From 2024, companies will have to report much more on their sustainable activities, not only on their carbon footprint, but also on their ambitions, future expectations and the footprint of the entire chain.
I remember telling one of my lectures at Nyenrode Business University in June 2020 about a news article “Super boring law may turn financial world upside down” published on the NOS website on 18 June 2020. It was about the EU taxonomy and how the indication of sustainable or not would rock the financial world. The world is changing faster than I expected, knowing that new external reporting guidelines have now been published from the EU that go much further. It’s about the Corporate Social Responsibility Directive that applies to listed companies and companies that meet two of the three criteria: €40 million turnover per year, €20 million balance sheet value, €250 employees. Do you meet this directive? Then as of 1-1-2024 (companies that were also covered by NFRD) or 1-1-2025 (the other companies covered by this directive) you will have to report broadly on your sustainable activities in your annual report.
License to operate
The guideline had already been published earlier this year as a preliminary version, on which many experts provided their input. From my research, I focus mainly on the circular economy and have followed developments from that guideline. In November 2022, the directive was approved within the EU and a new version was published. A comprehensive document, which highlights both the environmental, social and governance (ESG) sides of an organisation. From this directive, you are asked to report on the impact you have on the environment in the form of CO2 footprint (your energy consumption, transport movements as an organisation, of your employees, etc. – but also of your value chain), but also on your consumption of raw materials. The guideline also prescribes reporting on your efforts with regard to the social side of the organisation in the form of employee policies, but also human rights in the value chain. And then how you have set this up in the management of your organisation. A sustainable organisation that gives real attention to these issues has given attention to its stakeholders a place in decision-making or even from a stewardship approach. As an organisation, you can report that you do not pay attention to these topics and also have no ambitions to address them. From the transparency that this directive creates, by making this mandatory for larger organisations, there is pressure from the market to take steps in this anyway in order not to lose your licence to operate. An auditor’s report on the data you share in this area is part of the new directive. An exciting development, also for accountants, but a method to significantly reduce greenwashing. I can imagine that these guidelines make you nervous and now you really want to start working on making your organisation more sustainable. But how?
Road2Impact can help companies shape that strategy and gain step-by-step experience in what it brings to your organisation. Can we help you with this? Feel free to get in touch.
Diane Zandee
