Companies can use the Sustainability Code declaration to meet the requirements of the CSR reporting obligation regarding non-financial information. Users report the legally required issues across criteria 12, 14, 17, 18 and 20 and the Code team checks for formal completeness accordingly. 

What does the regulation govern?

• The CSR Directive Implementation Act (CSR-RUG) is the German implementation of the European Non-Financial Reporting Directive (NFRD). It stipulates which companies must report on sustainability and what the content of this reporting should be. Reporting companies are obligated to report on material non-financial aspects for each financial year, whereby the CSR-RUG requires the disclosure of information on environmental, labour and social affairs, the upholding of human rights and the prevention of corruption and bribery (§ 289c HGB). Companies are obligated to report on the following for each of these issues:
• The respective management concept including objectives, management involvement, strategies and action points as well as internal processes to monitor implementation;
• The results of said concept, including information on whether and to what extent previous targets have been achieved and whether and how it will be determined if the concept needs adjusting.
• The material risks linked to business operations and relationships as well as products and services. This should include a description of how these material risks were identified (due diligence processes).

All companies that are already obligated to report under the CSR Directive Implementation Act are also subject to the provisions of the EU taxonomy regulation as of 1 January 2022. An additional reporting option for the EU taxonomy has therefore been added to the Sustainability Code.

What does the regulation govern?

The taxonomy, the CSRD and the Sustainable Finance Disclosure Regulation are intended as the core elements of the sustainability reporting system and thus form the basis of the EU’s strategy on sustainable finance. The goal behind this legal framework is to create a consistent and coherent flow of information around sustainability along the financial value-creation chain.

For its part, the EU taxonomy is used to classify economic activities – more specifically, whether or not they can be considered sustainable in keeping with EU strategy. As of 2022, activities have been assessed according to two criteria: “climate change mitigation” and “climate change adaptation”.

2023 reports must also include the remaining four, non-climate-related criteria. These are:

• The sustainable use and protection of water and marine resources;
• The transition to a circular economy;
• Pollution prevention and control;
• The protection and restoration of biodiversity and ecosystems.

Companies can use their Sustainability Code declaration to report on the core elements of human rights due diligence from the National Action Plan for Business and Human Rights. Users should report these elements under criterion 17, and the Code Office checks the information provided for formal completeness accordingly.

What does the regulation govern?

The National Action Plan outlines the five core elements of human rights due diligence that should be integrated into corporate business activities:

• Human rights policy statement;
• Procedures for identifying actual or potential adverse impact on human rights;
• Measures to prevent any potential adverse impacts and a review of said measures’ efficacy;
• Reporting mechanism;
• Grievance mechanism.

The National Action Plan for Business and Human Rights (NAP)

• was adopted by the German federal government in 2016 to implement the UN Guiding Principles on Business and Human Rights;
• is aimed at all companies based in Germany;
• is based on the principle of voluntary self-commitment;
• outlines five core elements of corporate due diligence to uphold human rights.