Climate reporting: Majority of companies do not monitor and report adequately (Survey institute: Forsa)

• Manufacturing industry with high direct emissions is further ahead in monitoring and reporting than service providers and trade
• A quarter do not plan any sustainability reporting, despite regulatory requirements from 2025 at the latest
• 35 % do not follow any guidelines or frameworks in reporting

36 % of companies do not regularly monitor their own emissions. Those that do so primarily measure direct emissions, i.e. those caused directly by the company itself (82 %). Indirect emissions (43 %) and emissions from the entire value chain (22 %) are monitored by only a minority of the companies surveyed.

"However, we see big differences between industries," says Janina Hellwig, study author and expert on energy and climate at FTI-Andersch, the consulting unit of FTI Consulting in Germany that specializes in restructuring, business transformation and transactions. Eighty-three % of companies in the manufacturing sector regularly monitor their emissions, compared with 56 % of service providers and 30 % of companies in the retail sector. "This correlates with the fact that indirect emissions are currently not yet sufficiently included in monitoring: because these occur in particular at service providers and in trade."

Janina Hellwig says: "However, we assume that in the medium term all companies of a relevant size will be subject to regulatory requirements to monitor their own CO2 emissions very specifically. All industries should prepare for this today and create the necessary conditions in processes and IT infrastructure. In particular, controlling emissions in the supply chain will present all companies with immense challenges."

Only 40 % of companies produce sustainability report

Almost in line with the embedding of climate risks and opportunities in internal corporate governance systems (46 %), 40 % of the companies surveyed by Forsa have so far produced their own sustainability reporting. 38 % plan to do so, but around a quarter (22 %) do not. In the annual management report on the company's economic development, the majority (54 %) of companies have not included a separate section for a sustainability report. Only 20 % plan to do so, partly in view of the European Union's Corporate Sustainability Reporting Directive (CSRD).

"The fact that a significant proportion of the companies surveyed do not yet have a sustainability reporting section is remarkable in light of the new EU directive," says Professor Dr. Patrick Velte of Leuphana University of Lüneburg, who provided scientific support for the study. "This is because all of the companies surveyed fall under the CSRD reporting obligation." This states that all companies with more than 250 employees, a balance sheet total of more than 20 million euros and sales of more than 40 million euros are subject to reporting requirements from fiscal year 2025.

"Compared to listed companies, which currently either already have to prepare a non-financial statement or undertake voluntary sustainability reporting, medium-sized companies often have to start from zero to one hundred," says Velte. "Setting up appropriate management and reporting structures is a very time-consuming undertaking."

External audit requirement from 2025

Those that already prepare a sustainability report often (38 %) use internal guidelines to do so. "This is an individually defined framework that, in the best case, bundles relevant criteria and performance indicators from various frameworks and adapts them to the existing business model," says Janina Hellwig of FTI-Andersch. In contrast, 35 % do not use any frameworks or guidelines at all, while 27 % are guided by external guidelines, such as the German Sustainability Code.

"From 2025, however, it must be ensured that all reports are compliant with the CSRD. We therefore recommend that companies start now to take account of the prescribed form of presentation in their reports," says Hellwig.

The CSRD will also require an external audit of the content of the reports - for example, by the auditor who also issues the audit certificate for the annual financial statements. However, only 34 % of the companies surveyed have made use of third-party auditing to date, and 28 % do not plan to introduce it. "The feeling is imminent: A larger group of companies has yet to see what's coming," says Hellwig. As of now, all companies should ensure that data is made available and comparable, and that this data can also be validated by third parties and reported according to the standards that will be mandatory in the future. Those who are quick can already count on a positive impact in financing through a proactive transparent approach."

About the survey:

The survey and opinion research institute Forsa was commissioned by the management consultancy FTI-Andersch to interview a total of 152 companies from the industry, trade and services sectors with annual sales of between 40 million euros and 1 billion euros (German SMEs), including around 50 % from the manufacturing sector. The study 'Climate Governance 2023' by FTI-Andersch in cooperation with Leuphana University Lüneburg (Professor Dr. Patrick Velte) can be downloaded in full here:

About FTI-Andersch:

FTI-Andersch is a management consulting firm that supports its clients in the development and implementation of viable future/performance as well as restructuring concepts. FTI-Andersch actively supports companies that have to deal with operational or financial challenges and change processes - or want to align their business model, organization and processes for the future at an early stage.

Clients include in particular medium-sized companies and corporate groups that operate internationally. FTI-Andersch is part of the international FTI Consulting Group (NYSE: FCN) with more than 7,700 employees.