I wrote about CSR for ‘small businesses’ in February 2019, touting it as an opportunity to win new customers, attract employees and improve your local community when it was still voluntary.
The legislation only affected large businesses that were trading and niche businesses that were pioneering this. Of course, I wasn’t the only one to present this as an opportunity and the idea of thinking about it has become commonplace, but not always for the right reasons.
The ultimate aim remains to reduce the impact, ideally to be regenerative to compensate for years of abuse of our planet’s resources. This would enable our children to enjoy the same quality of life as we do, right?
Many companies are not yet ready and will not act until the regulator pushes them to move forward in reducing their environmental and social impact. The CSRD regulation is one such regulation.
From 2025, for 2024 data, more companies will have to report on their CSR impact or their supplementary financial reporting. For example, almost five times as many companies will have to report on their non-financial impact in Germany, from 11,000 to 50,000 entities. And the report is no longer a separate report; it must be integrated into the financial report and checked by the auditors like any other element.
Why does it matter?
“You can’t improve what you don’t measure.“
Simply asking companies to include non-financial elements reinforces the need to expose their current practices. This is an enormous opportunity to visualise the real impact of their activities in terms of environmental and social impact, both internally and externally. It is only when they can imagine their current position in the market that they have the opportunity to position themselves in their own sector, and surprises can emerge.
From this panorama, a new style of competition can emerge to take the lead in the field of sustainability; and this will not be long in coming. and governments have a card to play to encourage virtuous companies and motivate regenerative behaviour. Ambition will, I hope, be the keystone of progress.
What will the reports cover?
The three pillars of CSR (environment, social and governance) are included, but at the time of writing, the definitive standards have not been published. Nevertheless, it is clear that the following topics should be covered:
- Environment : Pollution, use of water and marine resources, circularity (including waste management) and resources used, biodiversity (such as land use and impact on land) and impact on ecosystems.
- Social: Workforce, value chain workforce, affected communities, consumers and end-users.
- Governance: Corporate governance.
How do you get started?
For those who have already started, it would be a matter of understanding what is expected to enter the official report (it will be digital), and perhaps filling in the gaps.
For those who haven’t started yet, this is an excellent opportunity to develop the company’s future-proof vision, involving stakeholders to work together to develop the best approach to get there. Drawing up a clear picture of current practices, opportunities, pain points, risks and bottlenecks, and selecting the SDGs that the company wants to address in line with its core values, sets the stage for successful progress.
What’s next?
As mentioned earlier, this is only the beginning of the journey, the company must use this new regulation not as a limitation but as an opportunity to move the company into the future. This needs to be understood by stakeholders, which means promoting the approach and gaining support internally (employees and management) as well as externally (community).
(employees and management) as well as externally (community, customers and suppliers, trade unions, authorities and professional and civil associations).
For the sake of future generations, it is quite positive to approach these changes with goodwill and vision.
Sources :
- Regenerative economy – https://www.weforum.org/agenda/2022/01/regenerative-capitalism-industry-explainer/
- SDG – https://sdgs.un.org/goals
- Lieferkettegesetz – https://de.wikipedia.org/wiki/Lieferkettengesetz
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