ESG, CSRD, ESRS and ISO standards: Why your company should act now

Why are there so many regulations in the first place and why are they necessary? ‍

The majority of the guidelines are the result of the global trend toward greater sustainability and responsible business practices. They were established by various institutions and organizations to set clear standards and help companies measure and improve their sustainability performance. With the help of the guidelines, companies can understand and reduce their environmental impacts, promote social responsibility, increase transparency in reporting, and identify and minimize risks related to climate change. 

The most important sustainability regulations at a glance

ESG Rating:

ESG stands for Environment, Social and Governance and rates companies based on their sustainability performance and practices. Investors and other stakeholders use these ratings to compare companies' sustainability performance and make informed decisions.

CSRD (Corporate Sustainability Reporting Directive):

The CSRD is a European Union directive that obliges capital market-oriented companies to disclose detailed sustainability information from 2025. It expands existing reporting requirements and aims to improve the transparency and comparability of sustainability reporting.

ESRS (European Sustainability Reporting Standards):

The ESRS are the new European sustainability reporting standards being developed under the CSRD. They define the scope and structure of future sustainability reporting and provide companies with clear guidelines for the disclosure of environmental, social and governance aspects. Accordingly, the CSRD specifies the requirements, the ESRS the contents of the reporting standard.

ISO standards:

ISO standards are internationally recognized standards that cover various aspects of sustainability. ISO 14001 standardizes environmental management requirements, while ISO 14040, ISO 14044 and ISO 14072 provide guidelines for assessing environmental impacts, conducting life cycle assessments and climate impact assessments. ISO standards are voluntary standards and have no legally binding force.

GRI (Global Reporting Initiative):

The GRI guidelines are a globally recognized framework for sustainability reporting. They help companies to identify and report on relevant environmental, social and governance aspects. The GRI Guidelines can be applied by companies worldwide, regardless of their size and legal form, and are based on a voluntary basis.

GHG Protocol (Greenhouse Gas Protocol):

The GHG Protocol is a guideline for recording and reporting greenhouse gas emissions. It enables companies to quantify their emissions and take action to reduce their environmental impact.

EMAS (Eco-Management and Audit Scheme):

EMAS is a voluntary environmental management system that helps companies improve and publicly report on their environmental performance. The system is an EU regulatory framework specifically aimed at companies in the EU. It is based on ISO 14001 and goes beyond the requirements of this standard.

Which sustainability standards are relevant for which company?

When choosing the appropriate regulations for companies, it is important to consider individual needs, goals, and context. General steps that may be helpful in the decision-making process include defining the company's goals, assessing stakeholder requirements, the industry, and conducting a comparative analysis of regulations. 

If the size of the companies is considered, the standards can be assigned as follows (to be considered only as a general recommendation, more important are the specific requirements of the companies themselves):

• Small and medium-sized enterprises (SMEs): GRI, ISO standards
• Medium to large companies: CSRD, GHG Protocol
• Large multinationals: ESG rating, ESRS (EU)

It should be noted that some regulations are interlinked. For example, the GHG Protocol is relevant to ESRS, or the combination of ISO standards, for example ISO 14001, and EMAS leads to a more comprehensive environmental management strategy.

Why companies should consider sustainability standards

Sustainability compliance is a strategic approach that improves corporate sustainability performance by reducing environmental impacts and promoting social responsibility. 

In addition, the company itself benefits: from a positive reputation with customers and stakeholders, an advantage in the labor market, new business opportunities and easier access to capital. Companies that meet sustainability standards are better positioned to meet changing legal requirements and ensure improved risk management.

Moreover, as the first mandatory guideline, the CSRD makes it clear: now is the time to act, because sustainability is not a passing trend, but a necessity that companies must address in order to be successful in the long term and achieve a positive impact. 

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