Last year I decided to put some of my savings into a sustainable investment product. I didn’t really shop around, but I talked to an adviser from my bank about what they could offer me. I know, I should have looked beyond my own bank, but this seemed like the most convenient solution to me at the time because I lead a busy life and cannot do in-depth research into everything I buy.
The advisor showed me a few investment funds and provided information material for all of them, based on which I tried to decide for myself which of them were truly, or at least most, sustainable. However, this proved to be an impossible task because the information was vague and because it was difficult to compare the funds’ degree of sustainability to each other.
But in the end, I gave up on my sustainable investment and decided to opt for a standard investment product due to the impossibility of seeing what was really sustainable, or at least most sustainable, and what wasn’t.
All change: a fundamental shift coming
If I were writing this blog in 2025, I am hoping that there would be a different outcome. That’s because – if a recently adopted EU law, the Corporate Sustainability Reporting Directive (CSRD), is properly implemented – major changes will be coming and lead to a fundamental shift in corporate reporting which, until now, focuses mostly on financial figures. This would have made it much easier for my bank to provide me with meaningful and comparable investment options.
A free-for-all
This would certainly be an improvement on the deplorable current state of affairs in corporate sustainability reporting. This is because reporting is for now a mostly voluntary and unstandardised free-for-all, full of fluffy language, lofty promises and rife with social- and greenwashing.
The EU’s CSRD (and the European Sustainable Reporting Standards that will set the rules of the game, but are still at the draft stage) are trying to fix that. They are set to make reporting not only mandatory for companies, but also ensure that sustainability reports are standardised and all-encompassing, and very importantly, audited.
If done well, this could really help consumers. It would certainly have helped me to see the options on the table in my meeting with my bank much more clearly. It could also help in more everyday decisions to see which jeans manufacturers are genuinely taking toxic chemicals and workers’ rights into account, for instance.
Admittedly, in many cases it won’t be the consumers themselves who check the sustainability reports, but the intermediaries that help us make choices. Think of organisations that put those little green/sustainable labels on supermarket products, for example. They would have much better information at their disposal.
If done well, this could really help consumers
But it also goes much beyond consumers alone. More transparency on sustainability reporting would create incentives for companies to clean up their acts and to help accelerate the sustainable transition.
A rocky road ahead
BEUC has taken an active role in the shaping of the standards that will determine the roll-out of the new reporting obligations, but it certainly won’t be a walk in the park.
It is all the more important that the consumer voice is heard on this debate, given the firepower of some of the other players. A German automotive group, for example, submitted feedback to the public consultation on the standards 14 times in summer 2022! Once directly in its own name, and many more times indirectly through the business associations that it is a part of.
This goes to the heart of the struggle for more transparency. On the one hand, consumer organisations, environmental NGOs and unions, and large parts of the private business sector on the other, who have been very actively trying to water down and delay the introduction of sustainability reporting even further.
It is all the more important that the consumer voice is heard on this debate
The draft standards are now with the European Commission, which must assess, and possibly amend them, before submitting them to another public consultation in spring 2023. That leaves plenty of time for corporations and their representatives to try to water down the drafts. All being well, the standards will then come into force in 2024 for large, listed companies and in subsequent years for smaller and/or unlisted companies.
Corporate sustainability reporting promises to be transformational in terms of the window of transparency it will offer consumers (and those helping them make decisions) into companies’ practices. We’re not safe yet; it still needs to survive the EU law-making process. But it will be valiantly defended by consumer groups and civil society organisations, unions, and sustainable-minded businesses.
I am still determined to make my sustainable investment. But I’m really hoping that when I do make it, I will be able to do so with all the information at my disposal to make a genuinely sustainable choice.