Environmental And Climate Protection Measures Are Dominated By Financial Targets

In January, the new EU sustainability reporting directive has entered into force. Companies now have to comply with more reporting regulations in the field of climate and environmental protection, social justice and governance. The reporting of many medium-sized companies will also have to be externally evaluated. The June report of the GBP explains if and how the tendency to be more aware of ESG measures influences company decisions.

The report shows that a significant portion of the companies in Germany has already implemented specific measures for environmental and climate protection (52 percent), social purposes (47 percent) or responsible governance (65 percent). Savings in energy consumption (87 percent) and switching to renewable energy sources (65 percent) are the most common measures in the field of environmental protection. But when it comes to defining their annual goals, only 15 percent of these companies take these non-financial key figures into account.

“For internal management, companies still rely on the traditional key figures such as sales and profits”, says Jannis Bischof, Professor of Business Administration and Accounting at the University of Mannheim. “This suggests that companies often meet the requested societal responsibility only if this is beneficial to their financial success”, says Bischof. Stricter legislation had not a significant effect on this phenomenon and would only increase the tendency to switch to other, less regulated markets.

There are several reasons why ESG measures are not implemented: For the most unprofitable companies (71 percent), the reason is that financial means are not available. And 75 percent of the profitable companies say that unclear legal regulations prevent them from making more ESG investments.

Manager deciding in favor of ESG measures are particularly prone to taking ESG measures if these measures fit the company’s values (56 percent). In addition, they expect that their reputation among customers (48 percent) and employees (44 percent) improves.

TRR 266 forum “Green transparency or data jungle?”
The TRR 266 forum “Green transparency or data jungle?”, which takes place on 13 June at the University of Mannheim, will cover questions on ESG investments and their importance for company success. The program includes presentations and panel discussions to exchange academic and practical knowledge and to find common solutions. There will also be discussion rounds of researchers of the University of Mannheim and managers of well-known companies.
René Aldach, Chief Financial Officer of Heidelberg Materials, will hold a keynote speech on “Decarbonization in practice: management, strategy and reporting”.