The Corporate Sustainability Reporting Directive (CSRD) significantly expands the scope of corporate reporting obligations for social and ecological activities. In Germany, 1,500 companies will be affected in the future, up from around 500 at present. Among other things, the CSRD requires companies to report on their sustainability strategies and objectives as well as on “due diligence” processes. This is intended to identify potential and future negative impacts and risks – including along their own value chain.
On May 26, 2023, VDMA North and ProduktionNRW organized a cross-state association virtual exchange of experiences to present the most significant changes in the area of CSR reporting and explain them using a practical example. The event focused on an intensive exchange among the participants.
Increasing demands on sustainability reporting
Judith Herzog-Kuballa, VDMA Environment and Sustainability Officer, began by outlining the increasing legal requirements in the area of sustainable reporting obligations. One of the aims of the CSRD is to create more transparency and credibility in this area of corporate activity. In the course of the CSRD, not only capital-oriented companies will be affected in the future, but all large corporations and limited partnerships. According to the EU definition, companies are affected if they meet at least two of the following criteria:
– over 20 million euros in total assets
– over 40 million euros in sales
– over 250 employees.
Accordingly, smaller listed companies may also be required to report on their social and environmental activities. The reporting requirements also focus on the materiality analysis, in which the sustainability aspects are of central importance that either have an influence on the company or that the company influences positively, but above all negatively, through its business activities.
The European Sustainability Reporting Standards (ESRS), which will be adopted by the EU Commission as a delegated act in the next few months, regulate how and what exactly has to be reported. the following background information is also available. In addition, the EU is pursuing the establishment of a framework to facilitate sustainable investments with the Taxonomy Regulation (EU) 2020/852.
Guideline for the development of a sustainability reporting system
Herzog-Kuballa went on to discuss the implementation of a sustainability reporting for medium-sized companies. According to this, the status quo must first be determined (stakeholder and environment analysis), then topics relevant to the company must be identified (materiality analysis), and finally a strategy or goals must be formulated. The support of the management, the definition of responsibilities and the corresponding communication are necessary prerequisites. The VDMA guidelines on sustainability management and reporting with the help of the German Sustainability Code (DNK) provide assistance.
In the subsequent discussion, different approaches to sustainability reporting were addressed. In addition, the challenge that customers can pass on their own sustainability requirements through the supply chain was discussed. This can create pressure for companies to report on issues that their own sustainability approach may not cover.
Case study: Practical implementation of a sustainability reporting system
Carolin von Rönne, Corporate Sustainability Manager, and Jörg Niermann, Division Manager Marketing, from Getriebebau NORD GmbH & Co. KG, then presented the strategic approach to establishing their own sustainability reporting. In a core team, composed of members from different company divisions, the concept of sustainability was first defined and the socio-political drivers identified. This was followed in i2022 by various measures for the German site, which will also be extended to the international sites in the coming years.
In addition to communicative measures, such as the development of a new logo, the calculation of the CO2 footprint of the company’s own products was also carried out, among other things. In this context, the overview of the individual measures for 2022 made it clear above all how time-consuming the development of a sustainability report is.
The final discussion included the calculation of the CO2 footprint of complex products with different components, the size of the core team, and experiences with training courses in the area of sustainability management. Overall, it became clear that CSR reporting can help to understand the social and environmental impacts in the company, to manage risks, to take advantage of opportunities and to improve the image of one’s own company. This makes such reporting an important component of a sustainable corporate strategy.
- CSRD: CSR reports to be mandatory for all non-SMEs!
- VDMA guide to sustainability management
- Practical implementation of the Product Carbon Footprint calculation
The event was offered by ProduktionNRW and the VDMA North. ProduktionNRW is the cluster of mechanical engineering and production technology in North Rhine-Westphalia and is organized by VDMA NRW. ProduktionNRW sees itself as a platform to connect, inform and market companies, institutions and networks among each other and along the value chain. Significant parts of the services provided by ProduktionNRW are funded by the Ministry of Economic Affairs, Industry, Climate Protection and Energy of the State of North Rhine-Westphalia.