First Things First
If you or your customers are in in scope for the European Corporate Sustainability Reporting Directive (CSRD) you will know if you’ve read our primer on CSRD that the first thing you need to do to prepare is to familiarise yourself with the disclosure requirements of the European Sustainability Reporting Standards (ESRS). To do this you can download the standards, watch EFRAG guidance videos or look at Section 20 of RBESG’s example sustainability and ESG report (use the checkout code ‘welcome100’ to download your free copy here).
The next steps we recommend are a gap analysis, SWOT analysis, requirements gathering and CSRD/sustainability transformation project or programme kickoff. Projects and programmes are funded, time-bound endeavours with defined scopes of activity that enable you phase your response in line with your budget, capacity and capabilities. In our opinion, attempting to ready yourself for CSRD without the formal structure and sponsorship of an official project or programme is a serious risk.
In saying that, it’s not just the creation of a project or programme that will ensure success. There are a number of other critical success factors (CSFs) for sustainability transformation that massively influence your probability of an on-time, in-budget delivery. You can check these out here.
Panic Stations
While there’s a palpable sense of panic in the industry in relation to readiness for CSRD at the moment, remember that your CSRD report is a disclosure of:
- How you impact people and planet
- How you are impacted by environmental, social and governance matters and
- How you run your organisation to manage your impact
If you haven’t taken the time to transform your organisation to integrate this impactful thinking into everything you do, you may suffer from the fallout of unimpressed investors, dissatisfied customers and increased company risk. Especially as CSRD reports will be digitally tagged, which means AI systems can poll and compare your performance against baseline requirements and the performance of other companies. Something that will be instantly available and accessible to interested stakeholders.
This requires thinking of your CSRD report as one output of a wider sustainability transformation programme rather than as a siloed requirement. Doing this will avoid a fragmented CSRD report and ensure an integrated approach to sustainability.
Re-group, STS Plan is here to help!
So, what do you need to do to ready yourself for CSRD and how can RBESG’s STS Plan help?
To recap, STS Plan is the ‘how-to’ component of RBESG’s STS Sustainability Transformation System. It details stage-by-stage and step-by-step how to go from nought to sustainable, saving you thousands in template setup and consultancy fees.
In our opinion, RBESG’s stages and steps for sustainability transformation provide the perfect framework for CSRD readiness. Let us break it down.
The European Sustainability Reporting Standards consist of
- General requirements and disclosures that apply to all businesses
- Environmental disclosure requirements, of which Climate change applies to all businesses
- Social disclosure requirements, of which Own workforce applies to all businesses
- Governance disclosure requirements, which apply to all businesses
At a high level these require businesses to have:
- Detailed knowledge of their value chain
- Formal and effective governance across the organisation
- Robust due diligence processes that engage stakeholders and assess the companies impact, risk and opportunity in relation to ESG topics from a double materiality perspective
- A sustainability-focused strategy
- Environmental-, social- and governance-focused principles, policies, plans, procedures and processes that implement the organisation’s response to its impact
- Environmental, social and governance targets and metrics that reliably and transparently inform stakeholders on company performance and that act as a strategic feedback loop for the company
All of which are met within STS Plan’s 5 Stage, 10 Step delivery methodology (Figure 3):
By following the STS Plan stages and steps mapped in Table 1 below, your company will be able to transform it sustainability and meet its CSRD requirements :
# | CSRD Requirement | STS Stage | STS Step |
1. | Detailed knowledge of value chain | 1 | 1 |
2. | Effective governance | 1 | 2 |
3. | Robust due diligence with stakeholder engagement | 1 and 5 | 2, 4 and 10 |
4. | A sustainability-focused strategy | 1 | 4 and 5 |
5. | Principles, policies, plans, processes and procedures | 2, 3 and 4 | 6, 7 and 8 |
6. | Targets and metrics that reliably inform | 3 | 7 |
Specifics Please
Ok, broadly speaking that’s great I hear you say, but specifically, what kind of policies and other assets do you need to have in place? We’ve compiled a list of recommendations that we believe will inspire stakeholder confidence in your sustainability journey as disclosed in your CSRD report (Table 2 below). While we know there’s a lot, it’s worth remembering that sustainability applies to everything you do, so you may find you already have a lot of these items in place. If so, these can just be re-assessed with a sustainability lens rather than being recreated.
If you do need to start from scratch, we advise exploring Section 2 of STS Plan. This provides context as to why a lot of these policies are needed and provides guidance and external links to best practice when it comes to creating these. In addition, the support materials provided with STS Plan provide you with useful templates to get you going.
Finally, the recommendations below do not all need to be in place for your first CSRD report. Step 4 of the STS delivery framework, Conduct ESG Materiality Assessment, will help you prioritise these from a double materiality perspective (i.e. how you impact people and planet and how you are impacted as a company by ESG topics). Investors and stakeholders appreciate you are on a journey and will understand if you tell them you plan to delivered these items in the short-, medium- or long-term. Intention and transparency are key!
Whether you are preparing for CSRD yourself or supporting your customers on their journey we wish you the very best of luck. We know it can be daunting to begin with but also know it should bring enormous benefits to your business in the form of increased resilience and efficiency, assurance and trust and long term viability. If you plan on doing this yourself we recommend STS Plan to steer you in the right direction or if you would like additional tailored advice or assistance please do not hesitate to book an online consultation with us to discuss your needs in more detail. You can also send us an email at info@rbesg.com.
Thanks for reading!
# | Area | Assets |
1. | Culture | – Mission statement – Vision – Values |
2. | Business Model | – Enterprise as a System (EaaS) diagram – Value chain map – Stakeholder register |
3. | Governance | – Governance Terms of Reference document(s) that cover roles and responsibilities of governance and management bodies and the identification and election processes for governance bodies which cover requirements related to diversity, tenure, skills and experience, etc. – Remuneration policy for governance members and senior management which include information on sustainability-related incentives – Capital project approval processes – Good tax governance policy – Anti-corruption and bribery policy – Anti-competitive and anti-trust policy – Privacy policy – Public policy and lobbying policy – Data governance and stewardship policy – Cyber security policy |
4. | Due Diligence | – Due diligence processes – Due diligence registers (i.e. compliance, impact, risk and opportunity) |
5. | Strategy | – Sustainability goals, objectives, strategies and tactics |
6. | Stakeholders | – Stakeholder engagement principles – Stakeholder engagement policy – Stakeholder engagement and management plans |
7. | Human Rights | – Human rights policy that includes a statement on child and forced labour – Publicly accessible grievance mechanism |
8. | Employees | – Recruitment and promotion policy, with information on principles relating to hiring employees versus contractors, ensuring accessibility, managing diversity and equal opportunities etc. – Employee remuneration and benefits policy – Freedom of association and collective bargaining policy – Employee handbook/code of conduct – Anti-bullying/harassment policy – Whistle blower/speak-up policy – Diversity policy – Equal opportunity policy – Health and safety policy – Work/Life balance policy – Training and development initiatives – Employee engagement processes |
9. | Procurement | – Responsible procurement policy which includes fair payment clause for suppliers – ESG screening process for new suppliers – Supplier agreement/code of conduct – Existing supplier assessment and verification processes – Supplier awareness and training campaigns |
10. | Investment | – Responsible investment policy with ESG screening criteria which includes provision for company pension schemes |
11. | Climate Change | – Scope 1, 2 and 3 emissions – Climate change transition plan – Targets and metrics – Scenario analysis |
12. | Biodiversity | – Environmental and ecosystem assessments – Biodiversity transition plan – Targets and metrics – Energy management policy – Recycling/waste management policy – Water management policy – Chemical usage policy – Product design process – Green labelling policy |