Navigating the Environmental, Social, and Governance Reporting Landscape: Perspectives from the Freight Forwarding Sector

Day-to-day operations in businesses across Europe are increasingly swamped with paperwork. Filing tax reports and timesheets is no longer sufficient – EU law now requires both public and private companies of a certain size to submit regular ESG reports. ESG refers to Environmental, Social, and Governance factors – measures used to assess a company’s overall sustainability and ethics. In practical terms, this means reporting on a wide range of issues, from carbon emissions to workplace diversity and labour conditions. And while the idea of greater corporate transparency and sustainability seems appealing, many businesspeople are growing frustrated with the bureaucratic burden that ESG reporting entails.

ESG ratings evaluate a company’s environmental and social impacts, as well as its corporate ethics, helping consumers and investors to make more informed choices. These ratings focus on highlighting risks arising from environmental, social, or corporate misconduct. Investors and consumers in the EU are increasingly paying attention to companies’ ESG profiles. Therefore, compliance with ESG regulations promises reputational gains. ESG ratings are additionally meant to crack down on greenwashing attempts, holding corporations accountable for their sustainability claims.

Amid increasing environmental destruction and social inequality, legislation mandating corporate accountability is long overdue. “Despite all claims to the contrary, the freight forwarding industry still has significant potential for savings,” says Nikolja Grabowski, Managing Director of the European Cargo Network of International Freight Forwarders AG (ELVIS AG) in an interview with The Maastricht Diplomat. “We know a lot of companies from the inside, and there isn’t a single one that doesn’t still have room for improvement somewhere.”

Previous regulations failed to transparently and credibly capture corporate impacts, prompting the European Commission to adopt stricter ESG reporting guidelines. The goal: to make ESG ratings more transparent, reliable, and comparable across the EU. These new regulations have very real consequences for running a business. “The resulting bureaucratic effort for our partners is enormous,” Grabowski explains. “And it is not yet earning them a single euro.”

Since the Corporate Sustainability Reporting Directive (CSRD) took effect at the start of 2024, the bureaucratic workload for many EU businesses has multiplied. The CSRD is part of an effort to advance the European Green Deal, which aims to make Europe the first climate-neutral continent by 2050. Under the new rules, companies with over 500 employees are required to issue their first reports in 2025 and in 2026, this procedure will extend to companies meeting two of the following three criteria: more than 250 employees, €25 million in total assets or €50 million in revenue. By 2027 even small and medium-sized enterprises (SMEs) will need to disclose their ESG data. In sum, over 50,000 EU companies will need to report on their environmental, social, and governance practices in the near future. 

After flying under the radar for so long, especially private SMEs will need to make a considerable effort to polish their ESG reporting capabilities. "Most people initially think about environmental aspects. But the fact that the social and governance factors also come into play is practically uncharted territory for many of these companies," Grabowski tells The Maastricht Diplomat.

Yet, he also points out that ESG compliance does not immediately pay off for most companies. Expected benefits, such as competitive advantages, improving operational efficiency, and sparking innovation, will only be visible in the long-run, after big investments of time and money. Nevertheless, businesses must comply or face legal repercussions. And while evaluating their impacts should not be new territory for corporations, being legally compelled to now deliver concrete numbers comes with many challenges.

Many of ELVIS AG’s partners are affected by the new ESG reporting guidelines. But rather than embracing the EU’s ESG vision as a path to a greener future, they feel unprepared and overwhelmed. It seems that there exists a general lack of necessary structures and know-how to tackle the obligatory reports, and many companies are struggling to manage the additional workload.

“The challenge mainly lies in a lack of uniformity in these queries,” Grabowski explains. “Major customers come up with completely different catalogs of values they want to know - if they even know what they want to know in the first place.”

On top of unclear guidelines, businesses are also struggling with a lack of ESG-savvy personnel. “The structures we are dealing with here are not corporate structures where there is an entire dedicated department,” Grabowski notes. “Often, the problem [...] still lies with the auditor, who already has ten different tasks and for whom ESG reporting has so far been an unfamiliar concept, and now a new field they have to navigate."

However, on 26th February 2025, the Commission adopted a legislative package to simplify EU rules. It seeks to only apply the CSRD to companies with over 1,000 employees, and to ensure that reporting requirements do not burden smaller companies in their value chains. This move follows a letter from Germany’s outgoing government to the European Commission asking to delay the implementation of the CSRD by two years and exempt SMEs altogether. 

While the so-called Omnibus package aims to reduce the bureaucratic burden on companies, it also stirred frustration among those who had already invested time and resources to ensure timely compliance.

Grabowski notes that Omnibus created a rift in the EU’s credibility: “Even the EU’s rollback, in which it wants to drastically scale back these topics again, is doing a disservice to the entire ESG issue. Every new ESG regulation that will need to be introduced in the future will now be viewed with increasing skepticism [...] and the resistance to it has grown even stronger.” 

But when asked for his personal verdict on European ESG regulations, Grabowski’s outlook isn’t all that bleak: "We need to make significant efforts in all aspects of sustainability to make our society fit for the future. So why shouldn’t we take the lead and present ourselves as an innovator?” The EU certainly follows that ambition, branding itself a global frontrunner in ESG matters.

Consistent ESG guidelines and decision-making may help the EU maintain a strong vision of a greener future, especially amid growing ESG pushback, most notably from the Trump administration. This is particularly important since the CSRD will also extend to non-European companies with over €150 million EU revenues from 2029 onwards, meaning that corporations with subsidiaries in Europe will also need to comply with European ESG regulations. To create a sustainable world, policymakers in Brussels, and on the national level, must now lead by example.

The increased importance given to ESG measures is viewed as a “cultural achievement” by Grabowski. “But unfortunately, in recent weeks, we've seen how this achievement is coming under pressure [...]. What’s needed is not just a legislative proposal, but also consideration of its practical implementation, along with sector-specific guidelines,” he adds.

For ESG to live up to its potential, it must be practically implementable in day-to-day business operations. The EU will need to manage the growing dissent among businesses, and ensure that further simplification efforts do not come at the cost of credibility, commitment, or trust in legislation driving corporate sustainability.