Opinion Article for ÓpticaPro Magazine, March 2024
Margarida Couto
President of GRACE – Responsible Companies, representing Vieira de Almeida & Associados
The so-called European Green Deal encompasses a genuine legislative tsunami that will significantly impact companies and other entities – there are indeed many measures aimed at compelling organizations to change the way they operate, which is at least challenging for most of them.
In a sense, "it all began" with the Environmental Taxonomy – perhaps the backbone of the European Green Deal – which establishes a classification of “sustainable activities” and requires all large companies to report the sustainability degree of their revenue and investments.
But the legislative piece that is currently exerting the most pressure on companies is the so-called “Corporate Sustainability Reporting Directive” (CSRD), which will lead to more than 50,000 companies in Europe (and over a thousand in Portugal) having to prepare a sustainability report as transparent and detailed as their financial report. This will be a revolution in terms of financial statements, which will henceforth include – with the same degree of importance – both financial and sustainability aspects!
And it doesn’t stop there, as these two major legislative measures are joined by many others.
To mention just a few parts of a vast and demanding European legislative puzzle on sustainability, unprecedented in any other continent: the European Climate Law, which sets stringent targets for reducing the carbon footprint, which, unlike those established in the Paris Agreement, are legally binding; the "fit-for-55" package, which comprises a wide range of legislation and defines how companies, industries, and sectors will have to contribute to reducing Europe's greenhouse gas emissions by (at least) 55% by 2030; the Corporate Sustainability Due Diligence Directive, which, when adopted, will elevate corporate responsibility in social and environmental matters to a whole new level. These are indeed just a few pieces of a puzzle that is continuously being constructed.
As with everything in life, there are two ways to face this intrinsically challenging reality: as a threat or as an opportunity.
In this dichotomy, companies that want to take the lead can find various opportunities if they can act proactively. Firstly, opportunities for differentiation. This is because, with sustainability increasingly becoming a competitive factor, the companies that will win the future are those that accelerate their ESG (Environmental, Social, and Governance) journey today.
In this journey, it is essential to look at the aforementioned Environmental Taxonomy and understand to what extent the organization’s activities can be considered sustainable (by contributing to one of the six environmental objectives defined by the European Union).
But this is just the beginning of the journey.
