New rules on sustainability reporting

Markus Kallifatides (S)

Mr. Speaker! We Social Democrats are working to ensure that Sweden is a leader in the work for a stronger EU, a European Union that stands up for democracy, the principles of the rule of law, the Convention on the Rights of the Child, and human rights. We want the work on the EU's social pillar to continue in order to strengthen equality and gender equality. We want to see an EU that competes through knowledge, more and better jobs, and good working conditions. Research and innovation shall be prioritized higher. Workers' security shall be strengthened, regardless of where in the EU one works or where one comes from. The EU has a central role in countering tax evasion, compelling companies to respect trade union rights and take an actual social responsibility, while at the same time our labor market model shall be protected.

We Social Democrats want Europe to become the world's first fossil-free continent. The EU's Green Deal shall be guiding for the EU's budget and recovery after the pandemic, in the serious security situation. The climate law that has been adopted is a major Social Democratic success. Biodiversity and the accelerating extinction of species are purely existential issues that must be addressed.

Mr. Speaker! The Green Deal is the Union's growth strategy. It aims to transform the Union into a modern, resource-efficient and competitive economy with no net greenhouse gas emissions by 2050 at the latest. It also aims to protect, preserve and improve the Union's natural capital and protect public health and well-being from environmental-related risks and effects. The Green Deal aims to break the link between economic growth and resource use and ensure that all regions and Union citizens participate in a socially just transition to a sustainable economic system, where no person or place is left behind.

The EU is therefore working towards the goal of reorienting capital flows towards sustainable investments in order to achieve sustainable growth for all, manage financial risks resulting from climate change, counter the depletion of natural resources and environmental degradation, manage social issues, and promote transparency and long-term perspective in financial and economic activities.

It is particularly important that climate-related plans are based on the latest research, including reports from the Intergovernmental Panel on Climate Change, IPCC, and reports from the European Scientific Advisory Board on Climate Change.

Demand for sustainability information has increased significantly in recent years, not least from investors. There is a great public interest in companies informing how they work with issues regarding the environment, social factors, including conditions for workers and human rights, as well as corporate governance. Even though many companies currently provide such information, the extent of the reporting varies considerably.

The new directive on sustainability reporting now requires additional categories of companies to report more detailed sustainability aspects in the management report. These companies shall prepare a sustainability report in accordance with mandatory reporting rules. The specific content of the report is determined by EU standards for sustainability reporting adopted by the EU Commission.

Mr. Speaker! The just climate transition is a societal construction. No single individual and no single company can alone achieve what is required. The transition must occur in such a way that it works in every part of our country, by ensuring that everyone can participate, have influence, and come forward with initiatives. That the work is carried out together in municipalities and neighborhoods, popular movements and association life, and with a strong position for the workers and cooperation between the parties in the labor market, contributes to Sweden being able to succeed.

The climate issue will be even more tangible for every new generation. Children and young people must gain knowledge about what can be done - by themselves, together with others, and through democratically made decisions.

A climate transition where everyone can participate and transition according to their ability, and which secures and provides jobs, is also the basis for the broad support that makes the transition democratically and socially sustainable. The strong society must be there so that one can move from the old technology to the new jobs. Deteriorating security does not make us employable, only poor. Insecurity threatens the climate transition.

Through an investment-driven transition that is jointly financed, we can both transition to a fossil-free welfare state, strengthen our growth through climate-smart innovation, and reduce the gaps. That is how we shall build the world's first fossil-free welfare state. It is our social democratic conviction.

The newly proposed rules for companies' sustainability reporting are a piece of the puzzle that helps us as a country get closer to the goal. And, Mr. Speaker, no one prevents companies that want to lead the way and be even further ahead from doing exactly that. I am convinced that many Swedish companies will choose that path.

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Mikael Eskilandersson (SD)

Mr. Speaker! Today we are debating the Committee on Civil Affairs' proposition New rules on sustainability reporting, 636 pages of EU bureaucracy. Through the legislative proposals, two new EU directives concerning companies' reporting are being implemented. It is thus further requirements for more extensive and costly bureaucracy from the bureaucrats in Brussels that are now to be implemented in Sweden.

The new requirements for expanded sustainability reporting are extensive and detailed and will entail significant costs and a heavily increased administrative burden for the companies covered. The increased reporting requirements and expectations also entail competitive disadvantages for smaller companies and risk becoming growth-inhibiting for them, especially in competition with companies outside the EU. Consequently, the transition to reduced emissions is also hindered when the focus is placed on completely wrong things and bureaucratic reporting becomes the goal instead of the means for sustainable development.

New rules on sustainability reporting will be [problematic/difficult] as this bill, with all desirable clarity, shows what the major problem is with the EU's expanded and increasingly detailed rules. Ordinarily, it is increased bureaucracy that is intended to lead to change within the EU - increased bureaucracy that is to be paid for by companies within the EU without any compensation whatsoever for the increased costs and the extra work that the EU places on all companies covered by the rules, companies that already have difficulty competing with companies outside the EU.

We also mean that individual companies in Sweden should not have to report the gender of board members in companies. How companies work with diversity and what actually constitutes diversity should not be decided by the EU, but it must be a matter for the companies' own right of decision. This is particularly important when it concerns the companies' boards and the board members that the owners appoint. That the EU is starting to set requirements for board members shows the EU's inherent inability to understand how free enterprise works. The Sweden Democrats are for free enterprise, and we believe that the government needs to act at the EU level against the compulsion when it comes to reporting on changes in the gender distribution among board members.

Against the background of all the new burdens that constantly come from the EU, it needs to be analyzed how the adaptations in Swedish law as a result of the directives affect small and medium-sized enterprises in Sweden and what consequences the new requirements have for these companies. It is high time that the EU actually starts taking full economic responsibility for the bureaucracy that is created, and it is reasonable to reflect on whether the costs for all the new bureaucracy are in proportion to the benefit.

The EU constantly continues to expand the requirements and the bureaucracy, without even reflecting on the costs and obstacles that are being built up in the system. We want to see an analysis of how all increased bureaucracy affects our companies. It is a task for the government to ensure that such an analysis is actually carried out and thereafter act based on what the analysis shows. The government should act at the EU level to reduce the bureaucracy that the increased reporting requirements regarding sustainability and gender distribution in corporate boards create.

In conclusion, Mr. Speaker, I would like to move for approval of reservation 2 in the committee report.

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Markus Kallifatides (S)

Mr. Speaker! Thank you, Mikael Eskilandersson, for the speech!

I felt an overwhelming urge to ask one or two questions. Mikael Eskilandersson has a very negative perception in his speech, partly generally about the European Union, and partly specifically regarding the issue of sustainability reporting. This is something that many companies have been engaged in for quite some time, also under the current EU regulations. There have been established manuals, consultants, and expertise available for a long time.

I wonder if Mikael Eskilandersson and possibly the Sweden Democrats as a party reject the entire idea that by putting pressure on European companies to carefully report on sustainability aspects in their operations, we facilitate for financial capital to come, as cheaply as possible and in large volumes, to precisely those companies that are at the forefront, which are innovative and openly and transparently report their plans for how human rights are respected, how climate goals are achieved, and how good corporate governance occurs, which can include work for equality between the two main genders.

How does Mikael Eskilandersson view the entire basic idea behind this, which I raised in my speech?

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Mikael Eskilandersson (SD)

Mr. Speaker! Above all, it is concerning that the whole is now being expanded to also include relatively small companies. That there are certain agreements among large companies, I see as quite natural.

Sustainability reports are mostly meaningless because there are certifications and the like in most industries. I personally come from the forestry industry where we have several different certifications that tell the forestry companies what they should and should not do. The requirements in the certifications ensure that they achieve all the goals that were intended in the environmental area.

We must remember that sustainability reports are usually not target-oriented, but they are merely reports where one writes down what one does. They are not restrictive in the sense that they, for example, say that forestry machines must run on eco-oil, but that is what the certifications do. The machines do it even if they are operated on land that is not certified, to take an example.

What one must remember is that when extra requirements are placed on companies, it creates a higher cost. This means that our timber industry becomes more expensive. Our timber industry competes directly with Chinese plastic manufactured from oil from Russia. When the plastic alternative suddenly becomes cheaper than the timber alternative, there is a risk that the customer chooses the plastic alternative for economic reasons, because we have imposed a lot of unnecessary requirements that actually do not give us anything back in terms of environmental benefit.

Somewhere one must consider a bit more than just what reporting requirements one has, because reporting requirements do not provide any environmental benefit. If the reporting requirement implies cost increases that cause the timber industry to be competed out by plastic from China that is manufactured from Russian oil, I do not think that is particularly good.

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Markus Kallifatides (S)

Mr. Speaker! I note that I did not quite receive an answer to my question regarding how Mikael Eskilandersson and the Sverigedemokraterna stand on the fundamental idea behind sustainability reporting, namely that capital should become cheaper and more accessible for those companies that clearly report the business's goals and strategies in relation to environmental goals, economic goals, human rights, social conditions, workers' rights, and corporate governance principles.

When this is reported and your work is made visible, the values of a more long-term character that exist in the company are highlighted, rather than in a company that is more hidden from the broad capital market. This is the whole idea behind it, and I gladly take an answer to that question.

Mr. Speaker! I also take the opportunity to point out that it is only small and medium-sized listed companies that are subject to the sustainability reporting requirements according to the directive and the bill. If one seeks the general public's capital on a securities market, it is not unreasonable to also follow the standard on that market. The truly small companies are not covered by this.

Finally, Mr. Speaker, I must nevertheless point out that it is the customers who bear the costs for the companies. I believe that very many European consumers are prepared to contribute to companies transitioning towards the realization of human rights, workers' conditions in the European labor market, and a climate transition that becomes just and that actually happens.

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Mikael Eskilandersson (SD)

Mr. Speaker! Once again, Markus Kallifatides: It is not that the sustainability report itself makes the company even a bit more environmentally friendly or climate neutral. The report itself is still just a report on what one does. One can do the same things without making a report, and one can do more things without making a report.

There are already requirements for sustainability reporting from, among others, the USA. All large multinational companies have been doing this for a long time, and the EU introduced it earlier for the larger companies. What the difference is now is that it goes down to quite small companies. Now it is being talked about that the more domestic companies should start making sustainability reports.

I do not believe that sustainability reporting is particularly beneficial for the climate. I believe that the certifications and similar measures that have been made in various areas are significantly more important for companies to actually take environmental responsibility. When the customer chooses, it is easier to choose based on what is certified than to go and read a sustainability report.

When it comes to getting access to more capital, there is still approximately the same amount of capital being invested in shares. In principle, all Swedes are, at least indirectly, shareholders in some way. I believe there are very few Swedes who sit and read sustainability reports in the evenings.

To manage to compare sustainability reports, quite good specialized knowledge is required, which few Swedes have. One usually buys shares for other reasons than having read a good sustainability report. On the other hand, one might perhaps read that the company has a good strategy, and if one believes that the company will develop well, one usually invests in that type of company.

This, however, has nothing to do with sustainability reports in themselves, but I believe that the companies themselves should market themselves in the best way.

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Jennie Wernäng (M)

Mr. Speaker! Today we shall debate the Committee on Civil Affairs' report regarding new rules on sustainability reporting. This matter has been treated in different rounds and in different forms since 2014, so the history stretches further back than several of us have been here.

The intention of the new directive is to address deficiencies in existing rules, which are judged to have insufficient quality. The purpose is to provide access to reliable and comparable information on both environment, social responsibility, and corporate governance. This shall, in the long run, contribute to sustainable investments and strengthen competitiveness regarding renewable and sustainable capital over time.

The government ensures that we keep watch on the issue so that we stay at a minimum level. As a smaller country, we do not always have to go out first, but we should be cautious in order to remain competitive with a regulatory framework that has always been Sweden's strength. Over-regulation leads to increased costs and an increased regulatory burden which, in the long run, risks weakening Swedish competitiveness.

The importance of limiting the administrative burden for small and medium-sized enterprises is highlighted in particular in this proposition. At the same time, the requirement for large companies to maintain a report is limited.

In order to be able to implement the EU directives on corporate reporting and on the gender balance among board members in listed companies, the directives are designed according to the minimum level, and the government emphasizes the importance of limiting the administrative burden. The government also emphasizes that it is working focusedly and highlights the simplification work, which is strengthened in the Government Offices, at agencies, and in the EU work.

To be able to identify different stages in the legislative chain, work is being done with two councils. The first is the simplification council, and it is there that proposals for measures that simplify within Swedish legislation should be submitted. The second is the implementation council, which I mentioned in the debate on digital receipts held last week. This council shall submit recommendations for the implementation of EU directives, with special attention and interest from a corporate perspective regarding upcoming legislation at the EU level specifically.

Mr. Speaker! In conclusion, I want to say: without companies, there is no environment. Companies drive development and innovation. Red tape and reporting drive costs. With high costs, there is no growth.

Companies are the engine for the innovative power for a better environment. It is the business sector that leads the way in the green transition, not politics. We know our different roles. We create the conditions for companies to grow. You cannot stop providing nutrients to a plant and expect it to continue growing and produce greenery. In the same way, it is with our companies. You cannot take the nutrients away from the companies and expect them to continue growing and developing. This statement describes why the government has chosen to settle on exactly the minimum level.

Let us limit the red tape and create opportunities instead! We do not get better companies than we have politicians. It is we who create the conditions. It is important not to forget this in all the bureaucracy. EU directives are best handled at the EU level, and it is also there that the directive will be followed up and evaluated.

I move for the proposal to be approved.

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Katarina Luhr (MP)

Mr. Speaker! I am one of those who do not want my money to go towards investments in child labor and inhumane weapons or towards investments that can support the fossil industry. This applies to both my tax money and, for example, my private pension savings. But it is not always easy as a private individual to know which pension funds to choose and which to avoid. It has also not been easy for the bank employees I have spoken with to be able to provide good advice on this. Many more than I think it can be very tricky.

Knowing which companies, for example, have a credible long-term plan to phase out the fossil [fuel] is not only important from an ethical point of view or from a climate perspective, but also from an economic perspective. Companies that today do not keep up with the green transition may face difficulties with competitiveness in the future, which means that they might not survive as companies. Thus, they constitute a poorer investment in the long run. There are, in fact, many today who want to invest in sustainable companies.

The purpose of the sustainability reporting that we are debating today is to give the financial markets access to reliable and comparable information from companies regarding environmental and social responsibility, which shall contribute to directing capital towards sustainable investments and facilitating the management of financial risks resulting from climate change and deficiencies in social conditions.

The new regulation is also intended to create advantages for individual companies. The reporting can facilitate financing and create awareness within the company regarding its own risks and opportunities linked to sustainability. By including the information in the annual reports and requiring it to be audited, the conditions for the sustainability information to be reliable, relevant, and comparable are also strengthened.

The legal requirements shall increase transparency and make it easier to compare companies. The new directive sets higher requirements for information on, among other things, social conditions, greenhouse gas emissions and the companies' climate work, and the legislation is something that is welcomed by most companies.

The business community demands long-term perspective, clear rules, and frameworks for the work on sustainability and fossil-free energy. This will become easier with a common regulatory framework that applies throughout the EU, which gives companies fair conditions on the European market. The legislation will also drive the green transition. For many reasons, it is therefore important that it is now put in place.

Unfortunately, the government has been slow with the legislation. It is to enter into force this year, but for many companies, the reporting requirement will not apply until next year since half the year has already passed. This could mean that the European Commission views this as an incorrect implementation.

In a report from Arena Idé from 2022, it is shown that Sweden stands out regarding the proportion of infringement cases relating to an incorrect implementation of EU law. In this regard, Sweden is above the EU average. It is also shown that Sweden has difficulty living up to the requirements set in EU's environmental legislation. It highlights that this is problematic, not least because it risks delaying environmental and climate work and making it more difficult for the EU to reach its environmental and climate goals.

In a response to a written question to Minister of Justice Gunnar Strömmer regarding the delayed implementation, he answers as follows: "We have, for example, been keen to give the referral bodies the time they need to be able to familiarize themselves with the issues and, during the preparation of the implementation, we have also taken into account the views received to the greatest extent possible. To achieve a correct implementation of the directive, extensive work with many trade-offs between different interests has been required."

I think it has become clear that the government prioritizes very differently in terms of new legislation. When it concerns crime, for example, one can use fast-tracks and legally uncertain legislation as long as it goes quickly. When it concerns the climate issue, one can postpone measures and legislation as long as it is possible. We see this, not least, when it concerns the government's overall environmental and climate work.

This is something that the business community, with Svenskt Näringsliv at the forefront, has begun to react to. They say that the competitiveness of Swedish companies and their opportunities to continue to be at the forefront depend on a successful implementation of the EU directives that were developed during the last mandate period.

That the legislation will hit companies late through, for example, greater uncertainty. This year, it will mean that companies will receive different conditions on the Swedish market. In this case, it concerns a directive that all companies need to invest time and effort into and which at the same time can provide advantages on the international market, and therefore this is not good for the business community which more than anything wants to see long-termism, not short-termism, in order to be competitive.

After the government, as Strömmer writes in his response, has also carried out extensive work with the directive, a proposal is now presented where they settle for the EU's absolute minimum level when it comes to reporting. It is foolish, I think, as someone who wants to see Swedish competitive companies that are at the forefront. Settling for a minimum level also means, among other things, that one ends up out of step with Sweden's own climate goals.

Mr. Speaker! Sweden's long-term climate goal is that greenhouse gas emissions shall be net zero by 2045 at the latest, to subsequently achieve negative emissions. By us in the Swedish implementation now aligning with the EU's minimum level, companies shall at least report their emission targets for the year 2030 and the year 2050.

In the Swedish context, this means that Swedish companies shall report their long-term emission targets five years after Sweden has achieved net zero. Reporting how far one should have come with emission reductions in the year 2040 should in a Swedish context be more valuable and at the same time provide us with the long-term perspective that both companies and climate work require. Miljöpartiet therefore considers that absolute targets for emissions even for the year 2040 should be introduced for Swedish companies in addition to the mandatory target years 2030 and 2050.

Under the delegated act, it is described that new target values shall be established after each five-year period after 2030. In that case, an early mandatory target value for 2040 will be an important point to ensure that emission reductions until then are in line with existing climate legislation.

It is clear that sharper climate work both nationally and globally will be needed in order for the goals of the Paris Agreement to be met. The Green Party therefore wants the government to return with a revised legislative proposal which means that companies shall report absolute targets for the reduction of greenhouse gases for the year 2040, in addition to 2030 and 2050.

That the corporate sustainability reporting is now being strengthened so that European companies will become more transparent and more comparable is good. But for our Swedish companies, there are several advantages to being able to stay ahead while simultaneously being in line with the Swedish climate goals.

I therefore wish to move for approval of the Miljöpartiets reservation 1.

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Mikael Eskilandersson (SD)

Mr. Speaker! Miljöpartiet does not only want this sustainability reporting but also that more companies should be covered. And preferably, it should be introduced without a referral process or at least with shortened referral times. I definitely oppose that.

I have read the Green Party's reservation and am a bit puzzled by the text. It states: "Sweden and the EU have historically high emissions in global comparison, and at the same time we have a good economic capacity to transition." I wonder what the Green Party bases this on.

When I read on, for example, Ekonomifakta.se how we stand regarding carbon dioxide emissions, I see that Sweden stands out with only about 3.6 tonnes per capita. This should be compared with the EU average, which is 6.2 tonnes, or the entire world's average, which is 4.7 tonnes. We are therefore below in all comparisons.

If you look at the 20 countries in the world that emit the most, you see that Sweden is not even among them. And in the EU, we would land in 27th place or something. That means we are still not included.

When it comes to the emissions being historically high, we were in the mid-1990s at emissions of over 9 tons per capita. Now we have, therefore, reduced to about 3.6. Then I wonder how one manages to make it so that we have historically high emissions, even in a global comparison. I don't quite understand what that is based on.

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Katarina Luhr (MP)

Madam Speaker! Thank you for the question, Mikael Eskilandersson!

Now, one could imagine it becoming a long lecture on climate policy. There isn't quite time for that in two minutes. But I will begin with the existing emissions in Sweden.

It has been calculated that a sustainable emission amount per capita is approximately 1 ton per person per year. Mikael Eskilandersson pointed out that we now have emissions of about 3.3 - I believe that is what he said. If one looks at our consumption-based emissions, one sees that we have perhaps 6 tons left. That is far too much for it to be sustainable. We must reduce to a sustainable level.

When it comes to the historical emissions, it is about the fact that we have been large emitters. Mikael Eskilandersson also pointed out that we were at 9 tons earlier. And we have, together with the entire Western world, for long periods had high emissions, which has contributed to the high concentration of carbon dioxide in the atmosphere.

That is why we cannot really afford to continue contributing with these emissions. We must come down and perhaps have lower emissions than the countries that have not had high emissions previously and that need to build up a new fossil-free infrastructure. That is the answer to that.

I also want to point out that Mikael Eskilandersson said that Miljöpartiet would want shorter referral periods and a sloppy handling. That is not what we want at all. But we would have liked to see the government have prioritized this matter. It is important, as one of the pieces of the puzzle to reduce our emissions. There are many other European countries that have already succeeded in implementing this legislation without having a loose and sloppy handling.

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Mikael Eskilandersson (SD)

Madam Speaker! There is nothing preventing companies from making sustainability reports when they want, as often as they want, and under whatever conditions they want. That it is not introduced until July 1st does not mean that companies have been prevented from doing so earlier. It has been free to do so.

If we are to return to this point about Sweden standing out with high emissions, I would still like to assert that what the Green Party has contributed during its time in the Riksdag is actually to increase emissions. Our low emissions are, in fact, linked to the fact that we have had nuclear power plants, which the Green Party has replaced with solar cells from China that have been produced using oil from Russia to some extent. That this should be environmentally good in any way, I find difficult to understand.

Furthermore, we can add that oil power plants shall compensate when the sun does not shine and the wind does not blow, instead of us retaining the nuclear power plants that actually work and provide good energy.

The tough thing about the sustainability reports is that they mean that Swedish companies, for example those involved in wood, are being competed out. Why would it be better that companies involved in wood are competed out by Chinese companies involved in plastic? Chinese companies will not be getting these requirements for sustainability reports.

If you are an ordinary consumer and do not sit with a parliamentary salary, as we members here do, you as a customer usually choose based on price and your own finances. You do not choose based on whether there is a sustainability report at the base that you consider sensible. It is price and economy that decide. And when we push up the prices on wood, plastic and other inferior products from, for example, China will compete out the Swedish wood. In what way is that good for the environment?

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Katarina Luhr (MP)

Madam Speaker! I would like to thank you for the many questions. There were so many allegations that I would like to address that I do not know if I will be able to keep them separate.

I will start with what Miljöpartiet contributed. It was actually about building up a renewable electricity system, which has delivered more electricity than ever before. When it comes to oil-fired power plants, they are starting up to sell expensive electricity to other countries.

When it comes to us buying dirty things from Russia and China, that is what the entire sustainability reporting is about. We should be able to look at different companies and see if they have a sustainable business plan, if they are trying to make emission reductions, and if they are serious actors that we want to trade with. That is what it is about. It should be the same for everyone.

Swedish companies should be able to compare themselves with companies in Europe with the same requirements and the same framework. That is something Swedish companies want to do. There is, therefore, a lot in this.

As I understand from what Mikael Eskilandersson says and what I have heard earlier, Mikael Eskilandersson and Sverigedemokraterna do not want to introduce this legislation. I do not think that Mikael Eskilandersson has any remarks left, but what I would like to know is if there is anything that Mikael Eskilandersson and Sverigedemokraterna would like to do to reduce climate emissions in Sweden and Europe. It does not seem so, based on what I hear.

The deliberation was hereby concluded.

(A decision was to be taken on 29 May.)

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