The importance of sustainability as part of business operations is constantly growing
Sustainability is increasingly becoming an essential part of business practices. It not only influences consumers’ purchasing decisions and the value of a company’s brand but also has a direct impact on the company’s financial position. For example, financing terms can vary depending on how well a company manages responsibility within its operations. Particularly, ESG criteria (environmental, social, governance) have taken on an increasingly important role in how investors and stakeholders assess a company’s operations.
More and more regulations concerning sustainability are being introduced, requiring companies to exercise greater diligence. Sustainability-related regulations encompass international agreements, mandatory national and EU-level regulations, as well as various reporting standards.
The European Parliament and Council finally reached an agreement in the spring of 2024 on the contents of the Corporate Sustainability Due Diligence Directive (CS3D), which came into effect on July 25, 2024. The directive establishes a due diligence obligation for, among others, companies operating in the EU with more than 1,000 employees and a turnover exceeding 450 million euros. These companies must ensure that both the company itself and all companies within its supply chain prevent, terminate, or mitigate adverse human rights and environmental impacts. Thus, the due diligence obligation not only affects the companies within the scope of the directive but also extends to smaller companies within their supply chains.
The Corporate Sustainability Reporting Directive (CSRD) came into force in January 2023 and requires companies to report on sustainability issues in accordance with the European Sustainability Reporting Standards (ESRS) as part of their management report. The directive primarily applies to large limited liability companies and cooperatives, large groups, small and medium-sized publicly listed companies, and large credit institutions and insurance companies. Through supply chains, the impact of the sustainability reporting directive also extends to smaller companies.
In addition to the aforementioned examples, there is a wide range of other regulations related to sustainability that impose various requirements on companies. These include, for example, the Battery Regulation, the Taxonomy Regulation, and the Directive on Public Procurement. The regulatory framework is complex and constantly evolving, and it is anticipated that legislation will become even more stringent in the coming years.
We offer our clients advisory services on matters related to sustainability. Contact us to discuss how we can best assist your company in navigating the world of sustainability requirements and the ever-evolving regulations.
Our team
Katariina Pesonen, Arto Kaikkonen, Matias Liespuu and Elina Väärä
