Madeleine Murray: New EU sustainability standards requires firms to upskill

Human resources need to promote sustainability awareness among employees.

Companies big and small have been given the new responsibility of ensuring their governance structures are compliant with fresh EU regulations. In addition to governance structures, they must also be compliant with sustainability policies.

Company teams must now have a comprehensive understanding of the Corporate Sustainability Reporting Directive (CSRD) and its disclosure and auditing requirements.

CSRD is a significant piece of EU legislation that aims to enhance the disclosure of climate and environmental data by companies. It requires companies to publish regular reports on their environmental and social impact activities. It has a phased rollout to allow companies to prepare, but ultimately, all SMEs will have to report in line with the standards.

If caught in the CSRD net, the implications on a company's whole value chain are immense because without a sustainable value chain, the disclosure process will remain fraught and piecemeal. SMEs with vague or fragmented environmental, social or governance targets and reporting make the task of reporting on CSRD harder for larger companies. But alienating those suppliers, partners or contractors is not the solution.

Madeleine Murray is the chief product officer at Change by Degrees, a sustainability skills building company.

CLIMATE & SUSTAINABILITY HUB

In terms of those charged with making these firms compliant, they will quickly inform the executive team that reporting on environmental, social and governance data, to the same standard as financial data, requires time, talent and budget.

Data haul

This data will come from all parts of a company - it’s an enormous data haul and many people will have to be involved. Whereas once, the top line figures as reported by facilities or operations on waste or water would suffice, now much more comprehensive detail is required.

Questions large organisations should ask include: who is responsible for sustainability reporting? Who leads the process and who signs off on the final product? Thereafter, the entire team needs to be made aware of the task at hand, and their role in delivering a quality, verifiable report that can stand up to scrutiny and stakeholder inspection.

In the case of operations and supply chain they will need to prove they are optimising resource use and reducing environmental impact. Crucially, they will have to also collaborate with suppliers to improve sustainability.

For the marketing and communications team, a delicate balance must be struck to communicate sustainability efforts transparently to stakeholders while never greenwashing. All marketing campaigns should be aligned with ESG (environmental, social and governance) values and reflect the ethos of the reporting structure their company is creating.

Legal and compliance functions are not off the hook and play a pivotal role in ensuring a company remains compliant with reporting requirements and know how to address legal implications of sustainability disclosures. Many will struggle to upskill at speed given the enormity of the requirements.

At the risk of stating the obvious, none of this can happen without people. Human resources will need to promote sustainability awareness among employees.

People can’t be transparent about something they don’t understand. Literacy on ESG metrics and the value of the disclosure process can only happen with a massive upskilling programme so that sustainability considerations can be integrated into all business units. 

• Madeleine Murray is the chief product office at Change by Degrees, a sustainability skills building company.