The Make-or-Break Decade for the SDGs has begun

What does this mean for reporting
obligations?
1. Sustainability reporting
There is ample evidence, however, that
the information which companies are
reporting is not sufficient. Reports often
omit information that investors and
other stakeholders think is important.
Reported information can be hard to
compare from company to company,
and users of the information are often
unsure whether they can trust it.
Problems in the quality of sustainability
reporting have knock-on effects. It means
that investors lack a reliable overview
of sustainability-related risks to which
companies are exposed.
Investors increasingly need to know
about the impacts of companies on people
and the environment. They need
to know this partly to meet their own
disclosure requirements under the Sustainable
Finance Disclosure Regulation.
More generally, if the market for green
investments is to be credible, investors
need to know about the sustainability
impacts of the companies in which
they invest. Without such information,
money cannot be channeled toward
environmentally friendly activities.
Finally, problems in the quality of reporting
create an accountability gap. Highquality
and reliable public reporting by
companies will help create a culture of
greater public accountability.
2. Human rights reporting
The UN Guiding Principles on Business
and Human Rights (UNGP) have been a
global instrument for remedying and
preventing human rights violations in
business contexts since 2011. To this end,
they are being transposed into national
law (“supply chain law”). In parallel,
the EU is working on a Europe-wide
law. At the end of January 2021, the
Legal Affairs Committee of the European
Parliament voted on its positions on the
planned supply chain law and called on
the Commission to submit a law. EU Justice
Commissioner Didier Reynders has
announced such a law by the summer
break. This supply chain law would be
the second European law on labor and
human rights after the law on conflict
minerals. What is new is that it will also
include other categories, in particular
requirements for suppliers to comply
with the Paris climate targets.
The EU wants to create uniform regulations
for the internal market and relies
on a risk-based approach: This means
that sectors and countries are assessed in
a differentiated manner. Problem zones
are designated as high-risk zones. This
also has consequences for the number of
companies affected: Unlike the German
approach, there is no minimum size for
companies in the Brussels simulation.
What counts is the vulnerability to risk.
Thus, says Axel Voss (MEP, EPP Group), a
company with 50 employees could become
subject to reporting requirements
if, for example, it sources its goods from
1,000 farmers in a high-risk zone. On
the other hand, all companies that work
mainly with suppliers from Europe will
probably get by without any requirements.
Brussels urges in a statement: “Companies
that want to be prepared for upcoming
regulations must now review their
human rights and environmental due
diligence processes. Assessing whether
their existing processes are in line with
the UNGP and OECD guidelines will help
identify gaps and channel resources to
drive sustainable change. A structured
human rights due diligence process is
critical to ensuring human rights compliance
across companies’ operations.”
3. Climate reporting
If we want to be climate neutral in Europe
by 2050, a lot still has to happen. To
achieve this, we must measure, reduce,
and measure again. Here, it is above
all the investor network of the Carbon
Disclosure Project (CDP), the Task Force
on Climate-related Financial Disclosures
(TCFD), as well as the Science Based Targets
initiative jointly launched by CDP,
WWF, the World Resources Institute,
and the Global Compact that are giving
companies steam. A KPMG survey
shows that TCFD recommendations are
already widespread in the oil and gas and
automotive sectors. Other sectors that
are also critical are still hesitant. These
include, in particular, the construction
and materials, forestry and paper, food
and beverage, and transport and leisure
sectors. Here the pressure will increase.
We can see this well in the example of
the real estate sector: Climate aspects are
leading to a comprehensive reassessment
of many properties on the European
market. Experts see the consideration
of sustainability criteria alongside the
central parameters of return and risk
as a third pillar in the evaluation of
real estate investments in the future.
24 Global Goals Yearbook 2021