Knowing what ESG is, we can move on to defining our organization's strategy in this area. What is an ESG strategy and why is it important? Reporting on ESG areas under the CSRD directive aims to lead businesses to minimize their negative environmental impact and eliminate socially harmful effects of their operations.
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Another instrument that gains more importance annually in the context of ESG and requires increasing effort from both non-financial and financial enterprises is the EU Taxonomy and taxonomic disclosures. Their goal is to enable an accurate assessment of the impact of enterprises on the natural environment.
The increasing pressure – both regulatory and social – concerning ESG reporting heightens the risk of a phenomenon known as "greenwashing." This practice involves organizations attempting to portray their activities as more environmentally friendly and socially responsible than they are. They hope this will earn them a reputation as a sustainable development-oriented organization, attracting customers and investors without a fundamental contribution of resources and commitmaent to this area.
The role of sustainability is growing undeniably. It has long been not just a "buzzword" but a fundamental value that stakeholders and legislators look at in the context of how companies and institutions operate. The European CSRD (Corporate Sustainability Reporting Directive) organizes how businesses - including financial institutions like banks and insurance companies - will report on their activities in the environmental, social and corporate governance areas at the European level.