GBP Monitor in January 2025: Expensive Reporting Obligations Slow Down Sustainable Investments

Only 12.6 percent of companies believe that the EU regulations on sustainability reporting actually contribute to a more sustainable economy. Many companies believe that the amount of work needed to adhere to these regulations far outweighs the advantages gained from the reports, as indicated by recent findings from the German Business Panel (GBP) at the University of Mannheim. The budget set aside for adhering to reporting requirements is commonly lacking, which limits the ability to implement new sustainability measures effectively.

Press release from 29 January 2025
Print version (PDF)

In response to considerable pushback from corporations, the EU Commission declared that it would implement major reductions in sustainability reporting requirements by the end of 2024. The initiative known as “Omnibus” seeks to cut the requirements by a minimum of 25 percent.  The guidelines concerning sustainability reporting (CSRD), due diligence in supply chains (CSDDD), and the EU taxonomy are among those impacted.

Companies that adopt their own sustainability measures often have a critical perspective
According to the most recent findings from the German Business Panel (GBP), there is a growing discontent among German companies: by the second half of 2024, the percentage of businesses expressing a negative view of the CSRD increased by nearly 12 points, reaching 67.6 percent. A mere 12.6 percent maintain the view that the regulations have the potential to enhance sustainability. Consequently, the backlash comes not from companies that oppose sustainable business models, but rather from those that are already implementing a sustainability strategy.

“Companies gather extensive data regarding their supply chains, environmental initiatives, and social responsibilities, but this information often fails to address the needs and interests of the report's target audience. This is a particular burden for small and medium-sized businesses. The funds allocated for producing these reports and satisfying the requirements frequently result in insufficient resources for other initiatives, like implementing the sustainability strategy,” explains Prof. Dr. Jannis Bischof, project manager of the GBP and holder of the Chair of Business Administration and Accounting at the University of Mannheim. He adds: “Moreover, many companies regard the implementation of these rules as nothing more than a formality, with no real impact on the economy.”

Missed investments and a backlog of innovation
Not only does bureaucracy foster dissatisfaction, but it also plays a crucial role in influencing investment outcomes. More than half of the companies (54.1 percent) stated that they had not implemented planned investments in the past two years. In addition, 40.9 percent refrained from developing new products. “There is a risk that the regulations on sustainability will reverse their actual objective,” says Bischof.

Contact with authorities adds additional burden
Businesses often perceive interactions with regulatory bodies as especially challenging. For businesses that are required to create sustainability reports and view sustainability as a key strategic objective, this element is regarded as more challenging than the regulations themselves (26.5 percent compared to 20.6 percent). Conversely, those who choose to adopt the CSRD perceive the reporting requirements as the primary obstacle, possibly because they engage with regulatory bodies less often.

Satisfaction with economic policy at an all-time low
The GBP report indicates that satisfaction with economic policy has diminished even more. Presently, it has fallen to its lowest figure since the surveys were started in 2019. “This underlines the urgent need to reduce the burden of sustainability obligations in order to regain the trust of companies,” concludes Bischof.

The complete report on company trends in January 2025 (“GBP-Monitor: Unternehmenstrends im Januar 2025”) can be found here (in German): https://www.accounting-for-transparency.de/publications/gbp-monitor-unternehmenstrends-im-januar-2025/

Further information on the GBP monitoring report
The German Business Panel interviews more than 800 companies per month and since March 2024, also more than 250 researchers, on the economic situation in Germany and collects data on 1) any expected changes in revenue, profit and investments, 2) economic decisions, 3) the expected shutdown rate in the sector, and 4) the satisfaction with the economic policy. Furthermore, GBP reports on particularly relevant questions every three months.

Background information on the German Business Panel
The GBP is the long-term survey panel of the trans-regional Collaborative Research Centre “Accounting for Transparency” (www.accounting-for-transparency.de). The Collaborative Research Center (CRC) “TRR 266 Accounting for Transparency” was established in July 2019. In May 2023, the German Research Foundation (DFG) approved the extension of four additional years. It is the first CRC with a focus on business administration. More than 100 researchers from the following nine universities are involved in the CRC: Paderborn University (host university), Humboldt-Universität zu Berlin, University of Mannheim, researchers of Ludwig-Maximilians-Universität München, Goethe University Frankfurt am Main, Frankfurt School of Finance & Management, University of Cologne and Leibniz University Hannover. The researchers examine how accounting and taxation affect the transparency of companies and how regulation and firm transparency impact our economy and society. The CRC is funded with approx. EUR 18 million.

Contact:
Professor Dr. Jannis Bischof
Chair of Business Administration and Accounting
University of Mannheim
Phone: +49 621 181-1630
e-mail: jbischofmail-uni-mannheim.de


Yvonne Kaul
Research Communication
University of Mannheim
Tel: +49 621 181-1266
e-mail: kaulmail-uni-mannheim.de