Board Members, Are You Grabbing the Bull by the Horns or Accepting the Consequences?
Tove Ahlström
Sustainability Expert, Just Sustainable AB and Secretary General, Network for Sustainable Business in Sweden
The commencement of the new legislation, CSRD, marks the beginning of significant changes that will gradually impact more companies in the coming years. In this article, Tove Ahlström shares valuable insights into the impending transformations and offers guidance for board members on how to navigate them effectively.
All companies in Sweden, and across the EU, are facing significant changes as the new EU-directive, CSRD, soon becomes Swedish law. Since the directive will be incorporated into economic legislation, the consequences and penalties will align with existing financial laws. Let me explain what this directive entails and how it will impact us in Sweden once it is integrated into our national legislation.
CSRD is the EU's response to the Paris Agreement and Agenda 2030 to achieve a sustainable future. This directive reshapes the business landscape, placing the responsibility in the boardroom and requiring companies to report transparently on all significant sustainability areas.
We will see several changes:
All large companies will, within three years, report sustainability aspects in a standardized manner and transparently demonstrate how they are addressing these aspects.
There will be the same quality requirements for sustainability information as there are for financial information. This marks a significant change, as financial quality standards have been developed over several hundred years, while sustainability calculations have only been in practice for approximately 20-30 years.
Increased accountability for board members, who will soon be held personally responsible if the company fails to comply with sustainability reporting laws. This could include financial penalties and, in severe cases, criminal consequences.
What does this mean for you as board members? You play a crucial role in ensuring that your company not only complies with the laws but also delivers sustainable results in the long term.
Here are some concrete steps you can take:
Double Materiality analysis: Conduct a gap analysis of the current state compared to the desired outcome and then perform a double materiality analysis to identify what is important specifically for your company.
Education and awareness: Ensure that the relevant parts of the organization understand what the new regulations implies. For example, the sustainability, finance, and procurement departments, as well as the board itself, should receive training on CSRD.
Review sustainability policies: Ensure that the company’s sustainability strategies, policies, and goals are updated and in line with the new requirements. It may be wise to conduct an external review to identify any gaps.
The implementation of this EU directive is not just a legal change but an opportunity for Swedish companies to position themselves and capture market share as leaders in sustainability. By taking these changes seriously and acting proactively, you can create long-term value for our companies and society. I look forward to following this development and supporting you in the transition.
Do you want to learn more? Take part of our course “Navigating through CSRD: The Board's Responsibilities and Commitments”. Read more about the course and sign up in our website.
