Sustainable corporate governance: implementing ESG-compliant practices

THE KEY TO EFFECTIVE SUSTAINABILITY MANAGEMENT

Effective sustainability management requires interdisciplinary collaboration and smooth processes across all areas of the company.
Those responsible for ESG often face immense challenges if sustainability-relevant information and data are not immediately available or key contacts are not involved.

WHAT IS MEANT BY ESG?

ESG (Environmental, Social, and Governance) stands for environmental, social and corporate governance. These are criteria that are used to assess companies in order to measure their sustainability and social responsibility.

• Environmental refers to how a company deals with environmental issues such as climate change, resource consumption, pollution, etc.
• Social relates to a company's relationships with its employees, suppliers, customers and the community in which it operates. This includes issues such as working conditions, diversity and inclusion, human rights, etc.
• Governance refers to the way in which a company is managed and controlled, including issues such as transparency, ethical behavior, board structure, anti-corruption, etc.

The integration of ESG criteria into business practices is becoming increasingly important, as investors and consumers are attaching more and more importance to sustainable and socially responsible action.

ESG REPORTING: CHALLENGES FOR SMALL AND MEDIUM-SIZED ENTERPRISES

As part of the EU ESG regulation, many new reporting and disclosure obligations must be observed as a result of the CSRD, LkSG, CSDDD and the EU taxonomy. The disclosure requirements of the CSRD and ESRS in particular pose enormous challenges for SMEs.

The extension of the CSRD reporting obligation means that up to 15,000 companies in Germany alone will be directly affected by the new disclosure requirements in future. Many more SMEs, as part of the value chain of companies already subject to reporting requirements, will also be indirectly obliged to disclose, irrespective of current areas of application.

Fulfilling these requirements in accordance with the directive poses a number of challenges:

• Overview of dynamic legislation in the area of sustainability:
  The ongoing changes and additions to legislation in the area of ESG present companies with the challenge of always staying up to date and adapting their strategies accordingly.
  
  
• Knowledge deficits, capacity bottlenecks and interdisciplinary collaboration:
  Meeting ESG requirements requires extensive knowledge and interdisciplinary collaboration within the organization. However, there is often a lack of both the necessary expertise and the human resources to fully meet the requirements.
  
  
• Procurement and processing of ESG data:
  The collection and processing of environmental indicators such as CO2 emissions in particular presents many companies with considerable difficulties. The availability and quality of this data are often insufficient to ensure reliable reporting.
  
  
• Avoiding greenwashing:
  When communicating sustainability efforts, there is a risk of unintentionally greenwashing. It is essential to report transparently and honestly on your own measures in order not to jeopardize the trust of stakeholders.
  
  

ACHIEVING ESG COMPLIANCE -
WITH CROSS-FUNCTIONAL COLLABORATION AND SHOPFLOOR MANAGEMENT

The"Shopfloor Management (SFM)" method, in combination with the digital SFM tool ^{ValueStreamer®}, can support the collection of sustainability data and the creation of transparency and efficient processes based on this data.
Its use plays a decisive role in data collection, active sustainability management and reporting.

To be mentioned here are:

• The strategic derivation and deployment of ESG-compliant business practices and objectives.
• The optimal interaction of the areas with the aim of achieving an optimal, i.e. minimal but sufficient bureaucracy.
• The simple, effective and efficient collection, aggregation and evaluation of data.
• Tracking measures to achieve the strategic objectives and targets in terms of ESG/sustainability.
• The standardization of processes by setting up digital twins, according to which the relevant processes for legally prescribed and ESG-compliant business practices must run as efficiently as possible.
  
  

OUR SOLUTION FOR ESG-COMPLIANT BUSINESS PRACTICES

This is why ClimateGrid GmbH and Staufen.ValueStreamer GmbH have strategically joined forces to support companies on their ESG journey in precisely these areas. By pooling our resources and expertise, we can help companies develop effective solutions on the path to Net-Zero.

cap-on, an expert in the field of IoT data connectivity and "Asset as a Service", is also part of this cooperation. By focusing on the collection of production data, cap-on helps to determine asset-related emissions and energy intensities. This enables an even more precise and comprehensive collection of ESG data, which is essential for sound and transparent sustainability reporting.

Authors:

Dr. Fabian Lenz (Cap On & Climate Grid)

Dr. Andreas Romberg (STAUFEN. ValueStreamer GmbH)

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