ESG compliance is already necessary in the EU with the Non-Financial Reporting Directive and is expected to grow with the forthcoming Corporate Sustainability Reporting Directive. In the US, calls for ESG disclosure regulation continue to be top of mind for the SEC. Being prepared now means you won’t be caught off guard when the time for compliance comes.
Environmental, Social, and Governance (ESG) compliance is starting to emerge as a key strategic area for many businesses. However, the current regulatory landscape is complicated – with a mix of both mandatory and voluntary disclosures.
Key legislation from around the world include the EU’s Non-Financial Reporting Directive (NFRD), and the EU Climate Benchmarks Regulation. In the US, the Security and Exchanges Committee (SEC) has signaled increased focus on disclosures related to climate, human capital management, and other ESG issues.
As it relates to third parties, especially supply chains, businesses need to be monitoring compliance according to US Dodd-Frank Section 1502, EU Conflict Minerals Regulation, and Modern Slavery Acts – required in the UK and Australia, amongst others.
Voluntary disclosure frameworks, such as the Sustainability Accounting Standards Board (SASB, now the Value Reporting Foundation) also incorporate compliance – even for areas such as fees paid for non-compliance against water/wastewater quality standards. The consensus is that these disclosures will only become more unified, and likely mandated.
The best thing a business can do to meet existing rules – as well as prepare for what may be coming – is to develop an ESG programme that is centralized, auditable, and accurate. It also must provide visibility into third-party performance across the ESG spectrum.
Effortlessly manage and integrate data from your organization to create formatted reports for ESG rating service providers. Resource and other inputs are automatically transformed into ESG-ready data that investors rely on.
Collect and highlight results from natural resources mix and greenhouse gas emission calculations to see how environmental sustainability initiatives are impacted.
Assess third parties to determine their sustainability efforts. Benchmark results against a broader pool of suppliers. Integrate results with RFP/RFI process and Scope 3 data capture that third parties require for reporting.
Integrate supplier data with NAVEX ESG to manage responsible sourcing of conflict minerals. Ensure suppliers are Dodd-Frank Conflict Mineral compliant. Create Conflict Mineral Report Template (CMRT) reports ready for SEC Form SD filing.
Conduct current v. future state assessment.
Define programme scope for the next 1-2 years and who needs to be involved.
Select communication plan for internal and public progress including reporting framework(s).
Establish repeatable workflows for sustainability management and responsible supply chains.