Sustainability – more than climate protection

“Only as much wood should be felled as can grow back.”

This quote by Hans Carl von Carlowitz dates back to the 18th century and describes the basic idea of sustainability: not to consume more resources than can be reproduced. Originally focusing only on the ecological perspective, the term has changed and become much more comprehensive. In 1987, the Brutland Commission defined development as sustainable “that meets the needs of the present without compromising the ability of future generations to meet their own needs and choose their own lifestyles.”

The fact that society’s needs regularly exceed available resources is powerfully documented by Earth Overshoot Day. That’s the day when humanity has

has used up all the biological resources the Earth can provide in a year. In 2022, this day was reached on July 28, 10 years ago it was August 4, 50 years ago it was December 14. This not only concerns people, but also companies and governments.

The interest of governments is reflected in legal requirements and the (resulting) interest of companies in industry- and customer-specific additional requirements.

Legal requirements (an excerpt)

SDG – Sustainability Goals

The UN has adopted 17 goals (Sustainability Development Goals – SDGs) in the 2030 Agenda with a view to socially, economically and environmentally sustainable development. These goals are subject to five core messages/principles:

• ➔ Focus on human dignity (People)
• ➔ Protecting the planet (Planet)
• ➔  Promote prosperity for everybody (Prosperity)
• ➔ Promoting peace (Peace)
• ➔ Building global partnerships (Partnership)

GRI – Global Reporting Initiative

The GRI guideline is among the best-known guidelines for sustainability reporting worldwide and is binding for the reporting of large companies and corporations as well as for governments and non-governmental organizations (NGOs). Compared to the UN SDGs, it contains more goals and is more complex.

ESG – Environment, Society, Governance

The term “ESG” has become established as the standard for sustainable investments. The abbreviation describes the three sustainability-related areas of responsibility of organizations:

• ➔ Environment: climate change – natural resources – pollution, waste and recyclables – circular economy
• ➔ Society: human capital – product liability and responsibility – stakeholder management
• ➔ Corporate governance: corporate management – corporate behavior – financing and accountability

ESG goes beyond CSR and means an internalized corporate culture.

CSRD – Corporate sustainability reporting directive

The NFRD (non-financial reporting directive) will be replaced by the CSRD from 2024 and represents an extension of the previous reporting obligations. In their reporting, the companies concerned will have to provide information about

• ➔ Sustainability goals
• ➔ The role of the management board and supervisory board
• ➔ The most important adverse effects of the company and
• ➔ On intangible resources not yet recognized in the balance sheet.

In the future, all companies listed on the stock exchange (except micro-enterprises) and all large companies that meet two of the following criteria will be affected:

• ➔ More than 250 employees
• ➔ At least 40 million euros in revenue
• ➔ At least 20 million balance sheet

Taxonomy regulation

The EU Taxonomy Regulation defines specifications for sustainable investments. It specifies criteria under which conditions an economic activity is to be classified as sustainable (from an environmental perspective):

• ➔ An economic activity makes a significant contribution to achieving one or more environmental objectives.
• ➔ No detrimental effect on one or more other environmental objectives
• ➔ Observance of minimum social standards.

The aim is to redirect financial flows to more sustainable activities in order to be able to finance the transformation of the economy toward sustainability. From January 1st 2022 for the reporting year 2021, all companies in the real economy and the financial sector that fall under reporting obligations pursuant to CSR-RUG are affected. From January 1st 2024 for the reporting year 2023, this will be extended to companies from the real and financial economy that fall under the reporting obligation according to CSRD.

The EU taxonomy comprises six environmental protection targets:

• ➔ Climate protection
• ➔ Adaptation to climate change
• ➔ Sustainable use and protection of water and marine resources
• ➔ Transition to a circular economy
• ➔ Pollution prevention and control
• ➔ Protection and restoration of biodiversity.

The disclosure requirement is designed gradually: Since 2022, this has initially applied to the two goals of climate protection and adaptation to climate change. The other four environmental protection targets will be subject to disclosure from 2024. The current EU taxonomy focuses on environmental sustainability, and a “social taxonomy” is currently being developed.

Act on Corporate Due Diligence Obligations for the Prevention of Human Rights Violations in Supply Chains

The Act on Corporate Due Diligence Obligations in Supply Chains aims to safeguard fundamental human rights, in particular to enforce the ban on child labor and to prevent or minimize environmental damage. The law will initially apply to companies with at least 3,000 employees in Germany from 2023, and to companies with at least 1,000 employees in Germany from 2024.

The due diligence obligations relate to the company’s own business operations, partners and other indirect suppliers. Thus, the responsibility of the companies concerned extends to the entire supply chain.

Do you have questions about the various legal requirements that (may) be imposed on your company?

Other stakeholders’ requirements

Due to the size of the company or the gradual implementation of guidelines, legal requirements for the fulfillment of sustainability goals may not yet or not at all apply to companies. However, organizations may be subject to

However, organizations are already at a disadvantage when it comes to granting loans or insurance policies if they fail to meet climate targets. Public pressure is increasing and sustainability is becoming more and more important in society.

Thus, in addition to legal requirements – whether at the UN, EU or federal level – there are also customer-specific requirements. For example, the determination of the CO2 footprint is often pushed by the customer.

There are also industry-specific requirements. Suppliers in the automotive industry, for example, are required to make a self-disclosure regarding CSR and sustainability. Contracts are awarded on the basis of compliance with environmental and CSR requirements. Detailed information on the Self-Assessment Questionnaire SAQ 4.0 can be found onthe bottom of this page.

From theory into practice

The fact is: In any case, all companies, regardless of size and industry, are actively called upon to deal with the topic of sustainability, to interpret the requirements for themselves and to implement them.

So far so good, if it weren’t for the jungle of terms, abbreviations and organizations on the one hand and the individual company’s starting situation on the other! We would like to support you here and first find out exactly where you currently stand. We determine this by means of a gap analysis and derive solution approaches from this.

One option is to set up an environmental management system with certification to ISO 14001. More comprehensive, since both environmental and energy management are covered by ISO 50001, is EMAS.

EMAS – Eco-Management and Audit Scheme

EMAS is an industry-independent management system for controlling and continuously improving environmental performance. It offers very good conditions for verifiably implementing binding obligations (both legal obligations and voluntary commitments) in the area of environmental issues. Advantages for companies that have implemented EMAS:

• ➔ They are demonstrably successful in terms of their environmental and sustainability performance.
• ➔ They demonstrate legal compliance in the area of environment and sustainability
• ➔ They benefit from financial advantages and relief in terms of regulation
• ➔ They have defined processes and responsibilities for sustainability issues (governance or management aspect)
• ➔ They involve employees actively and demonstrably

EMAS continuously provides the figures, data, and facts that you will need in the future when updating and maintaining your sustainability report without much additional effort. The report is audited and validated by independent state-approved auditors.

Source: www.emas.de/einstieg

DNK – German sustainability code

The Sustainability Code is a transparent standard for sustainability reporting that is suitable for all legal forms, regardless of size and industry affiliation. It serves as an instrument for reflecting on a company’s own sustainability performance. The DNK database may be used free of charge for the preparation and publication of the DNK statement. The formal completeness of the report is ensured by the Sustainability Code team.

The Sustainability Code highlights 20 criteria and performance indicators. One half is devoted to the sustainability concept, divided into strategy and process management. The other half covers sustainability aspects from the two areas of environment and society.

The principle of comply or explain applies to reporting. Data and facts on requested contents must be provided. If no concrete statements can (yet) be made or aspects are not relevant, this requires an explanation.

The workload is about 25 working days for the preparation of the first DNK statement, the duration from submission of the statement to publication is about 6-8 weeks.

Here is an overview of the advantages of the DNK:

Source: DNK

Our offer for you

We are happy to support you from the gap analysis to the certification or preparation of the report. Our own legal department determines the legal requirements applicable to you with a focus on legal compliance, alongside the entire supply chain.

Let`s take this journey together!

The different aspects of sustainability in the supply chain

Many industries supply us with the products we need for our everyday lives. Clothing, food, furniture, home textiles, communications technology, mobility, and even luxury goods have long since ceased to be produced in our neighborhood but are purchased worldwide. In times of global procurement of raw materials, products and services, the issue of sustainability is becoming increasingly important.

Global warming is driving the quest to minimize energy consumption and thus reduce greenhouse gas emissions and is currently changing more and more our present and future. Energy is being used more and more effectively and efficiently, and regenerative energies are increasingly coming into focus. The careful handling of nature, the safe avoidance of environmental pollution and damage are becoming more and more important.

The CO2 footprint should be as small as possible, which is why suppliers should also actively consider measures to reduce it. Employees must be treated and paid fairly and equitably on a global basis; child labor cannot be tolerated. Occupational health and safety is an essential task for all entrepreneurs, and the rights of all working people must be respected worldwide.

The more global the major manufacturers of our everyday consumer and luxury goods become, the bigger the issue of sustainability is hung up – and throughout the entire supply chain. In the automotive environment, in the supply to the major OEMs, suppliers are currently called upon to answer comprehensive questionnaires on all sustainability topics. Minimum requirements are defined and if the requirements are not met, corrective measures must be agreed upon and implemented.

Human rights

Sustainability in the supply chain has many aspects. One of them, which is queried or checked in the SAQ 5.0 questionnaire for the automotive industry, is the preservation of and respect for human rights. Because in order to produce sustainably, humane working conditions, freedom, justice, safety, respect and dignity are just as much a part of it as sustainable materials. I

Occupational safety

In all companies, safe and healthy working conditions must be created by the entrepreneur. These are prescribed by national laws, industry requirements and international standards. The commitment to meet all these requirements may be set out in an occupational health and safety guideline or in a company policy that obligates compliance with legal occupational health and safety requirements. In addition, the employer must create, provide and continuously develop a safe working environment with zero accidents.