FAQs

Find out about the main sustainability regulations applying to your business

Starting with the Green Deal, the EU is establishing more and more sustainable regulations that will apply to SMEs and startups from 50 employees - find out more in our FAQs!

FAQs

• What is the Whistleblowing Directive and why should I care? In December 2019, the EU approved the EU Whistleblobwing Directive. Starting from 2019, EU countries had two years to transpose the Directive into national law. Some countries have already transposed it, while others will soon do so (German law is expected for fall 2022). Check your country on the Whistleblowing Monitor. The Whistleblowing Directive requires companies with at least 50 employees to implement a whistleblower system that allows for confidential reporting by employees and third parties. The Directive requires both establishing an internal reporting system as well as an external one. In both systems, the person receiving the report should be able to act independently.
• Which companies should comply with the Whistleblowing Directive and when? As soon as the Directive is transposed in your country, companies will be required to set up their Whistleblowing system.
• What is the Corporate Sustainability Reporting Directive (CSRD)? The CSRD is grounded on the Non-Financial Reporting Directive (NFRD), which introduced the first principles and rules for sustainable reporting for large companies within the EU. This new Directive answers the need to establish a common reporting framework that ensures complete disclosure and comparability, including SMEs
• Which companies will have to comply with the CSRD and when? The final text is still under discussion and should be approved by the end of 2022; after that, EU countries will have to transpose the Directive into national law. Contact us and complete our questionnaire to understand all the regulations and deadlines applying to you.
• What is the EU Taxonomy? Entered into force in July 2020, the EU Taxonomy is a regulation. It consists of a framework which determines if an economic activity can be defined as environmentally sustainable based on four conditions that economic activity must meet to qualify as environmentally sustainable.The EU Taxonomy regulation established 6 environmental objectives: For each economic activity, the Taxonomy sets specific technical criteria that must be met to define the activity as “Taxonomy compliant”.
  1. Climate change mitigation
  2. Climate change adaptation
  3. The sustainable use and protection of water and marine resources
  4. The transition to a circular economy
  5. Pollution prevention and control
  6. The protection and restoration of biodiversity and ecosystems
• What is the Taxonomy timeline? Which companies will have to comply with the Taxonomy?
  • Companies with more than 500 employees which are required to report according to CSR-RUG, will have to report in January 2022 for the FY 2021.
  • Companies with more than 250 employees and a €20M balance sheet total or €40M turnover will have to report starting from 2024 (on FY 2023).
  • Capital market-oriented SMEs will have to report starting from 2026 (on FY 2025).
• What is the Lieferkettengesetz (LkSG)? Published in the Federal Law Gazette in July 2021, the LkSG or Supply Chain Act is a German law. The Act requires companies of a certain size to conduct due diligence of the supply chain to establish a risk management system to identify, prevent or minimise the risks of human rights violations and environmental damage. The Act sets out the necessary preventive, and remedial measures, makes complaint procedures mandatory, requires regular reports, and establishes administrative fines in case of non-compliance.The risk management system should consider the actions of the company within its own business area, the actions of contractual partners, and the actions of other (indirect) suppliers.
• Which companies must comply with the LkSG (Lieferkettengesetz -Supply Chain Act)? The LkSG sets clear requirements and timeline. Companies operating in Germany will have to establish, depending on their size, a risk management system in line with the LkSG’s requirements, revise it every year and publish an annual report on their website.

Sources:

• EU Whistleblowing Directive
• CSRD Proposal EU 21.04.21
• EU Taxonomy
• LkSG German Federal Ministry of Labour and Social Affairs

Unsure which regulations apply to you and how to proceed?