Regulations and reporting obligations associated with EU climate targets will affect many more and smaller companies in the future. Environmental policy makes them responsible in a variety of ways.
After the politicians in the EU have agreed on the “Green Deal” and thus on more stringent climate and sustainability goals, companies are now obliged to implement them. The way to achieve this is through ever more stringent and more extensive regulations, especially, but not only, at EU level.
One of the fields here is sustainability reporting. If sustainability reports in this country have so far concerned a manageable group of large listed companies, they will be in accordance with the new “Corporate Sustainability Reporting Directive” (CSRD) of the EU from 2023 for all “large” corporations (40 million euros turnover, 20 million euros balance sheet total, 250 employees, if two of these three criteria are exceeded) is mandatory. “The CSRD is becoming a game changer,” states Stefan Uher, partner at the auditing and consulting company EY. In addition to head Martin Unger, Uher and his colleague Georg Rogl are the two co-heads of the new EY unit EYCarbon, where the consultant bundles all services relating to climate neutrality, decarbonization and sustainability under one roof.
EYCARBON – sustainability under one roof
The sustainability consultancy EYCarbon combines all EY services related to sustainability under one roof and continuously offers insights, studies and events related to decarbonisation and climate change for Austrian companies.
www.ey-carbon.at
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“Companies have to show how they can become climate neutral by 2050.” GEORG ROGL SUSTAINABILITY EXPERT SENIOR MANAGER EY – © provided “Several thousand companies in Austria”, so estimates Rogl, will now for the first time have to create sustainability reports that are significantly more extensive and more demanding in terms of content. These have to be subjected to an external test – even that has never been done before. According to an EY study, 42 percent of the 100 largest domestic companies recently submitted a sustainability report, so even from this exclusive group more than half are breaking new ground. Uher already observed the trend “Sustainability goes Finance”. “Sustainability reporting moves to the finance departments because they are used to reporting,” says the expert. This also makes sense insofar as ecological criteria in corporate financing are increasingly being considered, both on the capital market and when granting loans. “Mandatory sustainability reporting becomes a game changer.” STEFAN UHER AUDITORS PARTNER EY – © provided One of the foundations for this and a relatively new bloom in the bouquet of green regulations is the EU taxonomy. This is a uniform classification system for sustainable economic activities. It is intended to increase the transparency of the degree of sustainability of companies, counteract greenwashing and ultimately direct funding flows more intensively into those companies that are particularly intensively involved in sustainable economic activities. As early as the 2022 financial year, companies that are subject to sustainability reporting will also have to indicate what proportion of sales they generate from sustainably manufactured or provided products or services. It must also state what percentage of the total investment and operating expenses are attributable to ecologically sustainable activities. The “catalog of definitions of 500 pages of technical criteria with hard thresholds for what green sales are” is how Rogl describes the taxonomy, but will only be “sharpened” in 2022 with regard to two of the EU’s six environmental goals, namely for climate protection and adaptation to climate change. From the 2023 financial year, all activities of the companies with regard to the use and protection of water and sea, the prevention and control of environmental pollution, the transition to a circular economy and the protection of biodiversity and ecosystems will also be examined carefully and checked to see whether they are green enough are. “This will be challenging, especially for the smaller companies affected, also because it comes so quickly,” says Uher. Rogl points out how deeply this regulation affects the basic orientation and strategies: “Ultimately, companies must show in their business models how they want to be climate-neutral by 2050.” Uher confirmed: “The business models are under observation and the pressure will increase.” For example, everyone would now have to deal with “carbon accounting”, which was previously only an issue for companies that needed CO2 certificates. The regulatory pressure is not only growing from the EU; national legislators, such as Germany with the current supply chain law, are also issuing new sustainability regulations. “That will also happen in the EU,” says Rogl. “And that can be incredibly complex,” adds Uher. In any case, there is a much rougher regulatory wind blowing for companies. In any case, environmental policy has already had this effect on the climate. In co-operation with
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