The EU is enforcing sustainability with the threat of significant sanctions – increasing the burden on sustainability leaders.
Upcoming EU legislation will affect thousands of companies in the coming years. Infine’s Sustainability and Leadership 2023 research shows that business management is undergoing significant change as a “regulatory tsunami” approaches.
The research by sustainability technology startup Infine involved 18 business decision-makers from over ten different sectors, exploring their views and experiences on sustainability priorities and current challenges.
The decision-makers speak with one voice: There is a significant movement towards comprehensive product responsibility across the entire value chain and overall sustainability management.
“Do no harm” is no longer sufficient; companies must be able to show strategic planning and positive contributions across multiple sustainability dimensions.
Sustainability Competence May Become a Critical Success Factor
“The EU has started regulating and sanctioning things that should already be obvious: in the future, you won’t be allowed to make false claims about environmental friendliness in advertising, and using child labour can get you publicly blacklisted. The Corporate Sustainability Due Diligence Directive introduces significant penalties and forces companies that violate the directive to make their information public. Sanctions are being made effective, proportionate, and dissuasive because the current legislation hasn’t been able to tackle these issues. The new regulations and reporting requirements are more complex and demand new types of data work from companies,” comments Tiina Saukko, founder of the sustainability technology startup Infine.
Starting in early 2024, many companies will also have to report on their sustainability and environmental efforts. The Corporate Sustainability Reporting Directive (CSRD) introduces requirements for the quality and verifiability of the reported data, while companies often haven’t even defined their processes or systems for collecting sustainability data.
With both the Corporate Sustainability Due Diligence Directive and the Green Claims Directive, significant sanctions linked to a company’s revenue and even personal criminal liability for executives will bring new pressure to take control of sustainability. This is comparable to GDPR regulation, where penalties were also around 4% of global revenue.
Understanding country risks is also essential, especially for large companies that are obliged to support small enterprises within their supply chains. For example, in food production chains, managing country risks has been the norm, but this area must be rapidly mapped across other industries as well.
Sustainability Moves to the Core of Business Management
Sustainability leaders feel that the appreciation for their work has significantly increased in recent years. Internal understanding and enthusiasm have grown, and executive support has strengthened. However, the interviewees expressed concern about the knowledge gap between sustainability experts and other staff. Reputational risks can materialise more easily if knowledge levels are inadequate. Quick training across the organisation is more than necessary – it is urgent.
“The results are not surprising,” says Infine CEO Tiina Saukko. “The direction was already evident three years ago in our 2020 Sustainability and Marketing study. What was anticipated back then has come true in many ways – we have moved from isolated solutions to strategic-level sustainability that is integrated into business decisions throughout the organisation.”
Watch Tiina’s summary of the research findings in the video below (In Finnish), or contact Tiina to talk more about how we can help your company to navigate in the new regulation environment and find new opportunities.
Infine
Infine has pioneered the automation of producing sustainability insights directly from product data. The Infine Data Service software combines information from multiple data sources to create a comprehensive sustainability analysis. Supporting the development of the service is the Ostavastuullisesti.fi website and its Sustainability Panel, consisting of experts in sustainable production and consumption. The service is primarily used for portfolio decision-making, creating CSRD reports, and identifying risks related to origin, social responsibility, and environmental responsibility within product portfolios.
For more information, please contact:
Tiina Saukko
CEO, Founder
+358 40 509 5909
tiina@infine.fi