Thomas Lyons 
One in five Irish companies are concerned about new rules aimed at tackling greenwashing, according to a survey by the Compliance Institute. The European Union’s Corporate Sustainability Reporting Directive (CSRD), which came into force at the start of the year, seeks to prevent businesses from misleading consumers about the sustainability of their products or services. The CSRD will strengthen the rules around the social and environmental information which companies have to report on. Of the companies surveyed, 57% said the new rules would have a significant or huge impact on their business, while 41% said they would struggle to provide the required data. A further 7% said they did not understand the new rules.
Michael Kavanagh, chief executive of the Compliance Institute, said that one-third of companies surveyed did not feel equipped to give a view about their obligations under the CSRD because they did not know enough about it. Kavanagh described this as “concerning”. He also warned that 46% of the companies surveyed were unaware that they would now be independently audited as a requirement of the CSRD.
The CSRD forms part of the European Green Deal’s climate change action objectives, which aim to further enhance the disclosure by companies on climate and environmental data and tackle greenwashing. The EU Green Deal has three key targets: to be the first climate-neutral continent by 2050; to achieve at least 55% less net greenhouse gas emissions by 2030, compared to 1990 levels; and to plant 3 billion additional trees in the EU by 2030.
Under the CSRD, mandatory reporting standards developed by the European Financial Reporting Advisory Group (EFRAG) have been introduced. EU companies will have to report in more detail and be more transparent about the impact of their actions and policies on the environment, human rights and social standards. More large companies, as well as listed small to medium sized enterprises, will be required to report on sustainability as a result of the new law.
Kavanagh said that almost half of businesses are concerned about the cost and time involved in these rules and that it is a “tsunami of legislation” that is coming through on other areas. The Compliance Institute’s survey highlights the need for companies to educate themselves on the new rules and take steps to comply with them. While there may be short-term costs involved, the long-term benefits of increased transparency and accountability could be significant.
