Sustainability reporting still a black box for many smaller companies in Germany – survey
Clean Energy Wire / Handelsblatt
The upcoming requirements on sustainability reporting for credit ratings pose a challenge for many small and medium-sized enterprises (SMEs) in Germany, a survey conducted by the state-owned development bank KfW has found. Almost half (45%) of SMEs could not say how important the topic will become for them when negotiating loans in the future and less than half (48%) said they could list at least one of the surveyed sustainability indicators now or soon. These indicators include data on energy use, greenhouse gas emissions and sustainability indicators associated with the EU’s taxonomy for sustainable finance criteria. Only 10 percent said they expected to be able to provide data on all surveyed indicators.
The Corporate Sustainability Reporting Directive (CSRD) obliges companies to register sustainability risks in their reports to allow financial institutions to better gauge how these affect climate change and how vulnerable the businesses are to physical or regulatory consequences. The CSRD has already been put in place for larger companies in Europe and will begin to cover SMEs active on the capital market by 2026. The KfW survey found that sustainability played a role in only 15 percent of credit negotiations of SMEs, with the incidence falling relative to the size of companies. “There appears to be great uncertainty among SMEs how important the topic is going to be in future,” with most companies not expecting it to rise in importance, KfW concluded.
Marcus Thiel, head of sustainability lending at Deutsche Bank, told business daily Handelsblatt that banks were aware of the challenges smaller companies face in complying with the CSRD requirements. These would not have to expect that banks will require comprehensive data sets from them soon, unless they are active in business areas that have a high exposure to climate change effects. “Companies from these industries must expect to be questioned more than companies active with lower risks in this area,” Thiel said.
