Companies fail to comply with EU sustainability rules

Despite the fact that large listed companies with more than 500 employees must provide insight into the impact of their activities on people, the environment and society in their annual reports from 2024 onwards, this year too, not a single Dutch company has yet met the relevant EU reporting requirements. Companies are waiting for the final rules and often still experience the EU's Corporate Sustainability Reporting Directive (CSRD) as a paper burden rather than a transition tool for sustainable business operations. This is what KPMG's 'Sustainability Reporting' annual report survey shows for the second year in a row among 24 listed and 22 large unlisted companies. Philips, DSM and Ahold Delhaize are the most mature in relation to the implementation of EU sustainability rules.

Most attention in current sustainability reporting is paid to climate change and the environment. For example, 90% of the listed and 70% of the unlisted companies provide insight into the impact of their business activities on the environment, biodiversity and, for example, water pollution. Most companies still provide insufficient information on social aspects beyond the borders of their own organisation. Where EU rules require disclosure of working conditions of employees throughout the value chain, including, for example, the production of parts in China or India, this is hardly ever reported in the annual report.

A crucial element of European sustainability reporting is the so-called dual materiality. This maps out both the financial business risks of sustainability and the risks to people and the environment. For example, it must show whether companies can cope with floods, higher temperatures or other effects of climate change. At the same time, it must be clear how nature will or will not be affected by, for example, the construction of a new factory. None of the companies investigated currently meets the EU reporting requirements on dual materiality.

Kpmg.nl