Many companies are not convinced that the "Sustainable Finance Regulation" will achieve the desired climate and environmental policy transformation. The vast majority of companies criticize the fact that while extensive, bureaucratic reporting and disclosure obligations are introduced, their positive effects on transformation goals are not adequately explained, and there is often no clear evidence of achieving sustainability goals.

The data required for reporting obligations can often only be determined inaccurately or not at all. This applies both to information within companies and information that companies need to obtain from other sources.

The numerous different regulations (including the Taxonomy Regulation, Sustainable Financial Disclosure Regulation (SFDR), Corporate Sustainability Reporting Directive (CSRD) with its delegated acts, Corporate Sustainability Due Diligence Directive (CSDDD), and diverse requirements in the environmental sector as well as from European and national financial supervisory authorities) are highly complex, detailed, and interlinked. For most companies, this is neither transparent nor manageable. Therefore, consistent revision and harmonization of existing European and national regulations are required to create a coherent and targeted framework which appropriately balances effort and benefit.

Instead of setting detailed and static specifications, the evaluation criteria should be simplified, made more flexible, and continuously developed in cooperation with industry. This would promote the transformation and competitiveness of European business. The diversity of existing criteria should be considered and consolidated. Developing another taxonomy, a "social taxonomy," is not compatible with these objectives, as it would further increase complexity and burden companies.

The necessary simplification also applies to funding programs. These should be based on uniform, straightforward guidelines and rely on data already available within companies. For non-capital-market-oriented SMEs, there should, for instance, be a focus on voluntary sustainability reporting data, as proposed by the European Financial Reporting Advisory Group (EFRAG) with the so-called Basic Module for voluntary SME standards. Such a standard should also apply to information needs in credit-financed investments that align companies towards greater sustainability. Downloads of related documents are provided below (only available in German).

The reporting obligations of the "Sustainable Finance Regulation" are designed to address the information needs of capital market investors and are therefore focused on large companies and financial market players. From a predominant point of view, the direct scope of the affected entities should therefore only apply to large capital market-oriented corporations. If it is to be maintained that non-capital market-oriented corporations are also covered, then adjusted criteria should ensure that only truly large corporations and not medium-sized, market-oriented companies are captured. If, as we have recommended, the thresholds in the Accounting Directive were raised beyond inflationary adjustments, the number of affected companies could be significantly reduced. Ultimately, however, reporting obligations for companies of all sizes should be as simple and unbureaucratic as possible.

The reporting obligations not only burden the large, directly reporting companies, but also small and medium-sized enterprises through supply and value chains (so-called "trickle-down effects"). Therefore, a workable voluntary standard should be established in the European regulations—such as the basic module of the voluntary SME standard (VSME). The bureaucratic effort for companies should be tightly limited through standardized input via a central platform with corresponding (digital) interfaces and approval options.

A simplified reporting standard for SMEs takes into account the different interests and expectations of capital market-oriented and non-capital market-oriented companies and reduces them to a manageable level for SMEs. A clearly defined and narrowly limited catalog ("basic data set") standardizes and structures the information needs of different financial market players, leading to significant relief for companies. Larger companies required to report should limit their information needs to the strictly necessary data.

Furthermore, a simplified reporting standard for SMEs should also be accepted by the financial supervision so that credit institutions can align themselves with it and do not, in turn, have to impose complex and heterogeneous information requirements on SMEs.

Download the PDF: Document (only available in German)

Different systems and methods of sustainability reporting cause companies considerable bureaucratic effort and prevent global transparency. Global standards can leverage efficiency gains and increase meaningfulness. The European special path in climate protection, biodiversity, and careful handling of resources carries the risk of weakening the competitiveness of the European location because sustainability aspects may not play a comparable role in non-European regions. This could lead to a migration of production and employment to other world regions.

Owing to taxonomy, the sustainable finance regulation has centred its focus on financing purely "green" activities. However, the emphasis should particularly be on financing the gradual transition phase towards green business models and technologies (Transition Finance), as this is where CO₂ savings will be at their greatest. Small and medium-sized enterprises cannot produce the scientifically based transition plans required for this process. Simplified and proportional approaches without explicit taxonomy connections should be accessible to these enterprises. It’s vital that these approaches are accepted by banking supervision to ensure access to financing for sustainable transformation. This unified structure should also guide promotional banks and other support schemes.