We are facing an ESG related regulation tsunami. Most of these changes are very welcome although this thunderstorm of requirements creates a burden for companies. How to manage?
CSDD, CSRD, ESRS, SFDR – these and many other acronyms are causing a lot of bureaucratic work for sustainability professionals. At the same time, we should focus on what is really important: mitigating the negative environmental and social impacts and maximising the positive ones.
Stay ahead
The first challenge is to stay informed of all new regulation drafts. For me it has been beneficial to follow different organizations like industry groups or dedicated experts to get fresh insights. Reading regulators’ publications is relevant as well. Sharing responsibilities of following the regulation landscape within your organization and leaning to 3rd party support might be very helpful.
We put together a sustainability regulation matrix to visualize what regulations we are actively following. We highlighted which of those are stable or under development. This helps us to understand the big picture and how these regulations are connected.
Ever-evolving value-adding sustainability reporting
Sustainability reporting is one evolving entity. Implementation of the Corporate Sustainability Reporting Directive (CSRD) and IFRS’ soon to be launched sustainability standards can change how we value sustainability data: it must be seen equally as important to financial data. I hope for this to happen, as it brings value and insights for company management and an ambition to be more sustainable not only because of reporting purposes. Similarly, we need to follow how reporting standards are evolving. For example, in 2022 we must adopt GRI updates and prepare for what IFRS introduces next year.
We follow sustainability disclosures as one part of the regulation matrix. This includes EU level reporting regulations and material standards and other topics that might have an impact like the evolving stakeholder questionnaires. We have nominated a person to lead the overall picture while subject matter experts provide support by securing and developing topical plans.
Strengthening the mitigation of human rights risks in value chain
While many countries within the EU have been waiting for Corporate Sustainability Due Diligence regulation and guidance, some have been active in introducing national regulations. This complicates the work for global companies who benefit from having global processes. Very simply put, the aim of the regulations is to ensure companies understand, manage, and mitigate human rights risks.
We established a cross-functional task force to lead the work. Our team of professionals from legal, compliance and ethics, procurement and sustainability created a high-level project plan and started communicating this internally to avoid multiple individual projects. The first task was to make an annual update to our human rights risks analysis. Secondly, we conducted a gap analysis for the Supply Chain Act in Germany to check if there were gaps in our global process.
Holistic view on processes supports sustainability work under uncertainty
The constantly moving target – changing regulations – makes sustainability work challenging to lead. The goal of being a forerunner in sustainability is not achieved only by being compliant with the ever-increasing regulations, but by building holistic processes. Sustainability should be in the core of strategy and responsibilities should be clear to all. This tsunami can be tackled through strong cooperation.
You can find more information about our sustainability approach at Konecranes here.
Anniina Virta-Toikka
Head of Sustainability
Konecranes
