As EFRAG continues its review of the EU’s climate legislation, Fredrik Erlandsson says now is the time to take back the green baton
It started more as a form of activism, then developed into a trend that everyone would jump on before turning into a monster whose tamers have completely resigned. With European regulations and a zealous auditing spirit, companies’ sustainability work has been driven to be about decimal points and regulatory compliance, instead of adding shareholder value or social and environmental benefits.
As the EU Commission says ‘stop, change and do things right’, the time has come for communicators and IROs to reclaim the concept of sustainability.
When we write the history of corporate communication up to and into the 2010s, the sustainability work of listed companies will probably take a grandiose first place in terms of attention and change. Few areas have received so much attention.
It started more with a tone of activism than being driven by the companies themselves. Sustainability was mixed with philanthropy and was often more about doing social good than a systematic effort that involved the entire company. Donations to charity became sustainable, reusing PET bottles for furniture and home decor became popular, and soon the gas station hot dog got a lettuce leaf as a cover and could be called sustainable.
Actual sustainability
Somewhere around 2020, however, work began within the European Commission to create a definition of sustainability. What is actually sustainable? In addition, they wanted companies to talk in unified terms around sustainability – preferably with numbers instead of words and even better if you use decimals too. Never mind communicating what you want to achieve.
Sixty percent of annual reports devoted more than 100 pages (!) to their sustainability report
It was also then that things started to go wrong. The eagerness to create a system of regulations around reporting, rather than focusing on the story, became more important than what actually happened, how the companies created sustainable value for shareholders or how an organization delivered social and environmental benefits.
The annual reports for 2024 – presented in the spring of 2025 – were the first real flood of reports that included the EU’s CSRD regulations.
Everyone should report in the same way. More data is better than less data – and if you don’t have accurate data, you should make an ‘educated’ guess.
When the global auditing firm KPMG reviewed 270 of the annual reports released in Sweden in 2025, it found that a full 60 percent devoted more than 100 pages (!) to their sustainability report. Only 10 percent (!) devoted fewer than 60 pages to it. In my world, these 34 companies are the winners!
Where did reality go?
Despite many, many pages, the reviewed reports largely lacked a link between the sustainability work and the business strategy. Instead, there was an overfocus on regulatory compliance, with a lack of focus on connecting to the actual company business. Oops…all those pages but reality and theory didn’t keep pace.
The financial parts did not match well with what companies wanted to achieve business-wise or their sustainability ambitions.
The new framework should help individual companies focus on the challenges that are most important
This is where sustainability became separate from business operations. It started to live its own life, without connection to the company business.
When the European Commission realized – a little too late – that scope of its regulations had gone too far, it unexpectedly stopped the work quickly. Sources in the corridors of the Commission say that it did not realize the challenge of moving from voluntary to statutory reporting. Above all, it did not appreciate the challenge of making the change so quickly and without any practice on interpretations of the regulations.
Now the EU Commission has given the European regulatory authority EFRAG the task of simplifying the regulations. The new framework should help individual companies to focus on the challenges that are most important for creating added value in society. The number of data points that must be collected should be reduced and the report should be more of a presentation framework instead of a compliance framework.
Let go of your anxiety
These new regulations will formally apply to reports presented in 2027, with content from 2026.
However, EFRAG’s proposed changes have already been presented and are now out for consultation. There may be changes in nuance, of course. But most of the content is well known. We know what will be simplified, most of what will disappear and what will be prioritized.
Now is the time for those who want to reclaim the concept of sustainability to take the baton: take the chance and start talking about sustainability in a comprehensible way again; explain what the company is doing well, what can be improved; take the chance to, without anxiety, put your foot down and ignore the decimal; say it loud: this is who we are, and this is what we do to create sustainable value for our shareholders and for our common future! I know I will grab the baton and run as fast as I can.
