The previous newsletter on the impact of ESG/CSR/RSE communications had to be supplemented by the impact and contribution of the new CSRD financial communication rules, applicable since 01/01/2024.
The CSRD (Corporate Sustainability Reporting Directive) standards are a set of directives established by the European Union to improve and standardize corporate communication regarding their impact on sustainability.
This therefore responds to the growing demand from investors mainly, but from my point of view, to the need to homogenize, to structure this information for all stakeholders interested in the subject (Obviously, more and more numerous, because it is a societal evolution, as everyone knows).
Fundamental Principles of CSRD Standards
1. Transparency and Comparability. Having clear and comparable information, which is the key word of this new approach.There is also a concept that I will refer to as “plain language”. Concept highlighted by the @Labarador teams during the annual transparency trophies. In short, have words, sentences with a common meaning, that everyone can understand, and not hide behind completely esoteric financial, legal verbiage, the nuances of which even professionals sometimes no longer understand.
2. Comprehensiveness: Address relevant topics regarding sustainability, environmental, social and governance impacts.
3. Reliability and verifiability: The information provided must be reliable and verifiable. They are subject to independent external verification to ensure accuracy.
4. Relevance: Relevance is determined by the importance of the impacts to the business and its stakeholders.
5. Accessibility: Information should be easily accessible and understandable to report users. This means that reports should be written clearly and concisely, with explanations of the methodologies used to collect and present the data.
The CSRD standards apply to a wide range of companies, both large listed companies and unlisted companies, but also small and medium-sized companies (SMEs) that exceed certain size thresholds.
Sustainability information must be integrated into company annual reports, thus ensuring a holistic view of company performance.
The CSRD has been in place since 01/01/2024.
The implementation of CSRD standards will be done gradually. Large listed companies will be the first to have to comply with the new requirements, followed by the others in the following years.
The CSRD standards represent a significant change in the way companies report their sustainability performance.
It should be noted that in the digital age, its data becomes much more dynamic. The time when all data was frozen until the publication of the next report (N+1) is therefore over. All reports are interactive, with links and gradually become more dynamic. Hence the great need to inventory, list and store this information appropriately.
Moreover, Bloomberg has just announced that CSRD data is now available on their platform.
As a reminder, the IFRS standards, which I mentioned in the previous issue of this newsletter, are dedicated to financial information, whereas here, we are in the ESG / sustainability register.
These two approaches are complementary and aim for greater transparency.
Feedback
Around 1200 KPIs defined, but companies choose those that are most relevant to them.
Anticipation is key.
Companies must absolutely anticipate, even if they are not obliged to do so in 2024, or even 2025.
You need to start taking inventory of the KPIs relevant to the company and organize yourself accordingly to measure them and implement action plans.
CSR / ESG is a fundamental element of the transformation of companies and adds a structuring and coherence element to their transformation plans.
We need to have a TopDown project with Excom, put governance in place and above all mobilize mid-management, which is a major challenge. It is absolutely necessary to generate buy-in and commitment from the start, but on a daily basis. This is never simple, because it is also added to their everyday operations.
Employees will easily buy in if it is a company project, but middle management will make a strong contribution and will play a critical role in the adoption and implementation of the plans.
There is no other solution than to incentivize them on a significant part of the variable remuneration.
It is above all a transversal project for the different departments of the company.
Certainly, the Finance department will play a vital role. On the one hand, it is the guarantor of the figures and their comparability over time, but also of their accuracy.
Through Investor Relations, Finance must take ownership of ESG content, because they must answer all kinds of questions from investors live.
This therefore considerably changes the profile and recruitment of new finance employees, who must have CSR as a second background to their initial finance training.
CSR/ESG topics represent 25% of investor meetings.
Analysis of investor behavior:
ESG investment funds work together, in groups or pools, and manage meetings together, while traditional investors are on more archaic schemes, having individual interviews, to seek to obtain the little bit of information for differentiation.
American investors are completely different from European investors, with regard to their interests in ESG aspects / commitments / KPIs. For example, the vision of CSR / ESG is seen as a risk in the US. They consider, for example, that the indexation of ESG criteria on manager remuneration is not desirable.
Approach and management
CSR / SRG (Greenhouse Gas Reduction Strategy) and therefore the legal obligation to communicate via the CSRD, generates a need to align risks with the various stakeholders. To ensure consistency, it is therefore necessary to carry out a double materiality analysis.
Communication issues
All rules and good communication practices apply in the same way:
- Control the content and defined scope,
- Anticipate what is outside the scope, because it will be requested by investors,
- Align messages to your audiences,
- Have a communication strategy and clear objectives,
- Be authentic, say what is working, but also what is not going well with the progress to improve,
- Engage your ambassadors, because they will be more authentic, more convincing (employee advocacy programs)...
In the previous newsletter, I referred to an ESG/SBF120 study from @Epsilon Technologies, which measured ESG topics at 10% of communications on social networks, for only 5.7% of views and just 3% of interactions (like & comments).
Which is, all in all, very little in the eyes of end consumers present every day on the various media. There is still a lot of work to be done to improve efficiency.
I had the opportunity to participate in a very good quality conference, organized by @Notified at the end of June. Some of the speakers will find in the comments above some of their testimonies and confirmations…
@Sébastien Valentin (@Carrefour); @benedicte Garbil (@Carbios); @pauline bireaud (@Pluxee); @bertrand biard (@LWMH) @yoann Besse (@grayling)
Companies with purpose & B Corp
When it comes to authenticity, the notion of a company with a purpose appears to be a minimum. This takes on its full meaning here, because it is the starting point for aligning the company's values, its role in society and its commitments to all of its stakeholders.
Small reminder, for once and finally, we have an alignment of the planets which is taking shape between the company, its various stakeholders and the investors.
All eyes converge on commitment and long-term actions. Of course, everything is illustrated through KPIs (investors remaining financial in mind, above all quantitative), but coupled with substantive qualitative actions.
In my opinion, this highlights the intrinsic evolution of the business world, because all roads lead to Rome, all companies must reinvent themselves and adapt to the world, according to new societal expectations, which have been flowering for several years.
Obviously this opens up virtuous reflection on what a company is, or should be, and its transformation as a mission-driven company.
Because even if it means embarking on the path of a company with a reason for being, there is only one step to transform its statutes, to enshrine it deep in its DNA.
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To become a mission-driven company, a company must include its purpose and missions in its legal statutes (B Corporation status). This involves a formal revision of the statutes with the agreement of the shareholders.
The company must create a mission committee, distinct from traditional governance bodies, responsible for ensuring the implementation of the defined missions. This committee may include external representatives to ensure a diverse and independent perspective.
The mission committee regularly evaluates the progress made by the company in achieving its missions. Specific performance indicators are defined to measure the impact of actions undertaken.
But integrating missions into strategy can be a challenge, requiring significant resources and coordination. Feedback illustrates the need to remain simple in the approach and not make it more complex in the launch phases.
Each year, the company must publish a mission report detailing the actions carried out and the results obtained in relation to the objectives set. This report is presented to shareholders and made public to ensure transparency.
Mission-driven companies are also subject to independent verification of their performance by a third-party organization, guaranteeing the objectivity and credibility of the information reported.
Mission-driven companies embody a new vision of entrepreneurship, where economic performance is closely linked to social and environmental impact. By adopting this model, companies commit to contributing positively to society while pursuing financial objectives.
This holistic and responsible approach meets the growing expectations of stakeholders, and paves the way for a more sustainable and equitable economy.
They are very often drivers of innovation, seeking new ways to create value, while respecting their social and environmental commitments. This can lead to the implementation of new business models and the transformation of internal processes.
Here we touch on a subject that is dear to me, the internal alignment of the company, between its values, its missions and its daily operations, which must be powerfully anchored and articulated by management (Top & middle management).
Ultimately, mission-driven companies benefit from a better brand image, increased customer and employee loyalty, and easier access to certain financing and partnerships.
These companies are and will be more differentiating, more virtuous, which is the key word for standing out in a competitive world where attracting and retaining talent becomes crucial, because they are more anchored in reciprocal values.
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Very recent example in France, with @Bel in the world of agri-food which has just adopted the status of mission-driven companies.
“The Bel group and its family shareholders reaffirm their long-term vision, where profitability and responsibility are closely linked. It is the culmination of more than 20 years of commitment, which perennially anchors a pioneering model of sustainable growth, as well as the vision driven and implemented by Antoine Fievet, Chairman of the Board of Directors of Bel, and Cécile Béliot, General Director.
With this new step, Bel reaffirms and inscribes its purpose in its statutes: by providing access to healthier and more sustainable food for all, Bel works to develop a food model that is respectful of the planet's natural resources, which benefits its entire ecosystem and thus allows it to act for today's generations and those of tomorrow.
Social and environmental objectives, in line with the sustainable strategy pursued by Bel for 20 years, as well as a mission committee will also be set up.»
The approach was accompanied by a global “We Share” employee shareholding plan, to make the societal and cultural approach even more concrete.
Reminders & principles:
Mission-driven companies represent a significant evolution in the modern entrepreneurial landscape, integrating social and environmental objectives into their business model. This concept, which is developing in particular in France with the PACTE law (Action Plan for Growth and Transformation of Companies) of 2019, aims to reconcile economic performance and social utility, allowing companies to meet the growing expectations of society in terms of responsibility and sustainability.
The key concepts of committed companies (with a reason for being or said to have missions, etc.)
A mission-driven company is a company, which beyond its business objectives, sets one or more social, societal or environmental missions in its statutes. These missions become commitments that guide the company’s strategy and actions.
Purpose: The purpose of a company's mission is a formal statement that describes the company's contribution to the general interest. It goes beyond simple profit to include long-term objectives, linked to social and environmental issues.
Social and Environmental Missions: These missions are specific commitments made by the company to have a positive impact on society and the environment. They can include objectives such as reducing CO2 emissions, improving working conditions, social inclusion, or even preserving biodiversity.
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My conclusion
The notion of commitments and transparency are dear to mission-driven companies, which must not only define clear missions, but also commit to actively pursuing them. This implies total transparency towards stakeholders, with regular reports on the progress made, and returns to the CSRD subject which is a perfectly adapted format and communication approach.
From my point of view, these structuring approaches will allows companies to gain organizational efficiency through greater cohesion, commitment and clarity.
These are completely virtuous approaches, which fundamentally revisit the identity and culture of the organization.
Références:
NOTIFIED conference in Paris on June 20th, 2024 « CSR New Issue / Public Relations / Investor Relations »
Examples and references where you can find useful information about the approaches and companies that have taken the step:
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