27.11.2024

Mastering CSRD Challenges: The Double Materiality Analysis in Seven Steps

Which topics are relevant for the CSRD report?
The answer is provided by the double materiality analysis. In this article, you will learn how to efficiently master the analysis step by step with the support of our AI-based software solution.

The goal of double materiality

With the introduction of the CSR reporting obligation CSRD, the European Union wants to increase the scope of sustainability disclosures. This will make CSR reports more meaningful and comparable.

The impact of the sustainability report will also be increased because the dual materiality contributes to a shift from a shareholder perspective to a stakeholder perspective. The CSR report is aimed at investors, but also at employees, customers and society.

Definition: What is double materiality?

Double materiality means: it must be stated
how sustainability aspects affect the company (outside-in perspective)
AND
how the company affects society and the environment (inside-out perspective). The dual materiality will change the materiality principle used in Germany in particular and lead to significantly more information being relevant to reporting and CSR reports becoming more meaningful as a result. In future, companies will have to state both perspectives – independently of each other – in the sustainability report.

Previously, both aspects had to be fulfilled at the same time. In the case of the outside-in perspective (“financial materiality”), disclosures must be made that are necessary for an understanding of the company’s business performance, results or position. Particularly in the world of finance, this perspective is often the only one considered today and referred to as “ESG” or “ESG-related risks” – in other words, only the risk perspective is considered from a sustainability perspective.

With the inside-out perspective (“environmental and social materiality”), information must be provided that is necessary for an understanding of the impact of business activities on sustainability aspects. In short, it must be explained: What impact does my company have on the planet and society?

Infografik: Erklärung doppelte Wesentlichkeit der CSRD

What is the outside-in perspective in double materiality?

Many companies have so far focused on the outside-in perspective, as it represents a form of risk management. This field will also be covered in the future. The information is primarily aimed at investors. From the outside-in perspective, companies must disclose the following information:

How do external developments affect the business model, strategy and sales, among other things? External developments include unexpected weather events, for example, but also stricter regulatory requirements.
Industry-specific topics also play a role: Are there sustainability aspects that have already been identified by competitors, customers or suppliers?
What are the main risks for the company, a product or a service? And how are they managed or mitigated?

What is the inside-out perspective?

The inside-out perspective significantly broadens the view. Contact persons are not only investors, but also employees, consumers and environmental and social organizations. From the inside-out perspective, companies must disclose how their activities affect society and the environment. The impact of products, services and business relationships (including the supply chain) should also be mentioned here. Information is required on, among other things

Environmental issues:

Climate impact
Prevention and reduction of environmental pollution
Environmental impact of energy use
Biodiversity

Social:

Health and safety in the workplace
Diversity and equal treatment
Human rights
Social commitment

Governance:

Management and control processes
Combating corruption and bribery

In 7 steps through the double materiality analysis

1. Create an understanding of dual materiality

In the dual materiality analysis, you determine how sustainability aspects affect your company and how its activities impact the environment and society. The double materiality analysis forms the start and basis for your sustainability reports in the coming years. A high-quality process and a well-founded result are therefore a must.

In addition, auditors will audit the materiality analysis process and the finished CSRD report in the future. It is therefore worth going through the analysis in a tool that is recognized by auditors. VERSO’s AI-supported software solution for dual materiality guides you through the process step by step; the auditor can check directly in the tool. First, it is important for you and your sustainability team to take a closer look at the concept of double materiality. Here are some questions that are helpful in this first phase:

Are we familiar with the concept of dual materiality? Does everyone in the team understand which perspectives (financial and impact materiality; impacts, risks and opportunities) need to be considered?
What are the general conditions of our company, which topics could be relevant from the outset due to the environment, industry and products?
Which upstream and downstream economic activities, from raw material extraction to consumption and disposal, are part of the value chain?
Do we all understand what the dual materiality analysis process should look like, what our goal is, how we will proceed?
Who are important stakeholders (e.g. those affected by impacts; groups with an interest in information) with whom we work and to whom we turn?
Have we brought the management team on board and kept them sufficiently informed? Can we count on their commitment?

2. Create a roadmap for the dual materiality analysis

Once everyone is familiar with the topic and has gained an overview, the next step is to plan the analysis. Fundamental decisions should be made in three areas:

Responsibilities: Clarify who in your team is responsible for what. You can define these responsibilities in the VERSO software. This allows you to assign different levels of authorization and keep track of who is working on which topics at all times.

Time and resource plan: Analyzing dual materiality takes time. Create a schedule and consider what human and financial resources you need. Plan in such a way that you can talk to all affected stakeholders, involve management in the process and also coordinate the results well at the end. Think about all of this in the context of the sustainability report: have you considered the double materiality analysis when preparing the report or do you need to adjust the project plan?

Sources and stakeholders: Consider which methods and with which stakeholders and colleagues you want to carry out the materiality analysis. The ESRS and other frameworks as well as industry standards and findings from the corporate environment provide you with starting points for possible relevant topics.

Einblick in das KI-gestützte Modul zur Wesentlichkeitsanalyse von VERSO

At VERSO, we have already supported many customers throughout the entire process – from the double materiality analysis to reporting. This includes, for example, the Deutsche Automobil Treuhand GmbH (DAT)which also uses the AI-supported VERSO software.

3. Identifying impacts, risks and opportunities (IROs)

A sustainability aspect of the ESRS is material and reportable if the associated impacts, risks or opportunities (IROs) are considered material. Example: If the pollution of wastewater by substances used is a material impact, this must be reported on the data points in the associated standard E2 “Environmental pollution”.

Identifikation der Auswirkungen, Risiken und Chancen (IROs) in der VERSO Software

But how do you get to the IROs?

The IROs can arise from a wide variety of sources, such as industry or company specifics and discussions with various stakeholder groups. Sparring with the VERSO consultants is helpful here. In addition, internal data from whistleblower systems, occupational health and safety information or discrimination cases can provide you with information on relevant ESG issues in your company.

VERSO makes it easier for you to determine the IROs: Based on your information on company activities, NACE codes, locations, industries, etc., our AI module suggests possible material topics. So you don’t start with a blank sheet of paper. You can start directly with individual effects and assign them to the respective topics. Anyone with a little knowledge of the subject will have noticed that our AI-supported materiality analysis module takes a bottom-up approach to IRO identification.

Here, you first identify and evaluate the IROs so that the material topics of the ESRS emerge at the end. You could also do it the other way around – but in our experience, important topics often fall through the cracks.

The bottom-up approach in detail:

Identify all actual and potential impacts that your company or your economic activities have or could have on stakeholders along the entire value chain(impact materiality or inside-out perspective).
Define which financial opportunities and risks could arise for your company from sustainability issues(financial materiality or outside-in perspective). Here you can build on the results of the impact assessment.
Sharpen the IROs to make them as specific as possible. You have clearly listed your collected impacts in the VERSO module. For a CSRD-compliant ESRS report, you must also specify the information and interests of your stakeholders. You must roughly describe which of your material IROs the stakeholders influence or experience impacts on. VERSO’s materiality module saves you time here too: you can enter the affected stakeholders when specifying the material topics and also describe these groups and their impacts in more detail.

4. Coordinating and sharpening of the IROs with the management

Now it is time to coordinate the preliminary results with your company’s management. The management level has a different view of the company and also knows other perspectives, such as those of investors.

And finally, the dual materiality analysis should be supported by the entire company and form the basis for strategy development – management must be on board for this. It is best to present the results to management directly in our software. The data is clearly presented in the module, but can of course also be exported in the desired format and incorporated into presentations.

5. Definition of the main topics

In order to classify the IROs as material in accordance with the CSRD, they must be assessed according to the ESRS criteria. Among other things, you evaluate the IROs according to

Extent,
Scope,
Immutability and
Probability of occurrence.

Attention:
Depending on the type or category of IROs (e.g. actual or potential impact), different assessment criteria must be used. These categories are already stored in the VERSO software. You can select these for your IROs and assess the scope, extent and probability of occurrence with just a few clicks. Suitable threshold values are also already stored in the software solution. They help you to determine the IROs that are actually material for your sustainability report. The software automatically calculates the severity of the respective IRO. At the end, you can see at a glance which IROs are classified as material.

Festlegung und Bewertung der wesentlichen IROs im VERSO Tool

You can easily assign the identified IROs to the ESRS-compliant subtopics in the module. This results in the relevant topics for your report. IROs that do not fit any of the predefined topics can of course still be included and assigned to your own topics in the software.

There is also a completeness check in the VERSO module to check whether you have evaluated and assigned all topics. You will see those ESRS topics and subtopics for which you have not entered any IROs. If such a topic seems important to you, you can refine it in the IROs.

This way, no IRO will slip through. Topics for which you have not identified any material IROs are not included in the reporting obligation. At the end, you have all topics that have been assessed as material from either a financial or an impact perspective. You can present the results graphically in a materiality matrix or in a classic table. According to the CSRD, a graphical representation of the materiality analysis is not mandatory. And that’s it for the analysis itself: with our software, you can save your information in the final step and lock it for editing. The auditor can then check your analysis directly in the module.

This last step is immensely important so that you can guarantee that the materiality analysis process has been carried out in accordance with the CSRD and checked by an auditor. With our software, you can also be sure that your double materiality analysis is ESRS-compliant and audit-proof in accordance with the requirements of the Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer – IDW). Once the materiality analysis has been completed, the material topics, standards and data points are transferred to the VERSO ESG Hub reporting module so that you can continue directly with your reporting.

6. Definition of measures

The double materiality analysis does not stand for itself: The material IROs serve as the basis for your sustainability report. This shows the status quo and, over the years, the development of your company in the area of sustainability. In addition, the materiality analysis is the basis for your sustainability strategy, in which you define targets and measures.Incidentally, the ESRS already provides you with valuable input for the definition of targets and measures. And you can find out how to approach the CSRD report in the CSRD practical guide.

7. Stick with it, adapt, repeat

A final tip from us: don’t see the double materiality analysis as a one-off project, but as an analysis tool that will accompany you in your sustainability work.

If there are significant changes in the company, you will have to repeat the double materiality analysis. You usually revise individual parts and adapt the analysis annually. This keeps the key IROs up to date and makes your company’s developments measurable.

Get to know the AI-supported materiality analysis directly

The dual materiality analysis is the basis of your CSRD report. We make this process easier and faster for you: with our AI-supported software solution for the dual materiality analysis, you can be sure that your analysis is CSRD-compliant. Try it out for yourself and book a demo where we will show you all the functions.

Get to know VERSO Software

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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19.11.2024

Sustainability Report – What Is It and What Do You Need to Know?

Some companies are intrinsically motivated to embed ESG within their organization, while others are driven by the CSRD requirements or aim to gain a competitive edge. For all of them, the sustainability report becomes a constant companion on their ESG journey. Here’s an overview of the key terms and requirements for reporting.

What is a sustainability report?

This is the first fundamental question to address. In their sustainability report, companies disclose information on:

Environmental aspects,
Social matters
Corporate governance

The report outlines how external factors impact the company and how the company’s activities affect the environment and society. The first report usually reflects the status quo. However, the report is meant to go beyond that: it also describes strategies, targets, and actions aimed at enhancing sustainability.

The length, structure, and thematic focus of sustainability reports can vary greatly. This depends on the standard you choose. In general, you are free to decide which reporting framework to follow – unless you are bound to mandatory reporting requirements, such as those under the CSRD. In that case, you must comply with specific guidelines and often follow certain standards, such as the ESRS.

Sustainability, ESG, CSR – What’s the difference?

When it comes to reporting, all three terms essentially refer to the same concept: addressing the fundamental responsibility of companies toward the environment and society – now and in the future.

In recent years, the term CSR (Corporate Social Responsibility) was widely used in Germany.

CSR describes a company’s responsibility for its impact on society.
In practice, the term was often used to cover all three dimensions of sustainability: environmental, social, and governance aspects.
The focus of CSR is more on the qualitative assessment of a company’s actions regarding sustainability, corporate values, and social engagement.

The term ESG has now become increasingly established.

ESG stands for Environmental, Social, and Governance.
The term originates from the financial sector and focuses primarily on assessing companies based on environmental, social, and governance factors.
Measuring sustainability follows a more quantitative approach.

The broader term sustainability is generally used synonymously with CSR and ESG. It also accurately describes the reporting process, as it covers sustainability across all areas of the business.

You can find more on this topic in our blog post “CSR, ESG, Sustainability – What’s the Difference?”.

When do I have to publish my first sustainability report?

With the new Corporate Sustainability Reporting Directive (CSRD), many companies will soon be required to publish a sustainability report. The reporting obligation is based on criteria such as the number of employees, revenue, and total assets.

Although the first report often requires significant effort and may contain only limited insights into progress and developments, our honest advice is: Start now!

Our CSRD factsheet helps you quickly find out if and when your company is subject to reporting requirements—and what your next steps should be.

How do I create a sustainability report?

The first sustainability report can be demanding. You’re likely doing this for the very first time, with little prior experience – targeted training can be a great help. You often have no benchmarks yet, no established processes or structures, and still need to find the right reporting software – based on our experience with customers, the list of challenges for a first report is long.

That’s where we come in: With the VERSO ESG Hub, you can create your sustainability report easily and efficiently. To help you get started, we’ve created a hands-on guide “7 Steps to Your CSR Report” that walks you through the process step by step toward a meaningful sustainability report.

And when it comes to software, you can rely on VERSO for your CSRD reporting: our CSRD Suite offers you an all-in-one solution.

7-step process showing the key stages of creating a sustainability report, from preparation and materiality analysis to data collection, goal setting, publication, and continuous improvement.

I’m new to the role of ESG Manager…

How do I establish sustainability management in my company?

If you’re just starting to work with ESG, this may sound familiar: You have a lot of ideas and initiatives in mind, but you need to align them within a clear, goal-oriented sustainability strategy. You’re also thinking about which targets are realistic and make sense for your business. On top of that, you still need the right processes and metrics to monitor progress.

And above all, three key questions arise:

What does all of this mean for my company?
How do I tackle such a huge topic?
How do I justify my efforts and the necessary resources to management?

Our introductory blog articles on sustainability management are a great starting point. You’ll gain valuable insights into your role and responsibilities as a sustainability manager and get tips on how to communicate effectively with management – showing why sustainability matters for your business.

CSRD, SFDR, EU Taxonomy – What are they, and what’s the background?

With so many regulations, you’ve probably come across terms like CSRD, SFDR, EU Taxonomy, and ESRS. They are all part of the European Green Deal and closely interconnected. The EU aims to strengthen sustainability across the economy through these directives and regulations.

To comply with the CSRD, companies are required to report according to the ESRS—the European standards set by the EU. But how exactly do you apply these standards? Do frameworks like GRI or DNK also meet these requirements? You’ll find the answers in our ESRS Whitepaper.

The SFDR is a sustainability-related disclosure regulation for the financial sector. If you’re unsure whether it applies to your business and what steps to take, our SFDR Factsheet provides the guidance you need.

The EU Taxonomy is a classification system applied within CSRD and SFDR. It defines when an economic activity is considered green, sustainable, or environmentally friendly—creating clarity around sustainability claims. What this classification means for your business and your sustainability work is explained in our EU Taxonomy Whitepaper.

How can I make my company more sustainable?

Start taking action now! The more you can showcase (implemented) measures in your report, the more meaningful your sustainability report will be. Here are a few tips for effective sustainability initiatives in your company.

Communicate your sustainability journey right from the start—and be transparent about areas where action is still needed. This makes your ambitions credible and easier to understand. But be careful not to fall into common greenwashing traps when communicating your efforts. Not only could this damage your reputation, but the EU is also introducing specific anti-greenwashing regulations, such as the Green Claims Directive.

We support you in creating your sustainability report!

Preparing a sustainability report is especially challenging the first time. But with the right tools and solid knowledge, you can save both time and costs. We offer the perfect solution for both: Our training programs (available in german) provide fresh insights and help you become a sustainability expert. And with our ESG management software, you can quickly and efficiently collect all relevant sustainability data in one place.

* This information is summarized editorial content and should not be considered legal advice. VERSO assumes no liability.

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Nachhaltigkeitsmanager:innen sind gefragt – so sieht der Beruf aus

15.11.2024

Trend Job Sustainability Manager: Skills, Tasks and Further Training

Let’s take a closer look at this up-and-coming professional group. What are the tasks of sustainability managers, what training and further education is available and what does their day-to-day work look like?

What distinguishes sustainability managers?

Sustainability managers, also known as CSR managers, sustainability managers or ESG managers, are usually passionately committed to the topic of sustainability and have set themselves higher goals: a fairer world, environmental and climate protection. They exemplify sustainability and motivate their colleagues for ecological and social issues. At the same time, sustainability managers are confronted with the comprehensive ESG regulations. They act as business strategists and cross-functional interfaces within the company to guide it through the sustainable transformation.

Why are sustainability managers important?

In over 14 years of experience in sustainability management, we at VERSO have learned that the sustainable transformation of a company can only be achieved through an effective strategy and clear responsibilities. Why? Sustainability affects all areas of the company. That’s why someone is needed to bring it all together. Sustainability managers take on this interface function. They analyze business processes, implement sustainable business practices and aspects such as environmental protection, employee and human rights. They help medium-sized companies in particular to differentiate themselves massively from the competition. And for some years now, they have also been ensuring ESG compliance in companies.

What does that mean? Sustainability managers are responsible for compliance with the CSRD and are also involved in other regulations such as EUDR, CBAM, CSDDD and LkSG, at least in a supportive capacity. They are also responsible for preparing a sustainability report, including data collection – which many companies now do in accordance with the complex CSRD. They are therefore jointly responsible for the future viability of companies – both from a sustainability and a business perspective.

How is the profession changing?

Sustainability managers often have to deliver a one-man or one-woman show. This is now slowly changing: with the well-known regulations CSRD, EUDR, CSDDD, CBAM and many other ESG-related tasks, it is becoming increasingly important for companies to build a strong sustainability team: A team that is fully committed to minimizing the company’s negative impact as far as possible, implementing sustainability campaigns and positioning the company for long-term sustainability. This is the only way for companies to survive in the long term. And not just survive: Those who take sustainability seriously can also generate real business value from it – more on this in our blog post on the opportunities of CSRD.

The new and complex ESG requirements have also changed the scope of tasks and the skills required of sustainability managers. In the past it was still very much about internal communication, driving ideas for more sustainability and writing reports as a means of communication. Nowadays, ESG managers often find themselves dealing with complicated legal texts, compliance requirements and time consuming data collection. To ensure that there is still time left to implement sustainability measures, it is worth investing in ESG software such as VERSO. In any case, sustainability managers are now required to have a very broad set of hard and soft skills.

What skills do sustainability managers need?

First of all, the so-called “hard skills” – i.e. technical skills or professional competencies that can be learned and are in demand. Below is a selection of some of the skills that are becoming particularly important in view of ESG regulation:

Knowledge of sustainability reporting (e.g. CSRD, GRI, ESRS)
Understanding of regulations/legislative texts (e.g. LkSG, CSDDD, EUDR)
Data analysis and management (e.g. for measuring CO2 emissions, energy consumption)
Understanding of value creation and economic activity
Project management (planning, implementation and monitoring of sustainability projects)
Supply chain management (assessment of environmental impact, supplier selection)
Fundamentals of environmental science, sustainability concepts and ecological footprinting

Hard skills can be learned well, and further training courses such as the VERSO Academy can also provide support here. Software is also a big help for skills such as data collection, carbon footprint and supply chain management. In addition to these skills that can be learned, sustainability managers also need special interpersonal skills, the so-called “soft skills”. Among other things, these skills help to effectively implement sustainability in companies:

Empathy and social responsibility (understanding social and ethical implications)
Communication skills (convincing communication with internal and external stakeholders)
Change management (leading companies through sustainable transformation)
Problem-solving and decision-making skills (solving complex challenges)
Negotiation skills (negotiating with suppliers, partners or superiors)
Ability to work in a team and leadership skills (management of teams, cooperation across departments)
Critical and strategic thinking (developing long-term sustainability strategies)
Flexibility and willingness to learn (react to changing regulations, findings and market requirements)

What are the tasks of sustainability managers?

Sustainability managers do not have a fixed working routine. They usually juggle between data collection, coordination and writing for the ESG report and the creative and strategic development of sustainability measures. The tasks of ESG managers include:

Developing a sustainability strategy
Collecting sustainability-relevant data (especially for the CSRD report)
Defining and implementing targets and measures, monitoring target achievement using key figures
Obtain expectations and input from internal and external stakeholders
Check supply chains
Create a sustainability report
Communicate sustainability issues internally and externally (especially with marketing and management level)
Prevent Greenwashing
Advising all business divisions on sustainability
Setting an example of sustainability as well as training employees and motivating them to follow suit

How much do sustainability managers earn?

According to statistics from the German Federal Employment Agency, the salary of sustainability managers lies between €5,000 and €7,100. The average full-time gross monthly salary in Germany is €6,628. However, the salary can vary greatly – it depends in particular on the size of the company, but also on the individual’s professional experience as well as the federal state they work in. Accelerating the sustainable transformation within a company therefore does not necessarily mean having to settle for a lower salary – quite the opposite: the trend is set to intensify, as demand is extremely high while the supply of qualified sustainability experts is scarce.

How do you become a sustainability manager – what training is required?

To become a sustainability manager, you usually need a degree in a field such as sustainability management, environmental sciences or business administration with a focus on CSR. However, lateral entry is also very possible. Many ESG managers also come from the communications industry or another specialist department. With further training in sustainability management, they can often join a company’s sustainability team directly.

What further training is important for sustainability managers?

With the new regulations and developments in the ESG area, it is particularly important for sustainability managers to continue educating themselves. Otherwise, topics such as CSRD, EU taxonomy or LkSG will quickly become too much for you. It is well worth your time to attend webinars and complete in-depth further training in the specific subject areas.

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16.10.2024

CO₂ Compensation – How to Make it Work Without Greenwashing

What to do with unavoidable greenhouse gas emissions? In this article, you will learn how to tackle carbon offsetting – with effective projects and without greenwashing.

Your carbon footprint and climate strategy have been drawn up and you are already reducing the first greenhouse gas emissions. But it is slowly becoming clear: Despite all your efforts, you will be left with certain residual emissions! What to do with the unavoidable emissions? If you are also faced with this question, this article is for you. Because of course, CO₂ compensation is the obvious solution. But…

Careful – Carbon offsetting is a double-edged sword

Carbon offsetting has long been a contentious issue. Quite rightly so, as the situation on the carbon market is actually not so rosy: the voluntary carbon market is currently not regulated by either state supervision or a binding legal framework. Instead of legally binding criteria for the validation of carbon offsetting, there are only a number of private standards and registries with different quality criteria. This makes the market structure opaque and leads to major differences in quality within the climate protection projects on which the so-called CO₂ credits are based. One example: Deutsche Umwelthilfe (DUH) has already successfully filed several lawsuits against offsetting through forest projects and reforestation. The reasons: The estimated forest area could not offset the amount of CO₂ emitted at all or the project did not run long enough to keep up with the lifespan of CO₂ in the atmosphere. This leaves you with two problems:

You cannot rely solely on the information provided by standards and registers for quality assurance
At the same time, your company is expected to report truthfully, as greenwashing is penalised.

Actually, you should now take another look at the certified projects yourself. As you can imagine: It will be time-consuming. With the following factors, we will show you how to efficiently select reputable carbon offsetting projects.

6 factors for the selection of serious projects for CO₂ compensation

1. Impact

The projects should have measurable positive effects on the environment that, where possible, go beyond the mere reduction of CO₂ emissions. This includes the protection of biodiversity, but also the improvement of air and water quality as well as the restoration and preservation of ecosystems (co-benefits). A strong environmental impact means that the selected project makes a holistic contribution to environmental protection.

2. Methodology and verification

The projects should be based on recognised scientific methods and standards. They should also be regularly reviewed by independent third parties to ensure the reliability of the emission reductions claimed.

3. Durability and monitoring

It is important that projects are monitored throughout their entire duration to ensure that emissions are actually reduced in the long term. Regular monitoring and reporting help to recognise risks at an early stage and take countermeasures. This ensures the long-term impact of the project.

4. Additionality

Projects are considered additional if they would not have been realised without the expected income from the proceeds of emission allowances. This requires a more detailed analysis and assessment of the initial scenario (project baseline).

5. Double counting

The project of your choice must guarantee that the emission reductions are not sold more than once or claimed by different parties. This protects the integrity of the carbon market.

6. Embedding in the climate strategy

CO₂ offsetting should really only be an option if you have already exhausted all potential for reducing emissions as part of your climate strategy. A serious project should be part of a comprehensive climate strategy and should never be considered in isolation. This ensures that the measures make a meaningful contribution to your overall climate goals and are not just used for ‘greenwashing’.

What you should take away from this article

If you want to offset emissions, you should therefore not choose the first offset project that comes along. Use our tips to select a project with a real impact! And remember: climate neutrality can only be achieved with close coordination between your carbon footprint, decarbonisation strategy, greenwashing awareness and reputable climate and environmental protection projects to offset your unavoidable residual emissions.

Looking for support with your CO₂ management?

As you can see, choosing the right projects for your CO₂ offsetting is not that easy. And who knows, maybe you can still reduce greenhouse gas emissions in one place or another? We would be happy to look at this with you. We will guide you through your decarbonization strategy with climate consulting and CO₂ software.

Please feel free to contact us.

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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Die Geschichte des Nachhaltigkeitsberichts beginnt in den 1980er Jahren – damals gab es die ersten freiwilligen Umweltberichte. Seitdem hat sich enorm viel getan – bis hin zu einer Berichtspflicht.

20.08.2024

The History of the Sustainability Report: How It Has Evolved

The history of the sustainability report begins in the 1980s, when the first voluntary environmental reports were published. A lot has happened since then – right up to mandatory reporting. Read about the milestones and drivers that have shaped the ESG report and how the reports have developed in terms of depth and quality.

History of the sustainability report from 1980-2000: The era of environmental reports

The history of the sustainability report goes back to the 1980s. But for the introduction to this blog article, let’s go back a little further. This will help us to understand why the topic of sustainability and ESG suddenly became so popular. Let’s transport ourselves back to the early 1970s, so to speak. The world was characterized by rapid change and far-reaching social, economic and political developments. The Cold War dominated international politics. The oil crisis made people aware of their dependence on fossil fuels and their finite nature. Economic growth and industrialization continued.

At the same time, however, environmental conditions deteriorated, for example due to polluted air and water. It was precisely at this time that a book was published that attracted worldwide attention. The title: “The Limits to Growth”. It was published by the Club of Rome, an association of scientists, economists, business people and former politicians. This was a turning point. The Club of Rome played a central role in ensuring that the issues of environmental awareness and sustainability were recognized globally for the first time. But here we need to put the brakes on: not everything changed immediately. Awareness was only gradually followed by action. But there have already been the first Forerunner of the sustainability report.

In the 1980s, chemical companies published so-called environmental reports on their environmental activities. These were voluntary and mainly served to improve their image, as the industry was subject to strong criticism.

In the 1990s, small and medium-sized enterprises (SMEs) followed suit and became involved in environmental issues. However, the reports of the time were still a decade away from the holistic approach of today’s sustainability reports. Only then did the consideration of all ESG aspects – i.e. environmental, social and corporate governance – become established.

Before we continue our journey through time, let’s take a look at a few highlights from the years of environmental reports:

1979: The first world climate conference under the auspices of the UN takes place in Geneva.
End of 1980: Many chemical companies publish environmental reports.
Early 1990: Some small and medium-sized companies follow suit and also publish environmental reports for marketing purposes.
1995: With the introduction of EMAS, more and more environmental declarations are drawn up (equivalent to environmental reports).

History of the sustainability report from 2000-2010: Major corporations report

Our journey through the history of sustainability reporting continues with the turn of the millennium. Compared to today, the attention paid to sustainability and ESG was manageable. But there were important developments that brought it into the national and international spotlight.

The Kyoto Protocol was signed in 1997 and came into force in 2005. It was the first international agreement to set binding targets for reducing greenhouse gas emissions.

In 2002, Germany, like other countries, adopted a “National Sustainability Strategy”. In addition to public interest, new technologies also gave the topic of sustainability a boost. At the turn of the millennium, wind power became the most important of all renewable energies. Ten years later, it was replaced at the top by solar energy.
The overall advance of all renewable energies was unstoppable.

While the topic of sustainability itself gained in importance, this did not yet have a major impact on ESG reporting. Until 2010, it was mainly large companies that published a voluntary sustainability report – they recognized the increasing attention for the topic.

However, two events provided a significant impetus here. The Global Reporting Initiative (GRI) published its first guidelines. They provided companies with a framework for reporting on environmental, social and economic aspects. Over the years, the guidelines were further developed into the GRI Standards (from 2016). The topic of sustainable finance also emerged. Special indices were created with companies that act more sustainably. Before the history of sustainability reports really picks up speed, let’s take a look at the most important milestones from this period:

1999: The GRI guidelines are published, at the same time the topic of sustainable finance gains in importance.
The era of environmental reports is over and social and economic aspects are increasingly included in sustainability reports.
2000: The non-profit organization Carbon Disclosure Project (CDP) is founded.
Its aim is for companies to publish environmental data such as greenhouse gas emissions and water consumption, and it now manages the largest database of its kind in the world.
2003: The first statutory reporting obligation in Europe comes into force with the EU Modernization Directive.

History of the sustainability report from 2014-2019: boom in frameworks

A veritable boom in ESG reporting regulations began in 2010. This was accompanied by the development of numerous reporting standards and frameworks that offered companies a standardized method for disclosing sustainability aspects.

As a result, reports became more standardized and clearer and transparency increased. A holistic view of sustainability was anchored in the standards. Typically, the environmental aspects were CO2 emissions, energy consumption and waste. Social aspects included working conditions, human rights and communities. Governance covered topics such as corporate management and ethical business practices. Companies began to define and measure their sustainability goals and progress more clearly. Many companies realized that sustainable practices are not only good for their image. They can also bring economic benefits, such as cost savings, risk reduction and an improved competitive position.

You can read about the business value that sustainability can bring in the blog post “Why is sustainability important for companies?”. As this decade draws to a close, we would also like to look at a few highlights. This time it’s about important frameworks and regulations:

2014: The EU Non-Financial Reporting Directive NFRD (predecessor of the CSRD) and its German implementation law CSR-RUG (followed in 2017) come into force.
This means that large listed companies with certain criteria, such as over 500 employees, are required to report.
2016: The UN’s Sustainable Development Goals, the 17 SDGs, come into force and have been a popular framework for reports ever since.
2017: The TCFD framework is published.
It provides good recommendations for reporting on the effects of climate change, particularly for the financial sector and capital market-oriented companies.
2018: Another framework: the SASB standards.
Today, they are part of the ISSB, which creates standards for global comparability.

By the way: If you need an overview of standards and frameworks, take a look at our factsheet.

History of the 2019-2024 Sustainability Report: The EU and the Green Deal

The story of the sustainability report is now slowly coming to an end. But only in this blog post.
A lot will certainly happen in this area in the coming years.

However, we don’t want to speculate, but rather take a closer look at what has happened since 2019. The initial situation: there was a reporting obligation. However, this only affected around 500 companies in Germany. Companies had some freedom in the information they provided. The main criticism was the poor comparability. The new approach: With its Green Deal, the EU not only wanted to optimize and standardize ESG reporting, but also drive forward the entire sustainable transformation of the economy. The central goal: Europe will be the first climate-neutral continent by 2050.

In order to implement this ambitious plan, the EU has put together a comprehensive package of directives and measures. These included, for example, the Corporate Sustainability Reporting Directive (CSRD) and the European Supply Chain Directive (CSDD). As part of the CSRD reporting obligation, a standardized European framework, the ESRS, was even developed for the first time, which provides companies with clear guidelines regarding content and form. Here is an overview of important regulations from recent years:

2019: The EU Green Deal is adopted.
2020: The EU taxonomy applies and defines which economic activities can be classified as sustainable.
2022: The CSRD is adopted and gradually increases the number of companies subject to reporting requirements from 2024 to around 50,000 in Europe and around 15,000 in Germany.
2023: The German Supply Chain Act LkSG comes into force and requires companies to submit a report on sustainability in their supply chain.
2024: The European supply chain law CSDDD is passed.
The reports are to be submitted together with the CSRD report, thus further expanding the content of the sustainability reports.

Bis 2010 haben dann hauptsächlich große Unternehmen berichtet, die bereits einen zunehmend Druck, sich des Themas Nachhaltigkeit langsam anzunehmen, verspürt haben. Daran war besonders stark die Global Reporting Initiative und das Aufkommen des Themas Sustainable Finance beteiligt. Die wichtigsten Meilensteine aus der Zeit:

1999: Die GRI-Leitlinien werden veröffentlicht, zeitgleich gewinnt das Thema Sustainable Finance an Bedeutung. Die Ära der Umweltberichte ist damit vorbei und es fließen zunehmend soziale und ökonomische Aspekte in die Nachhaltigkeitsberichte ein.
2000: Die Non-Profit-Organisation Carbon Disclosure Project (CDP) wird gegründet. Sie hat das Ziel, dass u.a. Unternehmen Umweltdaten wie THG-Emissionen sowie Wasserverbrauch veröffentlichen, und verwaltet inzwischen die größte Datenbank dieser Art weltweit.
2003: Mit der EU-Modernisierungs-Richtlinie tritt die erste gesetzliche Berichtspflicht in Europa
in Kraft.

Seit 2010 gibt es einen regelrechten Boom an Regularien, die Unternehmen dazu veranlassen, über Nachhaltigkeit in all ihren Aspekten zu berichten. Mit den Regularien wurden auch zahlreiche Standards und Frameworks entwickelt, die Unternehmen bei dem Projekt Nachhaltigkeitsbericht helfen. Wir haben einige wichtige Frameworks und Regularien herausgegriffen:

2014: Die EU-Richtlinie zur nicht- finanziellen Berichterstattung NFRD (Vorgänger der CSRD) und ihr deutsches Umsetzungsgesetz CSR-RUG gelten. Damit werden große börsennotierte Unternehmen mit bestimmten Kriterien, wie etwa >500 Mitarbeitende, berichtspflichtig.
2016: Die Nachhaltigkeitsziele der UN, die 17 SDGs, treten in Kraft und sind seitdem ein beliebtes Rahmenwerk für Berichte.
2017: Das TCFD-Framework wird veröffentlicht. Es stellt gerade für die Finanzbranche und kapitalmarktorientierte Unternehmen gute Empfehlungen für die Berichterstattung über Auswirkungen des Klimawandels dar.
2018: Ein weiteres Framework: die SASB Standards. Heute sind sie Teil des ISSB, das Standards zur globalen Vergleichbarkeit schafft.

Die Geschichte des Nachhaltigkeitsberichts – Zeitstrahl 2019-2024

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07.08.2024

Why the CSRD Is More Than Bureaucracy

Despite the many requirements, working on the CSRD report creates a profound awareness of genuine sustainability. Even if the CSRD is primarily a bureaucratic obligation, it also conceals valuable opportunities for business. Read this article to find out what these are.

The first companies have already published their CSRD report, and many more have yet to do so. In Germany alone, around 15,000 companies are affected by the new EU directive on sustainability reporting. And if we look a little further: Across Europe, a total of around 50,000 companies will have to report in accordance with the CSRD in the coming years.

What is the aim of the CSRD?

The CSRD is primarily intended to improve the transparency and comparability of sustainability reports, but also to close gaps in previous reporting obligations. To understand this, it helps to look back at the past of sustainability reporting. Sustainability reporting used to be voluntary for companies, was subject to no or only a few rules and often ended up as a kind of marketing brochure.

The first EU directives then put a stop to this. However, the CSRD now goes one step further. On the one hand, a whole host of companies are affected by the new reporting obligation, from small and medium-sized enterprises to large corporations. Across Europe. And in some cases even beyond the EU.

On the other hand, there are stricter rules: All disclosures must now be verifiable and signed off by auditors. The CSRD also requires significantly more and more in-depth quantitative and qualitative data. This should make the reports more comparable.

In this way, the EU wants to drive forward the sustainable transformation of the economy.
At the same time, the CSRD is a sensible response to the growing expectations of investors, customers and society as a whole. Companies are increasingly being held accountable for their sustainability performance – and more and more often, sustainability efforts also form the basis for economic success.

In a nutshell: CSRD makes sustainability transparent and comparable, creating the basis for us to steer our economy towards a more sustainable future in a targeted manner. “That sounds all well and good,” you may be thinking, “but what’s the point of all the pink clouds if I’m sitting here at my desk and can’t see sustainability for all the data?”

Awareness arises from bureaucracy

PwC recently published a study according to which the majority of the companies surveyed were confident: Yes, we will be ready for our new reporting obligations by the deadline. The respondents were mainly listed companies with an annual turnover of over one billion. However, we know from our own experience that small and medium-sized enterprises in particular are groaning in the face of the work involved in preparing and implementing the CSRD.

They tend to have mixed feelings about the CSRD. “The CSRD is just another useless bureaucracy that will create a burden, stress and work and tie up considerable resources, but ultimately won’t change anything at all.” This and similar criticism of the new directive is often voiced. And yes – of course there is a lot of bureaucracy behind the new laws and reporting obligations relating to sustainability.

A lot of data has to be collected, a lot of time is spent on preparation and implementation and a lot of employees are involved. However, in our work with our customers, we see time and again that anyone who writes sustainability reports and takes an in-depth look at the topic of sustainability also recognizes the potential of CSRD.

More than just a bureaucracy monster: 6 potentials of CSRD for your company

Despite (or perhaps because of!) the many requirements, working on the CSRD report creates a profound awareness of genuine sustainability. So even if the CSRD is primarily a bureaucratic obligation, it conceals valuable insights and potential. And let’s take a look at them now.

1. the CSRD promotes a better understanding of one’s own risks and opportunities

Before the actual CSRD report is prepared, the double materiality analysis is carried out. Here you determine:

How do sustainability aspects influence your company?
What impact does my company have on the environment and society?

Background: The ESRS, the CSRD framework, lists over 1,000 possible data points for the report. In the end, however, only selected data points such as ESRS 2 and those whose associated impacts, risks and opportunities (IROs) you have determined to be material are required to be reported. On the one hand, the double materiality analysis gives you clarity as to what belongs in your CSRD report. On the other hand, it also gives you a very helpful picture of how your company relates to the environment and society. You also get a crystal-clear overview of the risks your company could still face – where undiscovered opportunities for the future of your company lie dormant – and how your company is developing. Find out more in our article “The double materiality analysis in 7 steps”.

2. the CSRD brings economic benefits, supports innovation …

The majority of decision-makers surveyed in a Noerr study assume that ESG will bring about change in the company. However, the transformation of business models in turn requires comprehensive adjustments to product development, internal processes and management.

This is where the wealth of data you collect and analyze for CSRD provides useful insights. Where are resources still being wasted without this being noticed? Which processes that “we’ve always done this way” could be optimized – and thus promote not only sustainability but also efficiency? Where do we need to rethink in order for the sustainable transformation to succeed? These are just a few situations in which ESG data management lays the foundation for a sustainable future.

In the best case scenario, you don’t just write your CSRD report for the sake of it, but take something away from it for the success of your company.

3. … and strengthens the resilience of your company

Let’s take a concrete example: ESRS E1, the “climate change standard”. Here you have to report, among other things,

how your company has a positive and negative impact on the climate,
which climate protection measures you implement,
what risks and opportunities arise from climate change,
and how to adapt your company to climate change.

The smaller the company, the greater the likelihood that the issue of climate change will not necessarily be a high priority due to time constraints – i.e. it will be postponed for the time being without the CSRD. However, the first consequences of climate change are already making themselves felt. And will occur more frequently in the future. Heavy rain, floods, heatwaves, droughts and fires can paralyze production facilities, lead to staff absences, cause supply chain delays or destroy transport routes. 55% of managers surveyed in Germany in a Capgemini study estimate that climate change will cause the majority of operational disruptions in the coming years. So it only makes sense to look at what climate change means for your company and how you can counteract it. And in the course of CSRD, you approach such and similar considerations in a very structured way.

4. solid sustainability reports create trust

Investors and other stakeholders are now looking very closely at what is happening in your company in terms of sustainability. Sustainability reports are a great way to communicate your status quo and your ambitions in this area. The best way to do this, however, is with a reporting standard that specifies uniform requirements for all companies concerned in order to ensure maximum comparability. As we wrote at the beginning, CSRD transforms sustainability reports into transparent and, above all, verifiable documentation of your sustainability journey.

And if we want to look at things from a negative perspective: Intentional and grossly negligent errors in the CSRD report are punishable by, among other things, “naming and shaming” – i.e. public disclosure. If your company violates its CSRD reporting obligations or attempts to falsify data, this can ruin its reputation and trust. In this respect too, it is therefore worth seeing the CSRD as an opportunity and implementing it conscientiously. You can find more information on the possible sanctions in our article “The cost of mistakes in reporting and implementing sustainability.”

5 The CSRD report as a repository for fact-based sustainability communication

Once you have identified stakeholders, determined opportunities and risks, set up strategies and collected ESG data from all possible areas as part of your CSRD obligation, you have one thing in addition to the report: a very useful repository of information. This, in turn, is ideal for any sustainability communication outside of the report.

After all, this is also becoming increasingly important. Here we would like to quote a Capgemini survey once again: 77% of consumers surveyed are changing their purchasing behavior in favor of more sustainability. 66% are even specifically looking for sustainable products. Conversely, 36% of the companies surveyed also stated that Our customers are not interested in sustainability! This shows a major perception gap that needs to be closed.

The best way to do this is with comparable reports that are checked by a third party (you guessed it: the CSRD…). This is what 34% of consumers surveyed in a Deloitte study would like. Fact-based sustainability communication is also beneficial when it comes to recruiting talent and employee satisfaction. According to the EIB Climate Survey 2023, 56% of people surveyed value an employer that thinks and acts sustainably. According to a Gartner survey, a strong ESG culture even boosts employee engagement by up to 43%.

6 ESG data facilitates access to credit

It’s not just investors and the public who are demanding ESG measures, but also banks and credit institutions. Just as a disability insurer is interested in whether you prefer to solve crossword puzzles or skydive in your free time when taking out insurance, financial institutions are now increasingly looking at ESG risks when granting loans. The list of questions is based on the CSRD, among other things. This means that if you are already collecting ESG data for the CSRD anyway, you will have it to hand more quickly when applying for financing. Read more about this in our article “ESG in financing: This data decides on loans”.

Conclusion: CSRD is worthwhile in many respects – and it doesn’t have to be complicated at all

Let’s summarize once again. CSRD helps you to identify risks and opportunities for your company in a targeted manner. It provides your company with economic advantages and can even become a driver of innovation. Furthermore, it strengthens your company’s resilience in the long term if you take a close look at sustainability.

Externally, CSRD promotes the trust of your stakeholders and serves as a basis for general sustainability communication, which in turn appeals to customers and employees. Last but not least, the data once collected will help in future when granting loans. It’s exciting to see the wide-ranging effects of this report, which seems so dry at first, isn’t it?

And the best thing is that CSRD doesn’t necessarily have to be a nerve-wracking challenge.
With software and advice at eye level, VERSO will guide you step by step through the CSRD process. For example, with our new AI-supported module for audit-proof double materiality analysis. Or with our all-in-one solution for ESG management and ESG reporting – including carbon footprint and supply chain transparency.

Feel free to contact us!

ESG data management with VERSO

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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18.07.2024

Earth Overshoot Day:
3 Tips for Sustainable Resource Management

Earth Overshoot Day marks the day on which we humans have used up all the natural resources we are entitled to for the year. Earth Overshoot Day shows us that we must take action! In this blog post, you will find lots of information about Earth Overshoot Day as well as three tips for more sustainable resource management in your company.

Let’s imagine that: At the beginning of August, we have already spent our entire annual salary.
We should now be planning our big summer vacation – but no, there’s not a single cent left.
From now on, we’ll have to live on credit and somehow get by until the end of the year.
Not a nice idea, is it?
The scary thing is: This is exactly how we are treating our planetary resources – and this is what Earth Overshoot Day stands for.
In 2024, Earth Overshoot Day falls on August 1.
All the natural resources that we humans are actually entitled to this year have been used up.
From this day onwards, we will be living at the expense of the future – for another 5 months.
A bitter day?
Absolutely, there’s no denying it.
But it doesn’t help to bury our heads in the sand.
Let’s use the day as a reminder: let’s act now and push Earth Overshoot Day as far back as possible!
Following the information about Earth Overshoot Day, this blog post therefore contains three tips on how you can make your company’s resource management more sustainable.
These simple measures, which every company can implement, actively contribute to environmental and climate protection.

Definition: What is Earth Overshoot Day?

Earth Overshoot Day has been calculated since 1971.
In German, it is also known as Earth Overshoot Day or World Exhaustion Day.
It marks the date on which humanity’s demand for ecological resources and services in one year exceeds what the earth can regenerate in that year.
This is how the WWF describes it, for example.
The overshoot days are calculated globally and nationally – the total global consumption of resources is used or the consumption of a specific country is extrapolated to the global availability of resources.
The calculations for the overshoot days are based on the concept of the ecological footprint.
It describes the biologically productive area on earth that is necessary to enable a person’s lifestyle and standard of living.
In short, it documents how much nature we have and how much we need.
Earth Overshoot Day is calculated by the Footprint Data Foundation, York University and the Global Footprint Network.

Earth Overshoot Day earlier and earlier

It’s no big surprise: Earth Overshoot Day is always earlier, and it has steadily moved forward over the past 50 years.
Since the 2010s, however, it has settled around the beginning of August.

Der Earth Overshoot Day, auf deutsch auch Erdüberlastungstag oder Welterschöpfungstag genannt, fällt 2024 auf den 1. August. Der Tag zeigt, wann wir Menschen alle natürlichen Ressourcen, die uns für dieses Jahr zur Verfügung stehen, aufgebraucht haben. Er ist seit 1971 kontinuierlich früher. © Global Footprint Network www.footprintnetwork.org

It all started in 1971: the first Earth Overshoot Day came as a worrying Christmas present under the Christmas tree, so to speak.
It fell on December 25, but at least we were still almost on target.
However, the consumption of resources continued to increase and so did Earth Overshoot Day.
As early as 1974, it moved to November, from 1987 to October and in 1999 it was in September for the first time.
Since 2005, Earth Overshoot Day has been in August and is steadily approaching July.
In 2018 and 2022, Earth Overshoot Day was already on August 1, the earliest date to date.
Each time it was a little later the following year.
In 2024, it will fall on August 1 for the third time.
The coronavirus pandemic and specifically the year 2020 represent a notable break in the statistics.
Global lockdowns and restrictions, the decline in production and transportation had a drastic impact on people and the economy.
But energy and resource consumption and CO2 emissions also fell significantly and the Earth Overshoot Day slipped back to August 16.
However, the effect did not last long and was no longer strongly felt the following year.
If you follow the development of Earth Overshoot Day closely, you will have noticed the fluctuations.
From time to time the day is later than in the previous year or it is adjusted retrospectively.
This can also be related to optimizations in resource consumption.
However, the reasons are usually more precise calculation methods and improved data sets.

Overshoot Day for Germany

Calculated for Germany alone, Overshoot Day is even earlier.
In 2024, it already fell on May 2.
This means that if every country consumed resources like we do in Germany, everything the planet can offer and regenerate would already be used up by that day.
In other words, if everyone lived like we do, we would need three Earths.
Compared to previous years, not much has changed with regard to Germany’s Overshoot Day.
It is consistently at the beginning of May – except for the outlier in 2020 due to coronavirus.
So we haven’t got worse in Germany, but we haven’t really improved either.

Der Country Overshoot Day für Deutschland ist 2024 auf den 2. Mai gefallen. Würden alle Menschen auf der so leben wie wir in Deutschland, wären an diesem Tag alle natürlichen Ressourcen, die uns eigentlich zur Verfügung stehen, aufgebraucht. Das bedeutet: Wir bräuchten drei Erden. © Global Footprint Network www.footprintnetwork.org

However, it is also worth taking a look at other countries for comparison.
The three earliest Country Overshoot Days in 2024 were in:

Qatar: February 11
Luxembourg; February 20
United Arab Emirates: March 4

The three countries for which the respective Country Overshoot Day was calculated for the latest date are:

Guinea: December 27
Moldova: December 28
Kyrgyzstan: December 30

And to conclude the comparison, let’s take a look at three G12 countries:

USA: March 14
France: May 7
China: June 1

What Earth Overshoot Day means for your company

Earth Overshoot Day is first and foremost a wake-up call to humanity.
The initiators want to show that our actions can lead to unpleasant consequences.
And these consequences will also be felt by companies, or are already being felt.
One example is extreme weather events such as droughts or floods, which are occurring more frequently and more intensively as a result of climate change.
They show how vulnerable global supply chains are.
The consequences are often crop failures, shortages of raw materials or blocked transport routes.
All of this is already leading to bottlenecks in supply and production – and the trend is currently increasing rather than decreasing.

3 tips for sustainable resource management in your company

Resource consumption affects us all.
Even as private individuals, we can make a difference.
The WWF lists various ways for end consumers to live more sustainably and thus push back the date of World Exhaustion Day.
“Buy green, consume less and eat less meat” is the succinct but effective recommendation for private individuals.
However, one of the biggest levers for saving resources worldwide is the economy.
Anyone who now thinks that sustainability is just something for a clear conscience or regulatory reporting obligations is mistaken: sustainable management brings business value, creates competitive advantages and strengthens the future viability and resilience of companies.
Many measures can save you money.
These three tips will help you get closer to sustainable resource management:

The three big Rs – Reduce, Reuse, Recycle

One of the most effective methods for establishing sustainable resource management in a company is the circular economy.
It starts with the big three Rs: Reduce, Reuse, Recycle.
It is about reducing the use of resources and materials, reusing products and reusing the materials from one product in another product.
One approach is an internal recycling process in which production waste is collected, processed and reused.
This can significantly reduce waste and thus the amount of raw materials required.
In addition, recycled or bio-based materials can be ordered from suppliers.
Resources can also be saved during shipping.
For example, packaging that can be reused.
But also in transport itself.
There are special pooling systems for pallet cages and Euro pallets – a reusable system for load carriers, so to speak.
Empty runs by truck should also be avoided.
But savings can also be made quite simply in the office.
For example, in water or energy consumption.
Refillable printer cartridges produce less waste.
Or you can switch completely to a paperless office.
Incidentally, the three big Rs are just the beginning: the circular economy goes a big step further and focuses on the 10 Rs. The concept and many other interesting facts about the circular economy can be found in this blog post “How the circular economy works and what it can achieve in Germany“.

Save energy and use it more efficiently

Energy is an important resource for every company – which is why it makes sense to start here.
The range of measures to save energy and use it efficiently is very broad.
It starts with obvious and simple steps:

Use LED instead of halogen lamps
Install motion detectors for the lighting
Adjusting the brightness of screens downwards
Use laptops instead of desktop computers

You should also take a systematic approach here – an energy management system in accordance with ISO 50001, for example, is helpful.
Although individual measures can lead to savings, they can also cause problems in other areas.
Therefore, look at the big picture and start looking for energy guzzlers.
Air conditioning, heating and ventilation often offer opportunities for optimization.
Important: Also check whether there is a state subsidy for the replacement.
Or have you ever thought about hosting your website?
With tools such as the Website Carbon Calculator, you can calculate the CO2 footprint of your company website in no time at all.
In the blog post “How to communicate your sustainability on your website“, we provide simple tips under point 6 on how to make your website more sustainable without any design or coding knowledge.
Another way to save energy: your company can become an electricity producer itself.
Photovoltaic systems are not only suitable for building roofs, but also for parking lots.
Not only do you generate green electricity and cover part of your energy requirements, you also create a source of shade.
You can also participate in local wind farms.

Sensitize and train employees

Employees are the key to a company’s success.
This applies not only to purely financial success, but also to the implementation of ESG initiatives.
It is therefore important to sensitize the entire team to sustainable action and train them accordingly.
This firmly anchors sustainability in the corporate culture.
During workshops, you should emphasize waste separation and avoidance and give tips on saving water and energy.
If everyone, or at least many people, adapt their behavior a little, a lot can be achieved.
One question that everyone should ask themselves, for example: Do I really need to print out this document or will it suffice in digital form?
One major lever is the transport sector.
Switch to public transport for business trips within Germany.
At the same time, your company can reward environmentally friendly behavior – for example with rental bikes or a subsidy for public transport.

Is your company doing enough in terms of sustainability?
Here’s how to find out

A sustainability report is a good measurement tool for companies in terms of ESG and implementation.
It allows you to determine the status quo and see your development over the years.
On this basis, you can develop or adapt measures and targets.
The CSRD reporting obligation may even mean that your company is obliged to prepare a sustainability report.
VERSO provides you with comprehensive support for this task.
With the VERSO ESG Hub, you can collect all relevant data and create a meaningful sustainability report.
The Climate Hub also calculates the corporate carbon footprint. And the VERSO Sustainability Experts will support you throughout the entire process. Would you like to acquire even more knowledge about ESG and sustainability yourself? Then it’s worth visiting our VERSO Academy. In the online courses, you and your colleagues can learn all about sustainability in the company – now with a brand new course for specialists and managers.

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

24.05.2023

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09.10.2019

3 Gründe, warum nachhaltige Unternehmen erfolgreicher sind

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Nuvia Maslo im neuen Kurs der VERSO Academy, Fit for Sustainability

09.07.2024

What Specialists and Managers Should Know About Sustainability

ESG regulations, sanctions and real environmental threats are putting companies under increasing pressure. This means that sustainability must now be implemented in companies.

And in such a way that it does not become a bureaucratic monster. Because sustainability is not a spoilsport, but can create real business value. Read here to find out how this works and what you need to know as a specialist or manager.

Sustainability starts with specialists and managers

Sustainability ambitions must come from the management level.
Then it can create real business value with competitive advantages, cost savings and resilience.
At management level, the importance of the topic must be understood, priorities set and strategic decisions made for sustainability.
For specialists and managers, this means getting to grips with the topic of sustainability, acquiring knowledge and at least understanding the basics.
We give you 4 tips to help you successfully drive forward the sustainable transformation in your company.

4 tips for starting the sustainable transformation

1. find out about the role of companies in sustainability

Climate change is real.
The first effects are already being felt.
Extreme weather events are more extreme and occur more frequently.
There is a lot to be done to ensure that this planet remains liveable for future generations.
But what role do companies play in this?
Where are the most serious problems and how can we solve them?
You should be clear about this before you put sustainability on the agenda.
Because only then will you be able to win over your employees to the issue and only then will you have the know-how to implement measures with real impact.

2. familiarize yourself with the most important ESG regulations

With the Green Deal, the EU is bringing many laws and directives to the table that oblige companies to be more sustainable.
These include the CSRD reporting obligation, the CSDDD supply chain law and special regulations such as the EU Taxonomy, the SFDR regulation for the financial sector, the CBAM carbon border adjustment mechanism and the EUDR deforestation regulation.
In addition, there are also laws in Germany that require companies to deal with sustainability at all ESG levels, such as the German Supply Chain Act LkSG.
Of course, you don’t need to know all the directives and laws in detail.
However, an overview of the implementation deadlines, what needs to be done and which roles are required in the company is essential.

3. communicate sustainability transparently and without greenwashing

Regardless of whether you have to publish a sustainability report due to the CSRD obligation or would like to report on your sustainability activities voluntarily: Communicating sustainability is a fine line between correct and misleading.
What is communicated can quickly verge on greenwashing, and the CSRD also requires very comprehensive statements that have to be watertight.
Successful and legally compliant communication requires a good understanding of sustainability, of the company’s own activities, of sustainability communication and of the regulatory framework.

4. develop a sustainability strategy and use it to leverage potential for your company

The topic of sustainability and the associated laws and guidelines are often referred to as a “bureaucracy monster”.
But that doesn’t have to be the case: take a strategic approach to the topic and integrate sustainability firmly into your corporate strategy.
This will open up real opportunities for your company.
Because sustainable management makes your company resilient and fit for the future and opens up new business models and competitive advantages.

How do you get started? With knowledge building!

Now it’s time to get started!
At the VERSO Academy, we have the ideal course for you to gain knowledge on all these topics: You will efficiently learn everything important that specialists and managers should know about sustainability in the shortest possible time – tailored to your needs and potential.
After the training course, you can get started with the sustainable transformation straight away. Sounds good?
Get the 25 % Early bird discount – redeemable as soon as the course is bookable:

To the 25 % voucher

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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10.06.2024

How the Circular Economy Works and What It Can Achieve in Germany

Circular economy and circular economy are terms that you come across more and more often in the context of sustainability. What is behind them, why is the circular economy presented as an important system change and what would it look like in everyday life?

Circular Economy and circular economy are terms that you come across more and more frequently in the context of sustainability.
What is behind them, why are Circular Economy as an important system change and what would that look like in everyday life?
We have for you a brief insight with the most important topics compiled.
One really small. Dbecause the whole is so ramified and comprehensive that we could probably write a whole book about it.n couldnten

Circular economy and circular economy – what are they?

Let’s start with a classic definition.
Because – spoiler – the terms “Circular economy” and “Circular Economy” are often used synonymously, but are strictly speaking different.

Circular Economy

Circular economy describes an economic model in which resources and products are used for as long as possible within a closed cycle.
Once they have reached the end of their useful life, they are not simply disposed of, but returned to the cycle – i.e. made usable again.

The reference point is ISO 59004:2024.
It describes the basic principles and concepts of the circular economy, but also provides assistance for implementation in the company.
Circular economy is defined here as:

“Economic system that takes a systemic approach to maintaining the cycle of resources by recovering, preserving or enhancing their value while contributing to sustainable development.”

The WWF‘s definition is somewhat clearer and more direct:

“‘Circular Economy‘ [ist] a regenerative system, powered by renewable energy, which replaces the current linear industrial model ‘Take – produce – dispose‘ replaced.
Materials are instead retained in the economy, products are shared, while waste and negative impacts are avoided.
CE creates positive effects and benefits for the environment and society and works within planetary boundaries.
It is made possible by rethinking the current understanding of growth and consumption.”

A helpful overview of all relevant standards relating to the circular economy can be found at the German Institute for Standardization (DIN).

For companies subject to CSRD, ESRS E5 (Resource use and circular economy) is also important in this context.

Circular economy

“Circular economy“ means exactly the same thing in theory.
In Germany, however, the circular economy actually only means avoiding waste: “The circular economy within the meaning of [the Circular Economy Act] is the prevention and recycling of waste“.

If we talk about the circular economy here in Germany, the correct term would be “circular economy”.
After all, we like to make life difficult for ourselves with unwieldy terms.

However, when the term “circular economy” is used at EU level (e.g. on the website of the EU Commission or EU Parliament), it always refers to the circular economy in the true sense of the word.

Why do we need a circular economy?

Global consumption of raw materials has tripled since 1970.
We live and do business as if we had unlimited resources at our disposal.
Earth Overshoot Day – the day on which all resources are used up globally for the year – is taking place earlier and earlier.

What is no longer needed is disposed of and replaced by something new.
And then it disappears from the scene for us.
But it ends up somewhere else.
Europe exports around 3,000,000 kilograms of plastic waste to countries in the Global South every day.
This is sometimes referred to as “Garbage colonialism” labeled.
And it doesn’t stop with plastic.
Growing mountains of old clothes, scrap metal, batteries, tires – our waste is piling up in other parts of the world.

On top of this comes the extraction of ever more resources for products that are produced in abundance worldwide.
Far too often, extraction and production go hand in hand with environmental damage and the violation of human rights.

The CSRD and supply chain directives such as the LkSG, CSDDD, CBAM and EUDR are intended to gradually prevent the latter.
However, what we actually need is a new economic system that tackles the underlying problems at the root.

Curtain up for circular economy.

Linear Economy vs. Recycling Economy vs. Circular Economy – from the 3 Rs to the 10 Rs

Our current economic system is a one-way street.
It is therefore also known as “linear economy”.
There are already initial attempts to counteract the high consumption of raw materials and the throwaway mentality.
The focus here is on currently mainly on the so-called 3 Rs:

Reduce – Reduce use of resources and materials through greater efficiency in product manufacture/use
Reuse – Reuse of products that are still in good condition
Recycle – Reuse materials in products of the same or lower quality

This gives rise to the recycling economy.
However, recycling only puts a slight damper on things.
In the end, there is still far too much waste piling up in mountains of garbage.
Only 7.2 percent of our materials are reused after use.

Illustration, die Linear Economy, Recycling Economy und Circular Economy gegenüberstellt. Linear Economy führt direkt zur Mülltonne, bei Recycling Economy ist noch ein kleiner Umweg drin und bei Circular Economy dreht sich der Produktlebenszyklus im Kreis; es landet nichts im Müll

Circular Economy goes a big step further and relies on 10 R:

Reduce – Reduce use of resources and materials through greater efficiency in product manufacture/use
Reuse – Reuse of products that are still in good condition
Recycle – Reuse materials in products of the same or lower quality
Refuse – Avoid overconsumption by optimizing or innovating products and eliminating products
Rethink – Rethinking product use and manufacturing processes
Repair – Repair and maintenance of defective/damaged products
Refurbish – Refurbishing discarded products so that they can still be used
Remanufacture – Reuse of product parts in new products with the same function
Repurpose – Reuse of product parts in new products with a different function
Recover – Burning materials with energy recovery

Tabelle mit den 10 R der Circular Economy

The European Commission also lists 7 very similar pillars of the circular economy:

Sustainable supply chains
Ecodesign of products and services
Industrial and territorial ecology, i.e. cooperation and exchange between companies
Functional economic organization; i.e. sharing the benefits of products with others instead of owning your own products
Responsible consumption
Extend product service life
Recycle

So much for the theory.
Now you’re probably asking yourself: what will it all look like in practice?
After all, a lot has to change for the circular economy to become a reality.
We need new processes and more durable, fully recyclable materials.
Not to mention a change in mindset.

Circular economy in practice

Action plan for the circular economy and national circular economy strategy

As part of the Green Deal, the EU 2020 has “Action Plan for the Circular Economy”, which aims to achieve a “carbon-neutral, ecologically sustainable and pollutant-free circular economy” by 2050.
Initial measures such as the extension of ecodesign regulations, the right to repair and the Green Claims Directive are already in force.

The “National Circular Economy Strategy (NKWS)” is based on the EU action plan.
This is intended to create a future framework strategy for measures and targets to implement a circular economy in Germany.
The German government is working closely with industry and society on this.

The overarching objectives of the NKWS are:

Climate protection
Protection of biodiversity
Reducing species extinction and environmental pollution
Securing the supply of raw materials
Reduce GHG emissions

Model Germany Circular Economy

As the NKWS is still a work in progress, WWF Germany, together with the Öko-Institut, Fraunhofer ISI and the FU Berlin, has developed a roadmap for the circular economy in Germany – the “Model Germany Circular Economy (MDCE)“.
This comprehensive paper shows which measures, political strategies, targets and instruments could be used to achieve a circular economy by 2045.

Here is an overview of the most important findings.

The advantages of a circular economy compared to business as usual

The supply situation is easing for 29 out of 36 critical raw materials, and for 9 raw materials more than 50 percent of Germany’s demand could be reduced or covered
A CO₂-equivalent savings of up to 26 percent (186 million tons) are possible
We need 27 percent less raw materials (179 million tons), total material consumption is down by 26 percent (329 million tons)
We need 30 percent less land (8.5 million hectares)
The MDCE scenario could also be used to reduce emissions that are difficult to avoid
The modeled circular economy would avoid 26 percent (147 billion euros) of the climate damage costs caused by direct emissions – with indirect emissions 10.7 billion euros

What is currently hindering the circular economy

Passing on environmental costs (externalization)
Lack of infrastructure for circular products and processes
Lack of investment (e.g. in research and development) for a circular economy
Lack of transparency with regard to the transfer of information and data in the value chains
Long-term path dependencies due to investments in linear technologies
Lack of common standards for circular products

5 key strategies for implementing a circular economy

Reduce resource flows
Substitute materials
Slowing down resource flows
Intensify product use
Closing resource cycles with high quality

Consumers, companies and politicians share responsibility

The circular economy must be considered from two perspectives:

Behavior-based solutions – sustainable design of consumption
Technology-based solutions – on the technical and production side

The paper emphasizes that the necessary changes in behaviour do not lie solely with consumers.
Both approaches require “political and entrepreneurial need for action that goes far beyond information instruments and should be controlled by regulatory and market-based instruments.“

10 guiding political principles for the success of the circular economy

Prioritize absolute reduction of resource consumption
Set binding resource targets along the lines of climate targets
Shaping the structural change triggered by the circular economy with specific policy instruments
Creating conviction for comprehensive CE in social alliances
Understanding education and knowledge transfer as the key to transformation
Setting incentives for a change in values in companies
Expanding the state’s role model function in procurement
Strengthening regional value chains in Germany
Provide financing and research & development for the transformation to a circular economy
Germany must assume greater international responsibility

Conclusion: We still have a long way to go!

Looking at our current economic model and the MDCE draft, it is clear that we still have a lot of work to do to achieve a truly sustainable transformation.
It can only succeed if we all – consumers, companies and politicians – work hand in hand.
Let’s get started!

Read more:

Model Germany Circular Economy – Full paper with proposed measures for environmentally intensive sectors
Circularity Gap Report 2024 – Information and roadmap for a global circular economy
Information portal on the NKWS
German Circularity Index 2024 – an overview of the circular economy progress of German companies

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27.05.2024

Diversity in Companies: Why and How?

No company can avoid the word “diversity” these days. But diversity is much more than just adding “m/f/d” to a job advertisement. Read this article to find out why diversity is so important in companies, what it actually brings and what you can do to promote diversity in your company in a targeted manner.

Why do companies need diversity?

Every person is different

Let’s start by defining what “diversity” actually means.
Because – spoiler – diversity is more than just sexual orientation and skin color.
To be more precise, there are seven dimensions of diversity.
These are almost unchangeable characteristics that every person has.
After all, each of us has a different personality and a different history:

Age
Ethnic origin & nationality
Gender & gender identity
Physical & mental abilities
Religion & worldview
Sexual orientation
Social background

According to the Diversity Charter, these seven diversity dimensions have the greatest influence on whether we feel included or excluded in society.
In theory, the Basic Law and the General Equal Treatment Act already stipulate that no one should feel excluded.
Diversity is also important for many companies in the context of sustainability reporting.

Diversity in the company is surveyed in the ESG report

Above all ESG regulations, the ESRS – the CSRD reporting framework – has required disclosure of the diversity strategy since 2024.
ESRS S1 in particular asks how your company lives and promotes inclusion and diversity.

However, diversity was already an ESG reporting criterion before that.The German Sustainability Code, or DNKemphasizes the importance of diversity and has included it in its 20 criteria for report content.
Companies must state how they comply with the General Equal Treatment Act.
They should also show how they promote equal opportunities, pay everyone appropriately, avoid discrimination, make a positive contribution to the integration of minorities and promote the compatibility of family and career.

Of course, the globally recognized reporting standard of the Global Reporting Initiative (GRI) also deals with the topic of diversity.
The focus here is primarily on GRI 405.
Here you report, among other things, on the distribution of gender, age or the proportion of people with disabilities among employees and management.
There is also GRI 406, which relates to incidents of discrimination and asks how your company investigates or prevents them.

Diversity in the company as a cross-section of society

The diversity dimensions also show how different we all actually are.
If we zoom out to Germany, we get an incredibly diverse picture of society.
Now a question for you: With this image in mind, is it close to reality if the company is made up of 80% white, 30 to 50-year-old, Christian or atheist, heterosexual men?
Or would it not be much better, conversely, if a company reflected the diversity of society?

Advantages of diversity in companies

Of course that would be much better.
And there is even solid evidence for this.
We have compiled a small selection for you below.

A study by StepStone and the Handelsblatt Media Group shows that a diverse management team boosts employee motivation.
According to the study, 77% of job seekers are also more likely to apply to companies that are tolerant and diverse.
Not to mention the fact that your company has access to a much larger talent pool if you value diversity when recruiting.

The survey also revealed that 80% of respondents see diversity in management as a major positive influence on the economic success of companies.
One of the reasons for this is that diverse teams bring a wide range of different experiences, perspectives, ways of thinking and problem-solving approaches to the table.
Incidentally, this also means that decisions are made up to 87% faster – and not only with half as many meetings as in homogeneous teams, but also with 60% better results!

Diversity in companies is also considered one of the most important drivers of team engagement. Deloitte found in a study that millennials are 83% more likely to be engaged when the company promotes diversity and inclusion.
No wonder none of the employees feel excluded!

In short: diversity in the company makes the company more attractive, increases employee satisfaction and productivity – and ultimately strengthens competitiveness.
According to another Deloitte study, diverse, inclusive companies perform up to 35% better than their competitors.

Sounds good?
We think so too.
But you should be aware of this: If you want to reap the benefits of diversity, you need to promote diversity in a targeted manner.
Here are a few practical tips from our People team to help you achieve this!

7 tips for diversity in companies

1. diversity starts at the top

Diversity in companies starts in the boardroom.
Make sure that the management team is diverse.
This involves obvious criteria such as origin, age or gender, but cognitive diversity also plays a role.
The management level should also exemplify diversity itself.
Train your managers to use inclusive language and promote a diverse workforce.

2. make job advertisements appealing to everyone

This starts with the classic “m/f/d” or “all genders” reference in the job advertisement.
You should also include a diversity statement that emphasizes once again that everyone is welcome here.
Use a gender decoder to check whether men and women feel equally addressed in your job advertisement – because certain words only address one gender.

Incidentally, it is also interesting to know how men and women read job advertisements.
Women tend to want to fulfill all criteria and often do not apply if they do not fulfill one criterion.
So find the right balance in the level of detail in the job description.
Feel free to encourage applicants with a separate note to apply even if they do not fulfill every single point.

Last but not least: Make sure to write the advertisement in a screen-reader-friendly way.

3. also live diversity in the recruiting process

Involve as many different employees from different departments as possible in your recruiting processes.
Not only the HR team, but also specialist departments or future colleagues and superiors.
On the one hand, you will notice more quickly who harmonizes well with the team and who is needed.
On the other hand, different perspectives ensure less bias and more openness to diversity.

Speaking of bias: offer recruiting staff regular recruiting and interview training.
These training sessions should identify and reduce potential bias (which we all have!).

Give all applicants a chance.
And don’t necessarily base your selection on who is exactly the same as the rest.
It’s much more exciting to see who would complement the team well. What skills, what personality, what character is still missing?

4. create guidelines on diversity

If you want to create more diversity in your company, you may have to adapt guidelines and processes.
As just mentioned, this starts with the job advertisement, which should not exclude anyone and should appeal to everyone.
Other options are

Allow religious holidays that are not prescribed by law
Offer childcare or establish partnerships with daycare centers
Offer more paid sick days than required by law

5. offer flexible working time models

Remote working, part-time models and generally flexible working hours enable employees with children, for example, to juggle everything.
But employees with a different working rhythm also benefit from this.
This is because they can adjust their working hours to when they are most productive – within the framework of legal regulations.

A tip: Work with calendars and certain status options.
Anyone who has a blocker in their calendar or is not available according to their status should not be contacted or assigned tasks.

6. create a working environment in which everyone feels comfortable

Design the workplace in such a way that everyone feels comfortable and can work well.
This includes, for example

Barrier-free design of the workplace, but also of the toilets or kitchen and – sounds obvious, but is rarely considered – the entrance to the company!
Retreats or quiet zones for undisturbed work
Options for individual ergonomic workplace equipment, especially at the desk

7. check the implementation of diversity and have an open ear

Make sure that diversity in the company is not just on paper, but is actually practiced in everyday life.
Make sure that all employees are aware of the guidelines and rights.
Provide (anonymous) surveys and feedback opportunities.

This means that anyone can submit suggestions for improvement, but also draw attention to discrimination and disadvantages.
The Whistleblower Protection Act, for which companies must set up a whistleblower system anyway, is also essential for this.

Always remember: your employees see problems and potential that you probably don’t know about because you are not specifically affected!

Diversity in companies is a process – it pays to keep at it!

Diversity cannot be implemented overnight and certainly not top-down.

Take one step at a time.
Follow best practices and examples from other companies, but be sure to adapt them to your company with the help of your employees.

The first port of call is the Diversity Charter’s resources – e.g. its tips for diversity management in large companies, SMEs, the public sector and associations.
Over time, you will create a company where everyone feels welcome.
We wish you every success!

* This information is summarized editorial content and should not be construed as legal advice. VERSO accepts no liability.

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