Sustainability is a central element of corporate strategy today and encompasses environmental, social and governance issues (ESG), corporate social responsibility (CSR) and the protection of human rights. It is crucial for long-term corporate success to integrate these aspects into business processes. Companies must not only comply with legal requirements, but also gain the trust of stakeholders. This promotes competitive advantage and supports social responsibility.

Sustainability goes beyond ecological responsibility and includes social and ethical standards, such as the protection of human rights along the entire supply chain. Companies must create transparent ESG reports that present their business practices and their impact on the environment and society. This is not just about meeting legal requirements, but also about strengthening trust among customers, investors and other stakeholders.

The Corporate Sustainability Reporting Directive (CSRD, (EU) Directive 2022/2464) expands the existing reporting requirements and replaces the Non-Financial Reporting Directive (NFRD). It requires companies to disclose detailed information on environmental, social and governance aspects. This affects around 50,000 companies in the EU, including capital-market-oriented small and medium-sized enterprises (SMEs). Reporting is based on the European Sustainability Reporting Standards (ESRS) and must be externally audited.

Companies must provide comprehensive information in their reports on the following areas:

• Environmental: climate protection, emissions, resource efficiency
• Social: labour rights, diversity, human rights
• Governance: corporate governance, ethical standards, compliance

The concept of ‘double materiality’ requires companies to disclose both the impact of their activities on the environment and society and the risks that sustainability issues pose to the company itself.

In addition to the CSRD, international regulations such as the UN Guiding Principles on Business and Human Rights, the German Supply Chain Due Diligence Act (LkSG) and CS3D (Corporate Sustainability Due Diligence Directive, (EU) Directive 2024/1760) play a central role. These oblige companies to prevent human rights violations along their supply chain and to comply with due diligence in their business activities.

Compliance with ESG and human rights standards is not only a legal obligation today, but also an essential success factor. Contact us to develop your sustainability strategies and successfully implement the requirements of the CSRD.