Author: Saarinka Kiilunen

June 21, 2023

Corporate Sustainability Reporting Directive (CSRD) explained

Corporate Sustainability Reporting Directive (CSRD) is in action since January 2023. CSRD will strengthen and standardize the rules for how companies are required to report on their social and environmental activities and their impact on people and the planet. Currently Corporate Sustainability Reporting Directive impacts approximately 50 000 companies in Europe.

CSRD timeline and what to expect in the future

The Corporate Sustainability Reporting Directive applies to companies in the following order:

From January 2024, listed companies with more than 500 people (i.e. those already covered by the NFRD are obliged to prepare a statement of non-financial information and publish information according to the EU taxonomy).
From January 2025, listed and unlisted companies that meet at least two of the following criteria: more than 250 employees, revenue of 20 million euros or more than 40 million euros in turnover.
Listed SMEs from 1 January 2026.
From January 2028 CSRD expands to third-country companies with turnover over 150 million euros.

Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS).

ESRS entered a four-week feedback period for the first set of Sustainability Reporting Standards, the feedback period lasts from 9th of June to 7th of July 2023.

These mandatory reporting standards aim to ensure that companies are fully transparent about their impact on people and the environment. The standards will also be a key tool in trying to extinguish green washing. The new standards will assist companies in communicating and managing their sustainability performance more efficiently.

After the four week feedback period, the commission will consider the feedback given and then finalise the standards. When adopted, the standards will be used by companies that are subjected to CSRD (Corporate Sustainability Reporting Directive) reporting requirements. This will be another step forward to the goal to achieve a sustainable EU economy.The requirements for different companies will be phased in gradually, depending on factors such as company size and revenue.

Additionally, all sustainability reports must be verified by an independent assurance provider, to ensurereliable information. CSRD also supports and requires reporting in digital format.

Prepare now for CSRD reporting

In 2023 prepare reporting systems. Ensure you have clear Key Performance Indicators (KPI’s), goals and a plan in place for 2024 reporting requirements.

In 2024 gather data trough out the year for 2025 reporting and review it with your accountant. Note, if your company is subjected to NFRD you are required to report on 2024 data in 2025.

In 2025 review your reporting activities and systems to establish or improve for 2026 reporting. It is also good to note that many companies that are not yet in the scope of CSRD will have to report for the companies that are in the scope because they need information about their supply chain’s impacts.

Corporate Sustainability Reporting Directive reporting requirements

CSRD is adding requirements on top of the Non-Financial Reporting Directive (NFRD). According to the NFRD, large companies must report on:

environmental matters
social matters and treatment of employees
respect for human rights
anti-corruption and bribery
diversity on company boards (in terms of age, gender, educational and professional background)

With the Corporate Sustainability Reporting Directive companies need to also report on:

governance relating to sustainability impacts, risks and opportunities
impacts of sustainability-related risks and opportunities on the company’s strategy, business and financial planning
processes for identifying and assessing sustainability impacts, risks and opportunities
metrics and targets that are used to assess and manage sustainability risks and opportunities

Corporate Sustainability Reporting Directive impact on business strategy

Sustainability will in the future have a bigger role in the evaluation of companies. In addition to the reporting obligations, CSRD sets other requirements for companies. For example, in the future companies must plan how to take climate and other sustainability risks into account in the business model and strategy, as well as the transition to a climate-neutral economy.

The role of the company’s management and board of directors must now be strengthened in accordance with sustainability goals. The interest of customers and investors in responsible and environmentally sustainable businesses has grown. This contributes to the financing companies receive for sustainable and responsible projects.

The direction is clear even for those who have not yet been able to participate in creating responsible businesses. Common sustainable development rules accelerate the market, creating new growth opportunities for companies.

Large companies are already obliged to annually publish information on how much of their operations are in line with the EU taxonomy’s climate and environmental goals. The first EU taxonomy reporting was due in the first months of 2023.

Benefits of CSRD directive

According to the European Parliament, The CSRD will improve the existing legislation (NFRD) by requiring more detailed information from companies’ impact on the environment, human rights and social standards, that are in line with the EU’s climate goals.

What we can expect from adapting to CSRD is

Standardized reporting on companies’ activities on people and the planet, therefore providing the opportunity to compare sustainability reports to one another.
Direct finances and investments to activities and businesses that create a positive or ‘net-zero’ impact on the planet and people.
CSRD pushes management to adapt to or improve their strategies to be aligned with sustainability and EU climate goals.
CSRD enforces companies’ capability to mitigate risks, such as climate risks that will help companies to ensure longevity.

Adapting to CSRD requirements as soon as possible is recommended, due to the vast scope of the directive. Where to start from depends on the company’s status with sustainability matters and how well they are documented and reported in the past.

Building a reporting system with Double Materiality assessment is a highly recommended starting point as it is required in the directive to be analysed.

If you wish to talk more about CSRD, don’t hesitate to contact us below or send an email to info@ecobio.fi.

February 10, 2023

The science-based target for Nature – at the core of business strategy

The science-based target for Nature (SBTs for Nature) is leadership’s next must-have. Biodiversity loss and degradation of nature are increasing; therefore, businesses need to take biodiversity into account when creating their strategies and sustainability reports.

Biodiversity loss influences ecosystems, species extinction and the natural resources humans need. Companies working in forestry, farming, convenience, and infrastructure industry will be impacted first.

Science-based Targets (SBTs)

Science-based Target (SBT) mean emission reduction targets that are lined with the Paris Climate Agreement: targets support limiting global warming to well below 2°C compared to pre-industrial times and support efforts to limit warming to 1.5°C. With SBTs you know exactly how much and how fast you need to cut your greenhouse gas emissions.

Science-based means acting within limits of the earth’s carrying capacity that are favorable and safe for nature and humans, and determined by scientifically studied information. Additionally, target needs to be measurable, time-bound and impact the company’s activities.

The most known SBTs are Science-based Targets for Climate. SBT for Climate is widely known and globally used by various companies. The initiative is based on science-backed knowledge of how to cut greenhouse gas emissions globally to preserve living conditions. Companies committed to SBTs achieve on average better results than those not committed to SBTs.

What are science-based targets for Nature?

Science-based Target Network, SBTN, is preparing a Science-based target for Nature (SBT for Nature) model for companies, just like the Science-based target for Climate (SBT for Climate). In the SBT for Nature, companies will find guidelines for leading and reporting on companies’ actions to prevent future biodiversity loss.

The model will include the following steps:

Evaluate. Carry out a materiality assessment. Look at the business value chain.
Interpret and prioritize. Identify the affected areas. Prioritize.
Measure, set goals & report. Set the base level. Plan your observation. Set goals. Report baseline and goals.
Act. First of all, avoid adverse effects. Reduce them. Protect and restore. Convert.
Track the impact of your results. Report. Verify.

SBT for Nature will cover biodiversity, freshwater, ocean, and land. The model is still under development, currently, the principles, elements and guidelines are being tested. The first part of SBT for Nature V1, is published in March 2023

How does Science-based Target for Nature differ from SBT for Climate?

Science-based Targets for Climate aims to stop global warming to 1.5 degrees Celsius in accordance with the Paris climate agreement. Companies committed to climate goals have one clear goal, reducing greenhouse emissions. How the goals are achieved is freely up to the companies, and progress is easy to measure.

Currently, there is no global goal to protect nature, as there is for the climate. Prevention of biodiversity loss is location-bound, both in terms of influencers and consequences. Reducing greenhouse emissions is not location-bound.

The decrease in biodiversity is accelerated by changing, diverse and interacting factors. Biodiversity loss does not manifest itself in the same way globally, in which case protecting biodiversity and monitoring progress requires location-related goals.

SBT for Nature considers several different dimensions: water bodies, and the well-being of the soil and the seas, and requires site-specific plans and goals. Companies must therefore have separate goals for the use of fresh water, pollution of fresh water and so on.

Ecobio’s biodiversity services for companies

We offer biodiversity services ranging from research to leadership consulting. The expertise of Ecobio’s biodiversity team is created at the intersection of many disciplines – from the cooperation of specialists in biology, geography and management.

We will be happy to discuss more how you can move forward in taking nature into account in your business.

Ecobio is the expert partner of leading companies in biodiversity.

We help you balance business and nature.

January 10, 2023

Sustainability reporting in Europe – All you need to know

Every year sustainability reporting in Europe for companies operating in the European Union accelerates. Below you can read the key points of corporate sustainability reporting that are valid today and in the future.

EU Green Deal

Climate change and biodiversity degradation pose a threat to Europe and the world. To prevent aggravating climate change further and to overcome the challenges caused by climate change and biodiversity loss, the European Union established a European Green Deal.

The EU Green Deal’s short-term goals are:

Europe to be the first climate-neutral continent by 2050
Cut greenhouse gas emissions by 55% compared to 1990-levels
3 billion trees planted in the EU by 2030

In the long term the Green Deal aims to transform the EU into a modern, resource-efficient and competitive economy, ensuring:

no net emissions of greenhouse gases by 2050
economic growth decoupled from resource use
no person and no place is left behind

Corporate Sustainability Reporting in Europe

Under EU law large companies are obligated to report annually on company operations and how a company manages social and environmental challenges. The sustainability reporting regulations help to direct financing towards sustainable companies and activities, supporting the EU Green Deal goals for 2030 and 2050.

A key contribution to achieving the European Green Deal goals is to improve the data on the sustainability risks companies are exposed to and their impact on people and the environment. Improved data requires improved and mandatory corporate reporting on these issues.

Today, approximately 12000 public-listed companies are required to report, however, by 2027 over 50 000 companies will be impacted by European sustainability standards under the Corporate Sustainability Reporting Directive (CSRD).

All large companies (stock market lister or not) will have to adhere to the European sustainability standards, already reporting companies from 2025 and large companies currently not reporting from 2026.
Listed SMEs will have time until 2027 to adapt to coming reporting standards and requirements.
The reporting requirements will also cover companies with headquarters outside the EU with over 150€ million in turnover in the EU from 2029.

European sustainability reporting standards

The European Sustainability Reporting Standards (ESRS) specify the obligations of the Corporate Sustainability Reporting Directive (CSRD).

The ESRS define the minimum level of mandatory corporate responsibility information for companies. All companies report in addition to the general principles related to sustainable business operations:

strategy and business model
sustainability effects
sustainability risks and opportunities.

The standards were prepared with the choices of various stakeholders, the European financial reporting advisory group EFRAG in November the second set of EU sustainability reporting standards. Based on these 12 standard drafts, the commission will publish this standard in the summer of 2023. Read more here.

Mandatory reporting requirements

In 2023, the first round of full EU taxonomy reporting was required from companies reporting under the NFRD. From 2024 onwards, the scope of the EU taxonomy will expand as the Corporate Sustainability Reporting Directive (CSRD) is implemented, requiring more and more companies to include EU Taxonomy information in their sustainability reporting.

Corporate Sustainability Reporting Directive (CSRD)

With CSRD reporting, a larger part of companies operating in the EU will be covered by taxonomy reporting, and in addition, companies must publish more detailed information in connection with their activity report, e.g., about the environmental and social impacts of their business.

The CSRD scope:

Starting from 1 January 2024, all listed companies that employ more than 500 people (i.e. those that are already covered by the NFRD and are obliged to prepare a statement of non-financial information and to publish information according to the EU taxonomy).
From January 1, 2025, listed and unlisted companies with more than 250 employees and more than €40 M in turnover.
SMEs listed from 1 January 2026.
Third-country companies with net turnover above 150 million in the EU from 1 January 2029.

5 steps to prepare for CSRD – read more here

EU Taxonomy

EU taxonomy is part of the EU Green Deal, which aims to promote the EU carbon neutrality targets by 2050. EU taxonomy requires companies to classify their environmentally sustainable activities and investments. The aim of the Taxonomy is to get the financial market to direct investments towards more environmentally sustainable solutions.

As of January 2023, companies must assess the sustainability of their economic activities. This must happen in accordance with the technical screening criteria for the EU taxonomy climate goals.

EU Taxonomy in a nutshell – Read more here.

EU’s Directive on Corporate Sustainability Due Diligence (CSDD)

In February 2022, the European Commission proposed a Directive on corporate sustainability due diligence (CSDD). CSDD places companies with a key role in building a sustainable economy and society in the EU and complements several current sustainability reporting legislation, such as the CSRD, the Sustainable Finance Disclosure Regulation and the EU Taxonomy regulation.

Under the CSDD companies are required to:

integrate due diligence into policies;
identify actual or potential adverse human rights and environmental impacts;
prevent or mitigate potential impacts;
bring to an end or minimise actual impacts;
establish and maintain a complaints procedure;
monitor the effectiveness of the due diligence policy and measures;
and publicly communicate on due diligence.

The future of sustainability reporting

As sustainability reporting within Europe continues to develop, the legal and mandatory reporting requirements and due diligence work within the EU will increase. The EU aims to set a global standard for sustainability work and key features of sustainability reporting will have an impact outside the EU, encouraging the rest of the world to follow suit.

European countries outside the EU will most probably incorporate, or at least benefit from voluntary reporting from an early stage due to higher market pressure. All third-country companies with EU subsidiaries will have to report sustainability information based on CSRD from 2029, thereby affecting companies also on other continents.

The immediate next steps of future sustainability reporting in Europe include the adaption of the Corporate Due Diligence Directive and the addition of activities under the EU Taxonomy regulation. The EU has high ambitions for setting a legal framework to achieve the goals of the European Green Deal and combat the most threatening sustainability risks that impact our societies today.

Sources

https://www.consilium.europa.eu/en/press/press-releases/2022/11/28/council-gives-final-green-light-to-corporate-sustainability-reporting-directive/

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1145

November 9, 2022

Mitigation of climate change requires actions from companies and individuals

The third section of the sixth assessment report published in April by the International Climate Panel IPCC focuses on climate change mitigation and adaptation measures. As presented in the report on the effects of climate change published at the end of February, the time window for curbing the effects of climate change is closing. The increase in greenhouse gases in the atmosphere caused by human activities has been faster and stronger than predicted. Limiting warming to 1.5 degrees is starting to look even more unreal.

Mitigation of climate change in different sectors

The IPCC presents a number of ways to mitigate the effects of warming in different sectors and the emission reduction potential of these ways on an annual basis in different scenarios. For example, in industry, the capture and storage or use of carbon dioxide elsewhere could be useful when the carbon dioxide released from production plants could be directly collected. Carbon dioxide produces use elsewhere or it stores an alternative in the soil or long-lived materials of the trot. Large-scale recovery does not have a very high emission reduction potential on an annual basis and it is, at least for the time being, quite expensive. Better opportunities to reduce emissions are by changing very fossil fuels to bio-based, hydrogen and its derivatives or completely electric alternatives. Energy and material efficiency measures are also fairly inexpensive ways to reduce large amounts of emissions.

In energy production, agriculture and at the individual level, emission reduction is the most effective

According to the IPCC, the biggest emission reduction opportunities are related to energy production with wind and solar power. Increasing these production methods would reduce emissions by several gigatons annually, and the solutions would be quite inexpensive compared to almost all other solutions from different industries presented in the report.

In addition to energy production, solutions in agriculture and forestry are particularly effective in terms of mitigating climate change: sequestering carbon in the soil in agriculture, sustainable forest management, afforestation and restoring ecosystems would reduce emissions substantially every year. If farming were to be enhanced, for example, through arable forestry or farming methods that bind carbon to the soil, many natural forests would not need to be converted to agricultural use, and as the surface area in agricultural use decreases, previously used areas could be restored and thus improve their carbon sequestration capacity.

A decrease in the area of land used for agriculture would be possible not only by making cultivation more efficient. It could also be possible by globally changing the diet to be more sustainable. The report emphasizes that the mitigation of climate change is surprisingly largely also dependent on individual choices. By 2050, effective measures on the demand side between different sectors could reduce emissions by up to 40–70% of what emissions have been predicted to be in 2050 with current measures.

A plant-based diet can effectively reduce greenhouse gas emissions. Buying more material- and energy-efficient consumer products and using public transport would also have effects.

The electrification of public transport can reduce emissions. Improvements on the public transport infrastructure can also lead to more usage. Increasing remote work or recycling also curbs climate change. Although their emission reduction potential is clearly lower than other measures, especially sustainable dietary changes.

“Several means of controlling climate change not only reduce greenhouse gas emissions, but also improve air quality and human health, increase biodiversity and can also at best, for example, increase equality and improve food security”

Co-benefits can be obtained from containment measures

The report also highlights construction-related emission reduction opportunities, such as the construction of new buildings from low-carbon and long-lasting materials. Renovating existing buildings and adding carbon-sequestering materials and surfaces such as green roofs would reduce emissions. Increasing green surfaces and areas, especially in cities, mitigates the urban island phenomenon, where city centres heat up more than the surrounding areas due to many reflective and heat-trapping surfaces. In addition, green areas curb flooding during heavy rains.

Several measures to control climate change are needed. We need to reduce greenhouse gas emissions to stop the climate change. We also have to improve air quality and people’s health, increase biodiversity. By doing this it could lead to an increase in equality and improve food security. The report emphasizes that it is possible that the mitigation of climate change through various ambitious goals and measures may cause a positive chain reaction, in which emission reductions feed each other. The actions of individual people and a change in attitude are also of great importance.

REDUCE EMISSIONS TOGETHER WITH ECOBIO

Together with Ecobio’s experts, your company can develop the best and most suitable means of reducing emissions.

Ecobio can for example help with:

reducing company-level emissions with the help of carbon footprint calculations and various low-carbon road maps
increasing material efficiency with the help of life cycle calculations

Contact us below!

November 9, 2022

CSRD reporting – the new obligations accelerate companies’ sustainable business activities

The negotiations regarding the Corporate Sustainability Reporting Directive (CSRD reporting) were concluded at the EU level just before Midsummer in 2022. Large companies are already obliged to annually publish information on how much of their operations are in line with the taxonomy’s climate and environmental goals.

CSRD reporting is gradually affecting different sized companies The scope includes:

Starting from 1 January 2024, listed companies employing more than 500 people (i.e. those that are already covered by the NFRD and are obliged to prepare a statement of non-financial information and to publish information according to the EU taxonomy).
From January 1, 2025, listed and unlisted companies with more than 250 employees and more than €40 M in turnover.
SMEs listed from 1 January 2026.

The reporting is carried out in accordance with the European sustainability reporting standards, which are still being prepared. To ensure reliable information, sustainability reports must be certified by an independent inspector in the future.

CSRD reporting increases companies’ sustainability requirements

The role of the company’s management and board of directors must now be strengthened in accordance with sustainability goals. The interest of customers and investors in responsible and environmentally sustainable business has grown. This contributes to the financing companies receive for sustainable and responsible projects.

Ecobio’s experts help your company with strategy preparation and sustainability reporting

Pioneering companies find value instead of costs in production that puts less strain on the environment. Your company should start with a materiality assessment. This allows you to draw up a sustainability action plan and focus on the most relevant sustainability factors.

We help your company draw up a strategy that makes sustainability an essential part of the core of the business model and strategy. With our help, your company can find risks and opportunities, take goals to a practical level in good time, and be among the first to report on sustainable operations.

Science-based targets (SBT)

Science-Based Targets Initiative

The Science-based targets initiative (SBTi) was created to promote climate action in the private sector, helping companies to set science-based emission reduction targets for their own operations.

The initiative sets clear action guidelines for companies to reduce greenhouse gas emissions. These measures help prevent the worst effects of climate change and support the growth of a climate-friendly business.

Goals are considered “science-based” if they are consistent with what the latest climate science considers necessary to achieve the goals of the Paris Climate Agreement: goals support limiting global warming to well below 2°C compared to pre-industrial times and support efforts to limit warming to 1.5°C.

According to SBTi’s report for last year, during 2015–2020, companies committed to SBTi have significantly reduced emissions related to their own operations compared to the global average.

Watch the Ecobio webinar: Science-Based Targets – what and why?

In Science-Based Targets – what and why? -webinar leading consultant Inka Koskinen and consultant Mai Kärppä summarize what Science-Based Targets mean, what kind of obligations the regulation imposes on companies and why companies should join the SBT initiative. The webinar is in Finnish.

Webinar Agenda:

New obligations come from regulation
Science-based Targets initiative
Joining the initiative
Emission calculation required by SBTi
Setting emission reduction targets
Benefits of joining the initiative

Watch the recording to find out how you too can reduce business emissions and how to get started with the SBT initiative!

If you wish to download the webinar recording, you can find it here.

How to get started with the SBT initiative!

The SBT initiative requires the determination of planned goals for the business. Short-term emission reduction targets are set for 5–10 years or a long-term target in which emissions are reduced by at least 90% by 2050.

Determining the emission reduction targets also means calculating the emissions of the base year so that the development can be monitored. This means calculating the carbon footprint of the business according to the GHG protocol. The goals must also comply with SBTi’s criteria in order to be considered science-based.

Ecobio services related to the SBT initiative

Our consultants will clarify for you what the measures outlined in SBTi mean for your business. We help determine the carbon footprint of your operation and set emission reduction goals in accordance with SBTi. We advise what actions you need to take in your business structures and value chain in order to achieve the set goals.

Please contact us below

May 31, 2022

Ecobio appoints two new board members!

Ecobio celebrates its 33rd birthday by welcoming two new board members to support Ecobio’s success journey for the next three decades.

Only last week Ecobio celebrated the over three decades-long journey of making the world a better place by helping companies around the world with their sustainable activities. Today we are also known for our Ecobio Manager, an advanced SaaS for managing corporate sustainability.

“Ecobio aims for a strong position in the digitalization of corporate sustainability as well as sustainability consultancy in the European market. Therefore, we have complemented our board with two high-level members, Martti Hedman and Fredrik Rönnlund, with backgrounds in SaaS and international business management”, Ecobio’s founder and president Sanna Perkiö, D.Sc., commented. “I’m sure, that the new board will stimulate the growth and profitability of Ecobio.”

As Ecobio looks forward to another successful 30 years, we continue to rely on our purpose that was set over 30-years ago.

Our mission

We are changing the world with the help of our sustainability services for companies.

Our vision

Companies find a balance between their business goals and the well-being of nature.

Our promise

We help you balance business and nature.

Ecobio Manager and EU-Taxonomy leading the way

The future growth of Ecobio Manager and its EU-Taxonomy solution will be leading Ecobio’s journey for the next years.

“Ecobio Manager is the world’s first comprehensive taxonomy solution including a smooth classification process and up-to-date legal databases, as well as an environmental risk assessment protocol. So far, there has been no service with similar coverage in the global market.”

– Sanna Perkiö, D.Sc., founder, and the Head of Development of Ecobio.

We are certain that with the support of Martti Hedman and Fredrik Rönnlund, the journey ahead is even brighter.

“My joint path with Ecobio started last year as Advisor. I was immediately impressed by Ecobio’s expertise in the various areas of corporate responsibility. I am now super excited to join Ecobio’s Board and help the company to offer sustainability-related Consulting and SaaS services around the globe. The new EU wide taxonomy directive provides Ecobio with a great opportunity to support their existing customers, and accelerate its growth.”

– Martti Hedman

“I was deeply impressed by how Ecobio Manager helps corporations collect and communicate concrete acts that contribute to the EU taxonomy objectives. It is an overwhelming task for anyone. But Ecobio Manager manages to make it concrete, better than anything else in the market. This is a mission for the heart, as much as it is one for the mind.“

– Fredrik Rönnlund

Welcome to the team Martti Hedman and Fredrik Rönnlund!

April 25, 2022

Technical Screening Criteria – environmental objectives

Recommendations on the technical screening criteria for the last four environmental objectives

The Platform on Sustainable Finance recently released its report with recommendations to the EU Commission for the technical screening criteria for the remaining four environmental objectives defined under the EU Taxonomy Regulation (2020/852/EU). The report released on 30 March 2022 will provide the foundation for the upcoming environmental delegated act, although the EU Commission is not obliged to follow the recommendations. The Platform continues its work on the technical screening criteria for a selected set of activities and plans to release the criteria as a separate supplement in May 2022.

Defined methods and criteria

The current report details the methodological approach followed by the platform when selecting relevant and prioritised activities for which technical screening criteria should be developed – and formulating the criteria. The report consists of two parts.

Part A explains the approach of the platform and the methodology followed. It defines the ambition level for each environmental objective and clarifies what a substantial contribution means for each environmental objective. It also explains the consultation process and provides recommendations and reflections for future work.

Part B lists all the defined activities according to sector and defines the technical screening criteria and the rationale behind the selection of criteria. Note that the EU Commission is not required to follow these requirements.

The publication of the upcoming delegated act based on these recommendations is expected during Autumn 2022 and to apply from 1.1.2023. According to the Disclosures Delegated Act (2021/2178), companies need to report alignment with the new criteria 12 months after application.

The report from the Platform follows the recently released reports on the environmental transition taxonomy (29 March 2022) and the social taxonomy (28 February 2022).

Ecobio’s consulting services for sustainable finance

Ecobio can help you with interpreting the EU Taxonomy criteria and classify and report taxonomy-related information.

Check out our whitepaper identifying eight steps for compliance with the EU Taxonomy classification and reporting in 2023 to get more information.
By using the taxonomy tool in Ecobio Manger, you can simplify the classification and reporting process. Learn more about our tool in our upcoming demo presentations in May – sign up here.
You can keep up to date on current issues regarding the taxonomy and other sustainability-related topics from our news page.

If you have any questions about our taxonomy services, please contact us:

April 25, 2022

Corporate sustainability reporting requirements – Five steps to prepare

Corporate sustainability reporting requirements are taking a big leap forward and more detailed sustainability reporting will become obligatory in the EU for large and medium-sized companies.

Corporate sustainability reporting directive (CSRD) reporting is gradually affecting different-sized companies. With CSRD reporting, a larger part of companies operating in the EU will be covered by taxonomy reporting, and in addition, companies must publish more detailed information in connection with their activity report, e.g., about the environmental and social impacts of their business.

More and more companies are already now highlighting sustainability in their strategy and in their everyday business practices. Companies are aware that customers and investors are increasingly interested in sustainable products and responsible business, which makes them more willing to report about their sustainability goals and achievements.

To be able to effectively measure environmental and social impacts and to reach climate goals, companies will soon be provided with European sustainability reporting standards. Companies can already now start to prepare for the new sustainability requirements, hence making it easier to be compliant with reporting in due time.

Five steps to prepare for the Corporate Sustainability Reporting Directive (CSRD)

Make sure your business is ready to be transparent. The legislation sets the minimum requirements, but responsible companies aim further than just to be compliant. There is no reason to wait until sustainability requirements are obligatory. Instead, commit to the climate goals and update your company’s due diligence also in other environmental, social and governance (ESG) areas. A good starting point is to recognise the material topics in sustainability and identify those that are the most relevant and important to your company. Understand how sustainability matters affect your business and what impacts your business has on people and the environment (double materiality principle).
Top management commitment. Companies should prepare to mainstream sustainability in their strategy and targets and be ready to provide the information in their annual reports. CRSD will require to provide information on the role of the company board and management, and the resilience of the business model and strategy to risks and opportunities related to sustainability matters. Companies are expected to look forward in its impacts on sustainability matters, and appropriately consider the whole value chain, including its own operations, products and services and its business relationships and its supply chain.
Connect your risk management and financial experts in sustainability topics. Companies’ risk management plays an important role in evaluating how sustainability matters, such as climate change, can affect the business in the short or long-term. Experts in risk management will be able to understand the business value based on the results of a comprehensive materiality assessment. On the other hand, as sustainability reporting must be in line with the financial data, the financial experts have the skills and experience to create a link between financial and non-financial (sustainability) information.
Invest in reliable reporting. The EU Taxonomy requires companies to disclose certain KPIs (indicators) about their activities’ level of sustainability. The sustainability reporting standards will ensure that the reporting requirements and indicators are consistent with the EU Taxonomy. The standards will most likely facilitate the assurance of sustainability information which is also becoming a requirement for companies. High-quality preparation for reporting guarantees that company’s sustainability report passes the assurance, and the company can be trusted for what it informs about its impacts on people and the environment.
Digitalise. In a few years, companies are required to disclose their EU Taxonomy disclosures and other financial and sustainability information in a digital, machine-readable format. There will be an EU-wide digital access platform for the company data. The common reporting standards will facilitate digitalisation, but before the standards will apply, companies are encouraged to digitalise the reporting. Companies and data users save time and money when sustainability data is easily available in a digital format.

We can assist you in preparing for the upcoming CSRD reporting requirements. Our sustainability experts can help you guide your organisation towards sustainable development goals. Please contact our consultancy services:

You can read more about our consulting services here.

For EU-Taxonomy eligible companies, our newest whitepaper: EU-Taxonomy classification and reporting in 2023 – Eight steps to compliance whitepaper is a must-read.

Sources:

https://eur-lex.europa.eu/legal-content/FI/TXT/PDF/?uri=CELEX:52021PC0189&from=FR

https://data.consilium.europa.eu/doc/document/ST-6292-2022-INIT/fi/pdf

https://www.globalreporting.org/standards/standards-development/universal-standards/

March 9, 2022

New corporate sustainability due diligence requirements

The European Commission took a much-expected step towards sustainable corporate governance at the end of February when the proposal for a Directive on Corporate Sustainability Due Diligence was published. The new EU rules will require companies to strengthen their responsibility and sustainability operations throughout their global value chains and avoid adverse impacts on human rights and the environment. Companies operating in the EU will have common rules on corporate sustainability due diligence, and by this, the responsible companies can better meet investors’ and consumers’ expectations. Companies can also benefit from having a clearer view of their operations and their suppliers’ external impacts and will be able to identify problems and risks earlier.

Companies’ due diligence requirements will be clarified

Although many companies have already taken voluntary steps on corporate responsibility, there is a need to encourage more responsible and sustainable corporate behaviour. The aim is to answer many companies’ call for legal certainty on their due diligence requirements. Better transparency is also needed, as consumers and investors are increasingly more interested in the overall sustainability of companies and their products and services.

What the rules mean in practice for companies operating in the EU?

Companies will have to integrate due diligence policy to identify and prevent or mitigate negative human rights, climate and environmental impacts in their value chain. These avoided impacts include issues such as inadequate workplace health and safety and, for example pollution of the environment and biodiversity loss.
Companies are required to have a plan to ensure that their business strategy, and remuneration policies, are in line with the Paris agreement to limit global warming to 1,5°
The proposal also involves new rules for companies’ directors that will have duties to set up and oversee the implementation of corporate sustainability due diligence processes and ensure that sustainability matters are taken into account in the corporate strategy also in the long term.

The proposal also includes possibility to impose fines and sanctions to companies, if a company fails to fulfil its due diligence obligations. Company can also be liable for damages if its failure to comply with the due diligence obligations leads to damages to affected people.

Large companies and high-impact sectors are in the scope

Large companies operating in the EU (500+ employees and net turnover worldwide more than 150 million euro) are in the scope of the Directive. The rules start to apply to 2 years later for smaller companies (250 + employees and net turnover worldwide more than 40 million euro) operating in defined high-impact sectors, that include e.g., the manufacture of textiles, food manufacturing, forestry, agriculture, metal products and mineral resources. Larger market players can take a leading role in mitigating the risks in their value chains and hence support smaller companies, that are not directly in the scope of the proposal.

Once the Directive is in force and applied in the EU, all companies in scope need to establish due diligence procedures and integrate human rights, environmental and climate objectives into their corporate strategy. Directors are required to consider sustainability consequences of their decisions in the short, medium and long-term. Company’s Board of Directors should, in principle, be able to assess the company’s operations from an environmental and human rights perspective.

Corporate sustainability due diligence complements EU Taxonomy and sustainability reporting

The Corporate Sustainability Due Diligence Directive complements the EU Taxonomy and CSRD (the proposal for Corporate Sustainability Reporting Directive) by requiring companies to identify their adverse risks and, for example, by helping in providing more detailed information on how companies respect the social safeguards as required by the Taxonomy Regulation. The CSRD will complete the last step of companies’ due diligence duty, that is the reporting part.

At the same time as the due diligence proposal is negotiated in the EU, the national corporate social responsibility legislation is being prepared in Finland. According to the Finnish Government, the national and EU rules on corporate sustainability will complement each other. After all, the aim of both legislative proposals is clear, that is to have more effective protection of environment and human rights and to get more companies involved in sustainable development goals.

Ecobio’s sustainability tools for top management

Are you wondering how you should prepare to meet the obligations? Our sustainability experts can help you guide your organization towards sustainable development. We have the expertise to lead organizations towards their goals ranging from alternative strategies to practice management and reporting. You can find more information about our sustainability tools for top management here.

If you wish to speak to a consultant, please contact Henrik Österlund:

Henrik Österlund

email: henrik.osterlund@ecobio.fi

phone: +358 (0)20 756 9457

To read more about Ecobio Manager EU-Taxonomy services, please click here.

Written by: Terhi Valtonen, Senior Consultant, Ecobio