Irish companies are worried about new anti-greenwashing rules “because of the costs involved”, according to the results of a survey published today (Monday, May 8).
New EU rules, which came into force at the start of this year, aim to tackle so-called ‘greenwashing’ – when businesses mislead consumers to make them believe their products or services are sustainable, when that is not the case.
The EU’s new Corporate Sustainability Reporting Directive (CSRD) will strengthen the rules around the social and environmental information which companies have to report on.
According to a survey carried out by the professional body for compliance professionals in Ireland, one in five companies that took part in the survey said they were worried about the new CRSD requirements.
Michael Kavanagh, chief executive of the non-profit, Compliance Institute, said that one out of every three companies that were surveyed said that “they don’t feel equipped to give a view about their obligations under the CSRD because they don’t feel they know enough about it”.
Kavanagh described this as “concerning”.
According to the results of the survey conducted by the Compliance Institute, 41% of companies said they will struggle to provide the data required, while 57% said the new rules will have a significant or huge impact on their business.
A further 7% of businesses said they do not understand the new rules.
“Almost half of businesses are concerned about the cost and time involved in these rules and it is a tsunami of legislation that is coming through on other areas,” Kavanagh added.
He also warned that “46% of the companies that were surveyed were unaware that they will now be independently audited as a requirement of the CSRD”.
The CSRD is part of the European Green Deal’s climate change action objectives, 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;
- At least 55% less net greenhouse gas emissions by 2030, compared to 1990 levels;
- Three billion additional trees to be planted in the EU by 2030.
Under the CSRD, mandatory reporting standards developed by 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.