Category: General

April 25, 2022

Corporate sustainability reporting requirements – Five steps to prepare

Corporate sustainability reporting requirements are taking a big leap forward and more detailed sustainability reporting will become obligatory in the EU for large and medium-sized companies.

Corporate sustainability reporting directive (CSRD) reporting is gradually affecting different-sized companies. With CSRD reporting, a larger part of companies operating in the EU will be covered by taxonomy reporting, and in addition, companies must publish more detailed information in connection with their activity report, e.g., about the environmental and social impacts of their business.

More and more companies are already now highlighting sustainability in their strategy and in their everyday business practices. Companies are aware that customers and investors are increasingly interested in sustainable products and responsible business, which makes them more willing to report about their sustainability goals and achievements.

To be able to effectively measure environmental and social impacts and to reach climate goals, companies will soon be provided with European sustainability reporting standards. Companies can already now start to prepare for the new sustainability requirements, hence making it easier to be compliant with reporting in due time.

Five steps to prepare for the Corporate Sustainability Reporting Directive (CSRD)

Make sure your business is ready to be transparent. The legislation sets the minimum requirements, but responsible companies aim further than just to be compliant. There is no reason to wait until sustainability requirements are obligatory. Instead, commit to the climate goals and update your company’s due diligence also in other environmental, social and governance (ESG) areas. A good starting point is to recognise the material topics in sustainability and identify those that are the most relevant and important to your company. Understand how sustainability matters affect your business and what impacts your business has on people and the environment (double materiality principle).
Top management commitment. Companies should prepare to mainstream sustainability in their strategy and targets and be ready to provide the information in their annual reports. CRSD will require to provide information on the role of the company board and management, and the resilience of the business model and strategy to risks and opportunities related to sustainability matters. Companies are expected to look forward in its impacts on sustainability matters, and appropriately consider the whole value chain, including its own operations, products and services and its business relationships and its supply chain.
Connect your risk management and financial experts in sustainability topics. Companies’ risk management plays an important role in evaluating how sustainability matters, such as climate change, can affect the business in the short or long-term. Experts in risk management will be able to understand the business value based on the results of a comprehensive materiality assessment. On the other hand, as sustainability reporting must be in line with the financial data, the financial experts have the skills and experience to create a link between financial and non-financial (sustainability) information.
Invest in reliable reporting. The EU Taxonomy requires companies to disclose certain KPIs (indicators) about their activities’ level of sustainability. The sustainability reporting standards will ensure that the reporting requirements and indicators are consistent with the EU Taxonomy. The standards will most likely facilitate the assurance of sustainability information which is also becoming a requirement for companies. High-quality preparation for reporting guarantees that company’s sustainability report passes the assurance, and the company can be trusted for what it informs about its impacts on people and the environment.
Digitalise. In a few years, companies are required to disclose their EU Taxonomy disclosures and other financial and sustainability information in a digital, machine-readable format. There will be an EU-wide digital access platform for the company data. The common reporting standards will facilitate digitalisation, but before the standards will apply, companies are encouraged to digitalise the reporting. Companies and data users save time and money when sustainability data is easily available in a digital format.

We can assist you in preparing for the upcoming CSRD reporting requirements. Our sustainability experts can help you guide your organisation towards sustainable development goals. Please contact our consultancy services:

You can read more about our consulting services here.

For EU-Taxonomy eligible companies, our newest whitepaper: EU-Taxonomy classification and reporting in 2023 – Eight steps to compliance whitepaper is a must-read.

Sources:

https://eur-lex.europa.eu/legal-content/FI/TXT/PDF/?uri=CELEX:52021PC0189&from=FR

https://data.consilium.europa.eu/doc/document/ST-6292-2022-INIT/fi/pdf

https://www.globalreporting.org/standards/standards-development/universal-standards/

March 9, 2022

New corporate sustainability due diligence requirements

The European Commission took a much-expected step towards sustainable corporate governance at the end of February when the proposal for a Directive on Corporate Sustainability Due Diligence was published. The new EU rules will require companies to strengthen their responsibility and sustainability operations throughout their global value chains and avoid adverse impacts on human rights and the environment. Companies operating in the EU will have common rules on corporate sustainability due diligence, and by this, the responsible companies can better meet investors’ and consumers’ expectations. Companies can also benefit from having a clearer view of their operations and their suppliers’ external impacts and will be able to identify problems and risks earlier.

Companies’ due diligence requirements will be clarified

Although many companies have already taken voluntary steps on corporate responsibility, there is a need to encourage more responsible and sustainable corporate behaviour. The aim is to answer many companies’ call for legal certainty on their due diligence requirements. Better transparency is also needed, as consumers and investors are increasingly more interested in the overall sustainability of companies and their products and services.

What the rules mean in practice for companies operating in the EU?

Companies will have to integrate due diligence policy to identify and prevent or mitigate negative human rights, climate and environmental impacts in their value chain. These avoided impacts include issues such as inadequate workplace health and safety and, for example pollution of the environment and biodiversity loss.
Companies are required to have a plan to ensure that their business strategy, and remuneration policies, are in line with the Paris agreement to limit global warming to 1,5°
The proposal also involves new rules for companies’ directors that will have duties to set up and oversee the implementation of corporate sustainability due diligence processes and ensure that sustainability matters are taken into account in the corporate strategy also in the long term.

The proposal also includes possibility to impose fines and sanctions to companies, if a company fails to fulfil its due diligence obligations. Company can also be liable for damages if its failure to comply with the due diligence obligations leads to damages to affected people.

Large companies and high-impact sectors are in the scope

Large companies operating in the EU (500+ employees and net turnover worldwide more than 150 million euro) are in the scope of the Directive. The rules start to apply to 2 years later for smaller companies (250 + employees and net turnover worldwide more than 40 million euro) operating in defined high-impact sectors, that include e.g., the manufacture of textiles, food manufacturing, forestry, agriculture, metal products and mineral resources. Larger market players can take a leading role in mitigating the risks in their value chains and hence support smaller companies, that are not directly in the scope of the proposal.

Once the Directive is in force and applied in the EU, all companies in scope need to establish due diligence procedures and integrate human rights, environmental and climate objectives into their corporate strategy. Directors are required to consider sustainability consequences of their decisions in the short, medium and long-term. Company’s Board of Directors should, in principle, be able to assess the company’s operations from an environmental and human rights perspective.

Corporate sustainability due diligence complements EU Taxonomy and sustainability reporting

The Corporate Sustainability Due Diligence Directive complements the EU Taxonomy and CSRD (the proposal for Corporate Sustainability Reporting Directive) by requiring companies to identify their adverse risks and, for example, by helping in providing more detailed information on how companies respect the social safeguards as required by the Taxonomy Regulation. The CSRD will complete the last step of companies’ due diligence duty, that is the reporting part.

At the same time as the due diligence proposal is negotiated in the EU, the national corporate social responsibility legislation is being prepared in Finland. According to the Finnish Government, the national and EU rules on corporate sustainability will complement each other. After all, the aim of both legislative proposals is clear, that is to have more effective protection of environment and human rights and to get more companies involved in sustainable development goals.

Ecobio’s sustainability tools for top management

Are you wondering how you should prepare to meet the obligations? Our sustainability experts can help you guide your organization towards sustainable development. We have the expertise to lead organizations towards their goals ranging from alternative strategies to practice management and reporting. You can find more information about our sustainability tools for top management here.

If you wish to speak to a consultant, please contact Henrik Österlund:

Henrik Österlund

email: henrik.osterlund@ecobio.fi

phone: +358 (0)20 756 9457

To read more about Ecobio Manager EU-Taxonomy services, please click here.

Written by: Terhi Valtonen, Senior Consultant, Ecobio

February 11, 2022

Four new hazardous chemicals added to the SVHC Candidate List

ECHA has added four new entries to the Candidate List of substances of very high concern on 17 January 2022. Substances of Very High Concern (SVHC) may have serious and often irreversible effects on human health and the environment. There are currently 223 substances or groups of chemicals on the SVHC Candidate List.

Newly added substances are used in products such as cosmetics, rubbers, lubricants, and sealants. The substances have been added to the Candidate List due to their hazardous properties to human health or the environment.

Hazardous chemicals added to the Candidate List

Substance	EC/CAS number	Uses	Reason for proposing
6,6′-di-tert-butyl-2,2′-methylenedi-p-cresol	EC 204-327-1, CAS 119-47-1	Rubbers, lubricants, adhesives, inks, fuels	Toxic for reproduction (Article 57 c)
tris(2-methoxyethoxy)vinylsilane	EC 213-934-0, CAS 1067-53-4	Rubbers, plastics, sealants	Toxic for reproduction (Article 57 c)
(±)-1,7,7-trimethyl-3-[(4-methylphenyl)methylene]bicyclo[2.2.1]heptan-2-one covering any of the individual isomers and/or combinations thereof (4-MBC)	–	Cosmetics	Endocrine disrupting properties (Article 57 f – human health)
S-(tricyclo(5.2.1.02,6)deca-3-en-8(or 9)-yl O-(isopropyl or isobutyl or 2-ethylhexyl) O-(isopropyl or isobutyl or 2-ethylhexyl) phosphorodithioate	EC 401-850-9, CAS 255881-94-8	Lubricants, greases	PBT (Article 57 d)

Obligations related to SVHC

Companies have legal obligations if a substance included in the Candidate List is present in a concentration above 0.1% w/w. Obligations include:

Providing Safety Data Sheets for substances on their own and substances in mixtures containing SVHCs
Requirement to notify ECHA under REACH if an article contains a SVHC
Requirement to inform customers and consumers under REACH if an article contains a SVHC to allow safe use of the article
Requirement to notify ECHA under the Waste Framework Directive (SCIP Database) about articles containing SVHCs

Companies that are importing, producing, selling, or using substances, their mixtures, or articles (components, materials) containing SVHCs should keep an eye on the substances added to the Candidate List. Substances are regularly being added to the list. It is also recommended for companies to start looking for substitutes for the added substances already. Substances on the Candidate List may also be placed on the Authorisation List in the future, which means that continuing the use would need a permission.

Do you need help with chemical management?

Our experienced chemical consultants will assist you in meeting your chemical requirements. Furthermore, our Ecobio Manager SaaS-service will help you manage your chemicals and ensure compliance with global regulations. Interested? Contact us today!

Contact: info@ecobio.fi

Text: Mikael Hirn

Image: Unsplash

References

ECHA: Four hazardous chemicals added to the Candidate List.

TUKES: Erityistä huolta aiheuttavat aineet (SVHC).

January 7, 2022

Voluntary information as part of Taxonomy-eligibility reporting

Last December, the EU’s Taxonomy Platform published considerations on voluntary information as part of Taxonomy-eligibility reporting, which gives supplementary guidance for disclosures.

In addition to mandatory reporting, voluntary reporting under the Taxonomy framework can enable non-financial companies and financial institutions to explain the eligibility proportion of their entire operations, investment profile, or balance sheet since it may include both Non-Financial Reporting Directive (NFRD) and non-NFRD companies, for example.

Voluntary disclosures should be made regarding the same scope and timeline as the financial and non-financial statements of the firm and in line with the reporting obligations. Voluntary reporting should be prepared on the basis that it does not contradict or misrepresent the mandatory information according to the disclosures delegated act, and it should not be given more prominence than the mandatory disclosures. Where an undertaking includes voluntary reporting, this should be accompanied with information on the basis used for its preparation and a clear explanation of how it differs from mandatory reporting.

Ecobio Manager – Our proposal for the first-period reporting

We provide a free trial account for Ecobio Manager’s Taxonomy classification and reporting tool for non-financial companies. By which, your team can disclose according to the first period’s requirements. The offering is valid until the end of March 2022. Its value is 3000 euros.

Act now! Please contact us and request your access to Ecobio Manager and book a demo presentation: sales@ecobiomanager.com.

Text: Sanna Perkiö

Source: https://ec.europa.eu/info/files/sustainable-finance-taxonomy-eligibility-reporting-voluntary-information_en

January 5, 2022

Define total turnover, Capital expenditure and Operating expenses, of the Taxonomy-eligible economic activities in non-financial companies

Last December, The European Council adopted the Delegated Act (2021/2178/EU) related to Taxonomy methodology and disclosure obligations for financial and non-financial companies.

In 2022, non-financial companies shall disclose only information of Taxonomy-eligible activities for the environmental objectives of climate change mitigation and climate change adaptation.

From 1 January 2022 until 31 December 2022, non-financial undertakings shall only disclose the proportion of Taxonomy-eligible and Taxonomy non-eligible economic activities in their

total turnover,
capital expenditures, and
operational expenditures.

In addition, non-financial undertakings need to provide relevant qualitative information associated with the eligibility proportions.

Ecobio has published a whitepaper that provides more implementation guidance on the EU Taxonomy classification and reporting for non-financial companies. Please find the latest whitepaper here.

Upcoming for non-financial companies

In Q1/2021, the European Union will adopt

Taxonomy classification criteria for nuclear power and natural gas, and
Technical Screening Criteria for remaining environmental objectives.

Ecobio Manager – Our proposal for the first-period reporting

Act now! Please contact us and request your access to Ecobio Manager and book a demo presentation: sales@ecobiomanager.com.

With best regards,

Ecobio’s Taxonomy team

Katrine Hoset

Senior Consultant, Account Manager, PhD.

Sanna Perkiö

Head of Innovations, D.Sc.

Malena Weuerlander

Key Account Manager

December 10, 2021

Webinar 27.1: EU Taxonomy Reporting in 2022 – What are the obligations and how to use digitalization in reporting?

Join our EU Taxonomy webinar on the 27th of January!

In our webinar, Ecobio’s EU taxonomy experts will briefly review the current environmental classification and reporting obligations of the EU Taxonomy for large companies and entities regarding 2022 reporting. The webinar focuses on the requirements of large listed companies and non-financial entities.

Why is EU taxonomy reporting timely?

The EU Taxonomy Regulation requires large organizations to assess and report annually the financial impact of environmentally classified activities. In the spring of 2022, large listed companies and other non-profit organizations will report for the first time in accordance with the regulation.

The EU Commission has created a complex system that makes it easy for companies to get lost without expert help and a systematic way of working. Our webinar presents the steps of first-year taxonomy reporting and introduces an easy and comprehensive digital solution to meet the complex requirements. The taxonomy requirements will expand next spring, making it profitable to take advantage of the efficiency offered by digitalization. As an added benefit, we offer a free trial use of Ecobio Manager for taxonomy-obliged participants for a limited time.

Webinar agenda

Our taxonomy experts will answer the following questions in the webinar:

What are the benefits of the EU taxonomy regulation?
Which entities will be affected by the EU taxonomy in 2022, and what are the obligations?
How are economic activities identified, and how do you perform an eligibility assessment?
What key performance indicators should be reported and how?
What else is required for financial reporting?
How will the EU taxonomy develop in 2023 and the future?
How can digitalization help with environmental classification and reporting?

During the event, it is possible to ask questions of our experts in the chat.

To whom?

The webinar is aimed at financial and sustainability reporting officers of listed companies and other public interest entities, financial- and sustainability experts and those in charge of EU Green Bonds.

What are the additional benefits for the webinar participants?

We offer your company a free trial (worth 3 000 €) to our digital taxonomy solution, Ecobio Manager, until the end of March 2022. During the trial, you can conveniently use digitalization to classify and report your data according to the first year’s requirements. The offer is intended for participants with taxonomy obligations.

We give you the opportunity to take advantage of the added benefit even before the webinar. Contact us by email at sales@ecobiomanager.com, and we will open the service for your company.

When?

The free webinar in English will be held on Thursday, January 27, 2022, from 11:00 to 11:40 (UTC+2)!

In case you are interested in the topic but would prefer to listen to the webinar in Finnish you can register for the Finnish webinar (27.1.2022 at 10.00-10.40) here.

Welcome to listen and ask about the current EU environmental classification!

Read more about Ecobio here and Ecobio Manager here.

December 9, 2021

The Climate Delegated Act to the EU Taxonomy Approved and Ready to Be Applied

The delegated act on the climate part of the EU regulation (2020/852) on taxonomy – the first delegated act presented by the European Commission – was approved by the majority of the Member States. The delegated act specifies the technical screening criteria for environmental objectives of climate change mitigation and climate change adaption – two of six environmental objectives included in the EU Taxonomy. The Official Journal has published the decision on Thursday, the 9th December 2021.

This approval means that the large public-interest companies with more than 500 employees can accelerate their preparations to disclose this year’s taxonomy eligible economic activities as defined in the climate delegated act.

Before the end of the year, the Commission will present a complementary delegated act concerning the inclusion of fossil gas and nuclear in the taxonomy. No official date has yet been set.

Would you like to have more information about EU Taxonomy?

Please subscribe to Ecobio’s EU Taxonomy News here and book a presentation for Ecobio Manager’s digital taxonomy tool here.

Text: Sanna Perkiö & Katrine Hoset

Picture: Shutterstock

Source: European Parliament, 9.12.2021

November 25, 2021

Three steps for EU Taxonomy Reporting – Deadline coming soon

Are you ready to report EU Taxonomy eligibility as a non-financial entity? In the EU, this year will be the first EU Taxonomy reporting period to disclose in 2022 for non-financial listed companies with over 500 employees on average during the reporting period (Prop. 2021/22:11).

During the first year, non-financial companies shall disclose the proportion of total turnover, total CapEx and total OpEx that consist of environmentally sustainable economic activities eligible with the EU Taxonomy. I.e., the activities within one of the defined categories for which the Taxonomy regulation provides sustainability criteria. Reporting on eligibility already in 2022 will ensure that companies required to report complete KPIs on Taxonomy alignment from 2023 will be better prepared for the work of classifying and defining the financial reporting level necessary to comply with the Taxonomy regulation.

Three steps for EU Taxonomy Reporting

The following three steps guides reporting for the first year:

Step 1. Economic activity. Identify each potential economic activity, including a subset of transitional and enabling economic activities

Step 2. Eligibility. Assess eligibility by comparing your economic activity with the Taxonomy defined activity category descriptions and NACE codes.

Step 3. Reporting KPIs. Report eligibility as the proportion of total turnover, total CapEx and total OpEx, including relevant contextual information on how eligibility has been determined and implemented in the necessary calculations.

The turnover KPI represents the proportion of the net turnover derived from products or services that are taxonomy eligible. The turnover KPI gives a static view of the company’s contribution to environmental goals.

The CapEx KPI represents the proportion of the capital expenditure of an activity that is either already taxonomy-aligned or is part of a credible plan to extend or reach taxonomy alignment. CapEx provides a dynamic and forward-looking view of companies’ plans to transform their business activities.

The OpEx KPI represents the proportion of the operating expenditure associated with taxonomy-aligned activities or the CapEx plan. The operating expenditure covers direct non-capitalised costs relating to research and development, renovation measures, short-term lease, maintenance, and other direct expenditures relating to the day-to-day servicing of property, plant and equipment assets that are necessary to ensure continued and effective use of such assets.

The European Council will make a final decision about the schedule on the 8^th of December, 2021.

Digitalise your EU Taxonomy work process

With the deadline for the first reporting requirements regarding EU Taxonomy is approaching, it is beneficial to already from the beginning take advantage of the efficiency offered by digitalisation. Ecobio Manager is the world’s first comprehensive taxonomy solution, including a smooth classification process and up-to-date legal databases, as well as an environmental risk assessment protocol. So far, there has been no service with similar coverage in the global market.

With Ecobio Manager, you can turn the complex set of EU Taxonomy reporting requirements into a smooth and straightforward digital work process for your team. The digital solution includes a demanding entity of requirements always available and effectively managed. Our easy and comprehensive tool contains everything you need to meet the requirements of EU Taxonomy classification and reporting

Get expert advice and join our presentation

Presentation of our digital solution

Do you need help with EU Taxonomy classification and reporting? Join our presentation of the world’s first comprehensive digital solution for the EU Taxonomy! During our 30 min presentation, we present our easy and comprehensive tool containing all you need to meet the EU Taxonomy classification and reporting requirements.

Expert advice and personal demo account

Do you have questions regarding EU Taxonomy and need advisory? Do you want a presentation of our digital solution regarding EU Taxonomy? Contact our EU Taxonomy expert Katrine Hoset to get expert advice and an in-depth presentation of the comprehensive solution. Do not hesitate to ask our expert about a personal demo account to try out our platform.

Please get in touch with us

Katrine Hoset

Account Manager, Senior Consultant

katrine.hoset@ecobio.fi

+358 (0)20 756 2306

Read more about our EU Taxonomy digital solution here and our sustainable finance consultancy services here.

October 18, 2021

Safer Chemicals Conference 2021

The European Chemicals Agency (ECHA) organized a virtual Safer Chemicals Conference on 6 October 2021. Ecobio attended the event.

The conference focused on the chemical strategy and several related themes, which will affect e.g. the chemicals legislation and substance restrictions. The goal is a non-toxic environment where chemicals contribute to society while avoiding harm to the environment and humans. Three core issues of the chemicals strategy are 1) increasing the protection of the environment and people 2) innovation and 3) simplifying and consolidating the current legal framework.

The issues raised by the conference presentations and speeches included:

New safe chemicals and materials are needed, and innovation is an integral part of it.
Definition and criteria for a sustainable chemical are needed. Criteria must be introduced.
Research funding should support the development of safe and sustainable chemicals.
The chemicals strategy is not only about sustainability, but also includes measures for the circular economy and digitalisation.
A full life cycle assessment of chemicals is needed to ensure safety and sustainability.

The presentations addressed the grouping of substances to speed up and harmonize restrictive measures, the replacement of hazardous solvents by less harmful ones, PFA restrictions, the new Clean Drinking Water Directive, and nanomaterials. In addition, PCN and SCIP notifications and changes made in relation to them were reviewed.

Additionally, one of the themes of the event was compliance. Conformity and enforcement of products and chemicals will be strengthened through more frequent checks. ECHA supports companies in compliance e.g. with informal reviews through the Voluntary Action Plan.

The new features of PCN notifications for hazardous mixtures were reviewed. For example, it is possible to make notifications for several mixtures at the same time, provided that they have the same classification. Discontinuation of the product may also be indicated in the notices. Furthermore, new situations where the notification needs to be updated were discussed. Updates have also been made to the PCN format and the submission of notifications has been improved, e.g. through the System-to-System (S2S) service.

Obligation for notifying on Substances of Concern In articles as such or in complex objects (Products) was discussed as well as the preparation of the notification, and the public SCIP database and its use. A SCIP notification or a Simplified SCIP notification (SSN) must be made for articles containing more than 0.1 % of any Substance of Very High Concern (SVHC). Companies’ challenges in the SCIP notification obligation include the relatively short notice that was given to prepare for the new obligation and gather the necessary information in complex supply chains. Despite the difficulties, a significant number of SCIP notifications have already been made to the SCIP database.

In addition, the concerns of the companies were heard in the discussions and chat rooms of the event. The following ideas were put forward:

Companies need clear criteria and direction to invest in as quickly as possible. It takes time to achieve the given goals and make the necessary changes.
There must also be a market for sustainable and safe chemicals. Companies may face questions such as: How much more can a sustainable chemical cost? How much of the product’s properties are allowed to deteriorate?
In companies, a decrease in the consumption of chemicals may mean a decrease in growth.

The materials and recordings of the event are available at ECHA’s website here.

Text: Anne Kallioinen & Mikael Hirn

Picture: Shutterstock

October 11, 2021

Join our presentation of the world’s first comprehensive digital solution for the EU Taxonomy!

Do you need help with EU Taxonomy classification and reporting? Join our presentation of the world’s first comprehensive digital solution for the EU Taxonomy!

Join us for a free 30 min presentation and we will show how the new section in our digital solution, Ecobio Manager, will help you to turn the complex set of EU Taxonomy requirements into a smooth and straightforward work process for your team.

With the requirements for the EU Taxonomy soon coming into effect, it is beneficial to have an innovative, efficient, and in-depth solution at hand, to get the process toward compliance started.

Join our presentation to learn:

How you can benefit from digitalization during classification and reporting
How our easy-to-use and comprehensive digital solution works
How to create a smooth and straightforward work process for your taxonomy team

During the event, you are also able to ask questions from our experts. Please register using your business email address.

The free online presentations are held on Wednesdays at 13.00-13.30 (UTC+2). You can find the presentation dates and register here.

You are warmly welcome!

Are you unsure whether you are in or out of the EU Taxonomy classification and reporting requirements?

Take our EU taxonomy quiz and determine whether your company is affected by the EU Taxonomy regulation. Take the quiz here.

Our recorded webinars can be found on our homepage

In our webinar library, you can find our recorded webinars that you can watch whenever you find most suitable for you! You can find our webinar library here.