At Transport Intelligence we compile and present data to help companies better tailor their strategy to regulatory requirements and industry trends. The European Union’s Corporate Sustainability Reporting Directive (CSRD) offers a wealth of new information that we will harvest for guiding your approach.
By 2028 the CSRD will affect most of the top 100 logistics service providers (LSPs) that we routinely monitor, namely those that trade to any significant extent within the EU.
The problem with sustainability reporting at present
At a company level, ineffective regulations can skew the competitive landscape. Global integrator UPS stated in its 2021 Statement on Climate Change, “We believe that any policy to regulate greenhouse gas emissions should provide a clear, stable framework that enables the private sector to invest accordingly, and that minimizes the market imbalances that can result from polices applied unequally within or among nations.”
In recent years, on GSCi we have attempted to harvest and present information on climate impact presented by businesses that do report. Globally the regulatory landscape on this front is a mess. For example, US and Canadian businesses simply do not have to report at all, while only large publicly listed European companies have had to.
At the same time the data we find is often difficult to compare – one company might present Scopes 1 and 2 emissions as one category, while others do not report Scope 3 emissions and others again present large datasets that we could only wish every company would! Consequently the information we harvest can be very hard to present in a direct comparison.
The European Union stated, “Reports often omit information that investors and other stakeholders think is important. Reported information can be hard to compare from company to company, and users of the information are often unsure whether to trust it.”
The new European Sustainability Reporting Standards (ESRS), under which those affected by the CSRD will have to report, will level the playing field and for us that means we will be able to present that data in a way that is directly comparable from business to business.
Reporting and action
One issue that we often observe in our research at Ti is companies setting climate targets yet their own data shows their emissions continuing in an upward trajectory. Under the CSRD, those businesses affected will both have to report their data to stakeholders and the EU and act on this data to reduce their impact. This isn’t a box-ticking exercise so much as a means of actively reducing the environmental, social and governance impact of companies worldwide.
Whom is affected?
A sizeable majority of global LSPs will be affected by the CSRD. Broadly:
From 2024 all large EU listed companies with more than 500 employees will have had to collect, report and publish their ESG data
From 2025, all EU listed non-EU companies that meet two of the three criteria:
– Balance sheet of over €25m
– Turnover of over €50m
– Average number of employees 250 or more over the financial year
From 2026 all small and medium enterprises listed on an EU regulated market will have to comply
From 2028, non EU companies of over €150m turnover that have any of the three criteria:
– A large EU subsidiary listed on an EU-regulated market
– An SME subsidiary listed on an EU regulated market
– A branch in the EU with more than €40m turnover
Only a handful of the LSPs we monitor at Ti don’t fall into these criteria from China to the East to the US in the West. Ultimately this provides the coherent regulatory landscape that large businesses need as so many companies will be impacted.
Coherent regulation improves competition
As UPS indicated earlier on in this piece, businesses seek a coherent, clear and stable regulatory framework in which to operate. With every company of reasonable size that operates into the EU affected, so the competitive landscape is changed. Strategists can focus on issues such as the following:
– Choice of suppliers based on climate impact as well as financial elements, ultimately tackling Scope 3 (suppliers) emissions
– Driving efficiencies into supply chains that in turn has an impact on cost to serve and profitability
– A new innovation landscape where new ways to reduce environmental impact can improve competitiveness
– Long term business strategy that enables a proactive approach to environmental, social and governance market trends and regulations
– Investment decisions made towards lower environmental impact outcomes
As well as the more traditional data on revenues, volumes and logistics markets in which LSPs operate, GSCi is increasingly recording environmental, social and governance data covered by the CSRD. Presented coherently and in one place, that can improve the analysis and decision making process. That will ultimately make life easier where it comes to decisions on company strategy and investment.
Author – Richard Shrubb
Source: Ti Insight
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