Corporate Social Responsibility Reporting
The CSR report – Challenge and chance!
Corporate Social Responsibility (CSR) reporting has recently become mandatory for capital market-oriented companies. For many other companies, CSR is already part of their external image and internally a tool for better managing these essential issues. The 4C GROUP is convinced that reporting on social and ecological issues will play an even more central role for corporate management in the future. Since we take our social responsibility seriously, this topic is also very important to us.
- What is the CSR reporting obligation and who is affected by it?
- What are the requirements for CSR reporting?
- What are the main challenges of CSR reporting for companies?
- How can CSR reporting be used as an opportunity?
What is the CSR reporting obligation and who is affected by it?
The EU Directive (2014/95/EU) and the corresponding CSR Directive Implementation Act (CSR-RUG) provide the legal basis for CSR reporting in Germany. Certain companies are obliged to publish non-financial information on Corporate Social Responsibility (CSR). The CSR report is intended to inform stakeholders about the company's strategies and progress in the areas of economy, ecology and social affairs. According to CS-RUG, the reporting obligation covers corporations (§ 289b para. 1 HGB), partnerships and cooperatives with limited liability, as well as credit institutions and insurance companies classified as large, capital market-oriented and employing an average of more than 500 people.
What are the requirements for CSR reporting?
The CSR Directive Implementation Act does not provide any concrete information regarding content and scope. The law prescribes only five different aspects with examples to which the CSR report must refer:
1. Description of the business model
2. Environmental matters, such as information on greenhouse gas emissions, water consumption, air pollution, use of renewable and non-renewable energy sources or the protection of biodiversity
3. Employee matters, such as information on measures taken to ensure gender equality; working conditions; implementation of the basic conventions of the International Labour Organisation; respect for workers' rights to be informed and consulted; social dialogue; respect for trade union rights; health and safety at work
4. Social matters, such as information on dialogue at local or regional level or on measures taken to ensure the protection and development of local communities
5. Respect for human rights, such as information on the prevention of human rights violations and combating corruption and bribery
In addition to the guideline, the German Sustainability Code (DNK) provides orientation with regard to the content. The Code deals with 20 different topics ranging from strategy, the use of natural resources and resource management to legally compliant behaviour.
What are the main challenges of CSR reporting for companies?
The CSR reporting standards pose two fundamental challenges for companies:
1. The CSR report summarizes sustainability focused on the environment and social commitment to society. However, the two areas are fundamentally different both in terms of content and from a management perspective.
2. CSR reporting is non-financial in nature. Information on the various issues, such as the reduction of the CO2 footprint and social commitment to local communities, is not directly available in the systems.
The extent to which aspects of social and ecological impact are or must be integrated into a company's normal strategy and target setting process must be examined on a case-by-case basis. The focus of the documented guidelines is on implementation. However, this can only be promoted systematically if the focus areas are integrated into the management system.
How can CSR reporting be used as an opportunity?
Companies can regard CSR reporting as a duty and compile the information annually or deal with the content of the topics. The situation is very similar to that of ISO certification many years ago. In the meantime, most companies have incorporated quality management into their regular management processes. Fulfilling the CSR guideline is therefore both a challenge and an opportunity. The guideline deliberately leaves companies room to work out the material topics for them and to set the individual focus. Systematically integrating this into "regular" reporting and planning should also avoid "nasty" surprises, which can always occur if unmanaged topics are to be prepared once a year for external presentation.
Read our whitepaper for recommendations on how to implement CSR reporting standards in a meaningful way.
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