06.2021 Sustainability in German companies – plenty of room for improvement

Only 0.15% of companies in Germany are oriented sustainably. This is confirmed by a new study, commissioned by the German Council for Sustainable Development.

That is a total of only 5,837 companies, 18% of which are freelance, science, technology or service companies, 22% manufacturing and 10% trade. 3 million companies are not sustainable, are not interested in sustainability, or are not familiar with the term sustainability. This is a lot of room for improvement and reveals the implementation difficulties that exist.

Yet some framework conditions and specifications have long been in place. Since 2011, the European member states have been obliged to draw up an environmental balance sheet, which is incorporated into a “European environmental-economic balance sheet” (Regulation 691/2011/EU). We have compiled further information on this in the info box at the end of this blog post.

Following the ruling of the German Constitutional Court on the Climate Protection Act, the pressure on companies is increasing. A lack of sustainability can very quickly become a cost factor. But what is preventing companies from becoming sustainable in the first place? Whether SME or large industry, a lack of knowledge is often due to a lack of interest and vice versa, at the management level and likewise among employees. Often, the company’s own portfolio is not perceived as sustainable or there is no clarity about how CSR should be integrated into the company. Tight personnel capacities are often accompanied by a lack of support from management, which also leads to a lack of interest among employees. Last but not least, difficult economic conditions prevent companies from breaking new ground. Especially when they expect commercial disadvantages as a result.

However, there are just as many advantages and thus reasons for a company of any size and in any sector to adopt a sustainable strategy. Some are brought to companies from the outside: assuming environmental responsibility has been in the consciousness of entrepreneurs and customers since Greta Thunberg’s 2018 exclamation “How dare you?” at the World Climate Conference. More and more concrete political stipulations at many levels are forcing action. And the louder demands from interest groups, whether for cleaner air, renewable energy, less noise, fair trade or toxic-free goods, cannot be ignored. Because customers and investors are now joining such demands. On the inside, it is worth taking a close look to identify innovation potential and competitive advantages by demonstrating one’s own sustainable actions, identifying savings potential, for example, through resource conservation and circular economy, and thus enhancing the company’s reputation at the same time. This means motivation for employees and thus less fluctuation, as well as a greater chance of attracting young talent in a tight labor market.

Many good reasons to get involved in a sustainability strategy and CSR report and also to talk about it. In many industries, there are already renowned labels such as the Bio-Siegel, the Grüner Strom Label or the EMAS certification. There are associations such as the German Sustainable Business Association and associations such as the German Sustainable Building Council. Ambitious entrepreneurs take up the challenge of achieving the awards and rankings offered there. A real win-win situation with plenty of room for improvement.

Helping you on your way to sustainability:

The German Federal Ministry of Labor and Social Affairs offers CSR Made in Germany, a reporting format for “Corporate Social Responsibility.”” And the German Council for Sustainable Development RNE is tasked with implementing the global sustainability goals in business and offers a wide range of support for the forward-looking integration of ecological and social issues in all areas of business: global supplier networks, industry forums, accounting or the financial market.

In addition, the RNE offers a low-threshold entry into sustainability reporting, not only for small and medium-sized enterprises, with the platform German Sustainability Code DNK. With its climate protection plan, the German government provides orientation and perspective for any company willing to take a closer look, and the EU taxonomy promotes investment in green and sustainable projects.

And there are other national standards and regulations for Germany. The German Corporate Governance Code (DCGK), which is aimed primarily at listed companies, contains standards of good and responsible corporate governance. Value creation must be sustainably oriented. The recommendations of the GCGC are not mandatory. Nevertheless, there is an implicit obligation for listed stock corporations to implement them, as the Executive Board and Supervisory Board must prepare an annual declaration of conformity in accordance with Section 161 of the German Stock Corporation Act (AktG).

In international business, the sustainability or CSR report is frequently and increasingly the recognized framework of the Global Reporting Initiative GRI, while small companies prepare a declaration on the GSC.