by Beth Sandford-Bondy | Aug 29, 2024 | Blog
The Corporate Sustainability Due Diligence Directive (CSDDD) is the new kid on the block for many large companies active in the EU: here are the key things you need to know now.
What is CSDDD?
The CSDDD (CS3D) is a new EU human rights and environment due diligence legislation that applies to large companies operating in the EU. It requires processes be embedded in the business to identify, prevent, reduce, and end negative human rights and environmental impacts in their operations, subsidiaries, and value chains — both inside and outside Europe.
Is your company subject to CSDDD?
Two types of companies need to comply:
- EU-based companies with 1,000+ employees and a global net turnover of €450+ million.
- Non-EU-based companies with a net turnover of €450+ million in the EU.
Companies must comply by 2027, 2028, or 2029 depending on number of employees, global turnover amount, and whether they’re based in the EU or not.
What are the key steps to implementation?
1. Integrate due diligence into corporate policies
Make sure that due diligence is integrated into all relevant policies and risk management systems. You also need to have a specific policy that ensures risk-based due diligence.
2. Map your value chain and assess risks
It’s crucial to get an understanding of where your company’s actual and potential impacts lie. Start by mapping your value chain to identify areas with adverse impacts and risks, and prioritise them based on likelihood and severity. Then companies must carry out in-depth assessments of individual suppliers in prioritised areas.
3. Take measures to prevent, mitigate, and end adverse impacts
Preventing and ending adverse impacts on human rights and the environment is the core of the CSDDD. Companies should implement the following:
- Human rights and environmental strategies.
- Responsible purchasing practices — including assurances to comply with minimum standards, and supplier screening and assessments.
- Corrective measures and termination of business relationship as a last resort.
- Employee and supplier training.
- Targeted and proportionate support for business partners who are SMEs, including fair and non-discriminatory contractual assurances.
4. Provide a complaints procedure
Companies must provide a notification system which is accessible to potentially affected stakeholders and their representatives — including NGOs and human rights defenders, for example. The complaints procedure should be fair, publicly available, accessible, and transparent. Workers and their representatives must be informed of the procedure.
5. Monitor the effectiveness of due diligence measures
Periodically assessing your due diligence measures will help you see if they’re suitable and effective. Update your due diligence policy and measures as needed.
6. Publicly report impacts and due diligence processes
Compliance with CSRD means compliance with CSDDD reporting requirements. Companies must produce a publicly available annual statement on the potential and actual adverse impacts identified and due diligence measures taken.
7. Have a climate transition plan aligned with 1.5°C
Combat climate change with a transition plan aligned with limiting global warming to 1.5°C. If you’re complying with CSRD then your climate strategy is already ticked off the list.
What’s the connection to CSRD?
They are both new EU sustainability regulations covering social and environmental factors and applying to the operations and value chains of large companies. Both require public disclosure and a climate transition plan aligned with the Paris Agreement.
But while the CSDDD focuses on preventing and ending negative effects, the CSRD focuses on transparent disclosure.
For a more in-depth analysis of the overlap between CSRD and CSDDD, watch out for our upcoming blog on how they match up.
What can you do now to get started?
The first step is to familiarise yourselves with the CSDDD requirements to understand if, when and how you must comply. Assessing existing due diligence roles, policies and management systems will help you understand your gaps and establish any roles and responsibilities needed. The next step is to map your value chain to identify and prioritise risks based on likelihood and severity.
Once you understand where your biggest risks are, devise a plan to set up the necessary due diligence measures, engaging with both internal and external stakeholders. The strategy should include: in-depth supplier risk assessments, measures to prevent and mitigate impacts, grievance mechanisms, assessments to monitor due diligence processes, annual reporting, and a climate transition plan in line with the Paris Agreement.
Context is ready to support you with all your CSDDD needs — from value chain mapping and devising due diligence strategies, to writing policies and CSRD / CSDDD-aligned reports. If you would like to talk about your organisation’s needs, please get in touch via www.contextsustainability.com or helen.fisher@contexteurope.com.
by Sarah Walkley | Aug 6, 2024 | Blog
Language is a powerful — but often overlooked — tool in sustainability. It is how we shape ideas and understand the world around us. It helps us to connect with each other and with nature. By naming the things we value, we demonstrate what is important to us and to society as a whole.
Of course, language is also how we communicate knowledge about the social and environmental challenges we face ‘in a way that empowers people to take necessary actions for more sustainable lifestyles’, notes John Canning of Kingston University. And yet language figures very little in our conversations about sustainability. Neither culture nor language are explicitly mentioned within the Sustainable Development Goals (SDGs), despite the UN considering both fundamental to achieving 14 of the 17 SDGs.
We also tend to overlook the fact that much of the conversation takes place in English. When theories and ideas are formulated in one language, they can become culturally-specific and potentially divorced from other ways of thinking about the world. Although some brands are attempting to engage Indigenous communities on land use and management, we in the English-speaking world are still missing out on much of the deep ecological knowledge embedded in Indigenous cultures.
There are no words for climate change in many languages, including Yoruba, Igbo and Hausa which are widely spoken in Nigeria — even though these communities are already feeling the impact of extreme weather events. Talk of ‘climate change’ can feel distant and elitist in the face of day-to-day problems.
Even within Europe, we have examples of concepts that have struggled to cross borders. In early versions of the Brundtland definition of ‘sustainable development’ first adopted by the United Nations in 1987, the term was mistranslated into French as dévéloppement durable (robust and durable) rather than dévéloppement soutenable (sustainable over the longer term).
At Context, writing is central to the work we do for our clients. We appreciate that it is sometimes hard to fully convey the sentiment expressed in one language when translating to another without losing some of the nuance and subtlety of the message.
Why does all this matter?
Given the scale of the climate and nature crises, we need to mobilise as many people to take action as possible. We have previously highlighted research indicating English-speaking consumers lack understanding of key concepts, creating a business-consumer sustainability language barrier. That challenge is multiplied for companies trying to engage with multinational teams — or work with suppliers, customers and other stakeholders across the world.
Companies may also be missing out on opportunities to identify regional best practice that could be rolled out across the business. Research into linguistic injustice by Tatsuya Amano of the University of Queensland has revealed that non-native English speakers are 2.5 times more likely to have their scientific papers rejected by a journal because they find it harder to express their ideas and convey the originality of their research in English. In the corporate world, similar linguistic challenges may translate to a shyness to speak up about local initiatives.
As Erika Darics of the University of Groningen points out, ‘specific communication strategies influence attitudes and behaviours towards sustainability issues’. The English lexicon of sustainability is dominated by terms such as ‘reduction’ and ‘efficiency’, which focus on the things we have to lose in moving to a lower-carbon world. It makes the transition feel hard and unappealing. Other languages may offer a better vision for the kind of relationship with the world we could create — something we want to move towards. As change management specialists will attest, we need to create the desire for change before we can do things differently.
The new world could be one of ‘hiraeth’ (Welsh: deep yearning for and connection with the land around us) or ‘lagom’ (Swedish: having enough or just what we need). We don’t need to be fluent in Welsh or Swedish to familiarise ourselves with these words, just as we don’t need to learn German to recognise ‘Schadenfreude’ or Danish to appreciate ‘hygge’. Getting to grips with just a few words can open our eyes to inspiration from other cultures.
Similarly, being mindful of these issues can help us to be better communicators. It is about making a conscious effort to explain strategies and concepts in clear and simple terms that won’t get lost in translation. It helps us to be more inclusive.
There are also potential benefits for brands. Research across 13 countries found that a whopping 88% of respondents wanted brands to demonstrate understanding and appreciation of national identity — and 93% wanted brands to speak to them in their own language. Sadly, only 23% of those surveyed believed that brands truly delivered. Stepping up to the mark by offering ‘engaging, culturally relevant’ messaging and customer services could be an important competitive differentiator. For Maria Schnell, Chief Language Officer at RWS, a company that develops artificial intelligence-enabled translation tools, it means layering human insight and expertise over machine translation.
There is no easy formula for how to achieve communication that is culturally relevant. The answers will vary between one organisation and the next. Developing an awareness of the issues, a deep understanding of context and focusing on stakeholder needs is a good place to start.
by Kyisin Aung | Jul 29, 2024 | Blog
Many companies operate, or conduct business with partners, in challenging contexts1 that can pose significant human rights risks. This is especially true for large multinationals with complex supply chains, where the threat of modern slavery and human rights violations are a very real concern.
Adopted in 2011, the United Nations Guiding Principles on Business and Human Rights (UNGPs) establish a globally recognized framework for business and human rights. The UNGPs rest on three pillars: 1) the state’s duty to protect human rights; 2) corporate responsibility to respect human rights; and 3) ensuring access to remedy for those affected by adverse impacts.
Operational grievance mechanisms (OGMs) are formal channels to receive complaints from stakeholders affected by a company’s business activities. By fostering two-way dialogue with these stakeholders companies can resolve grievances swiftly and fairly. Establishing effective grievance mechanisms, aligned with international best practice, should be a cornerstone of any company’s strategy to uphold human rights within its operations and supply chains.
While there is no one-size-fits-all approach to building an effective grievance mechanism, all companies should consider a set of criteria when developing their OGM:
- Fit for purpose: OGMs work best when tailored to the operating context. This involves specifying how and where grievances can be lodged, whether through an individual, a form, or an online platform to encourage stakeholders to use the mechanism when needed.
- Clarity: Clearly defined grievance procedures outline how complaints will be handled. Transparently communicating the steps involved in investigating grievances assures stakeholders of the legitimacy of the process.
- Objectivity: All complaints must be investigated objectively and thoroughly. This requires appointing trained individuals who can handle investigations impartially, without bias.
- Timeliness: Promptly acknowledging and addressing complaints is essential to maintain stakeholder trust in the grievance process. This involves setting clear timelines and milestones to provide feedback on investigation outcomes and resolutions to complainants.
- Confidentiality: Ensuring confidentiality and respecting the privacy of the complainant are fundamental aspects to the grievance process. Stakeholders must be assured that their identities will not be disclosed without their consent, except where necessary for investigation purposes.
- Documentation: Keeping accurate records of all complaints is crucial for accountability. This also enables to companies to identify trends, hotspots of concern, and proactively mitigate recurrences.
In May 2024, the European Union formally adopted the Corporate Sustainability Due Diligence Directive (CSDDD), setting human rights standards for large companies operating within the EU. The legislation mandates companies to monitor, prevent, or remedy human rights damages throughout their operations and downstream and upstream value chains. Companies can be held liable for human rights violations they cause and will have to provide full compensation.
Context supports efforts to research, develop, and implement fit-for-purpose strategies unique to companies’ operating environment. If you’d to discuss your organization’s needs, please get in touch by e-mailing us at kyisin.aung@contextamerica.com
1 The UN Office of the High Commissioner for Human rights (OHCHR) defines challenging contexts as those with grave human rights situations due to conflict, political turmoil and/or systematic violations of human rights; those where national laws or regulations require businesses to take actions against internationally recognized rights; and those where states are not able to protect internally recognized rights.
by Sarah Walkley | Jul 23, 2024 | Blog
Radical transparency has been as the antidote to greenwashing. It requires companies to be accountable and responsible for the impact of their products, services and operations and to make full and frank disclosure about how the issues are being addressed.
Radical transparency provides all stakeholders with greater information, enabling collaboration and empowering action on systemic issues that could not be tackled by any one player in isolation.
Brands can build trust in their operations, enhance their reputation and potentially gain competitive advantage by being totally — and often brutally — honest about their sustainability efforts. That means not just going public on how a company has improved its products and operations, but also being open about what they are yet to do, what they got wrong and what they have learnt along the way. It shines a light on the actions that are working — and the ones that are less effective — enabling businesses to focus their sustainability efforts in the areas that count.
While businesses should be encouraged to progressively shift towards radical transparency, it is not without its risks and timing is everything. It can open the business up for increased scrutiny — including in areas not covered by mandatory reporting requirements. Some stakeholders may misinterpret a company’s admission of shortcomings, especially in the absence of any comparisons — if competitors aren’t equally honest, any challenge the business encounters may appear to be a company-specific issue, rather than a systemic risk affecting the whole industry. It is also essential to back up statements with data demonstrating clear progress, not just awareness of the issues.
Growing reporting requirements, including the EU Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), mean that companies will have to report on their activities in ever greater detail. How does a business determine if it is ready to go beyond the statutory minimum and embrace radical transparency?
Sarah Walkley, Senior Sustainability Writer at Context Group explores the key questions that you should ask yourself before your company takes the plunge.
- Are you doing it on your own terms?
First, it’s crucial to be clear about why you are considering boosting transparency. Is it because other companies, particularly your competitors, have gone down that road? Are their actions forcing your hand, or raising customer expectations for you to be ever more explicit about your activities?
Companies such as Ace & Tate and Noah, that are highly transparent about their activities, have done their preparation and evolved their approach over time. They have been collecting data on all aspects of their business, developed and tested the messaging and ensured they can tell a coherent story.
They have embraced a more transparent approach on their own terms — not been cajoled into it by those around them.
- Are you prepared for employees to ask anything?
Does your company provide every opportunity for employees to ask questions about corporate and sustainability strategy as part of regular townhalls and updates? And are they provided with full and frank answers?
The most transparent companies have ‘Ask me anything’ sessions in place. They provided a testbed for what companies are ready to talk about publicly. If a company is not yet ready to put its cards on the table and talk about its sustainability progress internally — both the positives and the negatives — then it is not ready to share that information externally.
- How do you think other stakeholders will react?
If your company is already fully open about its activities internally, the next step is to think about how other stakeholders would react to you telling all — and potentially doing so in a way that may be quite different from how you communicate now.
Ace & Tate made no secret of the fact it had made some bad decisions on its journey to becoming a B Corp and had ‘f*cked up’ at times. It made a break from the typically staid tones of corporate communications to indicate that it was not just saying something different — it was also doing things differently, for example reversing a decision to use polyurethane in its glasses cases, which helped to reduce emissions but increased water consumption.
For other organisations, including Noah, Ganni and Patagonia, it starts by acknowledging that they are not sustainable companies. Their focus is on being the most responsible businesses they can be.
If suggestions that your company follows a similar approach are greeted with consternation and worry about what shareholders, suppliers or customers would say, then maybe now is not the time for radical transparency. However, just having the conversation should help to flush out the biggest areas of concern which need to be addressed to unlock a willingness to be more open.
- Could you go above and beyond?
The European Sustainability Reporting Standards (ESRS) list the data points that companies subject to CSRD will have to report on. There are over 1,000 data points in total — most companies will be required to publish data on a few hundred points covering the material sustainability matters that are most relevant to their business.
Companies can choose to be even more transparent and report against additional data points.
But the mandatory reporting requirements under ESRS and CSRD are already a big ask, especially for many private companies that fall within the scope of mandatory reporting for the first time.
Does your company have capacity to go above and beyond the base requirements at this stage?
- Are you prepared to reveal the full picture?
Are you ready to share the truth, the whole truth and nothing but the truth?
Specificity is the key to avoiding greenwashing. The Directive on Empowering Consumers for the Green Transition (also known as ‘the Greenwashing Directive’) has made that abundantly clear in restricting the use of generic terms such as ‘green’ and ‘eco friendly’ and regulating the format of acceptable claims, e.g. ‘this bottle is made of 30% recycled plastic’.
But focusing so specifically on one aspect of a product raises questions about other, less favourable attributes, or even other products. Why is the product not made entirely of recycled plastic or even a different material, for example? Or why are other products still sold in non-recyclable sachets rather than recycled and recyclable bottles?
It is as important to reveal what you are not doing and why as it is to communicate where you are making progress. Like Noah, Ganni and Patagonia, that may mean setting the record straight that there is no such thing as a truly sustainable company — only ones that are trying to make a difference where they can and minimise any inevitable impact.
- Are you willing to share what went wrong?
No initiative ever goes entirely to plan. Things take longer than you think. Projects cost more. And unexpected challenges always emerge along the way. But these setbacks all bring valuable learning, enhancing future initiatives. They enable companies to identify where greater collaboration would help to tackle systemic issues.
Radical transparency requires humility and openness about what went wrong, what you have learnt from the experience and how that is shaping future activities. Bragging only about what went right will sound hollow.
- Are your stakeholders already using AI to judge your efforts?
Are your stakeholders using artificial intelligence to assess your actions? Tools such as ChatIPCC, ClarityAI, GreenwatchAI and ClimateBert enable users to compile information from a disparate range of sources and draw their own conclusions about whether your organisation is living up to its sustainability ambitions.
The most robust response is to be more open about your approach and consistent in the way that you talk about activities. The technology can flush out a poorly considered press release issued in a minor market or an unguarded comment uttered in an interview, making it easier than ever before for stakeholders to question your strategy. Consistent messaging is essential to prevent this and is the foundation to radical transparency.
Context supports companies to hit the right tone with their sustainability strategy, reporting and communications — encouraging transparency and building credibility and enabling delivery of impact-led sustainability strategies. If you would like to talk about your organisation’s needs, please get in touch via www.contextsustainability.com or helen.fisher@contexteurope.com.
by Gabrielle Carr | Jun 13, 2024 | Blog
The high cost of train travel gives gas guzzling flights an unfair advantage.
Rail is the most electrified mode of transport in Europe and accounts for less than 1% of EU transport emissions. It’s nearly five times less emissions-intensive than air travel (on average), which has contributed to an estimated 4% of global warming worldwide. For the more than 60% of Europeans who support a ban on short-distance flights, rail transport is the obvious transport choice.
But while three in four Europeans are willing to pay a premium for ‘sustainable products’, choosing the train costs travellers on average double the price of flying internationally in Europe. For some routes, it’s 30 times more.
So why are trains so expensive? Or, rather, how are flights so cheap?
Budget airlines infamously use an array of loopholes to squash costs, such as flying into cheaper airports, headquartering in countries with low corporate tax, and minimising the number of staff per flight.[1] And the entire EU aviation industry — budget and luxury airlines included — benefits from billions in government support each year, enabling artificially low prices industry-wide.
In 2022, EU governments lost out on an estimated €34 billion in tax exemptions to the industry. Airlines pay reduced or no flight ticket tax or VAT, and zero tax on kerosene (a fossil fuel used to power planes), despite contributing to nearly 4% of EU CO2 emissions. Governments are also financing other schemes that benefit airlines — for example, the Dutch government pays farmers near Amsterdam’s Schiphol Airport €853 per hectare each year to plough their land right after harvest, to avoid birds searching for food from colliding with planes. Meanwhile, EU railways and train operators pay energy taxes, VAT and high rail tolls in most countries.
Reducing the aviation tax gap will help train ticket prices compete. But the railway industry faces other challenges too.
Europe’s cross-border train system is disjointed. A lack of technical standardisation means countries use different trains, tracks and signalling systems, making crossing borders by train a logistical nightmare. Train scheduling and ticketing systems also vary across countries, making it complicated for passengers to book international train trips the way they would flights.
Railways are operated by national companies which make the vast majority of their profits via domestic travel, so there is little incentive to invest in fixing the cross-border conundrum. National operators understandably buy trains best suited to their country’s railroads, but this forces those travelling internationally to pay more and often switch trains at the border. The result of all this is an ‘ineffective patchwork of national lines,’ according to the executive director of the European Railway Agency.
Despite Europe continuing to fund carbon-intensive aviation, rail is starting to get more attention.
In 2023 the EU announced €6.2 billion in grants for more sustainable and efficient transport infrastructure initiatives, including cross-border rail projects. It has also set targets to double highspeed rail traffic by 2030 and triple it by 2050 (compared to 2015), as part of the EU Green Deal’s aim to cut transport-related emissions by 90% by 2050.
At a national level, France is leading the charge with concrete action. In 2023, it banned flights shorter than 2.5 hoursand announced its plan to finance €100 million of railway investment by increasing flight ticket tax.
Europe’s trains are on the right track. But we need to see more aggressive action from governments — taking inspiration from France — to make train travel the obvious choice from both an environmental and cost perspective.
[1] This Greenpeace report shares a fuller list of budget airlines’ shortcuts.
by Marielena Herbst de Cortina | Jun 10, 2024 | Blog
Even if we entirely stopped burning fossil fuels today, emissions from our “business as usual” food system would push average global temperature rise over 1.5°C by 2100. However, a recent study projected that we have a chance of staying below the 2°C threshold—and maybe even below the 1.5°C threshold—if we globally mitigate impacts from production methods, diet, and food waste. In my three-part series on our food system, I dive into each of these mitigation areas—from farm to table to trash.
Farm
Food production alone accounts for 26% of global greenhouse gas (GHG) emissions.To simply produce less food is not an option—the global population is expected to reach 9.8 billion in 2050 and 11.2 billion in 2100. Expanding agricultural lands is not a viable solution either. Not only is land a limited resource—around 40% of the planet’s surfaceand 50% of its habitable land are dedicated to agriculture already—but also land clearing is one of the most significant sources of agricultural emissions. With these challenges in mind, decarbonizing our agricultural system will require technological and human solutions. I’ll focus on two opportunities to reduce impact by combining scientific advancement and operational shifts.
Solution #1 Change our production processes to use agricultural inputs more efficiently
There are currently large discrepancies between potential and actual crop yields, called “yield gaps.” Global food production could more than double if we closed yields gap by 75% to 90%. Crop yields increase through improved farming methods that work synergistically with the natural environment, or “agroecological practices.” Planting nitrogen-fixing crops during fallow periods, rotating crops rather than practicing monoculture, and employing integrated pest management—where pesticides are applied sparingly and in addition to mechanical pest control methods—have been shown to increase crop yields.
Solution #2: Optimize fertilizer application
Applying fertilizer consciously when plants most demand nutrients reduces use without negatively impacting yields. Fertilizer production is one of the most GHG intensive elements of farming, and its application is spatially and temporally mismanaged. Fertilizers are under used in many economically developing nations where they are difficult or expensive to procure and overused in other parts of the world. Increasing access in underserved regions, particularly to lower-impact fertilizers, could go far in closing yield gaps. At the same time, producing more food in a given area through the responsible use of fertilizers decreases the need for further land clearing and thus avoids the climate impacts associated with land use change.
It will take a concerted global effort and widespread adoption of improved farming methods to capture the potential benefits of these solutions. Like so many societal issues, reducing our agricultural carbon footprint will involve breaking down systemic barriers. But if you’re not a farmer or a policymaker, how can you make a difference? In my next blog, I’ll cover dietary climate impact and how we can mitigate our individual footprints.
