Europe deploys a wide range of standards in order for companies to meet environmental, social and good governance criteria. This is the ESG regulation that will mark 2024.
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In 2024, companies must verify compliance with environmental, social and corporate governance criteria, or ESG. This year, several come into force - in a phased manner - European and national directives In the matter that will be required of them adapt your sustainability communication towards the company's stakeholders (customers, suppliers, workers, shareholders and communities affected by its activity). We see what standards are and summarize their key points.
The following mandatory regulations will change the way in which EU companies approach and communicate information on sustainability to your stakeholders:
La Corporate Sustainability Reporting Directive (CSRD) amends Directive 2014/95/EU on non-financial disclosure. El new regulation at European level From 2024 onwards, will guide the presentation of information on sustainability by large companies and SMEs in the European Union. This should include, among other things, “the company's plans [...] to ensure that its business model and strategy are compatible with the transition to a sustainable economy And with the limitation of global warming to 1.5 °C” of the Paris Agreement.
La CSRD multiplies its reach, going from the 12,000 companies involved by the previous directive to Affect nails 50,000 European companies, who must submit regular sustainability reports. Already during this exercise, the organizations with more than 500 employees They must collect information on its social and environmental impact (for example, GHG emission reduction targets and climate change mitigation commitments) for publish in 2025.
Companies must report their sustainability information based on common standards. The ESRS (European Sustainability Reporting Standards) are a dozens of European standards, aligned with the Global Reporting Initiative, in English GRIS. In total, more than 1700 requirements on environmental, social and governance issues. To make it easier for companies to report, The organization EFRAG or European Financial Reporting Advisory Group, promoted by the Commission, provides technical advice for developing standards and will provide implementation guidelines.
Both the above-mentioned CSRD Directive and the ESRS standards include as highlights information on value chain, as well as the Concepts of double materiality And of due diligence. The latter, related to the next Directive on corporate due diligence in the area of sustainability.
The new European CSDDD Directive (Corporate Sustainability Due Diligence Directive) will force companies to identify, prevent, mitigate and account for how to address their negative impacts on human rights and the environment. Impacts, real and potential, derived both from the company's own activities and from its subsidiaries and value chains.
La CSDDD will apply to companies in the Union with more than 500 employees and 150 million euros of billing, as well as other high-impact companies in certain sectors. Including Aspects affecting the waste vector: due diligence should cover “The adverse environmental impacts generated throughout the waste management” and that they occur “in companies' own operations, subsidiaries, products, services and value chains, in particular in the supply of raw materials [...] or in the disposal of products or waste”.
Las fines for non-compliance they can suppose, at least, The 5% of revenues of the company. Member countries have two years to transpose them. However, Spain already has the Preliminary Bill for the protection of human rights, sustainability and due diligence in transnational business activities.
In February 2024, the EU postponed the CSDDD vote in the absence of the necessary majority to approve it, after Germany announced that it would abstain.
La European Directive Green Claims It has as its objective protect consumers from Greenwashing. This legislative initiative establishes criteria against misleading, unreliable or false environmental statements what companies do about their products and services and that mislead them. La Green Claims Do you also want Stop the proliferation of ecolabels —currently there are about 230 active ecological labels in Europe— and thus protect official seals.
The European Commission has also proposed to amend the Consumer Rights Directive to force producers and sellers to facilitate information about the durability and repairability of your products. “Consumers will have the right to know how long a product is expected to last and, if so, how it can be repaired,” they say from the EC. To do this, merchants must provide such information to the consumer prior to purchase And in a way clear and understandable, either in the packaging, or in the description of the item on their website.
This new EU law that prohibits ecological laundering and misleading information has finally been adopted in February 2024.
Organizations are facing a flood of regulations in environmental, social and good governance matters. The above are the main ESG regulatory developments for 2024. The Spanish Network of the United Nations Global Compact states that these changes “represent a challenge and an opportunity for companies, as they must adapt to more rigorous standards and demonstrate a greater commitment to sustainability in their corporate reports.”
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