Robert Habeck and Tanso in Discussion: Opportunities and Challenges of Decarbonization

In a conversation with Robert Habeck and his team from the Federal Ministry for Economic Affairs and Climate Action (BMWK), Gyri Reiersen (Co-Founder and CPO of Tanso) discussed the challenges and complexities associated with implementing decarbonization in German industry. One topic was the regulatory frameworks set by the European Union on the path to climate neutrality, particularly through initiatives like the European Green Deal and Fit for 55.

However, results are now also being demanded. The European Corporate Sustainability Reporting Directive (CSRD) requires more than 50,000 companies to disclose up to 1,200 audited sustainability KPIs, with a strong focus on the area of climate (E1) and Scope 1-3 emissions.

~15,000 of these companies, which account for over 30% of emissions, are industrial manufacturers and the hidden champions of the European economy. They face enormous pressure to decarbonize their business models, operational processes, and supply chains, and to provide solid figures for progress monitoring.

Given the shortage of skilled workers and the energy crisis, the additional burden of reporting and carbon management becomes a considerable obstacle. 64.7% of the administrative efforts to comply with the CSRD (Corporate Sustainability Reporting Directive) fall in the assessment of ecological KPIs, for which industrial companies must collect and evaluate data from a variety of company areas - from energy management to procurement to the development department.

"For many of our clients as well as the involved auditors, this is initially a new topic and a new process. In times of skilled worker shortage, I understand the frustration over new bureaucracy and am convinced that for the success of the political objectives of the CSRD, administrative efforts must be minimized" (Gyri Reiersen).

Despite these barriers, the mood remains optimistic, with the belief that the European industrial sector can take a leading role through innovation and technological progress. New transparency in terms of sustainability and effectively harmonized disclosure practices are key steps in this direction.

The discussion concluded with strategies to minimize the administrative burden associated with compliance with the CSRD guidelines. Gyri Reiersen identifies three key approaches to overcoming these challenges:

1. Easing into third-party audits: A transition period should be created in which not only auditors but also other third-party providers can audit the reports, thus broadening the basis for verification.
2. Combating the shortage of skilled workers: Financial support for the training of new sustainability managers, who need to learn the correct and auditable implementation of these tasks to cover the increasing demand for qualified professionals in this area. But existing auditors also need further training to educate them on the latest standards and requirements in the field of sustainability and beyond.
3. Software solutions: Promoting the digitalization of internal data and processes to enable the automation of data collection and report generation, thus reducing manual labor.

The conversation highlights the complexity of optimizing ambitious environmental goals in the face of practical challenges. Successful decarbonization with economic growth is not an easy goal but remains possible with strategic support and innovation from all parties involved.

This is where Tanso comes in, providing the industrial mid-sized sector with a software platform for effective decarbonization and sustainability reporting. The Tanso software minimizes administrative efforts through automation, helps to prioritize based on data, and thus increases the effectiveness of all departments involved in implementing their sustainability goals.

Sources:

• EFRAG: Cost Benefit Analysis of the First Set of Draft of the European Sustainability Reporting Standards
• EFRAG: Draft EFRAG IG 3 List of ESRS Data Points
• European Parliament: Sustainable Economy: Parliament adopts new reporting rules for multinationals
• German Sustainability Code: Corporate Sustainability Reporting Directive (CSRD)
• European Commission: Commission Staff Working Document Impact Assessment
• Eurostat: Data Browser