This is the full transcription of podcast:
The ConsEUmer Podcast - EP189: Corporate sustainability (co-hosted w/ Yaël Ossowski).
Words: 6394
Token: 6660
Aired: 2025-11-06
#Podcast #Transcription #ReadAlong #KnowledgeUnlocked
#TheConsEUmerPodcast #cent #leoai #token #data
You are viewing a single comment's thread from:
Hello and welcome to another episode of Consumer, the European podcast of the Consumer Choice Centre. You're listening to episode 189 on November 6, 2025. Thank you all for joining once again on this Consumer podcast and we are joined this week by Jael Osofsky. You've heard him a couple of times here on the podcast before, many times on the podcast before. He's even hosted this podcast on his own before. Jael, how's it going? I'm doing quite well, Bill. Thank you so much for having me on once more on the Consumer. And what we often do with you is dive into topics that sometimes are more in the deep policy space but have real impacts on consumers. It's very often with you, it's the pieces of legislation that sound incredibly complicated and almost designed to be boring but do mean real costs and paperwork for consumers and companies alike. Which is why I wanted to talk to you today about the EU Corporate Sustainability Reporting Directive. That's quite a mouthful. So this is the CSRD (1/34)
which replaces the Non-Financial Reporting Directive. This has been adopted about three years ago and so we're slowly phasing companies into this reporting requirement. And this applies to a lot of large companies, there's a couple of conditions here. Overall it tries to target mostly what we would consider a large company, whether it's based in the EU or outside of the EU but has a subsidiary or some sort of HQ in Europe. So you're really thinking of the big names here in industry, energy and so on. And what it tries to do is mandate that companies report on their impacts on sustainability by using the somewhat known, I'd say I'm not sure if this applies to all of the audience but you've certainly heard of it before, ESG, Environmental, Social and Governance criteria and the companies must then report on how sustainability issues affect their business and also how their business impacts people and the environment and so they have to publish these reports and the idea is to create (2/34)
transparency for the users of those products or services but also for governments mostly which are going to be reading these reports to make rules and regulations around it and improve sustainability altogether. So all of that sounds a bit abstract I think to the average consumer, there's a lot of buzzwords that float around here. Can we narrow this down into a more digestible kind of conclusion here? What is this directive designed to do? Does it do anything good and what does it do that is bad? So basically the entire heart of what is really being discussed here and what is being I guess implemented through the regulation which is enforced and there are various versions of it, it essentially just comes down to benchmarking those ESG numbers. So environmental, social and political goals, sometimes they use kind of different names but typically it's your impact on the climate, your own kind of social hierarchy at your company and then just whether or not you're bribing foreign (3/34)
companies or foreign countries. It's essentially ranking all of that and putting it into some kind of benchmark and that would really make it a lot easier for the European Union, for the Commission, for any of the other institutions to actually say okay we know that our top 100 companies let's say are reaching let's say 85% fidelity with ESG goals which makes it X much easier to reach the net zero goal of the Paris Climate Accords by the year 2050. And it's essentially a data collection regulation but that data collection is not just some innocuous thing, it is applied to many of these industries who and you mentioned some of the numbers before but essentially if you have more than what is it a hundred or two hundred and fifty employees, you have an excess of 40 million euros in net turnover or you have 20 million euros in total assets means that you're going to have to provide the ESG data not just for your European operations but knowing how global capitalism and global markets work (4/34)
today on your global operations. And that's why there's been a lot of discussion about this because there are many foreign companies that do provide essential services in the European Union that are over that amount and they would have to rate their ESG practices not just in the physical territory but also in the United States, in Canada, Latin America, Australia, whatever country they're in. And that has been sort of the complicating factor of this. There was a recent headline by the head of Exxon, the American energy giant, that basically said if this actually goes through and we have to comply and there are two versions of this. One is the corporate sustainability reporting directive and then there's also the due diligence which is a separate matter but it's essentially within the same theme and it's essentially a ESG score for investors in the market. So it's a way that the European Union is trying to set up this ESG scorecard which if we use in an American example, private (5/34)
companies do this all the time. BlackRock used to do this a lot. They had the ESG scores that they would put on Microsoft or Nvidia or Airbus or whatever and you as an investor should be informed about what company is doing, X or Y. So basically those two elements are going to make it costlier for many of these foreign companies to apply all of their different global operations into this metric that the European Union has decided. And again, it's a very complicated process of what ESG is, how they do it, classification of employees, the diversity of your workforce, for instance, which again when you compare that in the European Union versus a place like the United States or Canada or you know just think of homogenous countries. It's just a strange kind of metric and I think the other interesting element is that really the financial capital has abandoned ESG wholesale. The political element is still very much interested in this but we saw there is something called the Net Zero Banking (6/34)
Alliance which essentially was a kind of progenitor of this and they had their own ESG scores specific to banks and investing and basically all of the major banks have now withdrawn from that alliance. I mean you have someone who used to be the head of that who's now the Prime Minister of Canada and Mark Carney but you have all of these different institutions in the private market that used to have these ESG scores and they've now retreated from this because they've understood not just the energy crisis in Europe after the invasion of Ukraine by Russia but just the growing electricity prices that we have. Whether it be in Germany or different parts of Europe, even in different parts of North America, electricity prices on the whole are rising and there needs to be a lot more development. There needs to be a lot more of figuring out how to generate power, how to get oil and gas resources out of the ground and the ESG scores for many of the major investors particularly on the finance and (7/34)
capital side, they're not in tune with government as they used to be at least about five years ago. So that's a long-winded way of saying kind of what the context is but it does impact consumers because again we're talking about electricity prices, we're talking about gas prices and gas prices and electricity prices are not just some thing in the market, they actually legitimately are the price of living, of humanity, of everything that we do, of how we heat our homes and our offices, of how we cook our food, of how we work, go to businesses, all of that. It's really like the core key ingredient for figuring out if things are sustainable, if things are affordable and if electricity prices and energy prices are going to go up even higher, it means that consumers are going to have less disposable income and that means it's going to really change a lot of things across society not just in Europe but many other places too. What I heard is that one of the reasons that the ESG criteria also (8/34)
for investors was not being taken too seriously is because as ESG is self-reported what the companies do is they hire external firms to do that reporting for them and of course because often those firms already have a relationship with those companies there's going to be a lot of ways to skew the ESG criteria or do even to advise the companies on how to skew the ESG criteria to get a better score and so it wasn't being taken too seriously because this this is not work that the government can rely on. The manpower wouldn't possibly even exist to be able to audit all of this so the auditing criteria was just done very weirdly and on top of that you didn't have that control mechanism of shareholders. When a company is being audited for its financial situation the shareholders have a vested interest in that being done diligently and there can be losses as a result but with the ESG criteria everyone has a vested interest in looking better towards the outset in order to be listed on those (9/34)
ESG investment portfolios and so on or to look better towards the governments that they're meeting so everyone had a vested interest to make it look to make it look great and so a lot of companies that wouldn't be traditionally seen as being very much in tune with those criteria looked pretty good and so I think that was why it was abandoned. It seems to me that this reporting and the you know the critical analysis of that level of reporting would take so much manpower also within governments to be able to do it diligently and to see whether it's actually being done right. I mean there's enough people already working in tax administrations to check whether corporate income tax is being paid correctly but I can only imagine what it would take to see whether a company, a global company, globally employs a certain amount of people in order to meet the diversity criteria, how much, what the carbon footprint is of that and how many resources are being used and how sustainable the resource (10/34)
use is. I mean that's a mammoth task that to me will only narrow down to an unreliable PowerPoint presentation as opposed to something that actually creates transparency. Yeah and I think the better point is just to see how it's been done in other markets and that you have private incentives to do this because there are a lot of people who invest and care about those ESG metrics specifically when we're talking about public institutions that are investing so that's a lot of pension funds, you have a lot of state-run companies that also buy up other shares of things particularly in Europe so there's a lot of thought about where that money is going and you can have in the private market all of those benchmarks if those are important to you you can there are any of these firms to do it and what you mentioned about the due diligence is absolutely true. Most companies would just hire the management consultants from one of the big four or one of the you know any of these kind of companies (11/34)
they know the mandate they put together the information you know you get all these 22-25 year olds pumping coffee and they put out these spreadsheets of all the different data and information and yeah they can comply and it's great but you know it's just that essentially the Commission what they're trying to do here is to set some kind of benchmark and then also figure out how they can use that to talk about 2050 and net zero and the Paris climate accords and it really comes down to Europe is really still set on this idea of the climate accords as something that public policy should be geared towards and basically the sustainability reporting directive the idea is that when people are reporting this that there will be negative repercussions in the market there will be negative repercussions with countries that allow some of these firms to enter onto their territory and set up operations so it is putting you know a bit very large thumb on the scale and that's this has always kind of (12/34)
been a problem of public policy when it comes to climate change and climate and net zero things overall is that governments can promise you know anything they can say hey we're gonna we're gonna be net zero in ten years and many different countries have done that in different ways but you have to have some mechanism for doing that and you can't just do a taxation can't just do it by shutting down industries or something like that you have to find a way to first measure and then figure out a way that you can actually reduce that now some countries are very good because they have a very balanced sort of portfolio of both energy and their industries France because it has a lot of nuclear energy basically is able to have much lower scores in terms of all the climate emissions that they're putting out because they use a sustainable renewable resource that does not have emissions so they're gonna naturally be a lot better than Poland for instance which uses a lot of coal or natural gas and (13/34)
this is all changing in a kind of post-ukrainian invasion environment where Europe doesn't really have a solidified energy policy everyone is getting whatever they can get at the cheapest price they can you have countries in the Mediterranean particularly in Italy that are just importing a lot of gas from Algiers Algeria you have a lot of the eastern countries that are trying to get it from Azerbaijan I mean there's everyone is just kind of scrambling to get energy because they don't have the domestic means to do it they'd love to invite more multinationals to come in and use their know-how their experience their expertise to do it and a lot of times many regulations like this may give pause to some of those investors and some of those companies because it means that they're gonna have to report a lot more it means that they're gonna have to open up their books outside of the European Union and I think that was something that in the early part of this sort of when it was being (14/34)
discussed you know you didn't have too many outside commentators people outside of the European Union who are paying attention at the time but it is a big deal because it's it's essentially the role of the European Union that it is playing in multiple domains whether it be technology, artificial intelligence is that it wants to be a kind of global regulator in setting the standards and oftentimes it's not really being done in conjunction with many of these other countries and jurisdictions where most of those companies actually come from and that's why being in the European Union it means that yes you're going to dedicate a lot of money and time and investment into your production and getting stuff going and hiring people but then regulatory compliance is going to be a much bigger slice of the pie than likely it would be in other countries and I think that is concerning for many particularly multinationals but then also for consumers and people who depend on those end products it also (15/34)
means that prices are likely to go up and that's the thing that I think is probably the the most important part of all of this and there's a lot of gobbledygook and bureaucracies and names and figures and digits and everything else but we don't really have a path particularly in the European Union right now for good affordable energy going forward there is no plan there is no sort of deus ex machina that's going to come save us we have to figure out how to innovate now and oftentimes many different reporting projects or regulations like this probably just slow it down and we found out also in practice that a hundred percent even just trying it for a day a hundred percent renewable in on the Iberian Peninsula meant no power for 12 hours in Spain and Portugal so and and Gibraltar kept running because of diesel generators so so sometimes we're finding out how difficult that switch can be and one of the things that all that's also fascinated me as someone from Luxembourg where we often get (16/34)
every year we get those numbers on like all Luxembourg overshoots the planetary per capita resources by was late February or something because the sale of petrol is very high because the neighboring countries the consumers they do buy all of that stuff in in Luxembourg and what I always found a bit interesting is like and this kind of relates also to the carbon footprint reporting sustainability reporting that goes on with the companies is because if you're a petrol company you will be rated based on the amount of liters of 95 and diesel that you sell in a particular country but then the consumers they also get rated based on their carbon footprint of what they have consumed how much they have purchased so I don't quite understand this because at the end a liter of petrol will be you know can only be used once yes somebody will burn it and whether we put that responsibility of that reporting carbon footprint on the company that sold it or the consumer that used it that's a question (17/34)
that smarter people will need to figure out but we can't have it both ways we can't be blaming both the consumer than the user and ultimately consumers only end up consuming what they actually need and if they have better alternatives they might be switching to those better alternatives and and what you said about rising costs it seems to me that there are now more creative ways being found to try and incentivize a shift that is very difficult to do as opposed to taxation because with taxation in the last few years we found that if there's a specific tax consumers know exactly how much that adds to their bill and then we get the Gilets Jours and the yellow vests in France this is so convoluted and complicated and it's so it's hidden on such an intra-institutional level that it's rather complicated for consumers to understand where exactly the rising costs come from and you can hide as a lawmaker behind these layers of complicated policy making in order to mask that and I'm not a fan I (18/34)
don't think that is that is like you know nobody you know for all the question of due diligence and like counting the cost of sustainability well can we also then have an impact assessment on the costs for consumers of this particular directive because we never do that you know we always have new directives and nobody ever calculates the potential cost we did it only once for farm to fork and then it was still USDA that did it for us and then calculated the cost and ultimately that particular piece of legislation that group of legislation collapsed because we figured out it was way too costly and I think that should be baked into the cake we should be told as consumers how much is that gonna cost cost us because the companies they do their part where they say like this is how much it's gonna cost us but that cost ultimately gets put off to the consumer and that's that's I think what's missing here is like you know what's the price tag I love that because I mean you have a famous quote (19/34)
that I think people can find probably on your your your own website bill but I forget what it is like if you want more carbon taxes you're just gonna get more yellow vests I don't remember if that was exactly it but that's great I think that was it okay but essentially you mentioned the impact statements I mean it's definitely true and I think the role of European Union here obviously they're trying to be helpful when it comes to reporting of this for that intended purpose of again that 2050 net zero goal and this is you know this is what governments have done since the Roman Empire right it's like getting together numbers putting the census they're figuring out how many sheeps and cows and you know houses and taxpayers and normally it was for that purpose is for you putting them the taxes and I get it that now it's for investors and figuring out where they should actually be putting their money and whether it is in an ESG friendly way you know and I this it's kind of difficult to see (20/34)
that because again there are many moving parts of our European institutions and on the one hand there's supposed to be the introduction of the European Capital Union so the idea that we have our capital markets that are fully integrated so we can actually go back to the single market idea that was supposed to be the entire point of the European project which is I think as every consumer knows as anyone who's ever tried to use a neo bank I ban in another country or another place when traveling or living somewhere else it's just not a single market we see that whenever we're buying and shipping and you know sending things there are still weird rules and loopholes and things that are make it difficult that make it so that Europe is not a single market in the way that it was promised all those years ago and you know there's a lot of emphasis that's being put on this and I understand that the European Union would like to act you know as a force but you still have the member states and you (21/34)
still have the member states that have very different opinions on what this means and what it'll mean for them and how much they were going to enforce it now what makes this different is that there would be penalties from the actual European Union and the Commission so that means that any of these companies that again have reached that threshold where they have this many employees and they have this much turnover and the like you know they're gonna have to report that and if they don't then it's much like again the digital rules they're gonna have to pay a percentage fine if they're not providing those numbers and that's why you do have some energy giants that may leave the market there are a lot of deals that perhaps won't be made this is the moment that you know despite whatever Donald Trump is doing in the United States there are a lot of LNG exporters that are working overtime to figure out how to pivot towards European markets Spain has been doing a very good job at that they've (22/34)
learned they've been kind of taking that on a bit more which is good you definitely have the Baltic states that have learned a lot more how to do it and they've set up their own terminal stations and put a lot of money into investing in it and I think that's that's well and good and we need a lot more of that but you just have to consider that you know all of this is you know it's just cutting around the edges because if we compare again the European Union and its emissions to China or India European Union is the croissants going down right that's good we all like that but China and India are just like 80 times you know much higher and they're not paying attention to any of this stuff don't really care and if it's any of those companies that are sitting up shop in the European Union you know they're probably just not going to comply and pay the fine or not who knows but it's something else to consider that a lot of this is just adding complication and bureaucracy that will increase our (23/34)
prices one website that I look at every day it's electricitymaps.com which I always recommend it's always very fascinating because on this website you can see in the active moment right now at this precise minute exactly how much electricity is being generated in a certain country how much is being exported imported and what that source is so if I look at Portugal right now Bill for you so a lot of wind today apparently so you have at least 4.2 gigawatts of wind energy that's being generated it's all very good and unfortunately still having to import a lot of electricity from Spain at this moment there's a little bit of gas that's being used natural gas that is put in the turbine to generate some of that electricity a little bit of solar you know it's about 15 percent today of the electricity that is available is coming from solar it's about 1.45 gigawatts a little bit of hydro some biomass biomass is very interesting as well Bill we can talk about that later but I love to see this (24/34)
because you can see the import export markets and a lot of energy markets are very fluid because there's a lot of places where like Switzerland for instance because it does have some nuclear energy and they do have very good hydro they're exporting their energy all the time they're exporting it to Austria to Germany to Italy and you can see that those markets are very fluid so you might have a company that's set up to do their operations in Switzerland let's say but then they're exporting to Italy and Austria and all these different countries and then if there are different rules or different mechanisms they're going to have to report that as well and it's just it's very complicated there's been a lot of efforts to also unify many of the European grids which is probably not something you want to do a great book I'd recommend is Blackout by the Austrian author what's his name Michael Michael something you can put it in the show notes but it just kind of tells the story of what happens (25/34)
when all of the sort of there's some kind of cyber attack on the European electricity grids everything goes down there's like a blackout for a month straight you know perilous and again for for you guys who are in Iberia we kind of thought that was was going to happen but I guess it didn't last too long I don't know how long you were out of power actually yeah it was a total of 12 hours it's a bit longer for some people on the countryside my home country Luxembourg actually imports the electricity from the nuclear power station in Catenal and which is sold cheaper at night because of course nuclear power doesn't just switch off so Luxembourg buys it at the night tariff and then pumps you use the electricity to in the municipalities to pump water up these water towers and then let it roll back down during the day to generate electricity cheaper so there's creative ways that some of the countries that have tried to not use nuclear power and this actually on the institutional level very (26/34)
against nuclear power still buys quite a bit of it from its neighboring countries because of its specific geographic situation just what you said I just wanted yeah go ahead no no no go ahead I wasn't gonna go on it well just like just like France again Germany shut down all of its nuclear power plants and if you look today just today you can see that you know the number one export market for French nuclear power is Germany so there we go that's I mean that's also I think you know there's always this joke about oh how the French built their nuclear power stations all along the border and the implication is always like oh you know if something goes wrong Paris won't be affected but it also had a lot to do with the fact that when Giscard decided to get all these stations built he knew that a lot of other countries were not gonna be building them at the same time and it's also going to be a great export market which was why they often are around the borders of other countries with France (27/34)
in order to be able to sell it easier to those countries so again the French got this one right and for what you said about the single market I just wanted to make a brief note because I saw this news recently of you know people moving bank accounts and all that sort of thing and trying to get utilities bills paid abroad Revolut just won a court case in Portugal against other Portuguese banks in order to be used be able to use the MB way system so this is a payment system by Portuguese banks it was it's set up by Portuguese banks it was not accessible for Revolut and Revolut has complained about this and saying that this is this is a market restrictions that the bank are imposing and they won that case so they will be able to be using the the MB way system which make it less less likely that expats will be using Portuguese banks in the future because Revolut just you know often offers a cheaper and better service so but ultimately for market access I'd say good on the people of Revolut (28/34)
because this court case is also going to serve as precedence for other neo banks to be able to to use that system as well so that's that's fantastic news for so the single market once in a while we get those kind of things happening yeah I just got the email today because again they send this out to the customers I was going to forward that Portugal one to you but I figured you already knew but they just got their Mika license as well for cryptocurrency which actually is kind of important and necessary because you only have a handful of cryptocurrency firms that have been able to get the Mika license that the European Union sort of instituted and that means that you can have normal banks putting money into cryptocurrency operations now and consumers can benefit you know whatever Mike writes about Mika and how complicated it is and everything else and all the tracking and surveillance but hey I think it's a it's a very good step and you know this is it's kind of it's an ordinary thing (29/34)
that we have like the very complicated process of European regulation and it's just over time you know markets win innovation wins you know and it figures out a way to overcome it so I don't always I'm not as blackpilled on on everything that's happening in Europe because essentially markets do want to deliver goods and services to people people want those and consumers ultimately can benefit sometimes it's just a bit slow sometimes it'll take a while we might not get it as fast as our American cousins or you know people who are living in Shenzhen or whatever but you know it comes with time I will just say this as as maybe I could describe myself as a bit of an originalist when it comes to the European communities and the single market because a lot of the things that are being done on the on the commission level that actually impose rules on member states about who can access a market whether it's a private rail company operating in another EU member state or these banking licenses (30/34)
that sort of thing is usually based on very old directives that have existed for a while about the openness of member states to market to to the companies from other EU member states and a lot of the new stuff that has been decided sort of in the last 20 to 30 years is usually the convoluted stuff that now the commission tries to simplify with omnibus legislation where we need to counter the stuff that we did in the last 20 years and that's to me just indicates that the you know the the the baseline principle of the open market that we had sort of in the 50s to 70s that was the right principle that we can still very like free ride off today while the new rules are usually more about surveillance and control I'm not a fan. You're a good old steel and coal community OG. That original building was in Luxembourg when nobody believed it was going to be a thing but yeah that was Robert Schuman's great idea I don't think he would be too keen on the on the ESG stuff I think that was and that's (31/34)
why the five freedoms yeah and the five freedoms and this idea of the European Union and you have Schengen as well which again it's not technically European Union it's something but that is it it has just provided so many benefits that we're probably not even utilizing to the degree that we can I know you are like physically right now but maybe I think there's just so much more that could be done just on the business side investing side I mean there's a great website called Vinted where people resell clothes and are able to do this I think it's pretty cool and if if you happen to be like a you know green party person you love it because people are recycling clothes and selling it and doing whatever you probably hate that people are selling it but either way it's like a great website where you can sell your clothes and do whatever and the way that the the website works it has to comply with all the different financial regulations in each member state so essentially they have to set up (32/34)
these section websites so then your ability to get products is super limited so in in Austria our market is just Austria and Italy for some reason which makes no sense you think it'd be Germany and you kind of see that with Amazon as well having e-commerce platform set up in different countries country websites you know depending on shipping locations it's like that stuff could be unified because again I've just with a car I can drive in 15 hours and like hit the Atlantic ocean from where I am in Europe and like you imagine a place like Canada or the United States and they're able to ship products and it's one single market now Canada is a different story because of provincial trade and all that but can't the US if you ship something from California to New York you know you have markets there and you have investment you have this like great ability of this huge single market and we just don't have that still right now in the European Union and I find that rather shameful because (33/34)
there's a lot of great services that I see people using in Germany or in the Netherlands that I would love to use here in Austria and again it's not that far away it's not too complicated I'm not convinced that the language barrier is enough of a reason for this stuff not spreading faster and further maybe it is the capital union's market stuff I'm not really sure I I hope we can fix that that would be a better use of time I think than many of these latest exploits as you say. Absolutely agree and I think this is where we have to end it because we're out of time Yael thank you for that great conclusion thank you for joining us today on the consumer podcast. Thank you very much Bill all the best. (34/34)