NL: ESG – what should you do with it?

 

Corporate social responsibility has gained significant ground in recent years. In this context, legislation has been drawn up in the field of Environmental, Social and Governance (ESG). In this way, companies are encouraged to integrate environmentally friendly, healthy, safe and social practices into their business. And to manage that company in a decent way. The purpose of this legislation is to promote sustainable entrepreneurship and to organize transparency in business operations. The European Union wants to ensure that companies play an important role in achieving sustainable goals through various reforms.

There are two laws that create obligations for large companies about the way they report and that are intended to identify the negative effects of their activities: the Corporate Sustainability Reporting Directive (CSRD Directive) and the Corporate Sustainability Due Diligence Directive (CSDD Directive). In addition, rules have been drawn up that indicate how investors should be informed about the company's strategy and sustainable objectives.

What does this mean for you?

Basically nothing (yet). At present, small and medium-sized enterprises are not covered by the rules mentioned above. Companies are only covered if they have an average of more than 500 employees and a turnover of more than EUR 150 million. If they carry out activities in certain (designated) sectors, the company is covered if it has 250 employees and a turnover of more than EUR 40 million. If your company is part of the chain of a company that does fall under this, you will notice the consequences. For example, if you are a supplier of Albert Heijn, Albert Heijn will also ask about your sustainability performance. This is because they must not only report on their own sustainability performance, but also on the practices of their suppliers. It is also expected that in the long term obligations will be introduced for small and medium-sized enterprises to have to report on the sustainability within their company. For the time being, this is not the case.

ESG legislation is an important step for entrepreneurs in the direction of more sustainable business. By mandating certain criteria and imposing reporting obligations, the government aims to ensure that companies take responsibility for their impact on the environment, society and governance. The government would like to see companies proactively adapt to the new legislation and thus make an active contribution to promoting sustainability within their company. In short, environmental policy and social aspects will become increasingly important within your company. Even though this may sound like the future, a good start is often half the battle. We are happy to think along with you if you want to prepare for this.

 

For further information, please contact:

Sjef Bartels, Partner

Labré advocaten, Amsterdam

e: sjef.bartels@labre.nl

t: +31 20 3052030

 

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