Upcoming requirements on sustainability reporting for the purposes of credit ratings are causing problems for many small and medium-sized enterprises (SMEs) in Germany, according to a KfW survey carried out by the state development bank. Almost half (45%) of SME representatives could not say how important the topic will become for them in future loan negotiations, and fewer than half (48%) of SMEs indicated that they can already, or will soon be able to, report at least one of the sustainability indicators covered by the survey. These indicators include data on energy consumption, greenhouse gas emissions and sustainability indicators linked to the European Union taxonomy criteria for sustainable finance. Only 10% of respondents said they expect to be able to provide data on all of the indicators covered.

The Corporate Sustainability Reporting Directive (CSRD) obliges companies to record sustainability risks in their reports so that financial institutions can better assess how they affect climate change and how vulnerable the companies are to physical or regulatory consequences. The CSRD has already been introduced for larger companies in Europe, and by 2026 it will also start to apply to SMEs that operate on the capital market. KfW The survey found that sustainability had played a role in only 15% of SME loan negotiations, and this figure falls in line with company size.

"There appears to be considerable uncertainty among SMEs about how important this topic will be in future," and most companies do not expect its significance to grow, KfW concludes.

Marcus Thiel (Marcus Thiel), head of sustainable lending at Deutsche Bank, told the business newspaper Handelsblatt that banks are aware of the difficulties smaller companies face in meeting the CSRD requirements. They should not expect banks to demand comprehensive data sets any time soon, unless they operate in business areas that are highly exposed to the effects of climate change.

"Companies in those sectors have to reckon with being questioned more closely than companies operating with lower risk in this area," Thiel said.