Supply chain laws: Misinterpretation of survey data hurts the cause.

Surveys of companies play an important role in the public debate on sustainability legislation at national or European level – they are regularly cited by both supporters and opponents of such regulation. This has just happened again in light of the discussions about a reform of CSRD, CSDDD and EU taxonomy at EU level as part of the so-called sustainability omnibus.

The data is usually collected in a methodologically sound manner and the analysis provides important insights. These include, for example, the fact that companies obviously often do not have sufficient data to meet the regulatory requirements. It is also clear that companies have to invest heavily in personnel and technology in order to meet the requirements of legislators at national or European level. It would be a good idea to leave it at results that are supported by the data.

Time and again, however, the authors of these studies exceed the significance of their data with their interpretations. Researchers speak of an overstretching of inferential statistical significance. This harms the cause. Against this background, I take an alternative approach by systematizing the results of selected studies from the years 2024 and 2025. The focus is not on whether positive or negative correlations can be proven with regard to the acceptance of the German Supply Chain Sustainability Act (LkSG) by companies, but on the question of how companies can be effectively supported on their way to a successful, sustainable transformation.

The sole focus on purely economic key figures - as is the case in such studies - also suggests that skeptical companies have no intrinsic interest in human rights, climate action or biodiversity. Based on my experience with many companies, I emphatically reject this assumption.

As long as studies come from actors with particular interests, finding solutions must unfortunately remain fragmented. The Israeli historian Yuval Noah Harari refers to this fundamental problem in the chapter "Discovery of Ignorance" (Nexus 2024). He asks whether curators can really put the search for knowledge above their interest in power. If they cannot, then the surveys of actors with particular interests have limited validity, regardless of whether they come from a business association or an NGO. This would only not be the case if such actors commissioned independent scientific institutions or opinion research institutes to design the relevant surveys without exerting any influence on them themselves.

In the case of the debate around supply chain laws, many of the studies distract from the real issue, which is that compliance with regulation could help companies to position themselves resiliently for the future. Many companies are still missing out on this opportunity because they are limiting themselves to eliminating business liability risks and fulfilling reporting obligations. However, such a compliance-driven mindset is backward-looking. A forward-looking approach would be for companies to analyze their supply chains for potential risks, enter into dialogue with their suppliers and work with them to find cooperative solutions.

However, this requires management in companies in which sustainability and finance are managed in an interlinked manner (integration). In addition, companies need to develop network and data capabilities through digital platforms and standardized processes along the supply chain (competence). The IT tools currently in use are far from sufficient for this. Companies should also exploit the numerous synergy potentials of the various sustainability regimes (convergence).

These three pillars – integration, competence and convergence – could form the basis for a sustainable transformation and the development of future-proof business models for companies. In this way, companies are helping to reduce the risks of human and environmental rights violations in their supply chains. At the same time, companies create innovative business models that strengthen themselves and ensure Europe's future viability and competitiveness. Those who tackle these risks at an early stage and consider opportunities and risks in the same breath transform them into competitive advantages - this is precisely what lies at the heart of dual materiality, which the EU has enshrined as a central principle in sustainability reporting. In their risk analysis, companies have long been concerned with how environmental, social and economic developments could affect their financial results. Recently, they have also had to consider the possible consequences of their own actions.

But no one goes down this path alone. For me, one thing is certain: We need an open, learning-oriented exchange in which people inspire and support each other. I believe that only a truly unbiased exchange platform can help companies achieve this, and this is where science has a clear advantage over practice. Our self-correction mechanism allows us not only to admit mistakes, but to use them in a targeted way to make progress – a privilege that I greatly appreciate. If we jointly develop practicable cost-benefit analyses, standardized data interfaces and adaptive governance structures on the basis of solid research, the willingness of companies to engage with the current sustainability requirements will also grow. This is exactly what I am committed to.

Elisabeth Fröhlich supports companies in their sustainable transformation. The business economist previously worked at the CBS International Business School for more than 16 years.