Status Quo of Voluntary Sustainability Reporting by German SMEs in 2021

Abstract

New regulations related to Environment, Social and Governance (ESG), such as the Non-Financial Reporting Directive (NFRD) or the upcom­ing Taxonomy Regulation of the European Union (EU), will have a signifi­cant impact on various market participants. To gain insight, a study was con­ducted comparing sustainability reporting patterns of the top ten voluntary small and medium-sized enterprises (SMEs) sustainability reports. The results showed that these companies do not follow a uniform approach to sustain­ability reporting. Though the evaluated topics were the same, their contents and level of detail differed. It was also observed that some of the examined companies selected key performance indicators (KPIs) according to their pref­erence and explained them in detail. Moreover, the companies issued differ­ent types of sustainability reports, such as separate PDF reports, online ver­sions, or a combination of both. The companies provided extensive informa­tion on environmental issues, especially on GHG emissions, concrete mea­sures, and targets for reducing emissions and energy consumption. Many pre­sented this information in detail with status and KPIs linked to their sustain­ability program based on their previously identified material issues. However, the topics of pollution, water and marine resources, biodiversity, and ecosys­tems were only marginally addressed in the examined sustainability reports. Regarding social information, the investigated companies disclosed a broad spectrum of information on their own workforce, especially on working con­ditions, equal treatment, and opportunities. On the other hand, the report­ing of the examined companies varied widely for governance. Many firms re­ported on mandatory topics such as corruption, bribery, and political engage­ment. These findings are useful for policymakers, other companies including banks and suppliers, and individuals interested in assessing sustainability sta­tus and progress.