Consultancy companies cashing in on the Corporate Sustainability Reporting Directive

Subject: Consultancy companies cashing in on the Corporate Sustainability Reporting Directive

Red tape and reporting obligations stemming from the Corporate Sustainability Reporting Directive (CSRD) have caused a hiring boom and a rush to recruit consultants specialised in environmental matters. KPMG has recruited 100 new staff members in Sweden since May 2022 and Ramboll, a small consultancy firm, has tripled its staff since 2020.

Swedish companies that have long been leaders in sustainability reporting have to do a lot more to meet the new requirements, such as emissions reporting for the entire value chain.

There is a massive demand for services linked to the ongoing energy and green transitions in industry according to Sofia Brodd, the director of the environmental unit at Sweco, which has increased its number of environmental consultants from 360 to 480 since 2020. Revenue generated by these environmental consultants increased by 4.3 % between 2020 and 2021 and grew by 8.8 % in the first half of 2022 compared with 20211.

Written Question E-005496/2021 on the special relationship between the EU and consultancy firms questioned the EUR 542.4 million spent by the Commission on external studies between 2016 and 2020.

1. Does the Commission agree that a job created to ensure compliance with EU legislation does not provide added value to the real economy?

2. Did it foresee massive profits for consultancy firms in its CSRD impact assessment?

Submitted: 30.11.2022

1 https://www.di.se/hallbart-naringsliv/konsultbolagen-taljer-guld-pa-nya-kraven-enorm-efterfragan/

Answer given by Ms McGuinness on behalf of the European Commission (31 January 2023)

The Commission believes that the overall benefits of the Corporate Sustainability Reporting Directive (CSRD) (2) will far outweigh the costs of compliance.

The CSRD will — by improving sustainability reporting at the least possible cost — help to realise the transition to a sustainable and inclusive economic and financial system in accordance with the European Green Deal (3) and the United Nations Sustainable Development Goals. (4)

The CSRD will provide investors with the data they need to channel private funding towards sustainable economic activities, without which the transition to a sustainable economy cannot succeed.

It will also enable investors to make investment decisions that take account of risks arising from climate change, biodiversity loss and other sustainability issues, thereby reducing systemic risks to the financial system.

In addition, the CSRD will help companies to better identify and manage their sustainability risks and impacts, so enhancing their resilience and long-term success. It is commonplace for companies to seek the advice of external consultants when applying new legislation, although they are not legally obliged to so.

The impact assessment accompanying the Commission proposal for the CSRD considered the compliance costs for companies.

Both the internal costs arising from the companies’ own workforce, and external costs arising from the possible engagement of consultants, for the first year of implementation and for following years, were included in this assessment. The conclusion remained that the benefits would far outweigh the costs.

1 ∙ ⸱ https://www.di.se/hallbart-naringsliv/konsultbolagen-taljer-guld-pa-nya-kraven-enorm-efterfragan/

2 ∙ ⸱ Directive (EU) 2022/2464 of the European Parliament and of the Council amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC

and Directive 2013/34/EU, as regards corporate sustainability reporting.

3 ∙ ⸱ Commission Communication, ‘The European Green Deal’, 11 December 2019, COM(2019) 640 final.

4 ∙ ⸱ United Nations 2030 Agenda for Sustainable Development. https://sdgs.un.org/publications/transforming-our-world-2030-agenda-sustainable-development-