ESG: A topic for each and every company?
You think that ESG does not concern you – after all, you are not listed on the stock market? Unfortunately, we have to destroy this illusion: Good ESG reporting is becoming increasingly relevant for non-listed companies as well:
What are the obligations of listed companies?
Since 2017, most listed companies have been subject to the provisions of the CSR Directive Implementation Act (CSR-RUG). The CSR-RUG requires companies to submit a non-financial statement if they are listed on the stock exchange, have total assets of more than 20 million, generate at least 40 million in sales and employ at least 500 people group-wide. Thematically, they must take a stand on the following five issues: Environmental concerns, employee concerns, social concerns, respect for human rights and the fight against corruption and bribery. The statement can be made in the annual report (in the Management Report or outside it) and/or in a separate sustainability report.
In addition, investors have been increasing ESG pressure in recent years. For example, BlackRock, the world’s largest asset manager, recently issued warnings to 244 corporations on climate risks and even refused to approve individual members of the supervisory boards and the entire board of 53 companies. As asset owners increasingly demand sustainable investments, companies must collect and publish more and more ESG information. Large investors use this information directly, and smaller investors indirectly, by drawing on ESG ratings produced by specialized ESG rating agencies. In the worst case, poor ESG ratings can be the reason for non-investment or disinvestment.
Even non-listed companies can no longer duck away
However, ESG issues are also becoming increasingly relevant for companies that are not listed on the stock exchange. For example, larger companies that also regularly issue bonds are already being evaluated by individual ESG rating agencies.
As part of the supply chain of other companies, more and more companies are now subject to disclosure obligations towards their business partners. Large companies in particular expect their upstream supply chains to provide detailed information on ESG issues. One example is the disclosure of CO2 emissions that occur during the manufacturing of an intermediate product. These are required by clients in order to be able to report CO2 Scope 3 emissions (i.e., emissions from upstream and downstream supply chains). If a supplier is unable to report its own CO2 emissions, in the worst case it could lose its business.
In addition, ESG issues also influence lending and bond issuances. Banks and other players are increasingly experimenting with better financing terms if they rate the ESG performance of a company positively. In addition, there are new financing options such as so-called green loans or green bonds. These are loans and bonds whose proceeds are intended to finance sustainable projects within the company – for example, if a company wants to put a solar system on the roof of a factory or convert its fleet to electric cars. Companies can benefit from more favorable conditions with these financing options: for green bonds and loans, a lower spread is typically required due to the current high demand.
ESG: A topic for each and every company
While non-listed companies should definitely not ignore the issue of ESG, listed companies must be careful not to target their ESG communication exclusively to the capital market, but to also address their employees and customers – both in the B2B and B2C sectors.
We support you in developing a 360° ESG communication that makes your various stakeholders happy:
Click [HERE] to learn more about the ESG competencies of cometis.