Michele Salvi of Avenir Suisse describes the current situation in an NZZ article on the subject as a ‘regulatory trap’ in which companies are drowning in a sea of regulations. The food industry provides an example. Thomas Kopp of Terravera describes in the aforementioned article how the requirements for sustainability certification are constantly increasing the administrative burden. The company has to comply with numerous standards on occupational safety, pesticides and health protection. ‘It's almost impossible to do everything one hundred per cent correctly,’ says Kopp. The bureaucratic burden ties up resources without leading to real progress in sustainability.

This ever-increasing reporting burden affects all companies, but most of all SMEs, which have fewer staff and resources than large companies. For SMEs, this means an enormous burden that pushes innovation and sustainable projects into the background. Clemens Gütermann, managing director of Villiger, the well-known cigar manufacturer, describes it this way: ‘To calculate the CO2 footprint, you have to specify the energy consumption and estimate how much the building insulation contributes and also how much renewable energy is used.’ Information that many SMEs do not have readily available. The additional work involved in providing this information weighs heavily on SMEs and erodes their competitiveness in the medium term.

Another problem is not only the extent of ESG reporting, but also the fact that these requirements are constantly changing. If companies are also active in different countries, they have to comply with different regulations, which further increases the workload and makes it more difficult to implement genuine sustainability. In a member survey initiated by economiesuisse, one survey participant is quoted as follows: ‘The resources we spend on sustainability reporting would be better invested in specific sustainability projects that really make a difference.’ economiesuisse has calculated that annual reporting in Switzerland ties up tens of thousands of workers – who are thus deprived of value-adding activities – and costs hundreds of millions of francs a year to implement.

One man's sorrow is another man's joy

It is therefore not surprising that ESG has become a lucrative business area for auditors and consultants. Companies have to spend a lot of money on external audits and consulting to ensure that they comply with the standards. Auditors and consultants benefit from the complexity of the regulations, while SMEs are discouraged from the actual objective of ESG criteria, namely real sustainability. An old consultant saying proves true: ‘More regulation, more fees.’

Instead of investing in sustainable projects, companies are focusing on meeting the requirements and creating reports. This leads to a distortion of the original objective of ESG criteria: real sustainable change is replaced by bureaucratic hurdles. And so the NZZ also comes to the apt conclusion: ‘Only the hassle is sustainable.’