Sustainability management

Extract from S1 paragraph 4.

This standard covers a company's own workforce, which includes both people who are employed by the company ("employees") and non-employees who are either people who have a contract with the company to perform work ("self-employed") or people who are supplied by companies primarily engaged in the "supply and leasing of labor" (NACE code N78). Examples of who is part of the own workforce can be found in Application Requirement 3. The information to be provided in relation to non-employees does not affect their status under applicable labor law.

In addition, application requirement 3, to which reference was made in the previous paragraph.

Persons covered by the term "own workforce" are, for example, the following:
a) Contractors (self-employed persons) within the company's own workforce include, for example:
i. Contractors who are commissioned by the company to carry out work that would otherwise be carried out by an employee,
ii. Contractors hired by the company to work in a public area (e.g. on a road),
iii. Contractors hired by the company to perform work/services directly at the workplace of a customer of the company.
b) Persons employed by a third party who perform "employment activities" include persons who perform the same work as employees, e.g.:
i. Persons who fill in when employees are temporarily unable to work (due to illness, vacation, parental leave, etc.),
ii. Persons who perform work in addition to regular employees,
iii. Persons who are temporarily posted from another EU Member State to work for the company ("posted workers").

Source: https://eur-lex.europa.eu/legal-content/DE/TXT/PDF/?uri=OJ:L_202302772, page 166 and 180.

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1. Scope 1 emissions (Direct emissions - Consumed): Direct emissions from sources that a company owns or controls, such as fuel burned in company vehicles and heating oil used in company-owned facilities.
2. Scope 2 emissions (Indirect emissions - Purchased): Indirect emissions associated with the purchase of electricity, steam, heating and cooling. This energy is generated outside the company, so the emissions are indirect and cannot be controlled directly by the company.
3. Scope 3 emissions (Indirect emissions - Utilized): All other indirect emissions that occur in a company's value chain, including upstream and downstream activities. Examples include energy consumption for the production of materials supplied to the company and emissions at the end of the product life cycle.
4. Complexity of calculating emissions: Scope 3 emissions are the most difficult to measure as they include activities that are not directly controlled by the company. They usually form the largest part of a company's emissions, unless it owns significant physical assets.
5. Practical example: A T-shirt manufacturer would include direct emissions from energy consumption in its own factories (Scope 1 and 2). Scope 3 would include upstream emissions such as energy for cotton processing and transportation of raw materials and downstream emissions such as the decomposition of T-shirts in landfills.

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1. Differences between CO2 neutrality and net zero: Although often used interchangeably, CO2 neutrality and net zero differ significantly. Both concepts are concerned with offsetting emissions, but differ in their approaches and requirements.‍
2. Explanation of CO2 neutrality: An organization can achieve CO2 neutrality by measuring its emissions and purchasing offsets to compensate for them. This approach does not require an actual reduction in the organization's own emissions, but helps to achieve an immediate environmental impact.‍
3. Requirements for net zero: Net zero, regulated by the Science-Based Targets Institute, requires significant emissions reductions in all areas (Scope 1, 2 and 3) by 90% without relying on offsets. The focus is on tangible measures such as the use of renewable energies, energy efficiency projects and electrification.‍
4. Alignment with global warming targets: To achieve net zero, an organization must set long- and short-term targets that are aligned with the global 1.5-degree warming scenario. This alignment ensures that the organization's goals contribute to the broader effort to maintain a habitable planet.‍
5. Verification and authenticity: Net zero requires external verification of targets and progress as it follows a recognized standard. This is important to avoid accusations of greenwashing and to ensure that climate targets are meaningful and make a sustainable contribution to environmental protection.

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We primarily support companies in all sectors with between 250 and 5,000 employees who want to take their sustainability management to the next level. Our clients also include smaller and larger companies. Please contact us to find out whether your challenges match our services.

Many of the benefits of Software for sustainability management can be found in the following areas: Data aggregation and management, analysis and evaluation, reporting and communication, risk management, compliance, improving own sustainability and investor relations.

In general, the efficiency of sustainability management (including through automation) is significantly increased. In addition, ESG- Software provides a structure with which sustainability management can be established in the company.

ESG-Software supports companies to implement 100% compliant reporting requirements according to CSRD as well as GHG protocol, EU taxonomy and the regulations for supply chains according to LkSG and CSDDD as well as to track, analyze, manage and report on all ESG key figures.

The CSRD provides for an annual determination. However, the values from previous years can be adopted if nothing has changed in the business model compared to the previous year.

The Corporate Sustainability Reporting Directive (CSRD) is a key EU directive that obliges companies to provide comprehensive sustainability reporting. This directive expands on previous requirements and is designed to increase the transparency and consistency of information on environmental, social and governance (ESG) aspects. The CSRD is particularly relevant for companies that focus on sustainable development and ESG compliance.

In parallel, the European Sustainability Reporting Standards (ESRS) define the specific requirements and criteria for sustainability reporting under the CSRD. These standards, developed by the European Financial Reporting Advisory Group (EFRAG), provide a detailed framework for companies to effectively communicate their sustainability performance. The link between CSRD and ESRS lies in their common objective of promoting standardized and transparent sustainability reporting within the EU.

By implementing ESRS under the CSRD Directive, companies can present their sustainability efforts more effectively, which is of great interest to stakeholders, including investors and customers. This development is particularly relevant for companies that want to improve their ESG strategies and optimize their sustainability reporting.

Even if your company is not currently subject to specific reporting obligations such as the CSRD (Corporate Sustainability Reporting Directive), the LkSG (Lieferkettensorgfaltspflichtengesetz) or the CSDDD (Corporate Sustainability Due Diligence Directive), the use of our Software offers considerable advantages.

Preparation for future regulations: Legal requirements, particularly in relation to sustainability and corporate social responsibility (CSR), are constantly evolving.

By using our Software you remain proactive and are prepared for future regulations that could potentially affect your company.

Improving the CO2 footprint: Regardless of the current reporting obligation, it is important for every company to monitor and minimize its CO2 footprint. Our Software helps you to measure your environmental impact and develop strategies to reduce CO2 emissions.

Improved reputation and competitiveness: Companies that voluntarily invest in sustainability initiatives often enjoy an improved market reputation. By using our Software you demonstrate a commitment to social and environmental responsibility, which increases your attractiveness to customers, investors and potential employees. Proactive risk mitigation: Even if your company is not currently required to report, there may be risks in the supply chain or in other areas. Our Software enables you to identify these risks at an early stage and act accordingly.

The Corporate Sustainability Reporting Directive (CSRD) came into force at EU level on January 5, 2023.

The member states of the European Union, including Germany, must transpose this directive into national law within 18 months. The current timetable envisages that the first companies currently covered by the CSR Directive Implementation Act (CSR-RUG) will report for the first time in 2025 on the 2024 reporting year in accordance with the requirements of the CSRD.

Other companies will follow in the coming years. This represents an important step towards more comprehensive and transparent sustainability reporting in the EU.

The CSRD applies to different types of companies in the EU.

These include: All large companies that fulfill at least two of the following criteria: Balance sheet total: at least 25 million euros.

Net sales: at least 50 million euros.

Average number of employees during the financial year: at least 250.

The CSRD also applies to all companies listed on the stock exchange, including small and non-complex credit institutions and captive (re)insurance companies.