs of more than seven billion euros for its companies.
Jörg Rocholl, head of the Scientific Advisory Board at the Federal Ministry of Finance, also spoke to the “Spiegel” magazine of a “big mess” in the economy. The new developments would require a considerable amount of data. Rocholl suggests greatly simplifying the reporting and reducing it to a few central points.
Another problem is that the new requirements are often difficult to implement, which leads to difficulties on both sides. A manufacturer of magnetic foils and a mineral oil dealer also complained to “Spiegel” because they risk losing major orders to companies or no longer being able to obtain important loans.
Simplification of reporting desired by entrepreneurs
The financial sector, which was supposed to benefit from the new guidelines, is also suffering from the new templates. Financial expert Andrew Murphy told “Spiegel” that the sustainability criteria are putting off many investors and blocking investment projects because all of the required data is often not available.
The intention to direct investments towards sustainable projects may be laudable, but the associated costs and administrative burden seem to significantly complicate this approach. The current requirements do not seem to acknowledge that green and fossil processes will coexist during the transition.
Source: German