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From sideshow to core business imperative of the 21st century
Next to economic considerations, companies nowadays must also address sustainability issues. This includes ecological and social impacts of their operations and requires a comprehensive and systematic approach to ensure responsible and sustainable business practices.
The EU Taxonomy, the EU Corporate Sustainability Reporting Directive (CSRD) in conjunction with the European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Due Diligence Directive (CSDDD) form the framework for the new sustainability reporting process, which will put sustainability reporting in Europe on a new level of quality.
Previously, only a limited number of companies were obliged to disclose the following topics in their management report or a separate sustainability report in accordance with the CSR Directive Implementation Act (CSR-RUG):
- Environmental concerns
- Social concerns
- Employee concerns
- Human rights
- Combatting corruption and bribery
No specifications were made in terms of content beyond the above-mentioned requirements. Both national and European standards were used. In Germany mainly the reporting standards of the Global Reporting Initiative (GRI) and the German Sustainability Code (DNK) were applied.
The changes in sustainability reporting
With the new Corporate Sustainability Reporting Directive (CSRD), the obligation for sustainability reporting will be extended to around 50,000 companies across the EU. Previously only an estimated 12,000 companies were obliged to report on sustainability topics. The European Sustainability Reporting Standards (ESRS), linked to the CSRD, further define the content requirements of the CSRD and specify the information that must be included in a sustainability report. In Germany, the CSRD will be implemented by the CSRD Implementation Act, its draft legislation published by the Federal Ministry of Justice at the end of March 2024, and government draft available since the end of July.
Regardless of whether you speak about sustainability management, sustainability reporting, CSR management, CSR reporting, Corporate Social Responsibility (CSR) or sustainability reporting, shareholders and stakeholders are increasingly expecting actions to follow words.
