How to differentiate the ESG reporting landscape

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Standards & frameworks

ESG standards and frameworks provide guidance for corporate sustainability reporting. While frameworks provide an overview of the structure and topics to be covered, standards provide detailed reporting structures, including specific metrics and criteria.

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Regulations

Regulations, directives, and laws at EU or country level oblige certain companies to report on sustainability. The new ESG regulations are intended to create transparency, promote sustainable investment, and ensure the achievement of the EU's and countries' zero emissions targets in the long term.

Goals, principles & guidelines

Officially defined goals, principles, and guidelines provide an approach for companies to define and implement their own sustainability goals. They can focus on one, several, or all ESG areas. Sustainability reporting based on this approach is mainly done on a voluntary basis.

Standard-setting bodies

In the past, associations and NGOs primarily developed guidelines to support companies in voluntary sustainability reporting. As a result of the growing volume of regulations, they are now increasingly involved in the development of standards and frameworks by political institutions.

The sustainability reporting landscape

CSDDD

CSRD

CSR-RUG

Standards & frameworks

Regulations

Regulations

Corporate Sustainability Due Diligence Directive (CSDDD)

  • Level: European Union
  • Status quo: proposal
  • Legal bond: mandatory
  • Target group: EU companies, companies in risk sectory, and third country companies fulfilling certain criteria (more in details)
  • Covered by Envoria: not yet

The Euopean Commission released a proposal for the Corporate Sustainability Due Diligence Directive (CSDDD) on February 23, 2022. By integrating human rights and environmental concerns into business operations and corporate governance, this directive aims to promote sustainable and responsible corporate practices along the value chain. Once the negotiations around the CSDDD are concluded and the proposal is accepted, firms will be required to address negative effects of their actions, including those along their value chains both inside and outside of Europe. In contrast to the German Supply Chain Act (LkSG), the CSDDD will affect the entire value chain, as well as apply to a wider range of companies. Furthermore, companies must align their corporate strategy to the Paris Agreement.

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Regulations

Corporate Sustainability Reporting Directive (CSRD)

  • Level: European Union
  • Status quo: in force
  • Legal bond: mandatory
  • Target group: (1) Large public-interest companies, (2) large companies that meet certain criteria, (3) listed SMEs and other undertakings, (4) Non-EU companies with substantial activity in the EU (more in details)
  • Covered by Envoria: yes (via ESRS)

The Corporate Sustainability Reporting Directive (CSRD) establishes a uniform framework for the reporting of non-financial data for companies operating in the European Union. The goal of the directive is to take into account the non-financial performance of large companies. The CSRD replaces the Directive 2014/95/EU – also called the Non-Financial Reporting Directive (NFRD) – and requires more detailed information on sustainability goals and key figures. More specifically, it requires disclosure about a company's business performance, results of operations, position and the impact of its activities. One of the most important differences compared to the NFRD is the introduction of the concept of double materiality. It provides tighter criteria for the determination of whether a sustainability matter must be included in a company’s sustainability report.

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Regulations

CSR Directive Implementation Act (CSR-RUG)

  • Level: Germany
  • Status quo: in force
  • Legal bond: mandatory
  • Target group: Capital-market orientened companies with 500+ employees, including insurances and financial institutions
  • Covered by Envoria: yes (via ESRS)

The German CSR Directive Implementation Act (German: CSR-Richtlinie-Umsetzungsgesetz, CSR-RUG) transposes the EU directive 2014/95/EU into German law. It is therefore based on the NFRD which requires large companies to publish their non-financial information. The directive went into effect at the beginning of 2017. The CSR-RUG requires companies to report on non-financial topics including environmental and social issues, human rights and anti-corruption measures as well as their corporate governance.

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Goals, principles & guidelines

Standard-setting bodies

Certifications