Sustainability Compliance Management (SCM)

What is sustainability compliance management?

Sustainability Compliance Management refers to the process through which a company ensures it complies with all relevant sustainability-related laws, guidelines, standards, and best practices. It is a strategic approach to ensuring that the company meets the social, environmental, and ethical requirements in its business practices and activities.

This management approach focuses on ensuring compliance with sustainability goals and requirements to minimize potential risks and capitalize on opportunities associated with sustainable business conduct.

What sustainability regulations are in place?

Regulatory requirements in the field of corporate sustainability may vary based on the country, region, and industry. Regarding the European Union and in the context of the Corporate Sustainability Reporting Directive (CSRD) as well as general sustainability regulations, here are some key regulatory requirements:

1. Corporate Sustainability Reporting Directive (CSRD): CSRD is a European Union-wide directive that establishes detailed requirements for the disclosure of sustainability information for large companies. It expands and strengthens existing reporting obligations and specifies the aspects of sustainability that need to be covered.

2. European Sustainability Reporting Standards (ESRS): The ESRS constitute a framework for the sustainability reporting of companies within the European Union. Published by the European Commission in December 2021, they become mandatory for large and publicly listed companies based in the EU starting from January 1, 2024.

3. Non-Financial Reporting Directive (NFRD): NFRD was the previous EU directive setting requirements for the non-financial reporting of large companies. CSRD replaces NFRD and builds upon its foundations.

4. Sustainable Finance Disclosure Regulation (SFDR): SFDR is an EU regulation that imposes transparency obligations on financial market participants and financial advisers regarding the integration of environmental, social, and governance (ESG) aspects into their activities.

5. EU Taxonomy Regulation: This regulation sets a framework for classifying economic activities as environmentally sustainable. It assists companies in reporting their alignment with environmentally sustainable activities.

6. UN Sustainable Development Goals (SDGs): The 17 SDGs are global goals set by the United Nations covering various aspects of sustainability. Companies are encouraged to document their efforts to support and achieve these goals.

7. Carbon Disclosure Project (CDP): CDP is a global initiative that urges companies to report their environmental data, especially related to greenhouse gas emissions, water, and forest management.

8. GRI Standards (Global Reporting Initiative): GRI Standards are internationally recognized guidelines for reporting on economic, environmental, and social aspects of corporate performance. They provide a framework for comprehensive sustainability reporting.

It's essential for companies to understand these regulatory requirements to ensure they align their sustainability reporting and activities accordingly and fully comply with legal provisions regarding sustainability.