Transparency in climate impact and labor practices

A lot has been written about the EU #Omnibus proposal, but personally, I find it deeply disappointing. 😞 While framed as a simplification, it guts corporate sustainability reporting at a time when we need more transparency, not less. Where do things stand? The European Commission has proposed rolling back the Corporate Sustainability Reporting Directive (CSRD), raising the threshold so that only firms with 1,000+ employees and either €50M in revenue or €25M in assets must comply. This exempts nearly 80% of companies, drastically reducing CSRD’s scope. The argument? Less red tape. The reality? A step backward for corporate accountability. This contradicts what rigorous research has shown. A 2022 paper in Journal of Accounting Research, "Real Effects of a Widespread CSR Reporting Mandate" by Peter Fiechter, Joerg-Markus Hitz, and Nico Lehmann, examines exactly this. 📚 Their findings? ✅ Mandatory reporting led to real CSR improvements, not just greenwashing. Firms didn’t just disclose more; they launched sustainability projects, improved governance, and linked executive pay to CSR. ✅ The biggest improvements came from firms previously lagging on sustainability. Those with low pre-existing CSR engagement saw the strongest gains. ✅ Firms acted before the mandate took effect. Anticipating regulatory pressure, peer benchmarking, and stakeholder scrutiny, companies improved CSR well in advance. ✅ Social improvements were stronger than environmental ones. While labor practices and governance advanced, environmental impact remained limited—suggesting more, not less, policy support is needed. ✅ Real CSR investments had financial costs. Increased CSR activity led to short-term profitability hits, confirming these were real commitments, not box-ticking exercises. So what does this mean for Omnibus? If we scale back CSRD, we risk reversing these expected real gains. Companies that were just getting serious may now step back, and those that lacked incentives before will have even less reason to act. At a time when corporate sustainability should be accelerating, the EU is taking a major step in the wrong direction. Instead of diluting reporting, we should be strengthening it. Transparency drives action. Weakening disclosure doesn’t just ease compliance—it removes accountability, stakeholder pressure, and market forces that push firms to do better. Do we really want to trade long-term progress for short-term “competitiveness”? Because if this proposal moves forward, that’s exactly what will happen. Full paper here: https://lnkd.in/e7gBvXYw #Sustainability #ESG #CorporateAccountability #CSRD

Have you ever wondered how companies measure their environmental impact and what that means for our planet? In 2023, Nearly 25,000 organizations stepped up to disclose their environmental practices through CDP, one of the largest platforms for environmental transparency. These companies are answering crucial questions about climate change, deforestation, water security, and plastics. It’s not just a box-ticking exercise it’s about understanding risks, finding opportunities, and holding themselves accountable. Let me break it down. CDP doesn’t just stop at collecting data; it scores participants from A to F. An “A” means you’re a leader with strong climate strategies and science-based targets, while an “F” signals a lack of disclosure. It’s a clear, consistent way to compare companies and their impact, which is why major investors and stakeholders pay attention. Take the climate change questionnaire, for example. It dives into how organizations manage risks, govern their strategies, and measure progress. Or the forest questionnaire, which explores the impact of commodities like timber and soy. These insights don’t just stay on paper—they drive action. Companies that participate often involve their entire supply chain, pushing sustainability efforts far beyond their own walls. But here’s the reality: Committing to CDP isn’t easy. It’s a long-term effort requiring detailed data collection and verification year after year. It’s not just about looking good it’s about doing good. From my perspective, This kind of transparency is vital. As someone deeply invested in sustainability and responsible business practices, I see CDP as more than a reporting tool. It’s a mirror for organizations to reflect on their impact and a guide to improve it. And for those of us watching closely whether we’re investors, employees, or consumers it’s a step toward a more accountable and sustainable future. If you’re curious, you can even check out CDP’s website to see how companies are scoring. It’s eye-opening to see who’s leading the way and who’s falling behind. What are your thoughts? Would you consider these disclosures a game-changer for sustainability, or is there more work to be done? Let’s talk!

This report from Business & Human Rights Resource Centre, 'Bitter Truth: Migrant Worker Abuse in the Production of Sugar, Cocoa, and Coffee in Chiapas', published in April 2025, explores the harsh realities faced by agricultural workers in Chiapas, Mexico. It highlights a number of signficant issues with #supplychain and #procurement practices within the sector: 1. Labour Exploitation Migrant workers, including Indigenous peoples from Central America, suffer from low wages, excessively long hours, unsanitary housing, harassment, and violence, particularly targeting women. 2. Forced and Child Labour Cases of modern slavery persist, with children exposed to hazardous working conditions. 3. Health & Living Conditions Lack of healthcare and social benefits; overcrowded and unsafe housing; exposure to agrochemical pollution, linked to childhood leukaemia and other illnesses. 4. Climate Crisis Impacts Rising temperatures affect crop yields, particularly coffee. Environmental degradation due to deforestation, agrochemical use, and industrial waste mismanagement. 5. Transparency Issues Many firms lack public #humanrights policies, particularly in the sugarcane sector. The lessons for #procurement and #supplychain functions from the report include: - Strengthen supplier accountability and require suppliers to publicly disclose human rights policies. - Ensure compliance with fair labour standards. - Implement ethical sourcing practices, prioritise suppliers with strong human rights commitments. - Avoid sourcing from companies with documented labour abuses. - Monitor and audit supply chains, conduct regular audits to verify compliance with labour rights and environmental standards. - Use independent verification mechanisms. - Support sustainable procurement, encourage suppliers to reduce agrochemical use and adopt renewable energy. - Promote fair trade models that empower local communities. These recommendations aim to protect workers, increase transparency, and promote sustainability in agroindustry, but are obviously applicable across many similar supply chains.

Is this where corporate sustainability disclosures are heading next? 👀 I mean, *after* we all get over the regulatory compliance, standardization, external assurance, and digitization hurdles. 🔎 The Value Balancing Alliance (as a result of its work with the International Foundation For Valuing Impacts (IFVI)) recently published the latest in a series of methodology documents and guidances, this one on Impact Statements. The primary objective of the Impact Statement (IS) is to transparently disclose the impacts, both positive and negative, that a company has on society and the environment in a clear, comparable, and concise way. The objective of this VBA #guidance is to bridge the gap between the need for monetized impact disclosure and the lack of standardization and data transparency. It encourages companies to disclose impact statements in line with regulatory requirements and voluntary disclosures, while allowing flexibility in the depth of data provided. It aligns with the mission of major organizations like VBA, IFVI, and GRI to support informed decision-making on corporate sustainability and aims to be compatible with key regulations, including the EU's CSRD and the SEC's climate disclosure rules. The visual below shows how we progress from current/incoming sustainability disclosure frameworks (which require sustainability-related performance, but not impact measurement) to monetary measures of #impact. Monetary measures of impact is a possible workaround for internalizing #externalities to make them part of the business decision-making process (while we wait for a systems change). To the extent that the impact value factors are context-specific, maybe it can also begin to introduce the notion of context-based sustainability measures. It will also facilitate the measurement of impacts on an industry level, which starts to get interesting when considering the management of finite resources and impacts on a macro level (i.e., which industries are generating the most negative impacts, and how much resources are they monopolizing in the process). Check out the VBA's Impact Statement guidance here: https://lnkd.in/epr36V7B #courage #transformation #systemschange #sustainablefinance #sustainabilitydisclosures #esgdata

FILE UNDER GREENWASHING -- CDP's annual "A LIST." "Ecolab Inc., a global sustainability leader offering water, hygiene and infection prevention solutions and services that PROTECT people and the resources VITAL to life, today announced it has once again been RECOGNIZED for LEADERSHIP in corporate TRANSPARENCY and PERFORMANCE on CLIMATE CHANGE and WATER SECURITY by global environmental non-profit CDP, securing a place on its annual ‘A List’." How many other corporate users of CDP disclosures have posted similar language on their webpage and social media? How many have touted this to their Board? It is very MISLEADING to say that your CDP GRADE CONFERS TRANSPARENCY OR PERFORMANCE. It conveys more than anything that you took the time to pay someone to JUST ANSWER CDP's QUESTIONNAIRE. As I have written before, CDP grades are largely influenced by the degree of completeness a company shows in answering its questionnaire. If a company answers all the questions - regardless of the answer" they are largely on their way to a B or higher. If a company refuses to provide any answers to CDP they receive a "F" - not because the are doing a poor job but because they didn't put in the effort to answer CDP's questionnaire. Getting an A grade by CDP requires answering some of the questions in a more preferred way - more detailed answers that demonstrate "leadership" to CDP. But by and large, companies are being graded much more on their decision to disclose information to CDP- not on the quality of their answers. And they are not being graded at all based on their actual performance against their public commitments or targets. See my comparison of corporate CDP scores to @Climate Market Watch's (https://lnkd.in/giY9Zyzj) assessment of transparency and integrity of the same companies. Many "A-listers" show poor performance on transparency and integrity. https://lnkd.in/gnYxXzAk Moreover, the CDP grade isn't based on a company's improved environmental or sustainability performance. Indeed many A-listers emissions and water use is going up not down. Indeed, Ecolab's 2023 reported total SCOPE 1-3 GHG emissions increased by 3%. They have significant reduced their SCOPE 2, electricity use like many companies, through buying renewable energy credits. However, their latest SCOPE 2 emissions are 1.1% of their latest total reported emissions (86557÷7391746). Worthy of an 'A'? I don't think so. Maybe a "C-" if I'm feeling encouraging. And, here what Jessica Fletcher from Murder She Wrote had to say about CDP Grades: https://lnkd.in/gYGF9pqU Curious the thoughts of Institute on the Environment University of Minnesota who houses the Ecoloab-sponsored Chair in Environmental Sciences.

👉 CSRD EXPLAINER 👈 The purpose of the Corporate Sustainability Reporting Directive (CSRD) is to standardize corporate sustainability reporting. Its primary objective is to ensure that stakeholders and investors have access to consistent, comparable, and reliable information regarding sustainability (ESG). The CSRD has 12 underlying European Sustainability Reporting Standards (ESRS). There are three critical ESRS (besides mandatory disclosures in ESRS 2), namely ESRS E1, ESRS S1, and ESRS G1, which focus on climate change, social aspects of the workforce, and governance practices, respectively. As shown in the figure, these standards pertain to processes that the reporting entity controls, manages, or is directly involved in through their operations. As part of ESRS E1, companies are required to report comprehensive information regarding their impact on and effects from climate change. It is important to note that all companies are CO2 emitters, which means that they have a negative effect on the environment. A company that determines that this topical matter is irrelevant must also provide a defense explaining why this is so. Companies that deem this matter material must disclose their exposure to physical and transition risks related to climate change and the opportunities they may pursue including, - GHG emissions (GHG Protocol): Detailed reporting on greenhouse gas (GHG) emissions, including Scope 1 (direct), Scope 2 (indirect from energy), and Scope 3 (all other indirect emissions) emissions. - Climate Targets and Transition Plans (TPT): Disclosure of targets related to climate change mitigation and adaptation, as well as the strategies and plans to achieve these targets. - Resilience of their business models in the face of climate change. ESRS S1 focusing on the company's own workforce. This is also an actual impact, however companies are not required to file a defense if they deem this matter immaterial. S1 requires companies to report information on working hours, wages, and employment conditions. Furthermore, entities need to report data on the diversity of the workforce, health and safety, training, as well as labor practices. ESRS G1 focuses on governance aspects, ensuring that companies provide clear and transparent information about their governance structures and practices. ESRS G1 requires companies to disclose the company’s governance framework, including the roles and responsibilities of the board and management. This includes information on the company’s policies and practices related to ethics, anti-corruption, and anti-bribery as well as how the company engages with stakeholders, including shareholders, employees, customers, and other relevant parties. Required information in G1 is risk management framework (processes for identifying, assessing, and managing risks), executive remuneration, and transparency regarding executive compensation, incl. link between remuneration and the company’s sustainability performance.

ESG is Here to Stay: Embrace the Future of Corporate Transparency SEC Climate Disclosure Rule Pause: Creates uncertainty but doesn't slow global ESG transparency efforts. EU’s CSRD: Finalized in December 2022, it's the most comprehensive ESG regulation, integrating financial data, ESG information, and assurance. Global ESG Regulations: Countries like the U.K., New Zealand, Japan, China, Brazil, South Korea, Hong Kong, and the EU are enacting similar rules. Practitioner Sentiment: 81% of non-CSRD companies plan to comply voluntarily, emphasizing transparency and accountability. ISSB Standards: Together with CSRD, over 60,000 companies worldwide must disclose climate-related risks, including 5,400 in the U.S. impacted by pending SEC rules. California's Climate Act: Requires large companies to report carbon footprints, adding urgency to ESG efforts. Investor Demand: 88% of institutional investors favor companies integrating financial and ESG data, driving rigorous reporting practices. SEC Ruling’s Core Message: Sustainability information is crucial; companies must disclose climate-related risks, management strategies, and goals. Scope 3 Emissions: While not mandatory under the SEC, many businesses must address this through regulations like the CSRD. Business Advantage: Integrating sustainability into corporate strategy offers significant benefits. Role of Technology: Essential for efficient data sharing, streamlined processes, and accurate emissions reporting. Beyond Compliance: ESG reporting demonstrates a commitment to positive environmental and social impact. Future Positioning: Companies prioritizing ESG reporting are better positioned for success in an evolving landscape. #ESG #Sustainability #CorporateTransparency #InvestorRelations #ClimateDisclosure #CSRD #ISSB #ESGReporting #BusinessStrategy #TechInnovation

Transparency is a prerequisite for the green transition! For electric cars, buildings or windmills to ever be truly sustainable, they must be made from zero-emission materials. Producing materials comes with challenges, however; impacting nature, climate and social conditions. That is why stronger traceability and transparency about each material's footprint is crucial to accelerate change. From organic foods to tyre sizes, many industries have developed standardized certifications and reporting methods, but the metals industry is still at odds on calculating and disclosing the carbon footprint along the value chain and even how to calculate emissions from recycled aluminium scrap. This discrepancy can result in greenwashing, distorting market prices for truly greener products and contributing to a lack of transparency and misinformed consumers. To accelerate change and have incentives to minimize adverse impacts from production, reporting on production emissions should be mandatory for all. Transparency around recycled content and how to measure the carbon footprint is necessary to avoid greenwashing and drive a real circular, low-carbon economy. Full transparency on every material’s carbon footprint will be the necessary game changer for a successful green transition.

#NatureAction100 just released its first benchmarking of multinationals with high impacts on biodiversity and ecosystems. Results aren't stellar... Such benchmarking isn't new. Climate Action 100+ has long done it on, well, climate. The World Benchmarking Alliance as well, also including on nature-related indicators. Still, this benchmarking is a bit more comprehensive and extensive on nature. The result are pretty terrible, esp. given the state of the planetary boundary on the biosphere. And we are just talking about transparency, not action. My personal highlights [don't necessarily reflect those of NA100] were: 💡 Reporting against the entire value chain is very immature. 🙋🏽♂️ Collecting site-specific data is critical and done by some firms to some extent. However, only very few, esp. in the Mining sector, provide comprehensive site-specific disclosures for their operations. This makes sense, as mining firms tend to have a small number of highly regulated high impact sites and a smaller upstream value chain. Reporting location-specific information on the downstream value chain is likely impossible for many firms, however. Firms with a small number of projects like shipbuilders may be an exception to the rule 💡 A substantial share of firms has some kind of ambition. Although it is worth taking a closer look at the ambition put forward. Plus, if there is little transparency on the value chain, I wonder how firms identify the most material impacts that deserve a stated ambition? 💡 A sizeable share of firms disclose some nature-related targets and committments. But again, if firms don't know what is going on across the value chain, then one needs to question how firms came up with those targets. 💡 Engagement and interaction with local communities and indigenous people is not very well developed yet. The findings are more or less in line with research conducted by the Umweltbundesamt - German Environment Agency (UBA). Nature-related reporting was and still is very much a niche topic. This may be about to change, as the materiality assessment on #ESRSE4 Biodiversity & Ecosystems mandatory. A survey of early adopters from STOXX Europe 600 indicates a much higher percentage than the 1% identified by UBA. So, investors now have some data and can decide whom to engage on what. Will everything magically get better? No. Far from it. We also have systemic issues at play, as the economic system is extractive by nature. But it is a step - one at a time and at least we know a bit better who tries least to be transparent about the damage they do. #CSRD Taskforce on Nature-related Financial Disclosures (TNFD)

Exciting News for Climate Transparency and a big opportunity for sustainability reporting #startups! Also a heads-up for companies to start planning how to report their emissions. 🌍📊 California's State Assembly has passed a bill, SB 253, which is now heading back to the Senate and ultimately Governor Newsom's desk for approval. This proposed legislation is a game-changer for corporate emissions reporting. Here's what you need to know: 1️⃣ Scope of Reporting: The bill targets large companies with revenues exceeding $1 billion that operate in California. These corporations will be required to disclose their full value chain greenhouse gas emissions, encompassing all three scopes: Scope 1 (direct emissions), Scope 2 (indirect emissions from electricity usage), and Scope 3 (indirect emissions linked to #SupplyChain, travel, commuting, procurement, waste, and water usage). 2️⃣ Timelines: Reporting obligations are phased in, starting with Scope 1 and 2 emissions in 2026 and Scope 3 emissions in 2027. Companies will follow the Greenhouse Gas Protocol standards for measurement and reporting. 3️⃣ Third-Party Assurance: To ensure transparency and accuracy, companies will need third-party assurance for their emissions reporting. This starts with a limited assurance level in 2026 for Scope 1 and 2 emissions, becoming more stringent by 2030. Scope 3 emissions will also require limited assurance by 2030. 4️⃣ California Leading the Way: Senator Scott Wiener, the bill's champion, sees this as a massive win for climate action. California aims to become a global leader in corporate carbon transparency, setting a precedent for other states and countries. 5️⃣ Comparison with SEC Rules: Notably, California's legislation goes beyond the proposed SEC climate disclosure rules. It applies to all large companies, not just public ones, and encompasses all Scope 3 emissions. While the SEC is finalizing its regulations, this state law could have a more immediate impact. 6️⃣ Broader Implications: If the SEC's climate reporting requirements face opposition or delays, California's law could lead the way, affecting most large U.S. companies doing business in the state. Companies operating in Europe will also need to comply with the EU's Corporate Sustainability Reporting Directive. This is a pivotal moment for corporate climate transparency, pushing businesses to take more significant steps in reducing their environmental footprint. It will be a large lift for companies that need to report, but harder for those who don't prepare or have a plan to report Scopes 1, 2, and 3 emissions. Stay tuned for more updates as this legislation progresses. 🌱💼 #ClimateAction #EmissionsReporting #Sustainability https://lnkd.in/eZgWzFfX