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econsense - Forum Nachhaltige Entwicklung der Deutschen Wirtschaft

econsense

econsense is a network of 53 internationally operating companies with a common goal: They want to actively shape the change to a more sustainable economy and society.

Lobbying Activity

Response to European Sustainability Reporting Standards

30 Jun 2023

econsense Forum for Sustainable Development of German Business e.V. is a network of 49 internationally operating companies, the majority of which are listed and are therefore already subject to the reporting requirements of the NFRD/CSR-RUG. econsense acts as a sustainability network. Therefore, we do not speak for the German economy as such but contribute to this consultation based on the experience and knowledge of our members. We support the CSRD's goal of making sustainability information more standardized, robust, and comparable using mandatory standards, the ESRS, and thereby facilitating the use of this information for key stakeholders. In general, we highly appreciate the efforts made by the European Commission (EC) to address the various concerns and implementation issues previously addressed. In fact, we welcome the simplifications that have been taken into account in the final draft of the ESRS. In the interest of practicability, we recommend following this path prescribed by the EU and making further adjustments especially in the interests of a legally defensible, appropriate application of the standards. Please refer to the attached file for the "General comments" as well as the "Specific comments on Annex I" and the "Specific comments on Annex II".
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Meeting with Malte Gallée (Member of the European Parliament, Rapporteur for opinion)

10 Feb 2023 · Due diligence legislation in Europe and Germany

Response to Sustainable corporate governance

23 May 2022

econsense is the German Business Network for Sustainability. Our members are 45 large, internationally operating companies from various sectors committed to sustainable development. They have long engaged with human rights due diligence based on the UN Guiding Principles on Business & Human Rights. econsense has already shown support for the EU-Commission’s initiative in the public consultation from 2021, as we prefer a supranational legislation on due diligence over differing national laws. We will share our feedback on the following six aspects, which are most relevant to our members. A more detailed statement can be found attached. 1. Need for a Risk-based Approach and Reasonable Effort We welcome that the due diligence requirements of the draft Directive are based on renowned international frameworks. However, by including all established business relationships in the due diligence scope the Directive does not follow a risk-based approach on the basis of reasonable effort. The concept of established business relationships still needs further clarification. In the proposal it includes direct and indirect business relationships and therefore neglects the significant difference in a company’s influence between the two. Comprehensive due diligence requirements should only be applied to direct suppliers. 2. Need to Limit Responsibilities Along the Value Chain Implementing the drafted due diligence efforts along the entire value chain is beyond a company’s sphere of influence and not feasible. There is a need for clarifying and limiting the scope of responsibility according to a company’s ability to influence. Especially for downstream obligations sector-specific approaches are needed, as the lifecycles of different products vary immensely. 3. Need to Clarify Obligations Derived from Conventions and Need for Focus on Human Rights The annex lists a comprehensive number of human rights conventions and several environmental conventions. However, it lacks the clarification of concrete obligations for businesses resulting from these international conventions. This creates an additional burden for companies and could lead to very different interpretations among them. The inclusion of several environmental obligations as well as the requirement of a climate plan extend the due diligence scope widely and thus lead to an overburden of the framework. 4. Need to Restrict Civil Liability According to the Obligation of Means We welcome that the draft Directive establishes an obligation of means. However, this is not reflected in the comprehensive liability scheme with its rebuttable presumption. Due performance of the obligations should consequently limit civil liability. Also, civil liability concerning third parties creates an uncontrollable risk for companies and could, as a consequence, lead to disengagement from certain high-risk markets. 5. Need for Policy Coherence and Harmonized Transposition We welcome that the draft Directive does not create separate reporting requirements but refers to the upcoming Corporate Sustainability Reporting Directive (CSRD). We encourage further policy coherence with disclosure obligations, e.g., through other due diligence regulations or the EU-Taxonomy. Also, fragmentation due to national differences in transposing the Directive needs to be avoided. Therefore, any ambiguous terms need to be clearly defined before Member States implement the Directive into national law. In order to prevent a competition for lowest or highest standards within the European Union, the Member States’ competency to define national specifications needs to be restricted. 6. Need for Strong Accompanying Measures and Support We welcome the accompanying measures of the draft Directive and would like to see them strengthened, especially the role of initiatives. Companies’ current engagement needs to be recognized as well as established standards and processes.
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Meeting with Axel Voss (Member of the European Parliament, Shadow rapporteur)

31 Aug 2021 · Corporate Sustainability Due Diligence

Response to Revision of Non-Financial Reporting Directive

13 Jul 2021

econsense – Forum for Sustainable Development of German business is a network of 40 large international companies dedicated to sustainability. Sustainability reporting has a long tradition among our members and we welcome the EU Commission’s ambition for an upgrade of sustainability reporting. econsense has been actively involved in the design of sustainability reporting in Germany, at the EU level and internationally for many years based on the experience of its members. That is also the reason why econsense has acted as EFRAG's partner at an outreach event in Germany on "Preparatory work on EU sustainability reporting standards" in January 2021. General comments on the regulation of sustainability reporting and the CSRD: - We explicitly welcome the further development of the terminology of the EU-COM from "non-financial reporting" to "sustainability reporting". - Sustainability reporting has two central functions: It is a strategic instrument for preparing companies and provides key figures relevant for decision-making in financial markets. Any changes in sustainability reporting requirements should pay respect to both functions. - An international perspective on sustainability reporting is to be preferred strongly, the EU-COM should only consider setting European standards if internationally recognized regulations are, despite all political efforts, not enforceable. - The CSRD needs to be coherent with other disclosure related initiatives (Taxonomy, SFDR). Proving compatibility cannot be the task of the companies in the first reporting cycle. - Standard development must draw on the experience of international standards such as GRI, SASB, GHG Protocol, or IIRC and the activities of the IFRS foundation. Preparers’ experience must be incorporated into the development process of standards. In this context, the time span between the final standards release (Oct 22) and the start of the reporting year 2023 is far too short. Comments on selected key aspects and changes of the CSRD: - EU-COM should set up a transparent and participatory development process within EFRAG that provides for balanced participation of all stakeholders, in particular the real economy and investors. We recommend the establishment of a permanent preparer forum at EFRAG that is generally included to evaluate the implementation of the standard and developments. - EFRAG needs a due process and appropriate governance structures that reflect the relevant stakeholders. An EU standard has to be co- developed by EFRAG and stakeholders in a transparent process as a binding legislative text that cannot be rejected or changed unilaterally by EU-COM in the end. - We support the definition of the management report as the place of sustainability reporting, full integration, as well as a separate section, should both be explicitly mentioned options. - It is not yet possible to comment on the report contents in detail before they are concretized in the course of developing the EU reporting standard. - We support mandatory third-party audits of sustainability information with "limited assurance" but the timeline is ambitious particularly for first- time preparers. - It is too early for a binding specification of the tagging of sustainability information. Experience gained from the application of the European Single Electronic Format (ESEF) should be incorporated into the application to sustainability information. We therefore recommend the EU-COM to postpone the project for mandatory tagging of sustainability information until further experiences can be reasonably taken into account. Please see also see the full PDF version of our contribution and contact Nadine-Lan Hönighaus, Executive Director of econsense, for further exchange at n.hoenighaus@econsense.de
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Response to Commission Delegated Regulation on taxonomy-alignment of undertakings reporting non-financial information

2 Jun 2021

As a network of large, internationally operating companies dedicated to sustainability, econsense supports the Sustainable Finance activities in the EU and considers the Taxonomy as a useful tool to foster sustainable investments and enhance transparency. We have identified the following key considerations and will provide feedback for practical implementation based on the experience and knowledge of our members: • The disclosure of the KPIs on an activity level is unprecedented and current reporting processes are not designed for this. The timeframe available for non-financial undertakings to implement the disclosure requirements stipulated is too short. • The reporting requirements for the disclosure of the KPIs for non-financial undertakings present an unjustified level of granularity, leading to the disclosure of sensitive information (detailed strategic investments and technologies) and resulting in a competitive disadvantage for European non-financial undertakings. • The added value for the data user (investors) of this granular reporting remains unclear. • The reporting obligation should only be applied forward-looking and not retroactively for five years. Please find attached our detailed feedback and recommendations to facilitate good practical implementation of this draft Delegated Act.
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