The countdown is on… Nine more months until companies have to submit their sustainability report for 2023. CSRD, as the EU directive is called, will be mandatory for all large companies from January 1, 2024. SMEs have three more years to comply with the reporting obligation.
Because the previous sustainability guidelines are often vaguely worded and leave a lot of leeway, more standards are needed to achieve comparability. Among other things, the reporting obligation is also about making CO2 consumption transparent in order to achieve the goals defined in the Paris climate agreement. The timing of Climate Proof’s launch couldn’t be better. Because most companies depend on external support when reporting their CO2 values.
Ariane Lindemann in conversation with Felix Merz.
How do companies measure the sustainability of their projects?
Actually not at all. You can say that you act sustainably, but real values that say something about how much CO2 reduction is achieved, for example, are currently not easily possible. And if so, then the effort is extremely high and very manual. It is therefore important to make the subject of CO2 transparent so that it can also be put into perspective.
How can this transparency be achieved?
In order to achieve greater transparency, there is the CSRD, the EU directive on corporate sustainability reporting. It obliges organizations to report on their environmental and social policies. This should enable companies, consumers, politicians and financiers to better assess sustainability performance and make sustainability-related business decisions.
Does this mean that in future companies will have to report on the topic of sustainability with the same quality as in financial reporting?
Yes and that makes sense too. In the financial sector, everything is perfected in terms of the euro. For example, with an automatic transmission with 800 parts, BMW knows exactly how much each part costs, how many euros go into processing, accounting, milling and washing, etc. We also need a measurable quantity for CO2. This gives people and organizations the opportunity to make sustainable decisions.
The currently applicable CSR guidelines have been made more precise and expanded. Why?
The previous guidelines for sustainability in companies are formulated very vaguely. What we need are standards. On the one hand, consumers are increasingly including a company’s sustainability record in their purchasing decisions. On the other hand, a corresponding sustainability performance strengthens trust in companies and products. Especially in sectors that cause high CO2 emissions. With the new directive, a significant expansion of the scope of application will therefore come into force.
Who will be affected by the sustainable reporting obligation in the future?
All large companies that meet two of three of the following criteria: more than 250 employees, 40 million sales, 20 million euros balance sheet total. Due to the weakening of their financial situation due to Corona, SMEs have three years longer to submit the reports.
How much time do companies have left?
The deadline for the 2023 report is January 1, 2024.
Are companies prepared for this?
Unfortunately not really. A few weeks ago we launched a questionnaire in which we asked companies whether they are obliged to report under the new EU directive. They largely denied it. That means they really don’t know what to expect.
This gives you a tailwind, because you have just finished developing a suitable tool…
Yes. We assume that the demand will now increase rapidly to implement this EU regulation 2464 into national law. We looked at the tools companies use and in most cases these are cumbersome Excel spreadsheets. Our goal is to relieve the user here by radically simplifying the input and at the same time evaluating the data intelligently using intelligent algorithms. In this way, the information can be converted into measurable sustainability strategies in a targeted and legally compliant manner.
We want to create a standard that is used across the entire value chain. Because only when there is a standard are decisions possible in more complex corporate structures and across company boundaries.
What technology do you use for this?
We solve this with cryptography, i.e. encrypting the data. We look at the process steps in the reduction of CO2 and store the information from each individual process step in the blockchain. In this way, we create traceable CO2 reductions and also a forgery-proof certification. So that it can be traced at any time when CO2 was reduced, by whom and in what quantity.
Doesn’t the blockchain consume a lot of energy?
Many associate blockchain with high energy consumption. But the blockchain we use uses 99.9% less than Bitcoin.
“Startup is a cool new world for us. We have set ourselves the goal of developing the most secure IT solution for CO2 certification. The CYBERLAB is of course ideally suited for this because it is the first address in the field of IT security.”
What was the biggest hurdle you faced when founding Climate Proof?
The first hurdle was really taking the step outside. I had a great job at BMW developing electric drives. Although I had the inner conviction that it was the right thing to go on this new path, but to take the risks, to overcome fears and doubts and then really go through with the step, to hand in the resignation, to leave Munich for Constance – that was anything but easy.
Where was the CyberLab Accelerator able to support you?
We all have more than ten years of professional experience and know the normal corporate world quite well. Startup is a cool new world for us. We have set ourselves the goal of developing the most secure IT solution for CO2 certification. The CyberLab is of course ideally suited to this because it is the first address in the field of IT security. Because if our product is not safe, then we cannot sufficiently differentiate ourselves from the existing CO2 certificates. The CyberLab helps us to develop the Bullet Proof IT side and make it secure against hacker attacks. But we also wanted to use CyberForum’s extensive network to communicate our vision to the outside world and acquire pilot customers. The expertise in the CyberLab helped us a lot.
Where are you right now?
We have developed a prototype for recording Scope 3 emissions, which we are now testing in the pilot phase with our customers, including a DAX group. Furthermore, we are currently holding talks with investors to finance the next expansion stages of the software and rollout to the companies affected by EU2022/2464.