Navigating the Future of Sustainability: EU’s Green New Deal and Corporate Responsibilities

The European Union’s vigorous promotion of the Green New Deal is a pivotal initiative aimed at ensuring environmental sustainability, economic revitalization, and social equity. This ambitious plan reaffirms the EU’s leadership in global environmental efforts, compelling corporations to swiftly adapt to new sustainability standards. For professionals in the field, understanding these evolving regulations is crucial.

The Corporate Sustainability Due Diligence Directive (CSDDD)

Recently published in the EU’s Official Journal, the Corporate Sustainability Due Diligence Directive (CSDDD) represents a significant step towards enhancing corporate accountability in sustainability practices. The directive, which includes amendments to the 2019 whistleblower protection laws and establishes a centralized data access point for financial and sustainability information, will come into force in the third quarter of 2027. This timeline necessitates that companies begin identifying their due diligence obligations immediately.

The CSDDD imposes incremental challenges on companies to ensure, document, and act on processes related to human and environmental risks. This preparatory phase is vital for compliance with future regulations governing the value chain and business ethics. By emphasizing the fight against human rights misconduct, the CSDDD signals the EU’s intent to expand legislation on supply chain and value chain management.

Understanding the Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) aims to standardize corporate sustainability reporting, ensuring stakeholders and investors have access to consistent, comparable, and reliable information. This directive is underpinned by twelve European Sustainability Reporting Standards (ESRS), with ESRS E1, S1, and G1 being particularly critical.

ESRS E1: Climate Change Reporting

Companies must report comprehensive data on their impact on and responses to climate change. This includes:

• Detailed reporting on greenhouse gas (GHG) emissions (Scope 1, Scope 2, and Scope 3).
• Disclosure of climate targets and transition plans, outlining strategies to achieve these goals.
• Assessment of the resilience of business models in the face of climate change.

ESRS S1: Workforce-Related Reporting

Companies are required to disclose information on their workforce, including working hours, wages, employment conditions, diversity, health and safety, and training practices. This transparency ensures companies acknowledge their responsibilities towards employees.

ESRS G1: Governance Practices

This standard mandates that companies provide clear information about their governance structures and practices. Disclosures must include the roles and responsibilities of the board and management, policies related to ethics, anti-corruption, and anti-bribery, and stakeholder engagement practices. Additionally, companies must report on their risk management frameworks and executive remuneration, linking compensation to sustainability performance.

The Social Standards (ESRS S1-4)

The Social Standards (ESRS S1-4) address the disclosure requirements related to an entity’s significant effects on its workforce, value chain workers, customers, and affected communities. These standards are crucial for understanding the social impacts of corporate activities.

• ESRS S1: Focuses on material impacts on the company’s workforce, emphasizing responsibility towards employees.
• ESRS S2: Addresses impacts on value chain workers, highlighting the importance of due diligence in upstream operations to mitigate risks.
• ESRS S3: Requires disclosure of impacts on affected communities, particularly relevant for asset-heavy companies and those relying on natural resources.
• ESRS S4: Focuses on the impacts on consumers and end-users, helping investors understand the financial implications of products and services.

Preparing for the Future

Understanding and adhering to these directives will enhance long-term sustainability and corporate resilience. Effective risk management through the mapping of impacts not only improves oversight but also positions companies to better handle inherent and systemic risks. This proactive approach will be critical as the EU continues to enforce and expand its sustainability legislation.

For sustainability professionals in the EU, staying informed and prepared for these regulatory changes is not just a compliance requirement but a strategic imperative that will drive future success. The Certified Sustainability ESG Practitioner Program provides tools for the design and implementation of the corporate Sustainability Strategy, as well as effective management of Sustainability complexities within their organization.

For early bird and group discounts contact [email protected].

• Only certification with dual specialization certificate options
• Specialization in ESG topics
• Free best-selling ebook: “Practical Sustainability Strategies: How to gain a Competitive Advantage” (Wiley Publication, 2nd-Edition e-book version) by Lead Trainer Nikos Avlonas
• Special assignments with practical insights
• Real-world business cases
• Participation from leading companies
• Multi-awarded tutors with practical experience