Last year the topic of sustainability continued to gain momentum on headlines and in boardrooms: the United Nations set 17 Sustainable Development Goals, and the number of countries who have ratified the Paris Agreement on climate change grew to 125. Not surprisingly, in this context, governments and other entities have been introducing sustainability reporting legislation.
In some countries, sustainability reporting legislation has come from governments (including France, Indonesia, and South Africa) and in others by stock exchanges (e.g. in Brazil, Malaysia, and Singapore). Requirements may cover a broad range of social, environmental, and governance areas (as in Denmark, France, and South Africa), or have a specific target such as GHG emissions (the UK), conflict minerals (the US), or social responsibility (India).
As of 1 January 2017, the European Directive on non-financial and diversity information is applicable in Luxembourg. As a result, a number of companies now fall under its requirements, and will have to submit information about:
- environmental matters (efficient use of resources such as energy and raw materials, waste, greenhouse gas emissions, etc.)
- social and employee aspects (consumer protection, gender equality, working conditions, health and safety, commitment to communities, etc.)
- human rights, anti-corruption, and bribery issues (ESG criteria, business ethics, etc.)
Not a fad
For businesses of all sizes in Luxembourg, even those beyond the scope of the Directive, it is more than time to jump on the sustainability reporting bandwagon! Not because it's required, necessarily, but because at some point it will become more of an opportunity than a constraint. Greater focus and accountability over non-financial issues can create value if integrated in business strategies, or result in operational risks if not addressed correctly. Indeed, customer opinion is more important than ever in a world of upvoting, liking, and sharing—and in a world where, to a brand, ethics and sustainability are as important as product and quality.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.