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"Companies are burying their heads in the sand when it comes to ESG regulation"

Companies are burying their heads in the sand when it comes to ESG regulation

A recent study has revealed that over 40% of European companies have not yet established policies regarding climate, sustainability, and corporate social responsibility (CSR). Furthermore, a quarter of these companies plan to ignore the impending climate and sustainability regulations set by the EU, which will take effect in the coming years. An alarming finding is that 75% of accountants tasked with monitoring adherence to these guidelines are barely aware of their content. This was discovered through a study conducted by Angi Studio, commissioned by Lefebvre Sarrut, the parent company of Sdu in the Netherlands.

The research, which included in-depth interviews and online surveys among 744 European companies - including 279 Dutch companies - further revealed that four out of ten companies are unaware of the EU's Corporate Sustainability Reporting Directive (CSRD). This directive requires companies with more than 250 employees or a turnover of over 40 million euros to report annually from 2025 on the impact of their activities on people and the environment (ESG and CSR). For companies with more than 500 employees, this requirement already applies from 1 January 2024.

According to Wanda Bolte, the lead researcher at Sdu, many companies do not understand the seriousness of this obligation, potentially jeopardizing their long-term survival. She reports that 40% of the companies have not appointed anyone to implement their ESG and CSR policies, and one-fifth only does what is legally required.

While the automotive and chemical industries are better prepared than other sectors, half of the companies that are actively engaged with these themes report that their implementation presents a significant challenge. This includes setting ESG targets, gathering data, making legislation transparent, and reporting.

Bolte emphasizes that complying with the CSRD is not just a checklist to complete: "The CSRD is not about ticking boxes. You can't outsource this to your accountant. Companies have to implement sustainability measures from top to bottom. Therefore, we are concerned that so many companies do not have people or resources available for this and are not aware of it. We hear from companies that are engaged in this, that setting up ESG and CSR policies takes a lot of effort and time."

She notes that the manufacturing industry is already more advanced in implementing ESG and CSR policies due to their longer experience with environmental regulations. However, the service sector, which also needs to comply with these laws and regulations, has not yet recognized this challenge.