Company's practical strategies for implementing the CSRD

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About this ATALK

At the 𝗔𝗣𝗟𝗔𝗡𝗘𝗧 𝗦𝘂𝗺𝗺𝗶𝘁 𝟮𝟬𝟮𝟰, the third panel focused on «𝗥𝗲𝗮𝗹-𝘄𝗼𝗿𝗹𝗱 𝗖𝗦𝗥𝗗 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗲𝘀». This session delves into practical strategies for implementing the Corporate Sustainability Reporting Directive (CSRD) in various industries. The discussion highlights the challenges and opportunities associated with the directive, emphasizing the importance of structured ESG data, stakeholder engagement, and comprehensive compliance strategies. Insights from companies illustrate how to navigate the complexities of CSRD, transforming compliance into a catalyst for sustainable business practices.

Key Discussion Points:

🔷 𝗜𝗻𝗶𝘁𝗶𝗮𝗹 𝗚𝗮𝗽 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀: Conducting preliminary evaluations to identify compliance gaps.
🔷 𝗗𝗼𝘂𝗯𝗹𝗲 𝗠𝗮𝘁𝗲𝗿𝗶𝗮𝗹𝗶𝘁𝘆 𝗔𝘀𝘀𝗲𝘀𝘀𝗺𝗲𝗻𝘁: Integrating and updating risk assessments.
🔷 𝗦𝘁𝗮𝗸𝗲𝗵𝗼𝗹𝗱𝗲𝗿 𝗘𝗻𝗴𝗮𝗴𝗲𝗺𝗲𝗻𝘁: Involving internal and external stakeholders in the process.
🔷 𝗗𝗮𝘁𝗮 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁: Structuring and consolidating ESG data for accurate reporting.
🔷 𝗚𝗼𝘃𝗲𝗿𝗻𝗮𝗻𝗰𝗲 𝗮𝗻𝗱 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆: Strengthening governance frameworks and aligning strategies with CSRD requirements.
🔷 𝗔𝗜 𝗮𝗻𝗱 𝗔𝘂𝘁𝗼𝗺𝗮𝘁𝗶𝗼𝗻: Exploring the use of AI to streamline ESG data management and reporting.

Speakers:

🎤 Marlena Babicka – Global Sustainability Manager at 𝗔𝘃𝗼𝗻
🎤 Mariana Sandoval Ulloa – Sustainability & ESG Team Leader at 𝗡𝗧𝗧 𝗗𝗔𝗧𝗔 𝗘𝗠𝗘𝗔𝗟
🎤 Chemida Vera Sánchez – Group ESG & Sustainability Manager at 𝗧𝗲𝗸𝗻𝗶𝗮

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Transcript

You can find the full transcript of their conversation below.

Panel 1

Welcome to our first panel, «Unravelling Compliance«. This session will explore the complexities of the current legislative landscape, including CSRD and ESG standards. Our experts will demystify the surge in sustainability related regulations, providing clarity and actionable insights for businesses navigating these compliance challenges. We will have a Q&A session after each panel. Feel free to share your thoughts over the chat or with any of our team members in the room.

Joining us today is Robert Adamczyk, a leading expert with over 25 years of experience in environmental and social issues. As the energy sector head in the Environmental and Sustainability department of the European Bank of Reconstruction and Development, the EBRD, Robert has played a pivotal role in shaping ESG standards across central and Eastern Europe. His extensive work includes developing ESG standard disclosure guidelines and contributing to the EU Corporate Sustainability Reporting Directive. CSRD as a EFRAG member of the TWG ESRS. Welcome Robert.

Also joining us is Inés Garcia-Pintos Balbas. Inés is a distinguished senior advisor for sustainability and sustainable finance. With a prolific career in the financial sector, including her role as head of sustainability department at CECA and Cecabank and AND CHAIRWOMAN OF SPAINSIF, Inés brings invaluable insights on ESG matters. She is also an esteemed lecturer at Universidad Complutense de Madrid and senior advisor at GABEIRAS&ASOCIADOS law firm colleagues the ESG forum at FIDE driving forward the conversation on sustainable finance and finance and impact investment. Welcome Ines.

Finally for our first panel is Laura Iriarte. Laura is a corporate sustainability consultant and the dynamic host of ‘Zero One Hundred ESG & Impact Talks’ podcast. An enthusiastic advocate for ESG and impact in the private equity and venture capital investors world, Laura brings over 14 years of international experience in communications, PR and sustainability. She excels in building reputations and engaging stakeholders through strategic sustainability strategies. The dynamic for this panel is we will have common questions for all of the three panelists. Lastly, a question for each one of them and a Q&A session.

Let’s begin with a common question. Robert what were the main drivers behind the development of CSRD and how does it aim to improve corporate transparency and accountability in sustainability practises within the broader european regulatory framework? So, first of all, reporting is not a new concept. It is a concept that’s been around for a long time, because we had the corporate corporate responsibility, we had reporting for a long time. We have ipos where information on environmental issues has always been put in, in terms of stock markets. So there is always been a level of information, privatisations required information. That’s when I started in the nineties of some of the work on environmental and social issues. And so it’s not a new concept, but it’s been refined and there’s been a lot of greenwashing. We’ve had, of course, the non financial reporting directive from 2004, but it wasn’t really binding. And the problem has been that it was, you could say PR more than anything else. It was looking at how to sell, how to present. Each report had a nice, you could say sunshine, a wind farm, a baby, and that was your CSR report, or the sustainability report, or various names that they had. So there needed to be a consolidation and a common yardsticks. We’ve always used GRI, and that’s been for a long time as well, that’s evolving, but something that is going to be mandatory, binding and have the same standards. We’ll talk about taxonomy and some of the other EU legislation later, but that’s where it’s actually come out. And it was interesting. In Poland, for instance, we were looking at, I’ve been for the past nearly ten years, looking at reporting and CSR reports for listed companies. And in 2017, there was a political decision, 1718, to get rid of gender, because the government at that stage, and all the state owned companies or majority owned, removed gender components from the annual reports and non financial reporting, because it was a bad word at the time for that government. And that’s when we came up, we have to do some guidance. So we started in Warsaw. Of course, CSRD, the pandemic helped, I think the pandemic helped us to develop a lot of things, more than anything else, because we sat around in front of our computers for 12 hours and didn’t have to travel to meet, but actually went off and did work and people exchanged information which otherwise would have been more difficult to do, actually go to Brussels or do anything else. So there is a lot of things that happen in that period as a result of the circumstances, the need and the implementation of the EU strategies as well, and coincides worldwide. So I think, first of all, it’s a worldwide trend, because we look already TCFD climate first has been there. We Europeans have gone a bit further than the rest of the world, rightly so, particularly on the social side, because we do care a bit more about the people that we work with and who we are and our neighbours. And the need to stop greenwashing is, in my view, one of the key drivers, because you can’t then sell or even develop sustainability without data and without reliable data. And that’s, I think, the key driver at the end of the day, in my view. What do you think, Inés? Well, I will just add to what Robert has just said, because I fully agree with what he has said. I would like to focus on two institutions which I think have been the ones more pushing the reporting agenda. I think that everything is. I mean, the kick off starts with the Paris agreement in 2015, when countries agreed and committed to have some targets on decarbonization. This brings to the need to have information about how much carbon emissions do companies emit. So if investors and regulators need to know how much emissions they, I mean, they are either financing or trying to regulate, they need companies to disclose about their emissions. So then that’s why they set up the TCFD, the task force on climate related financial disclosures, which pointed out at climate risk. But the first time we begin saying climate risk, and not only non financial risks, I mean, climate was no longer a non financial issue, but a financial issue. So the need for information for investors, the TCFD pointing out the fact that climate is a risk for investors put on the stage, the need to have reliable data for investors to know where they are going to invest and how much risk they are ready to absorb. So that’s one investor driver. The second one, which derives also from this one, is the European Commission. If there are risks in the market, I mean, if climate poses risks in the market and in companies, this means that the financial system might be absorbing risks which is not yet aware of. So they decided to set up this sustainable finance action plan, which it had three objectives. One of the objectives was to increase transparency and long term perspective. And this is where the CSRD comes from. I mean, the whole sustainable finance action plan is the roadmap, which was set up by the European Commission. So the EU financial system can drive funds to sustainability activities, can avoid or mitigate or at least identify climate risk and increase transparency. I mean, within this huge roadmap, there are different pieces of legislation which will come up later on on the discussion, but one of them is the corporate sustainability reporting directive, which is the subject of this discussion. So I hope that I have been clear. I mean, I think adding to what Robert said, there are two institutions which has pushed on this issue. The TCFD, after the Paris agreement, and the European Union with a sustainable finance plan, under which is the CSRD. Thank you very much. Laura, what do you think about this? Is this working? Yes. Well, I don’t know if there’s anything extra I can say, at least in terms of concepts. No, but I do can add from a more pr background that what Robert said is true. This whole sustainability concept started with philanthropy. You know, companies started doing philanthropy and then this evolved and they saw the value in doing this. So then they turned into greenwashing. Right. And the reason why. And greenwashing is the reason why we are having this new regulation. But there’s also because companies have seen, because we use, you are used to having the whole sustainability areas as part of the corporate affairs areas. And companies have realised that in order to have sustainability as the core of their business, they need to spread it throughout the organisation. So because of that, also we need a proper regulation, which I think it’s a bit of a late response to what the companies have already been laid, like evolving too. But even though it’s a bit late, it’s like very necessary. And I think they are, I mean, going to change a little bit the way companies communicate sustainability and the way they approach it. Because I think one of the things that we have is that with the Paris, as you say, agreement and setting targets, we have set long term objectives. And those long term objectives worldwide are also setting the way we will have to live and what we can do or not. And there’s also geopolitics. We’re moving away from gas, we’re moving from coal, that side. And that means that for financial planning and for investors, we have to look long forward. Ten years ahead, 20 years ahead, and not like the financial planning so far, which is really. You’re looking at your mirror backwards. What happened last year on your financial statement and maybe project some strategies. Now we know some things will be banned, some things will change, some things like some products and the entire sustainability areas that we move away. It was a bit like the discussions on smoking in restaurants. It will kill restaurants. No one will go to cafes, bars, pubs, whatever. The actual result is different. It’s actually reverse. But the position was just as big that it will change. And it’s about changing our lifestyle at the end of the day and looking forward that companies have to look what are the perspectives? The good regulations will change and we need to look at how to prepare for that. And as an investor, I need to factor it in. And that, I think, is a key issue on the transparency. It’s not about banning things, because that sometimes it’s not about even compliance that much apart from reporting, because I can, as I was lecturing to some students, I could set up the Black Death fund that invests in all the bad things. But I’m transparent about it. It’s not illegal, but it’s the choice we want to make of how we live and which way we go and how investors want to go, where our pension funds should go. Yes. It’s interesting what you said about the financial system, because I think once the financial system enters into the scene, reporting becomes important. I think, and at the origin of this, I want to repeat it again because I think I would like to underline it again. The test, TCFD was important because it provided guidelines for disclosure. But I think more important than that was it was the first time that climate risks were named as climate risk or climate related financial risks, not non financial. So as long, I mean, as long as we assume that climate change imposes risks and opportunities on our businesses, on our way of living, I mean, it’s not just the nice thing to do. Okay, it’s really, really something that impacts the business, then investors need to have information because they need to know what their exposure is. And then reporting becomes important, in my opinion. I mean, it’s not just impact, which is very important, but it’s important for certain kinds of stakeholders. But the ones that drives the agenda, I mean, the business agenda are the investors and the financial system, whether we like it or not. I don’t mind, because I work for this financial system. It’s also our pension funds. It’s. I want my pension fund to still pay out in 50 years time. And that means it needs to take into account those risks that are still out there 50 years in advance. And I think that’s the, that’s the issue where climate will be a risk that needs to be taken in. No, no. And I think that’s very important because in the end, we have to differentiate impact from ESG, right? ESG is about reporting. It’s about data disclosure. It actually was born because of the financial services, because of investors need to have this information in order to make informed decisions, whereas impact is more into the purpose a company can be. I don’t know, like a great example of ESG reporting, but cannot be the best example of an impact company. I can give you like shell for example. They are known for being like top five in terms of ESG disclosure, but in the end they are still producing oil. No, I mean, they cannot be named or framed as an impression company. So I think that that’s what you’re saying. No, it’s very important to actually have this language where everyone can at least report speaking the same, with the same concepts. And that’s what we’re trying to do with the CSRD and also like the SFDR and is the. And I’ll give you back the. Can I just add, because I have a personal anecdote regarding the pension funds. Just two minutes. When I was working in the bank in CECA, I took part in the discussions about the pension fund of the employees. All companies in Spain, or big companies in Spain, have a pension fund for their employees. And the investment decisions are taken by the trade unions and the company and so on. So I went there to give them, you know, some kind of speech, lecture of what to sustainability investment was about, blah, blah, blah. And then one of the persons in the trade union said, Ines, I like that very much, but I want to have my pension. This is very nice, but I don’t want it. I mean, that’s very nice to have a chat, but we are talking about money. And I said, yes, I’m also talking about money. Just imagine that your pension fund is invested in oil, is invested in logistic companies affected by sea level. Imagine that your pension fund is invested in agriculture industries. Don’t you think that this is what we are talking about? I mean, the possibility of you having a good pension in 20 years time. I persuaded them more or less. I think that was a really, really, really nice way of putting this. But regarding reporting. And I think that moves me to my next question. Ines, can you explain the importance of standard interoperability with CSRD, its alignment with international sustainability standards and the relationship between CSRD, SFDR and the EU Taxonomy? Well, sorry, yes, I don’t want to extend a lot because Laura and Robert have a lot of insights to add as well. But I think that ESG data is the input for any other sustainability exercises. I mean, the Taxonomy is a tool for classification. The CSRD is a tool for. For reporting, but you have to report according to a classification or according to a standardisation of activities. And CSRD is important because it provides other economic agents with information, again, coming to investors. Investors need the CSRD information, I mean the corporate sustainability reporting to feed their own investment decisions and to feed some of the regulations they are subject to, for example, the SFDR sustainability financial disclosure regulation. So for those who are not aware with that, it means that financial institutions need to disclose how sustainable their investments are. And you cannot disclose how sustainable your investments are if your assets don’t tell you how sustainable they are. Because at the end of the day, what you do is invest in assets. You need to know how sustainable the assets are. So CSRD is the input for any other, for many other pieces of legislation. I don’t know if you see it like that in EFRAG or I’m not speaking fair, fragments where they’re sort of providing independence. But there is advice. There is. In the ideal world, we would have had CSRD. First you’d have data, information, then you would have defined the taxonomy and the taxonomies to define what is green. And actually there’s only green or not green. There should be working on that on the third side, that there will be sort of the transition and the transition. Five years or ten years, I think ten years. There’s still debate. It should be ten years. So you have something which is never going to meet. Something which could meet, but it has to have investment and the green assets which are green from beginning. And you have to define, because something could be green from a climate point of view, but it could do social harm, it could actually do biodiversity harm, or the supply chains or labour issues. So we want to make sure that there is a definition of what is green and a common yardstick. And the taxonomy is not just Europe. This taxonomy is being done in, in China, India, throughout the world, apart from the US, which seems to have fallen off, I think, recently, of some of the environmental issues. But so you have that definition. And SFDR is about products. So if I want to go in and someone sells me a fund or a pension fund and says it’s green, that there’s article six, eight and nine and they’re being defined and going to be changed, that if it is nine, that nine is green, then it meets those criteria. So I think there is the issue of that. It’s not inter probability, it’s part of the CSRD does not require you to have green assets, but it’s theirs to report on what your capex, that we might actually drop the opex, but capex, what is the capex of my investment? Green. And what percentage of that operation is green, meeting that taxonomy, which is separate, defined. And then an investor, an asset manager, will look at what percentage of their assets are green. The percentages right now are very small. Let’s not kid ourselves. These are sometimes in eastern Europe it’s 2%, even less in some areas. We’re looking at how to increase. The whole point is how to increase the flow. But there is another issue of interoperability. Interoperability is how to use existing standards, be it IFRS, be it GRI, and how do you sort of mold it all? And I think I know we’ll be saying a bit more from that side, is that we have different regimes for reporting and we need to bring them together. And that there is that also interpretability. If I report in the City of London, then the city of Frankfurt will understand also what Singapore does, what New York and Rio, because I think that’s side of reporting is going to be define scope one, two and three in the same way and provide that information. Provide information what biodiversity is, what, what gender even means or number of women on boards. I mean, again, critical areas which we sometimes forget a progressive company will be more inclusive, more diverse, but it also business sense. It will, particularly if you are in a certain areas, you want to know who your stakeholders are, who you’re selling to. And if you say polish, we call it Stadejadi. Old men sitting there on the board, they’ll be looking at what they did 50 years ago when they were young. They will not understand the youth, they will not understand the changes in society. And you need to have that. I don’t know what to add to that. I think it’s a very complete response now. We, I mean, they have to be. The interoperability is basic in order to speak the same language and in order to make some sense with all the data that now we’re trying to collect. Because the problem right now is that companies first are having problems gathering that data because this is new. And once they have the data, they don’t know what to do with it. And that’s what we’re trying to do with the CSRD. That’s what investors have to do when it comes to making investment decisions with the SFDR. And in the end, it’s all about being able to speak the same language and then be able, as we now can talk about, like IFRS or GAAP or whatever, when we talk about financial accounting, be able to do the same, but with sustainability. Fantastic. Laura, what are the strategic benefits for companies that go beyond mere compliance with CSRD? And how can adherence to these regulations drive broader sustainable business actions and transformations? Well, there are many benefits. I’m going to name like. I think the first one is what we have been already talking about, which is access to financing even. No matter what some politicians in the US say, investors do care about sustainability. I mean, they do care for their assets. They want to know that their assets are being deployed in activities that are going to be good for, like not save the world, but are going to do good for the world. I think. And in the end, that’s one of the benefits. As you were mentioning before, I think that the myth that there’s a trade off between sustainability and profitability has been proved wrong. I mean, just to throw some numbers that I have here, there’s this McKinsey report that’s been done with over 2000 public companies and they said the results are that those companies who cared and financial growth and ESG growth outperformed their peers that only cared for financial growth at around 2% points. So in the end it shows that this is like a benefit not only to do good. No, but also it’s good for you to do good. That’s one thing. And then the other part, well, within many others, but it has to do with my background, as I said before, come from the corporate communications world, where we’ve always struggled with data. No, we always struggled with numbers that could prove the impact of what we were doing. No. And that’s reputation. And in the end, I think that companies that not only comply with CSRD but go beyond, they are building this kind of like a floating device that will be bigger. Because these issues only take relevance when there’s a crisis. Right? You only know that all the things you have done before in terms of reputation have a meaning, take meaning when you have an issue. So I think that companies are actually investing in showing a sustainable strategy that’s been going like with, like growing with time and it’s being consistent are the ones that will do better. Right. And then of course maybe you can measure there are other benefits, no operational costs, then you can adapt to regulations more easily because regulations are always going to be changing. I don’t know, Ines or Robert, if you want to compliment or say something about this, maybe first thing change always costs. So this issue of the CSRD and the entire area will mean some companies will have to have a cost. It’s not free. And that is, I think we need to recognise that the data getting, the verification, the assurance will take data, like with any organisation, the better you are, know your data, know your business, the better you can manage it, the better. Of course, investors and you can say easier to get financing, of course, but you are better prepared for the changes. And it’s about particularly with our demographics, with our geopolitical situation. Will I attract people to work for me? Will they be dedicated to work for me? Will they deliver beyond? Because it’s not 8 hours people work. Yes, unfortunately, I wish it was. But it’s not whether people will be committed and want to see and to attract and want to. And then we are coming into the issue as well is how resilient my business is to change. And the change will come in from different factors to change. Of course, climate. Climate will change. Hotter, colder. If you bought a ski chalet on 1500 meters in the alps, you probably losing business now because there’s no snow. If you’re still two and a half thousand meters, you are fine. Again, that is climate change, which we already see. But it’s the forests, it’s the flooding, it’s where your vineyards are, wherever your agriculture. But it’s also coming on the geopolitical. There is a lot of research saying that the syrian uprising and problems were because of drought for four years, five years, which meant a lot of people moved into the cities. That caused tension. And of course, when the democratic movements went in, those unfortunately died out first. But then it changed into something a bit more horrendous. So the issue is, of course, migration change. You look at where did the roman empire get its food? And why did the barbarians at the gates appear? There was a movement of people, amount of people that died in 560. Was it 535 with the justinian plague, because of the volcano? But also plague destroyed a lot of. So is a company destroy half the population and destroy the real ancient world? So is that going to be for us, these events right now, with where our suppliers are coming in, what happens if the supply chain fails? What happens if they sanctioned? What happens if there’s human rights? We’re talking about China, we’re talking about Russia, we’re talking about other parts of the world. Isawa business knows that supply chain and therefore can resiliently change. Does it know if there is a flooding and if there’s a forest fire and we can’t get certain areas? Could I change because I know my supplies or help them when they are in need to make sure that there is the migrations that are coming in? So there is a lot of additional logic behind the reporting. It’s not just about sustainability at the end. It’s about governance, it’s about robustness, it’s about us in Europe being independent in terms of circular economy, in terms of managing our systems. And I think Europe has to become independent in terms of resources. That’s our to be or not to be. So there is a lot more behind it than just the pure sustainability. It is an area of how do we want to live, where, how do we want to treat our neighbours, how our partners, how do we actually work and engage with them, how we help them to develop and how we also look at that Sylvia, that caring factor as well. But at the end of the day, it’s business that my business is resilient, robust, and can withstand the pressures of the years to come. And I also report, and I attract better financing as a result of it, but also attract better people. Better people. All people are good, but it’s attract more committed, dedicated and the best talent. And that’s also very important in the current high tech environment that we live in as we are in this Google place, is, I think, what we want high tech best of the best to be be with us. Can I add something regarding to what Robert said? I think it’s about bringing long term into a very short term world, you know, because in the end, like markets and businesses work not only on a quarterly basis, they can work even by the hour when, because they are public companies. So in the end, sustainability brings this like point of view and a strategic vision towards like maybe ten, 2100 years from now, right? Yes. If I may add just some very practical ideas. If I have to point out the benefits for a corporate to report, the first one would be if you report, I mean, if you have a sustainability report, that means that you have included sustainability in your conversations, and at least you have identified where sustainability tackles each of your departments. So only that I think it’s a benefit. But reporting is only part of the whole transparency and disclosure exercise. I mean, it’s just one part. Then there is communications, advertisement stakeholder engagement, there are others. Reporting is just one one. And it’s the one which is compulsory or at least regulated. So it’s under the compliance field, which means it’s the same for all. You have no room for differentiation. So unless you go beyond compliance, you’re not going to ripe the benefits of disclosure and transparency. Just stick to what it’s compulsory. That’s fine. You comply with the law, you are comparable with others, you are comparable with yourself two or three years ago, but that’s all. You have to go beyond compliance to reap the benefits. Some of the benefits are differentiation. Even complying the law, you can be different and there are some companies that make transparency a bulk mark of their company. And I can speak about Telefonica or VBV in Spain. I mean, doing a good report is part of their way of being transparent. So that’s one. And also you can use it to have conversation with your stakeholders. So my idea would be just reporting is fine because it allows you to have sustainability in the conversation. But I would invite companies to go beyond compliance to reap the benefits of the differentiation, competitive advantage, blah, blah, blah. I love that you say that, because today is from compliance to sustainability. So that’s actually the point. But I think there’s also the one thing is the CSRD, for the first time and actually worldwide world, will provide accountability and responsibility of management boards, including potentially personal fines and prison sentences for white crime if they actually cheat and provide false data. Now that means that all the data reports will be looked at by lawyers and 1010 people. Because no board director will sign off on something which they don’t understand, but the fact that they are accountable for the first time, they’ll look at it, read it, have a think about it. What am I signing? What does it mean to me? You have to reply to strategy. That means at the board level, managers will have to think about. So what is our strategy with climate? What is our strategy with even personnel issues which before they didn’t, it was somebody wrote a report, no liability, someone signed off, maybe never read it. And there it goes, my philanthropy report. So that entire issue of accountability and responsibility sheds a new light. It doesn’t mean it will solve the issue, it doesn’t mean that there are reports and you say you want to go beyond, but by the fact that you read something and by the fact you have to debate a strategy, even if you don’t have a strategy, you at least thought about it. And that is the first change in life is if I am thinking about it and my senior management or actually the decision makers are thinking about something, they might come with a solution, they might not. But a higher chance that they will and a higher chance and probability that we’ll move in the right direction and move the dial in the right direction. And that is, I think what we’re trying to achieve, the accountability, because there’s been too much green washing, whitewashing, whatever washing you want to use and quite often green wishing that I wish I was green and I’ll say I’ll be green and I’ll sign off to anything, but I’m going to retire in two years time. It makes no difference. It’s something in ten years which we commit to. So that I think is essential get people to think. And the most difficult thing, I think if you’re lecturing students or if you’re working in a team, how to get your people to think. And once they do think, they come up with great solutions, great ideas, not all, but most. And that is, I think, the fundamental issue which I love about CSRD, it will make them management board think. And that is a start to anything on our journey on sustainability. That’s what I was saying, that it puts sustainability in the agenda, in the conversation. And maybe one thing, one extra thing to add to what Robert was saying is that it makes companies to actually know themselves, because I think there are many companies that think they are very, I don’t know, like their human rights, like they have like the best policies. They are, they have the best GI policies and then they see like the real numbers and they realise, I mean, yes, they have a lot of female, a lot of women because of. Because of probably the industry they are in, but then you cheque the senior female women and they have like nothing, so. But they thought they were, because if you see, they do have a lot of women in the company, but in the end, this is like what CSrd is doing is making companies to actually look at themselves without their, like, without the mom glasses, but with the real glasses, you know. And I think that’s very important to point out. Really, really love the green wishing thing. I have a question for each one of you, but I couldn’t dare to stop you while you were talking because you’re saying a lot of great things, but we unfortunately wouldn’t have a lot of time. So I’m going to give the opportunity to people in the audience, if you have any questions, we can go to the Q and A. Now if I see that there’s none. Oh, I see one there. Does anyone have the mic? Yeah, it’s going there. Just a moment, please. Hello. Thank you everybody. I would like to know the relationship between CRRD and ISSV from the prolagation that t shift d in two areas. The first, single global materiality, and the second, a forward looking matrix. Thank you. I’m sorry, I think we didn’t understood the second part, the last one. The first one is the differences between ISV and CRD, the convergences of differences in two areas. First, CRD’s double materiality. What do you think about ISV? And the second, how both of them try to qualify the forward looking matrix, the future matrix. The use of scenarios in calculating the matrix. This is the question. Perhaps it’s very concrete, but this is my. Maybe if I answer because we just approved in EFRAG on the 2 May at the interoperability report, which is available on the Internet between ESRS and ISSB or IFRs. So the issue is, of course, course. So there is the view of how to make one report interoperable with others. ESRs is more developed or the CSRd and the ESrss than Issb, iFRs s one and S two. But on the climate particularly, there’s a lot of similarities. Both of them look forward. But of course esrse one is more demanding in terms of it has the assurance process in it. You have to go a bit further. So we Europeans have gone a bit further. The IFRS is basically now TCFD. So it’s basically the climate data goes into that. So that I think is going to be very similar. And it’s. Both of them are forward looking, but the Europeans are defined a bit more than what this IFRS, which is not. It’s going to be implemented by each country, which will have a difference. So the UK will implement it. Turkey, Brazil will all have ifrs. For instance, I think Nigeria. So they’re signing up. So it’s the first element. It’s viewed as an element, but there are very similarities. And it will be eventually this inter probability will move in. Because you have under IFRS, you have a requirement to disclose sustainability issues which are material to your investor. And again, if the investors and most investors sustainability issues are material, then of course in the US they might move away, but in Europe they will. So even if you report on IFRS, I’ll have to put this in. So when I had a chat with one of the ISSB board members, they’re saying it’s a bit one and a half materiality, because the double materiality and single material, single materiality, just financial risk. And therefore I can put in, in some countries they put in that it’s a financial risk. If I kill somebody, it’s not financially, because it’s not a big, big issue. Now, for us, it might be a big issue, but in some countries, life is cheap. So we have to look at whether it is. That’s, that’s extreme, that’s not my view. It’s. But it is something that, where we have to put in, you know, what is material, what is not much. The double materiality is what we in Ifis have always used and has been. We look at. It’s the reputational risk, it’s your impact. But it’s the soft issues that death of somebody on your workplace is a material issue for us. And the pure financial, it might not be because I just pay a fine and I pay $50,000 in some countries and that’s it. And there is, you know, and it, it goes away. It doesn’t in Europe, it doesn’t elsewhere and it shouldn’t. And I think what we’re trying to do is to bring in that sort of common yardstick. ISSB is moving and there’s a lot of talk. CSRD has been watered down substantially and the SRS is actually half of what they used to be and what we wrote in the first ones because of make it a bit more palatable internationally with including the us companies and including outside or Africa and Asia. So there is the movement, but you need to start on that side. And I think we’re going to be moving in the same direction. Europeans a bit further, but definitely single materiality is not there. But I mean, kind of can speak over coffee a lot about this, but look at the report from the 2 May on the interoperability between ESRS and IFRS. I think a 50 page or 30 odd page document which gives you a lot of answers already. That’s it. Fantastic. Does anyone have any other question? Okay, I’ll go with mine. Since you just answered one, I’ll go with how can CSRD reporting become a lever for value creation and a competitive advantage tool for organisations? Okay, well, I think sustainability has three sources of value creation for companies. One source is it allows companies to align with societal values, like if society is concerned about biodiversity, or about diversity, or about animal care, which is mainly values, nothing else, or about, you know, recycling. It allows the company to align with its societal values and therefore reporting on this makes you more appealing to your public. A second source of value creation that sustainability provides companies is the possibility of identifying your impacts. Let’s say companies have an impact on society and the environment. They can be positive or negative. I mean, you can pollute or you can innovate. So reporting allows you to be accountable for these impacts and allows you to build trust with your stakeholders, mainly communities, customers, regulators, media and so on. And a third source of value creation for companies is the risks and opportunities that sustainability provides. I mean you have, as we have seen, physical and transition risk coming from climate, but you also have opportunities. I mean, if you look around in Madrid streets, there are things that were not there five years ago. I mean, everything related with urban mobility is new it’s business opportunities related to climate change or climate adaptation. So there are opportunities. And reporting allows you to create the business case of sustainability for your company. So I think in these three sources of value creation, alignment with values impact or financial materiality, reporting allows you to create value, either communicating with society, being accountable for your impacts, or creating a business case which is appealing for investors mainly, or maybe suppliers and also employees. So depending on the stakeholder, I mean, one source of value creation is more important than the other, but reporting also allows you to leverage on these value creation sources. Fantastic. And Laura, hard investors, including ESG related regulation into their investment strategies. And what are their challenges? Well, investors have to include, are including ESG regulation in two ways. One is the CSRD, of course, because they have two. That’s like internally, no, they have to, because most we’re talking about institutional investors, which are the ones that move the needle, they have to internally report their numbers, but they also become, because of SFDR, they have to also know where they’re putting their money. So they do care about it. And actually they’re like numbers like 90% of european institutional investors, they say they do care about ESG when they decide where to put their money. And also when it comes to the private world, I think they’re struggling a little bit more. The private equity venture capital world where I work, or at least I know a bit more about, they are struggling with gathering the data, as I said before, but they have to, they have to because their investors are asking for it. And in the end, they need to have investors. But once they have the data, they are still, and as I said before, they don’t know what to do with the data. And I think that’s the main problem. And it’s very complicated when you try to measure everyone with the same, you know, with the same like standard, because if you have, like, if you’re a venture capital company and you invest in startups, I mean, it’s very hard, you have a really small team, it’s very hard for you to be compliant, and it’s even harder for you to gather the data from your portfolio companies, for example. And the same with private equity. So I think that’s one part they are struggling with, gathering the data and then once they have the data, they don’t know what to do with it. And I think that it’s a matter of time that we, I think I said this before, once we actually know what this data is for, we will be able to improve it and this will be like organic information now there will be a time where we won’t be sitting here talking about, yeah, there should be. Companies should be like forced to report the number of women they have on senior positions or you know, whatever other ESG data. Really disclosure that right now are an issue. Fantastic. Since we still have a couple of minutes and going a little bit off topic, CSDD has been really well done in the last month when it was approved. But in your role involving due diligence, can you share insights on how company can effectively incorporate due diligence into their operations and decision making processes? First of all, due diligence is always duty of care is being traditionally done in acquisitions transactions. And you do a due diligence to assess what you’re buying or investing in is actually there. So that’s a process. And you did environmental and social as well to look at the environmental and social risk. So that’s a due diligence. We have now the due diligence directive, the corporate sustainability due diligence directive which has gone through, it’s been watered down, it’s of course less entities than it was. Financial institutions are covered. But anyway it’s a starting step. But originally that was viewed as the environment and human rights due diligence directive and it got changed to the sustainability and the aim is to look at really at the supply chains and at the workforce throughout and you’re looking at making sure that the big companies implement these issues in terms of cheques. So it actually fits into the CSRD as well because you have the reporting on your, on your human rights and on the social side it means it’s mandatory for big companies, it’s not for small. But whoever has worked even there worked with Ikea, Coca Cola, BMW, they always did a supply chain assessment anyway. Nike does one in. Now we can argue whether it’s good enough or not and whether they fall full foul. But they have been doing those in Bangladesh on some of the human rights issues in the past where they source things. So it’s going to make a common benchmark in terms of your supply chains assessment. So from a due diligence point of view, as we do, is when we finance, we will always do an environmental and social because that’s a mandate of an international financial institution like ours. IFC, World Bank, EIB will do the same, although not in Europe, outside Europe. So this is very, very interesting how EIB works, but it is a key that we cheque whether you have compliance. And the due diligence is when I’m buying something, someone will say it’s, you know, the car is fine, but I’m going to cheque the engine, whether it’s not been flooded and whether they’ve not revamped it backwards. I used to do greenwashing in myself, or greenwashing. I used to do vendor due diligence. So I’d go into a factory and then say, paint this, change that, change those light bulbs. It’ll make it look better. We sell it better. So you do that. And again, it’s a professional side, as it nowadays, maybe look at it, but it’s normal. If I’m selling something, I’ll tidy it up. If I’m preparing something, I need to look at it. So again, the value change is a very important area that we look at where people are there actually workers. And it’s quite often, if I look legally, and this is, we talked about it, for instance, in Poland, we have a big problem. It’s also coming in, in all of Europe is I have a good company. The company has a good EPC contractor. They’re excellent. They will want to follow everyone. But that EPC contract has a subcontractor, and that subcontractor hires people through agency workers. And those agency workers are people that are either refugees going in right now with Ukraine is, of course, you know, these people are scared that they’re going to be rounded up and sent off to the front line. They’re running away. They don’t want to, you know, for various reasons. And they’re there for working for peanuts, no Social Security. Something happens to them, they’re left to die. Even that’s happened in Poland. So these issues are issues that we have, and it’s called modern slavery. It is that it happens in our doorsteps in Europe, on building sites, in some factories where you have illegal immigrants that they want to earn a living and they’re desperate that they’ll do anything and somebody abuses them. So what we’re trying to do is that we are not part of that chain. We can’t stop it, unfortunately. We wish we could, but we make sure that the company we invest in, the factory we build, the construction site that is, does not have that. And if it does, we challenge it and try to address it. And again, the world is not perfect, but we. So we have problems right now on some projects somewhere in Asia, we have exactly these issues where we’re trying to resolve with the clients. Because of the EPC contracts, you have chinese contractors, they sometimes either forget or don’t do. And if you don’t ask, you don’t get. So this is, again, the due diligence. You ask, you cheque and bring in the standards and you try to mitigate, try to improve. At the end of the day, we want that if we use something, if we have this glass bottle actually made with not forced labour, not child labour, it’s actually done properly and maybe pay a little bit more for it, but make sure it is sustainable, but also socially sustainable. And sustainable socially. It’s done with social care and that we respect human rights. Amazing. This was some fantastic panel with really unravel compliance here. Thank you very much to the three of you. You have taught us a lot. Okay, we’ll have a small break of five minutes for the next panel.

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