By Matt Mace

Copyright edie

A new YouGov survey of more than 2,500 European business leaders, commissioned by the think tank E3G, found that most organisations are in favour of stringent reporting requirements.

The survey found that 63% of business leaders agree that larger businesses should be required to implement plans that outline transitions to a greener future.

The EU wants to reduce reporting obligations by 25% for large private firms and 35% for SMEs. It is doing so by simplifying key ESG-related due diligence and reporting frameworks, in a package known as ‘Omnibus 1’.

As such, the number of companies covered by the scope of the Corporate Sustainability Reporting Directive (CSRD) has been reduced. Companies have also been given up to two additional years to prepare their first reports.

Survey respondents are in favour of more companies having to comply with CSRD. Almost one-third of companies believe that organisations with 250 or more employees should report, compared to the 1,000-employee threshold proposed by the European Commission.

Almost half (48%) of businesses have also claimed that current legal uncertainty on sustainability reporting is delaying investment decisions. For larger companies, the figure rises to 63%.

More than half (55%) believe that becoming more sustainable can act as a competitive differentiator, compared to 21% who view it as unimportant. Half of businesses also believe that improving regular data collections via sustainability reporting will help attract investment; this rises to 68% for larger businesses.

There are also regional competitiveness issues to consider. In total, 53% of businesses believe stronger EU due diligence rules would lead to larger companies favouring suppliers across the bloc, while 48% agree that rules requiring companies to meet environmental and social standards would create a competitive edge over China and the US. In comparison, just 21% disagree with this notion.

“Policymakers are operating under the false assumption that businesses want to get rid of sustainability obligations,” said Jurei Yada, Director and Head of EU Sustainable Finance at E3G. “This survey blows that narrative out of the water. European businesses don’t see sustainability as red tape or a box-ticking exercise but a genuine driver of competitiveness, and an area where businesses and EU policymakers should lead the charge globally.

“The current political horse-trading risks undermining the very framework that businesses are asking for.”

Separate research from PwC recently found that more than two-thirds of companies enhancing their sustainability reporting approach have stated that doing so has generated “moderate” or “significant” value, beyond regulatory compliance.

ESRS response

The survey comes as Europe’s leading association for responsible investment has published its response to EFRAG’s consultation on the review aimed at simplifying the European Sustainability Reporting Standards (ESRS).

Eurosif has highlighted that the suggested modifications to the Standards would better manage investor needs while still simplifying processes for organisations reporting under various standards. However, the association warns that further reductions in scope and coverage would limit the usefulness of disclosures provided.

Additionally, Eurosif warns that simplification could create “significant” data gaps and lead to fragmentation between the ESRS and other international reporting frameworks at a time where businesses are calling for unified streamlining.

“The reduction of data points by 57% already represents a substantial simplification of the reporting requirements,” Nathalie Dogniez, Chair of Eurosif, said. “Any further cuts risk removing vital data that investors need to make informed decisions, channel finance for the transition to a low-carbon economy and comply with their own regulatory requirements.”