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Office Talk – ESG, things are getting serious

The Green Deal as the new growth strategy of the European Union aiming to transform the Union into a resource-efficient and competitive economy with no net emissions of greenhouse gases (GHG) by 2050 has already started. As of 2024 the Corporate Sustainability Directive (CSDR) becomes applicable for large companies and listed SMEs as well as non-capital markets oriented companies fulfilling certain criteria. They will have to report on sustainability, assess risks, and explain how they want to achieve certain environmental and sustainable goals. This way, awareness of the financial implications of certain risks shall grow and make the market more transparent as to who indeed achieves environmental and sustainable goals.

Smaller companies will be challenged as well, in particular as on 14 December 2023 a provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD) has been reached. It will become mandatory for larger companies to perform due diligence in their value chains and foster business conduct that respects human rights, children’s rights and the environment in their own operations and through their value chains, by identifying, preventing, mitigating and accounting for their adverse human rights, and environmental impacts, and having adequate governance, management systems and measures in place to this end. The CSDDD will therefore also impact smaller companies as well as non-EU-companies. It will become crucial for all companies and stakeholders to set up governance and management systems and due diligence processes.