Access to capital: Taxonomy of environmentally sustainable activities
In terms of regulatory requirements, management boards are interested in the EU Taxonomy of environmentally sustainable activities, because
Non-compliance with the Taxonomy, including non-compliance with the Minimum Guarantees, may limit access to financial capital in the long term.
GRI Standards and ESG rating agencies
In turn, in the GRI Standards 2021, the role and responsibilities of supervisory boards and management boards are specified not only in GRI indicator 2-9 (Management Structure), GRI 2-12 (Role of the highest governance body in overseeing impact management), but also in GRI 2-14 and GRI 2-16. When deciding to report in accordance with these standards, a company should explain to stakeholders who is responsible for what at the level of the supervisory board, management board, and managers. The same is expected by rating agencies such as CDP, Sustainalytics, and MSCI. However, in CDP, for example, linking the remuneration policy of these bodies to climate goals is additionally scored.
CSRD and ESRS: remuneration policy update
A very similar scope of information is required by the CSRD Directive and the draft ESRS. Already in the text of the CSRD Directive itself, the European regulator imposes a requirement on companies to disclose whether the organization „has a policy on incentives offered to members of these bodies and related to sustainability issues”In practice, this means that before the end of this year, the remuneration policy at the supervisory, management, and administrative levels of the company should be updated by introducing ESG criteria for the payment of, for example, annual bonuses.
Sustainable development: the same responsibility as in financial matters
It should be remembered that, according to the CSRD, sustainability reports will (1) be part of the annual report, (2) be subject to the same verification as financial statements, and (3) be subject to the same penalties as financial statements. These are also elements that will prompt supervisory boards and management boards of companies to take on greater responsibility for sustainability than before.
CSDDD: Corporate Sustainability Due Diligence Directive
In the future, it is worth keeping an eye on the draft CSDDD Directive (Corporate Sustainability Due Diligence Directive), which will introduce corporate responsibility for human and environmental impacts and explicitly link climate targets to executive compensation. The same mechanism is envisaged for employee and social issues.
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