The challenge of corporate sustainability reporting for organizations in relation to the new report “Supporting ESG reporting standards”
In January 2024, the Spanish Association for Standardization (hereinafter, UNE) issued a report entitled “Supporting ESG reporting standards“, with the aim of encouraging the application of specific standards by Spanish organizations in their sustainability reporting.
The purpose of this note is to provide a comprehensive approach to corporate reporting, focusing especially on the benefits inherent to this process and the main aspects regulated in the various reporting areas.
In accordance with the guidelines established by UNE, expressed in the aforementioned report, the aim is to promote the use of UNE, EN, ISO and IEC standards (hereinafter, the standards) by organizations in Spain. The main objective of this initiative is to ensure compliance with the provisions established in the Corporate Sustainability Reporting Directive (EU) 2022/2464 (hereinafter, CSRD).
The CSRD establishes reporting obligations in the field of sustainability, addressing three (3) specific dimensions: environmental, social and good governance, known as ESG (hereinafter, ESG). The main purpose of these obligations is to comply with the European Green Pact, an initiative launched by the European Commission in 2019, with the aim of promoting a sustainable European market.
The current reporting context is based on the provisions of the European Sustainability Reporting Standards, which intensify the requirements of the European regulatory framework in conjunction with other European Union regulations.
Although it is clear that Spanish organizations will have to devote significant resources and efforts to align their operations with the established standards and comply with the corresponding minimum criteria, compliance with legislative obligations contributes to the generation of competitiveness for the following reasons:
- It facilitates the efficient use and optimization of the resources, efforts and procedures that entities devote to compliance with current regulations.
- It provides a wide range of standards in the field of sustainability that stand as a reliable, solid and recognized source, both qualitatively and quantitatively.
- Standardization is based on consensus and transparency, thus ensuring effectiveness in the implementation of regulations, not only at European level, but also at state, regional and local levels, highlighting its relevance in the field of public procurement.
- It constitutes a facilitating tool in the process of verification of sustainability information, simplifying the work of auditors and verifiers, while providing investors and stakeholders with a comprehensive view of their financial, social and environmental performance, as well as risk management and regulatory compliance.
With regard to the standards that regulate the areas defined by the ESG criteria, those that address the following matters stand out:
- In the environmental area, standards that quantify greenhouse gas emissions and promote the circular economy, facilitating their measurement within the organization, gain relevance. These standards are covered by UNE-EN ISO 14064-1 about Greenhouse gases (inventory) and ISO 59020 about Measurement and evaluating circularity, respectively.
- As for the social dimension, there are regulations aimed at ensuring a stable working environment, as established in the UNE 19604 about social and labour compliance management systems standard; as well as standards that guarantee inclusion, with ISO 30410 about diversity and inclusion, being a support in this area.
- Standards related to good governance provide organizations with specific tools for managing regulatory compliance in areas relevant to criminal law, through the UNE 19601 about Criminal compliance management systems standard, as well as taxation, with the support of the UNE 19602 about tax compliance management systems standard. In addition, these standards facilitate effective risk management, in accordance with the provisions contained in UNE-ISO 31000 about risk management, among other relevant regulations.
After this analysis, it is worth mentioning the relevance of Compliance in the process of standardization and reporting on corporate sustainability. Compliance, as a facilitating tool for responsible business management, stands as a guarantor of transparency, as well as risk management and mitigation, anticipating future challenges in the field of sustainability.
In this sense, the effective integration of regulatory obligations in the area of sustainability and Compliance ensures that the company complies with applicable legal and ethical standards.
In conclusion, the use of standards by Spanish organizations and regulatory compliance are intertwined in the pursuit of sustainable and ethical business management. Effective implementation of both practices not only contributes to the long-term success of the organization, but also fosters the confidence of investors, customers and other stakeholders in the entity.
Molins Defensa Penal, Department of Compliance.