The focus of the economy
The focus of the economy
In 2015, the global community adopted the 2030 Agenda which includes 17 Sustainable Development Goals – SDGs for short. These actual goals for (global) sustainable development are aimed at governments, civil societies, the private sector and science across the world. All states are being called upon to act to make a decent life possible anywhere in the world while safeguarding natural resources. This guiding principle encompasses economic, environmental and social aspects.
Increasing pressure to adapt
Legislation is increasingly piling pressure on companies to be much more proactively involved in sustainability measures. Take the German Supply Chain Act [Lieferkettengesetz], for example: defined duty of care requirements are intended to ensure that human rights are comprehensively respected in future activities. These requirements relate not just to a company's own business operations, but also to the actions of its contractual partners and (indirect) suppliers. The regulations will apply to companies with more than 3,000 employees from 1st January 2023. (from 1st January 2024 for companies with more than 1,000 employees).
Customers, suppliers, employees, investors, financiers and business partners will increasingly be demanding sustainable action and incorporating this into their decision-making.
Corporate responsibility therefore exists along the entire supply chain. Violations may be punishable with fines of up to two per cent of a company's annual turnover. In addition, the European Union plans to extend the reporting obligation under the CSRD (Corporate Sustainability Reporting Directive) to include large corporations from 2024 (i.e. the 2023 reporting year). In Germany, more than 16,000 companies will then be required to report on sustainability, with the result that many companies will be faced with considerable changes in terms of reporting and prioritising measures and goals.
Companies will, in future, have to give much higher priority to the issue of sustainability if they are to meet regulatory, social, economic and environmental requirements. At the same time, customers, suppliers, employees, investors, financiers and business partners will increasingly be demanding sustainable action and incorporating this into their decision-making. The legal requirements, the complexity of the issues, the reporting needs, the expectations of various stakeholders and the reputational risks (keywords: greenwashing or "black sheep of the industry") should not be underestimated. This explains why companies need to be more proactively involved in taking a wide range of appropriate measures without delay. To be precise, this means business models need to be reviewed and revised from a sustainability standpoint. Insurance providers have noticeably adjusted their investment policies. There is now considerable pressure for business strategies and risk policies to change, too.
Sustainable development goals
Source: United Nations, iStock (Victor Antkevych)