Keeping Up with European Standards: A Proactive Approach by DAX Companies
In Step with European Sustainability Guidelines, Even Without a Legal Backbone - A Focus on Broad Engagement
Location: Frankfurt
Contributor: Sabine Reifenberger, Frankfurt
Esoteric factions advocate for clarity and user-friendliness in Environmental, Social, and Governance reports.
Though the European sustainability reporting regulations haven't been integrated into German law yet, the DAX companies are aligning with them, reveals an analysis by Forvis Mazars. Despite the set standards, some companies are still working on making their reports more reader-friendly.
The 2024 reporting season brought an unexpected twist for numerous companies: The dissolution of the coalition government delayed the anticipated transposition of the European Corporate Sustainability Reporting Directive (CSRD) into German law. Though caught off guard, many corporations had already thoroughly prepared for the implementation of the CSRD, with a focus on uniform European reporting standards, the European Sustainability Reporting Standards (ESRS). The corporate giants in the DAX are carrying on this path even in the absence of national legislation. This perspective is reflected in the analysis "CSRD Implementation in the DAX 40" by Forvis Mazars, which was shared exclusively with the Financial Times prior to publication. For this, the 34 sustainability reports submitted by DAX companies by the end of March were assessed.
And yet, they march on...
The DAX and the CSRD
Early Adoption of the CSRD - Many European companies, including those in the DAX, have already published sustainability reports that meet CSRD requirements ahead of its 2025 official launch. This early adoption symbolizes a strong commitment to transparency and aligns with the ESRS [2].
ESRS Compliant Reports - Companies, like those in the DAX, are structuring their reports in a manner that conforms to ESRS requirements. This proactive approach helps them prepare for future regulatory requirements and resonates with investors and stakeholders seeking ESG transparency [2][3].
Sustainability Reporting Made Better
Enhanced Transparency - The DAX companies have heightened the detail and openness in their sustainability reporting, providing a clearer picture of their environmental and social impacts [3][4].
Emissions Reduction - The decline in direct greenhouse gas emissions shown by the DAX companies, as reported by EY, indicates a profound dedication to their sustainability objectives. While this reduction mainly pertains to direct emissions, it showcases their efforts towards achieving climate neutrality [3][4].
Legal Loopholes and Creative Innovations
Lack of a Specific German Framework - Though a unique German legal framework for sustainability reporting is absent, companies are utilizing EU directives and standards to guide their practices. Even though the CSRD hasn't been enforced in full, it provides a roadmap for companies to follow [2].
Adaptation and Innovation - Companies are adapting to new regulations and cutting-edge reporting standards. This adaptive nature, combined with the high demand from investors and stakeholders for ESG transparency, incites DAX companies to align with European sustainability standards, despite local regulatory shortcomings [3][4].
- Despite the lack of national legislation integrating European sustainability reporting regulations into German law, DAX companies are still adopting and structuring their finance and business operations in line with European Sustainability Reporting Standards (ESRS).
- Some DAX companies have even taken an extra step and published sustainability reports that meet the requirements of the European Corporate Sustainability Reporting Directive (CSRD) ahead of its 2025 official launch, signifying a proactive approach to the industry's finance and business practices.
