As a result of the “Green Deal”, the head of the EU and the Commission, Ursula von der Leyen, have introduced new sustainability guidelines for companies. This also includes the “Corporate Sustainability Reporting Directive (CSRD)”, according to which companies in Germany are obliged to provide detailed reports on their ecological and social responsibility from 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 businessman Manfred Schultheis. According to “Spiegel”, he is just one of the many who suffer the demands: “The answers we must respond are incredible,” he says.
Even questions about slave labor: a burden on companies
The questionnaires that land on your desk no longer just concern the prices and specifications of your machines, but also resource consumption, CO2 emissions and human rights in your company. The reports aim to help banks and investment firms direct their investors’ money towards sustainable investments.
What seems sensible in theory threatens to become a “bureaucratic nightmare” in practice, according to “Spiegel.”
Businessman Schultheis explains that currently two of his 190 employees are dedicated solely to filling out sustainability questionnaires. The effort is still around 20 hours a month, but if its around 200 major clients become subject to reporting obligations in the coming years, this could change quickly: the costs of the reporting service could rise to up to €50,000 a year. . , calculates Entrepreneurs.
You can easily answer questions such as those about slavery or child labor at Schultheis’ company. But others pose a bigger challenge: Recently, a client wanted to know if their greenhouse gas reduction targets were certified by the Science Based Targets Initiative. Otherwise, they requested 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 application of the new regulation will entail extraordinary costs of 750 million euros for the economy and annual costs of 1.4 billion euros.
And that’s not all: since companies initially need up to seven specialists to prepare the reports, the Association of the Chemical Industry (VCI) foresees costs of more than seven billion euros for its companies.
Jörg Rocholl, head of the Scientific Advisory Council of the Federal Ministry of Finance, also spoke in the newspaper “Spiegel” about a “major disaster” in the economy. New developments would require a significant amount of data. Rocholl suggests greatly simplifying your reporting and narrowing it down to a few key points.
Another problem is that the new requirements are often difficult to implement, which creates difficulties for both parties. A magnetic foil manufacturer and a mineral oil trader also complain to the newspaper “Spiegel” that they risk losing important orders to companies or not receiving important loans.
Business owners want to simplify reporting
The financial sector, which should actually benefit from the new guidelines, is also being affected by the new models. Financial expert Andrew Murphy tells the newspaper “Spiegel” that sustainability criteria deter many investors and block investment projects, because often not all the necessary data is available.
The intention to channel investment into sustainable projects may be laudable, but the associated costs and administrative burden appear to make this approach significantly more difficult. Current needs do not seem to recognize that green and fossil processes will coexist during the transition.
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