It is urgent to turn the tide on our planet; more and more signals from around the world indicate that we have already reached the “tipping point” for many planetary boundaries. This terrifying reality is perhaps reflected in the wave of upcoming legislation in sustainability we are seeing right now.
Regulatory tsunami – From voluntary to mandatory
Sustainability legislation has developed rapidly in recent years. It is particularly intense with many updated laws and regulations in the area. Most of these regulations and frameworks are connected in various ways and inspire each other during their creation.
The Commission launched the European Green Deal in December 2019, a package of political initiatives to pave the way for a green transition in the EU. The ultimate goal is climate neutrality by 2050. The package comprises closely related climate, environment, energy, transport, industry, agriculture, and sustainable financing initiatives. The upcoming EU CSRD for sustainability reporting (Corporate sustainability reporting directive) is also included. It aims to create the appropriate conditions for the EU to meet its Net Zero objectives by 2050 through increased reporting transparency.CSRD requires specific information that was previously voluntary, ensuring ESG information availability to investors. CSRD also includes ESRS (European sustainability reporting standards) mandatory reporting standards. There are several other international agreements, for example, the UN’s Agenda 2030 goals and conventions on human rights. In addition, the ILO’s working life conventions, the OECD’s guidelines for multinational companies, and international agreements in the environmental field. Some are binding on member states, and some are voluntary.
Voluntary initiatives
In addition to mandatory regulations, several companies also participate in voluntary initiatives, such as setting scientifically based climate targets, SBT (Science-based targets), measuring climate emissions based on the Greenhouse Gas Protocol (GHG), or collecting and managing environmental data via the CDP (Carbon Disclosure Project). Many companies report according to the voluntary and established global sustainability reporting framework, the Global Reporting Initiative (GRI).
From “must-do” to organizational ESG maturity and value creation
For companies, many sustainability regulations can be challenging and impossible—most start by doing what the law requires, such as reporting according to the CSRD.
Not all companies can – or need to – be industry leaders in sustainability. Instead, each company needs to understand where it is on the “ESG maturity curve” and then decide the next step to align strategy, activities, goals, and performance with ESG initiatives. All organizations and businesses are different and have different prerequisites for maturity and development in ESG.
The article was written by Maria (Mia) Gjerde, Senior Consultant of Strategic Sustainability at Knightec.
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