ZVEI – Business associations warn of bottlenecks and high costs when examining sustainability reports
Implementation of the EU directive into national law is imminent.
In the future, around 15,000 companies will have to prepare sustainability reports and have them checked by external bodies. Auditors and technical experts should have equal rights. Business associations contact the responsible federal ministries and warn of competitive disadvantages for Germany.
Berlin, September 13, 2023 – Sustainability reports from companies should in future be treated on an equal footing with financial reporting and should be audited by independent bodies. Before that, the European Corporate Sustainability Reporting Directive (CSRD) must be implemented into national law. A corresponding draft law is expected shortly. Numerous business associations have now contacted the lead Federal Ministry of Justice (BMJ), the Ministry of Economic Affairs and Climate Protection (BMWK) and the Ministry of Finance (BMF) and called for an open market for the upcoming mandatory audit of sustainability reports and warned of capacity bottlenecks.
“According to the European CSRD directive, sustainability reports will be mandatory for many companies in the future. Now it’s a matter of implementing the requirements into national law in accordance with the needs of the around 15,000 affected companies. In addition to auditors, technical experts should also be allowed to carry out appropriate audits of sustainability reports,” says Dr. Joachim Bühler, Managing Director of the TÜV Association.
The technical testing companies had many years of experience in, among other things, the certification of environmental management systems and the verification of CO 2-Company footprint or supply chain audits.
Bühler: “According to reports, the audits of sustainability reports in Germany should only be carried out by auditors. The result would already be foreseeable capacity bottlenecks among auditors, higher costs that would burden medium-sized businesses in particular, and the risk of inferior audit results if there is a lack of personnel or technical know-how. We need an open market that is based solely on the quality, expertise and independence of the auditing companies.”
Representatives of the affected sectors of the economy are also sounding the alarm.
“For the external audit of sustainability reports, we need the widest possible range of qualified audit service providers who work at reasonable costs. This is crucial for medium-sized companies that do not have the financial resources of large corporations. Germany should follow countries like France, Italy and Spain and, in addition to auditing firms, also approve other accredited testing bodies, such as TÜV, Dekra, DQS and other organizations,” says Thilo Brodtmann, General Manager of the VDMA.
“It should also be possible to link the review of sustainability reports with the ISO audit.”
“There must be no special German path. Uniformity in implementation is also the key to this EU directive. Otherwise there is a risk of a confusing patchwork quilt and our companies being disadvantaged compared to competitors from other European countries. The involvement of independent audit service providers increases availability and ensures fair competition,” says Wolfgang Weber, Chairman of the ZVEI Management Board.
“For the implementation of future sustainability reporting obligations, it is essential that sufficient capacity and corresponding know-how are available on the audit side. “Especially in the chemical-pharmaceutical industry, a high level of specialist expertise is required from auditors due to the complex value chains and the demanding requirements with regard to climate protection and the circular economy,” says Berthold Welling, VCI Managing Director Legal and Tax, Sustainability.
“We expect that testing service providers will have to diversify and specialize accordingly when it comes to sustainability. In this respect, a vital market with different accredited players is needed. It is all the more important to recognize independent auditors, who often have many years of experience in the area of sustainability.
“The Sustainability Reporting Directive brings with it considerable burdens, especially for German medium-sized businesses, especially given that companies already have to comply with numerous legal reporting obligations. At least when it comes to the question of reviewing reports, the federal government should make proportionality and practicability the basis for decisions,” says Dr. Uwe Mazura, General Manager of the German Textile and Fashion Industry Association.
From the point of view of the business associations, it currently makes neither economic nor technical sense to exclude highly qualified testing service providers from sustainability reporting. According to the CSRD specifications, technical testing service providers should be approved by the German Accreditation Body (DAkks). Requirements include an aptitude test, quality assurance systems and continuous training. The decisive criteria are the independence and impartiality of the providers. Accreditation bodies oversee the supervision and quality control of the testing organizations and thus ensure a high level of testing services.
More information on ZVEI: See the full profile on EMR Executive Services
More information on Wolfgang Weber (Chairman of the Executive Board, ZVEI): See the full profile on EMR Executive Services
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More information on the European Corporate Sustainability Reporting Directive (CSRD): https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en + EU law requires all large companies and all listed companies (except listed micro-enterprises) to disclose information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment.
This helps investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies, as part of the European green deal.
On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD)EN••• entered into force. This new directive modernises and strengthens the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability.
The new rules will ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues. Finally, reporting costs will be reduced for companies over the medium to long term by harmonising the information to be provided.
The first companies will have to apply the new rules for the first time in the 2024 financial year, for reports published in 2025.
More information on TÜV: https://www.tuv.com/world/en/ + TÜV Rheinland stands for safety and quality in virtually all areas of business and life. Founded almost 150 years ago, the company is one of the world’s leading testing service providers with more than 20,600 employees and annual revenues of around 2 billion euros. TÜV Rheinland’s highly qualified experts test technical systems and products around the world, support innovations in technology and business, train people in numerous professions and certify management systems according to international standards. In doing so, the independent experts generate trust in products as well as processes across global value-adding chains and the flow of commodities. Since 2006, TÜV Rheinland has been a member of the United Nations Global Compact to promote sustainability and combat corruption.
More information on Dr. Joachim Bühler (Managing Director , TÜV): https://www.tuev-verband.de/ueber-uns/organisation/team + https://www.linkedin.com/in/joachim-b%C3%BChler-14a43045/
More information on VDMA: https://www.vdma.org/en/ + With 3,600 members, the VDMA is the largest network organization and an important voice for the machinery and equipment manufacturing industry in Germany and Europe. The association represents the common economic, technical and scientific interests of this unique and diverse industry.
With our broad-based organizational structure and the know-how of more than 500 employees worldwide, we support you in making the right decisions in your company.
The VDMA is an important voice for the mechanical and plant engineering industry, it is a pioneer for its members and the largest networking platform for the industry in Europe. In order to successfully fulfill all these tasks and offer its members real added value, the association is divided into a wide variety of organizational units.
The VDMA bundles the know-how and competence of its entire organization in eleven topic areas and offers you support for your entrepreneurial decisions – from daily business to the political representation of interests to the recruitment of young talent.
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More information on Karl Haeusgen (President, VDMA): https://www.vdma.org/viewer/-/v2article/render/304544
More information on Thilo Brodtmann (Executive Director, VDMA): https://www.vdma.org/imprint
More information on DEKRA: https://www.dekra.com/en/home/ + DEKRA has been active in the field of safety for almost 100 years. Founded in 1925 in Berlin as Deutscher Kraftfahrzeug-Überwachungs-Verein e.V., it is today one of the world’s leading expert organizations. DEKRA SE is a subsidiary of DEKRA e.V. and manages the Group’s operating business. In 2022, DEKRA generated sales totaling nearly EUR 3.8 billion. The company currently employs almost 49,000 people in approximately 60 countries on five continents. With qualified and independent expert services, they work for safety on the road, at work and at home. These services range from vehicle inspection and expert appraisals to claims services, industrial and building inspections, advisory and training services, testing and certification of products and systems, also in the digital world, as well as temporary work. The vision for the company’s 100th birthday in 2025 is that DEKRA will be the global partner for a safe, secure, and sustainable world. With a platinum rating from EcoVadis, DEKRA is now in the top one percent of sustainable businesses ranked.
In 2022, the company grew with consolidated revenues rising by 7.4 % to EUR 3.8 billion. DEKRA is the world’s largest unlisted expert organization in the TIC (testing, inspection, certification) industry. You can find more information about our latest business figures, expansions, developments and management in our annual and financial reports.
More information on DQS: https://www.dqsglobal.com/intl/ + Every day, we create essential added value for organizations around the world. With our reliable, seamless and sustainable certification processes, we strengthen trust in your organization and enable you to enter new markets. Uniquely high levels of expertise, digital processes and passionately dedicated employees are the cornerstones of DQS. Our experienced teams are there for you all around the world, using all their expertise to lead your organization into the future.
- 2,500+ Auditors
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More information on Ingo M. Rübenach (Managing Director and Chief Executive Officer, DQS): https://www.dqsglobal.com/intl/about/our-leadership-team + https://www.linkedin.com/in/ingo-m-r%C3%BCbenach-b0a4708/
More information on ISO: http://www.iso.org/ + ISO (International Organization for Standardization) is the world’s largest developer of International Standards. Through our members and their stakeholders, we bring people together to create International Standards that respond to global challenges. ISO standards support global trade, drive inclusive and equitable economic growth, advance innovation and promote health and safety to achieve a sustainable future. Follow us to learn more about standards and how you can participate to making lives easier, safer, and better.
More information on VCI (Verband der Chemischen Industrie e.V.): https://www.vci.de/startseite.jsp + The VCI represents the interests of around 1,900 chemical companies in Germany towards politics, authorities, other areas of the economy and the media.
More information on Berthold Welling (Managing Director Legal and Tax, Sustainability, VCI): https://www.vci.de/der-vci/organisation-struktur/geschaeftsfuehrung/seiten.jsp + https://www.linkedin.com/in/berthold-welling-0a54a4204/
More information on the German Textile and Fashion Industry Association): https://textil-mode.de/en/ + The Confederation of the German Textile and Fashion Industry represents the interests of the entire industry on matters relating to economic, social and collective bargaining policies. The Confederation is the spokesperson for the industry on the international, economic, political and social arena. The most important objectives include securing the high level innovation and maintaining the leading position for textile and fashion companies. Furthermore, to safeguard the general appeal of Germany as a commercial location compared to other countries in the world.
- 7 Industry Sectors
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More information on Dr. Uwe Mazura (General Manager, German Textile and Fashion Industry Association): https://textil-mode.de/en/impressum/
More information on the German Accreditation Body (DAkks): https://www.dakks.de/en/home-en.html + We are Deutsche Akkreditierungsstelle (DAkkS), the national accreditation body of the Federal Republic of Germany. Our accreditations establish confidence in the work of testing, inspection and certification bodies whose assessment services are required in many sectors of the economy. With an accreditation, we confirm that these organisations can perform their work competently and in accordance with the requirements of internationally applicable standards, legal bases and relevant rules. That is our legal mandate. With our accreditations, we help to make products, processes and services safer and to simplify trade in Europe and around the world – in the interests of the nation and the economy, of protecting society and the environment.
More information on Dr. Stephan Finke (Chief Executive Officer, DAkkS): https://www.dakks.de/en/ceo.html + https://www.linkedin.com/in/stephan-finke-18769384/
EMR Additional Notes:
- Carbon Dioxide (CO2):
- Primary greenhouse gas emitted through human activities. Carbon dioxide enters the atmosphere through burning fossil fuels (coal, natural gas, and oil), solid waste, trees and other biological materials, and also as a result of certain chemical reactions (e.g., manufacture of cement). Carbon dioxide is removed from the atmosphere (or “sequestered”) when it is absorbed by plants as part of the biological carbon cycle.
- Reduction of carbon dioxide emissions through the use of low carbon power sources, achieving a lower output of greenhouse gasses into the atmosphere.